HCCP Financial Analysis 4

Question 1

A tax credit project has total eligible basis of $4,000,000 and an applicable percentage of 9%. What is the annual tax credit allocation?

Accepted Answer

$360,000

Answer

Annual credit = $4,000,000 × 9% = $360,000.

Question 2

Which source of funds in a LIHTC capital stack is typically repaid only from cash flow or upon sale or refinancing?

Accepted Answer

Deferred developer fee

Answer

The deferred developer fee is subordinate debt that is repaid from project cash flow or residual proceeds, not from a fixed amortization schedule.

Question 3

Break-even occupancy is defined as the occupancy level at which a property's effective gross income exactly covers which of the following?

Accepted Answer

Operating expenses plus debt service

Answer

Break-even occupancy is the point at which effective gross income equals total operating expenses plus annual debt service, leaving no net income.

Question 4

In a LIHTC analysis, 'soft debt' most commonly refers to which type of financing?

Accepted Answer

Subordinate government loans at below-market rates or deferred terms

Answer

Soft debt includes HOME loans, CDBG grants structured as loans, and other government subordinate financing with favorable or deferred repayment terms.

Question 5

When underwriting rent increases in a LIHTC pro forma, what annual growth rate do most state agencies conservatively assume?

Accepted Answer

2–3%

Answer

Most HFAs use a conservative 2–3% annual rent growth assumption to avoid overstating future income in long-term LIHTC projections.

(HCCP) Housing Credit Certified Professional Practice Test

(HCCP) Housing Credit Certified Professional Practice Test

HCCP Financial Analysis 4