LIHTC Eligibility Criteria & Application Process 3 — Questions and Answers
Question 1: California's LIHTC program offers a state credit in addition to the federal credit. What is the approximate value of the California state credit relative to the federal credit?
- 10% of the federal credit amount
- 20% of the federal credit amount
- 30% of the federal credit amount (Correct answer)
- Equal to the federal credit amount
Correct answer: 30% of the federal credit amount
California's state LIHTC is generally 30% of the federal credit, providing additional financing for affordable housing development.
Question 2: Which income averaging option allows some LIHTC units to serve households earning up to 80% AMI as long as the project average does not exceed 60% AMI?
- The 20-50 test
- The 40-60 test
- The income averaging election (Correct answer)
- The deep rent skewing option
Correct answer: The income averaging election
The income averaging election, added by the Consolidated Appropriations Act of 2018, allows units at various income levels as long as the project-wide average does not exceed 60% AMI.
Question 3: During the LIHTC compliance period in California, how often must owners certify tenant income?
- Every 6 months
- Annually (Correct answer)
- Every 2 years
- Only at initial move-in
Correct answer: Annually
Owners must certify tenant income annually throughout the compliance period to ensure ongoing eligibility.
Question 4: A LIHTC project in a Difficult Development Area (DDA) is eligible for what benefit in California?
- Waiver of all state fees
- A basis boost of up to 130% of eligible basis (Correct answer)
- Exemption from the extended use agreement
- Priority ranking in CTCAC's competitive scoring
Correct answer: A basis boost of up to 130% of eligible basis
Projects in DDAs or Qualified Census Tracts can use up to 130% of eligible basis to calculate the credit, increasing the available credit amount.
Question 5: What document must a California LIHTC project owner record with the county to memorialize affordability requirements?
- A Certificate of Occupancy
- A Land Use Restriction Agreement (LURA) (Correct answer)
- A Building Permit
- An Operating Cost Certificate
Correct answer: A Land Use Restriction Agreement (LURA)
A Land Use Restriction Agreement (LURA), also called an Extended Use Agreement, is recorded against the property to enforce long-term affordability requirements.
Question 6: For California LIHTC purposes, which of the following household members' income is generally NOT counted in determining tenant eligibility?
- A full-time student spouse earning part-time wages
- A minor child's SSI payments
- A live-in aide employed by the tenant (Correct answer)
- A non-custodial parent's child support payments received
Correct answer: A live-in aide employed by the tenant
Income of a live-in aide is excluded from household income calculations because the aide is not considered a household member.
Question 7: What is the maximum gross rent (including utilities) that may be charged for a LIHTC unit restricted at 50% AMI for a 2-bedroom unit?
- 30% of 50% of AMI for a 2-person household
- 30% of 50% of AMI using a 3-person imputed household size (Correct answer)
- 30% of 60% of AMI using actual household income
- 30% of area median gross income for the county
Correct answer: 30% of 50% of AMI using a 3-person imputed household size
LIHTC gross rent limits are calculated as 30% of the income limit for the imputed household size, which is bedroom count plus one.
LIHTC Eligibility Criteria & Application Process 3
California's LIHTC program offers a state credit in addition to the federal credit.
What is the approximate value of the California state credit relative to the federal credit?