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- Appendix A—Debt Limit Committee-Awarded Bond Resources
- Appendix B—Tax Committee Distribution of Tax Credits Awarded
- Appendix C—Scope and Methodology
Debt Limit Committee-Awarded Bond Resources
The Audit Committee directed the California State Auditor (State Auditor) to determine the amount of bond funds the Debt Limit Committee has allocated to affordable housing over the last five years. Table A presents the Debt Limit Committee's total bond resources awarded for multifamily affordable housing, single-family housing, and nonhousing projects from 2015 through 2019.
Debt Limit Committee-Awarded Bond Resources From 2015 Through 2019
|Total Bond Awards||HOUSING||Nonhousing*|
Source: 2015 to 2019 Debt Limit Committee Estimated Public Benefits summaries.
* Nonhousing includes bond resources that support other purposes such as recycling facilities, landfills, and wastewater treatment facilities.
Tax Committee Distribution of Tax Credits Awarded
The Audit Committee directed the State Auditor to determine the geographic distribution of tax credits awarded by the Tax Committee for affordable housing in the last five years. Table B presents the Tax Committee's tax credit awards—including federal and state tax credits—and units supported by those awards by county from 2015 through 2019.
Tax Committee-Awarded Tax Credits by County From 2015 Through 2019
|County||Household Population||Tax Committee Supported Lower- Income Units||Tax Committee Tax Credits in Dollars—Federal||Tax Committee Tax Credits in Dollars—State||Tax Committee Tax Credits in Dollars—Total||Units Per 1,000 Household Population|
|San Luis Obispo||262,169||897||15,282,547||24,617,853||39,900,400||3.4|
Source: Tax Committee tax credit award data from 2015 through 2019 and 2019 household population data from the Department of Finance.
Scope and Methodology
The Audit Committee directed the State Auditor to conduct an audit of the Tax Committee and the Debt Limit Committee to assess their efforts to provide tax credits and financing for affordable housing projects throughout California. Table C below lists the objectives that the Audit Committee approved and the methods we used to address them.
Audit Objectives and the Methods Used to Address Them
|1||Review and evaluate the laws, rules, and regulations significant to the audit objectives.||Reviewed and evaluated relevant federal and state laws, rules, regulations, and other relevant information related to affordable housing development.|
|2||Identify and evaluate the following:
|3||Review the Tax Committee's and the Debt Limit Committee's management and operation practices, management structure, and internal controls to ensure that they are operating effectively and efficiently.||
|4||Analyze the transparency of the Tax Committee's and Debt Limit Committee's processes and governance, such as whether the rules and processes are sufficiently clear for developers, and whether topics discussed at meetings are properly placed on the agenda.||
|5||Determine and analyze the geographical distribution of funds awarded by the Tax Committee for affordable housing in the last five years, including the following:
|6||Review the Tax Committee's and Debt Limit Committee's competitive and noncompetitive processes for deciding which projects to fund.||
|7||Review the Tax Committee's efforts to recruit applicants that would provide affordable housing throughout the entire State, including the San Joaquin Valley and rural areas.||Interviewed Tax Committee staff and reviewed conference and workshop documentation to evaluate Tax Committee developer recruitment efforts between 2015 and 2019.|
|8||Determine the amount of bond funds the Debt Limit Committee has allocated to affordable housing over the last five years. Evaluate the Debt Limit Committee's methodology for allocating tax-exempt debt to housing and other purposes.||
|9||Review the Tax Committee's process for ensuring that developers have met all program requirements and continue the affordability and habitability of their developments into the future.||
|10||Analyze the Debt Limit Committee's and Tax Committee's efforts to work together to prioritize projects to ensure that there is enough private equity bond funding for projects approved by the Tax Committee. Further, analyze the Debt Limit Committee and Tax Committee housing priorities, how they may conflict, and how this conflict is resolved.||Interviewed staff at the Tax Committee and the Debt Limit Committee and reviewed documentation of their processes—including regulations that establish housing priorities—to identify conflicts.|
|11||Identify the sources and amount of funds developers typically used on a selection of Tax Committee projects, including ways to incentivize non-state resources.||
|12||Identify any best practices that encourage the creation of additional affordable housing throughout the State, including balancing the needs of high-cost and rural areas.||
|13||Review and assess any other issues that are significant to the audit.||We did not identify any additional issues that are significant to the audit.|
Source: Analysis of the Audit Committee's audit request number 2020-108, as well as information and documentation identified in the column titled Method.
Assessment of Data Reliability
The U.S. Government Accountability Office, whose standards we are statutorily obligated to follow, requires us to assess the sufficiency and appropriateness of computer-processed information we use to support our findings, conclusions, or recommendations. In performing this audit, we obtained electronic data from the Tax Committee and Debt Limit Committee related to awarded tax credits and bond allocations. To evaluate the Tax Committee's data, we reviewed existing information about the data; interviewed staff knowledgeable about the data; and performed electronic, completeness, and accuracy testing. We found these data to be sufficiently reliable for our purposes. Further, the State lacks a single source of data to show all affordable housing units created with state financial resources. Because the four housing agencies indicated that most affordable housing projects receive tax credits and our analysis verified that the Tax Committee's data contained many of the projects from the other housing agencies, we determined that the Tax Committee's data were reasonable to represent state-supported housing. To evaluate the Debt Limit Committee's data, we reviewed existing information about the data, interviewed staff knowledgeable about the data, and performed electronic and completeness testing. We found them to be sufficiently reliable for our purposes.
Moreover, we obtained publicly available federal data related to cost burden, overcrowding, and vacancy rates to identify cities and counties with indications of affordable housing need. We performed general completeness testing of the data and found them to be sufficiently reliable for our purposes. We also obtained a list of HCD's enforcement actions and performed electronic testing and interviewed key staff knowledgeable about the data. We found these data to be sufficiently reliable for our purposes.
Lastly, we obtained annual progress report data from HCD to help identify local jurisdictions that were not meeting their affordable housing goals. We performed limited testing of the data and found them to be of undetermined reliability because they are self‑reported data from local jurisdictions. Although this determination may affect the precision of the numbers we present, there is sufficient evidence in total to support our findings, conclusions, and recommendations.