The California Tax Credit Allocation Committee (CTCAC, commonly known as TCAC) offers incentives for tax credits on new and/or rehabilitated affordable housing projects. These projects may apply for tax credits based on a number of factors, but sometimes there may be some confusion as to the necessary components of the application, especially regarding energy and green building needs. Understanding your application strategy can potentially save you thousands of dollars in hard costs and labor. Below are the top 5 myths and misconceptions about TCAC applications (in no particular order).
- “The building must achieve at least 15% improved energy performance over Title 24.”
This misconception stems from the competitive route for 9% tax credit applications (as opposed to the 4% noncompetitive route). When TCAC projects are competitive, they have several opportunities to earn up to 5 points. One of these paths is through energy performance improvements. This is beneficial in its own right, but it’s not explicitly necessary depending on which path you take. One thing to note is that rehabilitation projects have their own energy thresholds compared to new construction for points, so it’s important to make this distinction and identify these targets before working off the wrong assumptions.
- “The building must have photovoltaic systems installed.”
You may hear this from time to time since PV systems can help to achieve the 15% threshold mentioned above. However, the Minimum Construction Standards for all TCAC projects do not state the need for PV systems at all. Although PV systems are required for new low-rise residential projects under the 2019 Energy Code (more on that here), if your project is 4 stories or higher, PV and/or solar thermal for domestic hot water systems are not necessary.
- “The building must be LEED certified for compliance.”
Although LEED is becoming more popular, especially in California as more jurisdictions demand it for permitting and Certificates of Occupancy, no TCAC project is required to pursue this certification or others like it (such as GPR or ENERGY STAR) unless they have chosen to do so through the competitive route. LEED offers 5 points for competitive projects and is relatively low stress on budgets when it comes to soft costs and additional design measures since so much of it aligns with 2019 CALGreen and Energy Code requirements by default. But if this is not a preferred certification, either for TCAC or for marketing purposes, then it is not required.
- “The project must pursue points whether it’s competitive or not.”
As mentioned above, there are two routes for TCAC applications: competitive and noncompetitive. Noncompetitive projects do not have any points to pursue and thus offer a lower tax incentive (4%). Similar to the items above, the confusion lies in the difference between these two types of applications. If your project is noncompetitive, no points need to be pursued, whether it’s through green building certifications, energy performance, or water efficiency.
- “The Sustainability Management Workbook must be submitted with every application.”
You may have seen the gigantic and sometimes intimidating Excel document offered as a resource for TCAC. This Sustainability Management Workbook is filled with information across several tabs summarizing the requirements for all TCAC applications, as well as the “Application Phase” and “Placed-in-Service Phase” tabs. These tabs (and the workbook itself) are only required to be submitted for competitive projects pursuing the energy performance route for points. If this doesn’t apply to your project, you can safely leave the workbook out of the application and never think about it. However, it is important to note that, whether the project is competitive or not, an energy model must be produced by a CEA, and there must be a meeting between the owner, architect, and the CEA prior to the initial application to discuss the building’s performance and opportunities for improvement.
Distinguishing fact from fiction is the first step towards a smooth, successful TCAC application, and the process becomes much easier when meeting with a qualified LEED Green Rater and CEA to discuss the optimal path for your project (hence why it is mandatory for all TCAC projects). VCA Green offers green building consultancy, energy modeling, and field verification services for TCAC through our team of certified LEED Green Raters, CEAs, and HERS Raters to ensure you receive the highest benefits for your project at the lowest cost possible. However you are planning to maximize your points for sustainability, LEED, GreenPoint Rated, or energy performance, VCA Green is here to help. For more information, contact Moe Fakih below.
Contributing Writer: Burke Boydell, CEA, HERS Rater
Moe Fakih, Principal