California awarded more than $2 billion in private-activity bonds to 108 affordable housing developments this week as it implements changes approved under the One Big Beautiful Bill (OBBB).
Signed into law in July, the legislation reduced the bond financing threshold for 4% low-income housing tax credit (LIHTC) projects from 50% to 25%, beginning in 2026. This move lowers a barrier for developers and allows states to make more efficient use of their bond cap resources.
California was the first state to begin putting the lower threshold into action, with the California Debt Limit Allocation Committee (CDLAC) and the California Tax Credit Allocation Committee (CTCAC) adopting emergency regulations just one month after the federal legislation was enacted.
"California's swift implementation of federal changes this August has allowed us to deliver immediate, measurable, and meaningful results for our state's future affordable housing supply," said state Treasurer Fiona Ma, who chairs CDLAC and CTCAC. "Our team's first-in-the-nation adoption of these changes has allowed California to fund far more affordable housing developments than ever before and, combined with the LIHTC program, will mean a safe, affordable home for nearly 29,000 California households that are struggling to make ends meet.”
The increase is significant. Overall, CDLAC has approved 195 projects, totaling 25,781 units, under the 4% credit and bond program this year compared with 138 projects with 15,484 units in 2024.
For the first two funding rounds, which were awarded prior to OBBB’s passage, California leaders incentivized developers to voluntarily reduce their allocations to 30% or lower prior to Aug. 31, so they could redeploy those bonds into the third round, said state officials.
Prior to OBBB, the state had limited bond requests to 55% of a development’s aggregate basis plus land. Beginning in the recent third round, that limit is now 30%, but a development may request up to 40% if the development’s permanent financing supports the larger allocation and the development is unable to obtain recycled bonds.
On Dec. 10, in its third round, CDLAC awarded 108 projects, totaling 14,244 units. The agency received 165 applications requesting just over $3 billion in bonds.