California Enacts LIHTC Bills on Farmworker Housing Scoring and Over-Income Lease Nonrenewal

California has enacted two bills that adjust how the state's Low-Income Housing Tax Credit program treats farmworker housing and over-income tenants, both signed by Governor Gavin Newsom and effective September 30. Tax and housing trade outlets reported the enactments this week: A.B. 2270 directs the state's tax credit allocation committee to consider scoring changes favoring farmworker housing, and A.B. 2689 lets owners of fully tax-credit-restricted properties decline to renew leases for tenants whose incomes rise well above program limits.

Neither bill rewrites the program on its own. A.B. 2270 is a directive to consider regulatory changes rather than an enacted scoring change, and A.B. 2689 is a permission with conditions rather than a requirement. Together they still mark the most consequential California LIHTC policy adjustments of the fall session for practitioners allocating credits or managing restricted properties.

The timing matters for the coming allocation cycle. Allocation committees typically revise qualified allocation plans on an annual rhythm, so a statutory directive to consider scoring changes now positions farmworker housing for possible preference in the next plan revision. Property managers, by contrast, can apply the lease nonrenewal authority immediately where its conditions are met.

A.B. 2270 POINTS TCAC TOWARD FARMWORKER HOUSING

A.B. 2270 requires the California Tax Credit Allocation Committee to consider amending the LIHTC regulatory scoring system in two specific ways, according to Bloomberg Tax's report on the enacted law. First, the committee must consider treating farmworker housing as large family projects under the scoring system. Second, it must consider assigning farmworker housing the same point allocation used for rural set-aside projects when scoring the proximity of amenities to an eligible farmworker housing project.

The large-family treatment matters because family-oriented scoring categories historically reward unit sizes and amenities that farmworker developments also provide. Moving farmworker projects into that scoring frame could raise their competitive position without creating a new set-aside. The amenity-proximity change addresses a structural disadvantage: farmworker housing is frequently sited near fields rather than services, and amenity scoring can otherwise penalize exactly the locations the housing serves.

California has wrestled for years with how to house agricultural workers within its mainstream affordable programs. Farmworker households often earn too little to compete for market housing yet live in places where conventional amenity-scored applications underperform. The scoring questions A.B. 2270 puts to the committee go directly at that mismatch, asking whether the state's largest affordable production tool should grade farmworker proposals on their own terms.

The bill also draws a boundary. It prohibits low-income housing tax credits from financing units that comply with the federal H-2A visa program's employer-furnished housing requirement. That provision separates the state's farmworker housing investments, aimed at permanent agricultural communities, from housing tied to temporary guestworker arrangements. Developers with mixed concepts will need to keep the two categories cleanly apart in applications.

CONSIDER IS NOT ADOPT

The operative word in A.B. 2270 is "consider." The statute obligates the committee to take up the scoring amendments; it does not enact them. Sponsors of farmworker projects should treat the bill as the start of a regulatory process in which TCAC's agenda, public comment and final scoring decisions will determine the actual advantage, if any.

That distinction is standard in allocation policy but easy to lose in headlines. A directive to consider signals legislative intent and puts the item on the committee's calendar, and committees usually act on such directives in some form. But the shape of the final scoring - how many points, for which project types, under what definitions - remains a regulatory decision that applicants will need to read in the adopted plan.

For advocates, the practical next step is engagement with the committee's plan revision process. For developers, it is premature to underwrite a farmworker application on the assumption of new points. The bill took effect September 30, and the committee's response will unfold in its normal planning cycle.

The committee's calendar therefore becomes the story to watch. Qualified allocation plan revisions typically move through draft, comment and adoption stages over months, and any scoring change adopted for farmworker housing would apply prospectively to future application rounds. Projects already awarded credits are unaffected; nothing in the bill reopens existing allocations.

A.B. 2689 CREATES A NARROW LEASE NONRENEWAL PATH

A.B. 2689 applies to LIHTC properties where 100 percent of the apartments, excluding manager units, are restricted to lower-income households. At those properties, an owner may refuse to renew a resident's lease when two conditions are both met: the household's income exceeds 140 percent of area median income for at least two consecutive years, and 30 percent of the household's monthly income exceeds the fair market rent for the county where the property sits, according to Novogradac's report on the enacted bill.

