0959 Debt Limit Allocation Committee
Program Descriptions

0810 - CALIFORNIA DEBT LIMIT ALLOCATION COMMITTEE

Qualified Residential Rental Project Program:
State and local government agencies and joint powers authorities can issue tax-exempt housing revenue bonds. These bonds assist developers of multifamily rental housing units to acquire land and construct new units or purchase and rehabilitate existing units. The tax-exempt bonds lower the interest rate on a mortgage to be paid by the developers. The developers in turn produce affordable and market rate rental housing for low and very low-income households by reducing rental rates to these individuals and families. Projects that receive an award of bond authority have the right to apply for non-competitive four-percent tax credits.

Single-Family Housing Program:
State and local government agencies and joint powers authorities can issue tax-exempt mortgage revenue bonds (MRBs) or mortgage credit certificates (MCCs) to assist first-time homebuyers with purchasing homes. These agencies and authorities may issue MRBs, the proceeds of which back below-market interest rate mortgages. As an alternative to issuing MRBs, state and local government agencies and joint powers authorities may issue MCCs. Homebuyers use the MCCs to reduce their federal tax liability by applying the credit to their net tax due. Homebuyers may purchase single-family homes, either freestanding detached, condominiums or townhouses. Program participants must meet program income limits and must purchase a home that falls within the program's purchase price limitations.

Home Improvement and Rehabilitation Bond Program:
State and local government agencies and joint powers authorities can issue MRBs or MCCs to assist homeowners with home improvement financing. These agencies and authorities may issue MRBs, the proceeds of which back below-market interest rate home improvement or qualified rehabilitation loans. As an alternative to issuing MRBs, state and local government agencies and joint powers authorities may issue MCCs. Homeowners use the MCCs to reduce their federal tax liability by applying the credit to their net tax due. Homeowners may improve single-family homes, either freestanding detached, condominiums or townhouses. Program participants must meet program income limits, and in certain cases, must own a home that falls within the program's rehabilitation cost and age-of-home limitations.

Extra Credit Home Purchase Program:
State and local government agencies and joint powers authorities can issue MRBs or MCCs to assist teachers, principals and other eligible school staff with purchasing homes. These agencies and authorities may issue MRBs, the proceeds of which back below-market interest rate mortgages. As an alternative to issuing MRBs, state and local governmental agencies and joint powers authorities may issue MCCs. Homebuyers use the MCC to reduce their federal tax liability by applying the credit to their net tax due.

Industrial Development Bond Project Program:
Small-Issue Industrial Development Bonds (IDBs) are tax-exempt private activity bonds that are issued through state and local government agencies to assist manufacturing facilities finance capital expenditures. IDBs offer interest rate savings to small and midsize manufacturers in contrast to conventional loans. When used by manufacturers, IDBs serve to retain and create new jobs within their communities.

Exempt Facility Program:
Exempt Facility Bonds are tax-exempt private activity bonds that are issued by state and local government agencies to finance solid waste disposal and waste recycling facilities. The tax-exempt bonds provide facility owners with low-cost financing in the form of below-market interest rate loans. The interest rate savings enable the project owners to maintain lower customer rates or minimize customer rate increases, while at the same time assisting the communities they serve meet their mandated requirements to protect and enhance the environment.

Student Loan Program:
Student Loan Bonds are tax-exempt private activity bonds issued by authorized agencies for the purpose of either financing direct loans to college students and their parents or purchasing bundles of already-originated loans on the secondary market. When used for direct lending programs, tax-exempt bond allocation allows lenders to pass on interest rate savings to financially needy students via below-market interest rate loans. Financially needy students are borrowers for whom the cost to attend college exceeds their ability to pay, as determined by their school's financial aid office.

Beginning Farmer Program:
Beginning Farmer Bonds are tax-exempt private activity bonds that are issued through state and local government agencies to back below-market interest rate financing for eligible agricultural land, construction/improvements, breeder livestock and equipment for qualified farmers. Eligibility, permissible items and loan limits are set by the United States Internal Revenue Code. Under the Program, a conduit bond issuer applies to the Committee for an allocation of Beginning Farmer Bonds. If the Committee approves the allocation, the issuer then brings together farmers, financial institutions, contract sellers or investors to negotiate terms of a transaction. The issuer then sells the bonds to finance the loan, sale or investment.

Qualified Energy Conservation Bond Program:
Qualified Energy Conservation Bonds (QECBs) may be issued as either tax-exempt private activity bonds or governmental purpose taxable bonds. When issued as a governmental purpose taxable bond, QECBs provide the issuer with either a direct or tax credit interest subsidy. QECBs may be issued to finance a broad array of qualified conservation purposes such as capital expenditures, research facilities and research grant programs, mass commuting facilities, public education campaigns, and demonstration projects. There is no sunset date for this program.