HCCP Financial Analysis 5

Question 1

Which component is subtracted from total development cost to calculate the 'financing gap' that equity must fill?

Accepted Answer

Permanent loan proceeds plus other grants and soft debt

Answer

Replacement reserves

Answer

Investor equity

Answer

Annual tax credits

Question 2

What is the primary purpose of a 15-year extended use agreement in LIHTC transactions?

Accepted Answer

To extend the affordability restrictions past the initial 15-year compliance period

Answer

To guarantee investor returns beyond the credit period

Answer

To lock in debt service terms for the permanent loan

Answer

To maintain the applicable percentage for additional credits

Question 3

In LIHTC development proformas, which expense category typically includes insurance, real estate taxes, and management fees?

Accepted Answer

Operating expenses

Answer

Hard costs

Answer

Soft costs

Answer

Replacement reserves

Question 4

A LIHTC investor's internal rate of return (IRR) analysis primarily values which stream of benefits?

Accepted Answer

Tax credits, tax losses, and residual cash flows over the holding period

Answer

Annual cash distributions only

Answer

Appreciation in property value over 30 years

Answer

Management fee income from the general partner

Question 5

Which term describes the year in which a LIHTC project is first placed in service and the credit period begins?

Accepted Answer

Placed-in-service date year

Answer

Credit allocation year

Answer

Carryover year

Answer

Extended use year

Question 6

If a LIHTC project's permanent loan has a loan-to-value ratio of 70% and the property is appraised at $5,000,000, what is the maximum loan amount?

Accepted Answer

$3,500,000

Answer

$3,000,000

Answer

$4,000,000

Answer

$4,500,000

Question 7

What does a 'sources and uses' statement in a LIHTC development budget primarily demonstrate?

Accepted Answer

That all development funding sources equal total development costs

Answer

Annual operating income and expense projections

Answer

The investor's projected after-tax IRR

Answer

The credit allocation amount approved by the state agency