LIHTC Eligibility Criteria & Application Process 4 — Questions and Answers
Question 1: Under California LIHTC rules, a full-time student household is generally disqualified UNLESS it meets one of several exceptions. Which of the following IS an allowable exception?
- The household includes a student athlete on scholarship
- The household receives TANF assistance (Correct answer)
- All household members are enrolled in graduate school
- The household is composed entirely of part-time students
Correct answer: The household receives TANF assistance
A household receiving TANF (Temporary Assistance for Needy Families) is one of the IRS-recognized exceptions to the full-time student restriction.
Question 2: When calculating a LIHTC applicant's annual income, which of the following sources must be included?
- One-time inheritance received during the prior year
- Foster care payments received for a foster child
- Regular contributions from persons outside the household (Correct answer)
- Lump-sum additions to family assets such as insurance settlements
Correct answer: Regular contributions from persons outside the household
Regular, recurring contributions from persons outside the household (e.g., alimony, regular gifts) must be counted as annual income.
Question 3: What is the standard extended use period required for California LIHTC projects beyond the initial 15-year compliance period?
- An additional 15 years (30 years total) (Correct answer)
- An additional 40 years (55 years total)
- An additional 25 years (40 years total)
- An additional 10 years (25 years total)
Correct answer: An additional 15 years (30 years total)
Federal law requires an additional 15-year extended use period after the initial 15-year compliance period, for a minimum of 30 years of affordability.
Question 4: In California, which funding source is most commonly layered with LIHTC to finance affordable housing projects?
- Federal Home Loan Bank (FHLB) Affordable Housing Program grants
- Tax-exempt mortgage revenue bonds (4% credit projects) (Correct answer)
- Community Development Block Grants (CDBG)
- HUD Section 8 project-based vouchers
Correct answer: Tax-exempt mortgage revenue bonds (4% credit projects)
Tax-exempt mortgage revenue bonds paired with 4% credits are the most common financing layer used alongside LIHTC in California, enabling non-competitive credit access.
Question 5: Under California LIHTC regulations, what must an owner do if a previously income-qualified tenant's income rises above the applicable limit upon annual recertification?
- Immediately terminate the lease and begin eviction proceedings
- Document the over-income status and apply the next available unit rule (Correct answer)
- Retroactively recapture credits for the prior year
- Raise the tenant's rent to 30% of their actual income
Correct answer: Document the over-income status and apply the next available unit rule
When a tenant's income exceeds the limit, the owner must document the over-income status and follow the next available unit rule before replacing the tenant.
Question 6: Which set-aside election requires that at least 20% of LIHTC units be occupied by tenants at or below 50% of AMI?
- The 40-60 test
- The 20-50 test (Correct answer)
- The income averaging election
- The minimum set-aside standard
Correct answer: The 20-50 test
The 20-50 test requires that a minimum of 20% of the units be occupied by tenants earning at or below 50% of AMI.
Question 7: A California LIHTC developer submits a 9% competitive application. Which threshold requirement must be met before the application is scored?
- The project must already have a Certificate of Occupancy
- The developer must demonstrate site control (Correct answer)
- At least 50% of financing must be committed
- The general contractor must be licensed in California for 10+ years
Correct answer: The developer must demonstrate site control
Site control is a threshold requirement in California's QAP; without documented site control, the application is disqualified before scoring.
LIHTC Eligibility Criteria & Application Process 4
Under California LIHTC rules, a full-time student household is generally disqualified UNLESS it meets one of several exceptions.
Which of the following IS an allowable exception?