LIHTC Financial Management & Tax Credit Allocation 4

Question 1

California's TCAC scoring system awards points for projects serving populations with special needs. Which of the following is a recognized special needs population under TCAC regulations?

Accepted Answer

Chronically homeless individuals

Answer

TCAC awards scoring points for serving special needs populations including the chronically homeless, veterans, persons with disabilities, and farmworkers.

Question 2

What financial ratio does TCAC require projects to maintain during the compliance period to demonstrate adequate cash flow to cover debt obligations?

Accepted Answer

Debt Service Coverage Ratio (DSCR) of at least 1.15

Answer

TCAC requires a minimum DSCR of 1.15, meaning net operating income must be at least 115% of annual debt service.

Question 3

In a LIHTC partnership structure, what is the typical ownership percentage held by the limited partner (tax credit investor)?

Accepted Answer

99.99%

Answer

Tax credit investors typically hold 99.99% limited partnership interest to receive virtually all tax benefits, while the general partner holds 0.01%.

Question 4

A LIHTC project in California is financed with 4% tax credits and tax-exempt bonds. Which entity typically issues the tax-exempt bonds for these projects?

Accepted Answer

California Debt Limit Allocation Committee (CDLAC)

Answer

CDLAC allocates California's private activity bond cap, which is used to issue tax-exempt bonds that trigger 4% credits without a separate TCAC application.

Question 5

What happens to previously claimed LIHTC credits if a project fails to maintain compliance during the initial 15-year period?

Accepted Answer

The investor must recapture the credits with interest on their federal tax return

Answer

Noncompliance triggers IRS recapture of previously claimed credits plus interest, creating significant financial risk for investors.

(LIHTC) California Low-Income Housing Tax Credit Exam Practice Test

(LIHTC) California Low-Income Housing Tax Credit Exam Practice Test

LIHTC Financial Management & Tax Credit Allocation 4