LIHTC Ethical Standards & Professional Conduct 2 — Questions and Answers
Question 1: A LIHTC property manager discovers a maintenance contractor is a close relative of the owner. What is the ethical obligation?
- Disclose the relationship to oversight authorities and document any transactions (Correct answer)
- Terminate the contractor immediately to avoid any appearance of conflict
- Keep the relationship private as long as work quality is acceptable
- Allow the owner to decide without any formal disclosure
Correct answer: Disclose the relationship to oversight authorities and document any transactions
Conflicts of interest involving related parties must be disclosed to oversight entities and documented to ensure transparency.
Question 2: Under California LIHTC ethical standards, what does 'affirmative fair housing marketing' require a property to do?
- Market only to income-qualified households without regard to protected class
- Actively reach out to underrepresented groups least likely to apply for housing (Correct answer)
- Advertise exclusively through online platforms to maximize reach
- Accept applications on a first-come, first-served basis from any applicant
Correct answer: Actively reach out to underrepresented groups least likely to apply for housing
Affirmative fair housing marketing requires targeting outreach to groups historically underserved or least likely to apply in that market area.
Question 3: A LIHTC compliance officer is offered tickets to a sporting event by a vendor seeking a contract. The ethical standard requires the officer to:
- Accept the tickets as a professional courtesy if under $50 in value
- Decline and report the offer to a supervisor in accordance with the agency's gift policy (Correct answer)
- Accept and disclose the gift on a quarterly ethics report
- Return the tickets only if the vendor is ultimately awarded the contract
Correct answer: Decline and report the offer to a supervisor in accordance with the agency's gift policy
Gifts from vendors seeking contracts create the appearance of impropriety and should be declined and reported per agency gift policies.
Question 4: Which action by a LIHTC developer would constitute a violation of professional conduct standards during the application process?
- Submitting a market study prepared by an independent third party
- Providing false or misleading financial projections in the tax credit application (Correct answer)
- Using a syndication partner to raise equity capital
- Applying for both 4% and 9% credits in the same application cycle
Correct answer: Providing false or misleading financial projections in the tax credit application
Submitting false financial projections constitutes fraud and is a serious violation of professional conduct standards in LIHTC applications.
Question 5: When a tenant alleges disability discrimination at a LIHTC property, the property manager's first ethical step is to:
- Deny the allegation immediately to protect the property's reputation
- Document the complaint, respond in writing, and engage in an interactive process (Correct answer)
- Refer the tenant directly to a fair housing attorney without further action
- Ignore informal complaints until a formal regulatory inquiry is received
Correct answer: Document the complaint, respond in writing, and engage in an interactive process
Professional conduct requires documenting complaints, providing a written response, and engaging in an interactive reasonable accommodation process.
Question 6: A LIHTC syndicator learns that a project's construction is significantly behind schedule. Ethical conduct requires the syndicator to:
- Wait until the credit delivery deadline passes before notifying investors
- Promptly notify investors and the allocating agency of the material project risk (Correct answer)
- Quietly negotiate a deadline extension without disclosing delays to limited partners
- Advance additional equity to cover costs without documenting the change
Correct answer: Promptly notify investors and the allocating agency of the material project risk
Material risks such as construction delays must be promptly disclosed to investors and the allocating agency as a fiduciary and professional obligation.
Question 7: Under TCAC ethical requirements, which practice is prohibited when scoring competitive 9% LIHTC applications?
- Awarding points for community support letters from local governments
- Awarding points to applications from developers who contributed to staff training funds (Correct answer)
- Considering the feasibility gap in determining award size
- Evaluating developer experience based on prior completed projects
Correct answer: Awarding points to applications from developers who contributed to staff training funds
Awarding scoring preferences based on developer contributions to agency funds would constitute an unethical pay-to-play arrangement.
LIHTC Ethical Standards & Professional Conduct 2
A LIHTC property manager discovers a maintenance contractor is a close relative of the owner.
What is the ethical obligation?