Armanino Blog

California Takes Actions to Support Affordable Housing

April 28, 2020

Here is a roundup of the steps California has taken to help owners and developers of affordable housing, as well as individuals impacted by the COVID-19 pandemic.

Help to Pay Rent and Bills

On April 18, Governor Newsom issued an Executive Order placing a moratorium on evictions for renters who can’t pay full rent due to COVID-19 through May 31. California is also placing a moratorium on foreclosure sales or evictions for 60 days. Note that the CARES Act provides much stronger eviction protections for most affordable housing projects.

The Governor also reached an agreement with financial institutions to give relief which allows mortgagees to reduce or delay monthly payments. In addition, many utility providers are not shutting off services due to non-payment. Check with the California Public Utilities Commission for more information.

Housing and Homelessness

On April 18, Governor Newsom announced that the state has secured more than 10,000 rooms for vulnerable Californians experiencing homelessness. Find answers to your questions on housing and homelessness during COVID-19 here.

HCD Guidance for Property Owners and Developers

On April 16, the California Department for Housing and Community Development (HCD) published guidance on emergency hardship requests and compliance.

Property owners and management agents should refer to this guidance when considering relief options for properties experiencing cash flow shortages due to decreased rental revenue caused by renter (both residential and commercial) failure to pay as a result of the COVID-19 state of emergency. Key points of this guidance are:

  1. Relief requests — HCD is going to consider and implement reasonable financial accommodations. Residual receipt payments will be extended to July 15. Upon approval from HCD, owners can use HCD-controlled operating reserves. However, material terms and conditions from HCD loan documents and regulatory agreements remain in full force and effect.
  2. Reporting requirements — Prior to May 15, HCD allows a grace period for all projects to comply with Asset Management and Compliance (AMC) Branch Fiscal and Occupancy reporting requirements. For example, annual report, CPA-certified audit, AMC Form 184, 185, 187, AAMAR and budgets and schedule of rental income.
  3. Compliance monitoring — Physical inspections are cancelled through May 15, and desk audits may be used.
  4. HCD has provided a checklist of best practices for rental housing development. For details, click here.

TCAC Updates for Property Owners and Developers

On April 13, the California Tax Credit Allocation Committee (TCAC) issued additional guidance for income verifications and documentation. The guidance includes:

  1. Verifications of employment (VOEs) — TCAC will continue the VOE and income documentation requirements during the pandemic but has added specific guidance and clarification.
  2. Calculating unemployment and temporary unemployment benefits — For new-move-ins and recertifications where the tenant has been laid off and not returned to work, or furloughed but there is a return to work date or option, or has filed for unemployment but has not received the first check, TCAC requests verification of last day of employment and to calculate unemployment differently among the three categories.
  3. CARES Act and economic impact payments — The CARES Act offers two types of individual assistance: one-time economic impact payments and extra unemployment benefits. TCAC will exclude these assistances from income determination.
  4. Electronic signatures — TCAC will make a one-time exception to the “wet signature” rule and will allow electronic signatures for all documents, including lease and TCAC required forms, through DocuSign, but no other electronic signatures, and all costs associated with this change is on owners. TCAC will return to the previous policy once the pandemic regulations have been lifted.
  5. Rent deferrals and repayment — Regarding rent deferrals and the repayment process for units where a prorated deferral payment would put the household over the maximum rent limit for the unit, TCAC is currently in contact with the IRS and will update later.

At the April 3 TCAC meeting, the 2020 application schedule was updated, which reflects a change to the previous application deadline of April 17. The next 4% credit application deadline is May 15, for a committee meeting award date of August 19.

For the latest regulatory changes and other information on keeping your organization running through disruption, visit our COVID-19 Resource Center.

April 28, 2020

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