NAHP Affordable Housing Programs & Regulations 3 — Questions and Answers
Question 1: A LIHTC project must maintain affordability restrictions for a minimum compliance period plus an extended use period. What is the total minimum years required by federal law?
- 15 years
- 20 years
- 30 years (Correct answer)
- 40 years
Correct answer: 30 years
Federal law requires a 15-year initial compliance period plus a 15-year extended use period, for a total minimum of 30 years of affordability.
Question 2: What is 'recapture' in the context of the LIHTC program?
- The state's ability to reassign credits to a new developer
- The IRS clawback of previously claimed tax credits when a project falls out of compliance (Correct answer)
- The process of converting market-rate units to affordable units
- Reassigning housing vouchers from one household to another
Correct answer: The IRS clawback of previously claimed tax credits when a project falls out of compliance
Recapture occurs when the IRS requires an investor to repay previously taken LIHTC credits plus interest if the project violates compliance requirements.
Question 3: Under Section 8 Housing Choice Voucher program rules, what is the maximum percentage of income a voucher holder is required to pay toward rent when first leasing a unit?
- 20%
- 30% (Correct answer)
- 40%
- 50%
Correct answer: 30%
Voucher holders must pay at least 30% of their adjusted monthly income toward rent and utilities, and cannot initially pay more than 40% when first leasing a unit.
Question 4: Which regulation requires that federally assisted housing projects conduct an environmental review before any project commitment or property acquisition?
- Davis-Bacon Act
- National Environmental Policy Act (NEPA) (Correct answer)
- Section 3 of the Housing and Urban Development Act
- Uniform Relocation Act
Correct answer: National Environmental Policy Act (NEPA)
NEPA (and HUD's implementing regulations at 24 CFR Part 58) require environmental review of proposed projects before federal funds are committed or property is acquired.
Question 5: What is the purpose of a Rental Assistance Demonstration (RAD) conversion?
- To demolish all public housing units and relocate residents permanently
- To convert public housing and other HUD-assisted properties to a more stable project-based Section 8 funding platform (Correct answer)
- To convert Section 8 vouchers into tax credits
- To transfer ownership of public housing to HUD directly
Correct answer: To convert public housing and other HUD-assisted properties to a more stable project-based Section 8 funding platform
RAD converts public housing (and certain other assisted properties) from operating and capital fund subsidies to long-term project-based rental assistance contracts, enabling private financing for rehabilitation.
Question 6: A developer is applying for LIHTC credits. The state housing finance agency reviews applications through a competitive process guided by which document?
- Annual Consolidated Plan
- Qualified Allocation Plan (QAP) (Correct answer)
- Fair Housing Marketing Plan
- Environmental Review Record
Correct answer: Qualified Allocation Plan (QAP)
Each state's housing finance agency publishes a Qualified Allocation Plan (QAP) that establishes the criteria and priorities used to rank and award competitive 9% LIHTC credits.
Question 7: Under the Community Reinvestment Act (CRA), what are banks primarily evaluated on?
- Their internal diversity and inclusion programs
- Their record of meeting the credit needs of their entire community, including low- and moderate-income neighborhoods (Correct answer)
- Their compliance with LIHTC investor requirements
- The number of affordable units they own directly
Correct answer: Their record of meeting the credit needs of their entire community, including low- and moderate-income neighborhoods
CRA requires federal regulators to assess whether banks are meeting the credit needs of all communities they serve, especially LMI areas, which influences bank ratings and merger approvals.
NAHP Affordable Housing Programs & Regulations 3
A LIHTC project must maintain affordability restrictions for a minimum compliance period plus an extended use period.
What is the total minimum years required by federal law?