An owner choosing nonrenewal must issue a notice at least 90 days before the lease expires. The bill took effect immediately upon signing September 30, so the authority is available now rather than at a future regulatory date.

Both conditions matter and they are conjunctive. A household crossing 140 percent of AMI alone does not qualify; the rent-burden test must also be met, meaning the household would pay less than 30 percent of its income at the county fair market rent. The design targets households who have clearly outgrown subsidy need, not those marginally over a limit.

THE ENACTED TEXT ADDS NOTICE DUTIES BEFORE ANY NONRENEWAL

The chaptered text frames the authority as good cause: for qualifying properties, nonrenewal of a lease counts as good cause when both statutory conditions are met. That framing matters because it plugs the authority into California's existing just-cause eviction structure rather than creating a freestanding termination right.

The statute also builds in a warning step. If a household's income exceeds 140 percent of area median income during any income certification, the owner must notify the household within 30 days of that certification. The notice must state that income has exceeded the threshold and that exceeding it for the required consecutive period may give the owner good cause for nonrenewal. Residents therefore receive documented advance warning at certification time, not a surprise notice at lease end.

For the rent-burden test, the bill lets owners use either HUD's fair market rent for the county or HUD's Small Area Fair Market Rent for an equivalent-sized unit in the ZIP code, each as updated annually. The Small Area option can matter in high-cost metros where ZIP-level rents diverge sharply from countywide figures, and owners should document which standard they apply.

HOW NONRENEWAL INTERACTS WITH EXISTING OVER-INCOME RULES

Federal LIHTC rules already address over-income households through the available unit rule, which governs the unit mix when a household's income rises above program limits. The California bill operates on a different axis: it gives owners at fully restricted properties a state-law basis to end the tenancy itself under defined conditions, freeing the unit for a lower-income household.

Owners should read the authority as an option with procedural duties, not an obligation or an eviction shortcut. The 90-day notice requirement is explicit, and ordinary just-cause and local tenant-protection rules still frame how a nonrenewal is executed. Properties that are not 100 percent restricted fall outside the bill's scope entirely.

Mixed-financed properties deserve special care. Many California tax credit developments carry a minority of unrestricted or manager units, and the bill's 100 percent restriction test excludes them by design. Owners of those properties cannot borrow the new good-cause definition; their over-income households remain governed by the federal available unit rule and ordinary lease terms.

For residents, the practical exposure is narrow but real. A household whose income has exceeded 140 percent of AMI for two consecutive years and whose rent burden is minimal by the fair-market-rent test could face nonrenewal at lease end at a fully restricted property. Households below those markers are not affected by the bill.

Managers should also expect questions from households nowhere near the thresholds. Clear communication that the authority applies only after two consecutive years over 140 percent of AMI, with a certification-time warning and a 90-day notice, will prevent the bill from being misread as a general rent-increase or removal mechanism.

WHAT PRACTITIONERS SHOULD DO WITH BOTH BILLS

For allocators and applicants, the A.B. 2270 work begins now: track the committee's plan revision, participate in comment and model how large-family scoring treatment and rural amenity points would change specific farmworker applications. The prohibition on financing H-2A-compliant units should be checked against any farmworker concept currently in development, because it applies regardless of the scoring process.

For property managers, A.B. 2689 calls for a policy decision rather than automatic use. Owners must decide whether to adopt nonrenewal authority at qualifying properties, build the two-condition test into recertification workflows and prepare the 90-day notice process. Resident communication will matter; households approaching the thresholds should hear about the policy before receiving a notice.

Advocates will watch implementation from both directions. Farmworker housing organizations want the scoring consideration to become real points; tenant organizations will watch whether nonrenewal authority stays within its narrow conditions. Early committee agendas and any owner guidance from state housing agencies will show how each side's concerns are being handled.

Both bills reflect California's broader push to tune its tax credit program toward agricultural labor housing and turnover of units held by higher-income households. They are adjustments, not restructuring, and their real effects will be visible in the next allocation plan and in management policies adopted over the coming lease cycles.