TCAC Regulatory Agreement: An Overview
The Tax Credit Allocation Committee (TCAC) is a federal agency that administers the Low-Income Housing Tax Credit (LIHTC) program, which provides tax credits to developers of affordable housing. In order to qualify for LIHTC, developers must agree to a TCAC regulatory agreement.
The TCAC regulatory agreement outlines the requirements and restrictions of LIHTC properties. Some of the key provisions of the agreement include:
– Rent restrictions: LIHTC properties must offer affordable rents to low-income tenants. