On March 6, 2019, the California Tax Credit Allocation Committee (TCAC) released a notice describing the process for preparing and submitting a Lease Rider Agreement, which is required for all tax credit housing projects developed under a leasehold interest (i.e., where the land is subject to a ground lease). A copy of the notice can be found on the TCAC website here. The notice includes a link to a template for the required Lease Rider Agreement.
A few issues to keep in mind for these types of transactions:
- Form 8609 (Low-Income Housing Credit Allocation and Certification) will not be released by TCAC until the Lease Rider Agreement is executed by all parties.
- The Lease Rider Agreement must be recorded prior to the TCAC regulatory agreement.
- The legal description in the Lease Rider Agreement should reflect the fee simple interest.
- The legal description in the TCAC regulatory agreement should reflect the leasehold interest.
- TCAC executes the Lease Rider Agreement last to ensure that the document is as approved.
For more information regarding TCAC’s policies and procedures, and affordable housing development generally, please feel free to contact us here.