As California’s looming budget deadline of June 15th approaches, the Legislature has released its version of the 2025–2026 budget, in contrast to the revised budget the Governor released last month. Both the Governor’s and the Legislature’s versions of the budget address the projected shortfall, but how they close the gap and how they prioritize funding vary greatly. The Legislature’s version of the budget is far more favorable to the affordable housing community, as it includes a housing affordability package with the following components:

• $500 million in supplemental state Low-Income Housing Tax Credits (LIHTC) to unlock financial backing for affordable housing projects statewide;
• $300 million for the California Dream for All first-time, first-generation homebuyer shared appreciation loan program;
• $120 million for deeply affordable housing construction through the Multifamily Housing Program;
• Renter’s Tax Credit reforms;
• Housing construction streamlining legislation to modify CEQA procedures through Trailer Bill language — AB 609 (Wicks) and SB 607 (Wiener).

The federal 2025 reconciliation package is making its way through the Senate, with a few hurdles remaining before a final vote, expected before July 4th. The “Big Beautiful Bill,” as it has been dubbed, carries many of the Republican Party’s major policy objectives. Included in the current version of the bill are significant expansions of LIHTC and private activity bonds. The legislation, in its current form, would do the following:

• Lower the 50% test to 25% for 4% LIHTC projects;
• Increase the 9% LIHTC volume cap by 12%;
• Make the above changes permanent

Novogradac projects that these provisions could result in additional funding for an estimated 527,700 affordable rental units across the country through 2035. While this version of the bill is not finalized and changes may still occur, we remain optimistic about the direction of the bill and the provisions within it.

Guy Spieler, President of Churchill Stateside Securities, had the following to say about the affordable housing provisions in the “Big Beautiful Bill”:

“The reduction in the 50% test is transformative. We expect bond volume and deal flow to surge—our team and platform are built to move with precision when it counts.”

CCAH will continue to closely monitor and track these matters as they develop.