LIHTC Overview of California Low-Income Housing Tax Credit Program 2 — Questions and Answers
Question 1: Which California state agency administers the state Low-Income Housing Tax Credit (LIHTC) program?
- California Department of Housing and Community Development
- California Tax Credit Allocation Committee (Correct answer)
- California Housing Finance Agency
- California Department of Finance
Correct answer: California Tax Credit Allocation Committee
The California Tax Credit Allocation Committee (CTCAC) administers both the federal and state LIHTC programs in California.
Question 2: Under California's LIHTC program, what is the minimum percentage of units that must be set aside for low-income tenants under the 20-50 test?
- 10%
- 15%
- 20% (Correct answer)
- 25%
Correct answer: 20%
The 20-50 test requires at least 20% of units to be occupied by households earning 50% or less of area median income.
Question 3: The federal 9% LIHTC credit is generally awarded through which competitive process?
- First-come, first-served lottery
- Qualified Allocation Plan (QAP) scoring (Correct answer)
- Direct legislative appropriation
- Federal agency discretionary grant
Correct answer: Qualified Allocation Plan (QAP) scoring
The 9% credit is competitively allocated through a scoring system established by each state's Qualified Allocation Plan.
Question 4: What is the length of the extended use agreement that California LIHTC projects must comply with beyond the initial 15-year compliance period?
- 10 additional years
- 15 additional years (Correct answer)
- 20 additional years
- 25 additional years
Correct answer: 15 additional years
California LIHTC projects are subject to a 55-year total affordability period: the initial 15-year compliance period plus a 40-year extended use period (15+40=55).
Question 5: Which of the following project types generally receives the highest scoring preference under California's CTCAC Qualified Allocation Plan?
- Market-rate mixed-income developments
- Projects serving the lowest income households in high-opportunity areas (Correct answer)
- Luxury rehabilitation projects
- Short-term workforce housing
Correct answer: Projects serving the lowest income households in high-opportunity areas
CTCAC's QAP prioritizes projects that serve the deepest income targeting in high-opportunity areas to advance fair housing goals.
Question 6: In the LIHTC program, what does the term 'applicable fraction' determine?
- The percentage of tax credits returned to CTCAC upon project sale
- The portion of a building's units and floor space that are low-income qualified (Correct answer)
- The ratio of state to federal credits allocated
- The percentage of annual rents that must be waived
Correct answer: The portion of a building's units and floor space that are low-income qualified
The applicable fraction is the lesser of the unit fraction or floor space fraction used to calculate the qualified basis of a LIHTC project.
Question 7: Which income test allows a LIHTC project to maintain compliance if a unit's household income rises above the income limit, provided the next available unit of the same or smaller size is rented to a qualifying tenant?
- Available Unit Rule
- Next Available Unit Rule (Correct answer)
- Income Averaging Rule
- Vacant Unit Rule
Correct answer: Next Available Unit Rule
The Next Available Unit Rule permits existing over-income tenants to remain while the owner must rent the next comparable vacant unit to a qualifying low-income household.
LIHTC Overview of California Low-Income Housing Tax Credit Program 2
Which California state agency administers the state Low-Income Housing Tax Credit (LIHTC) program?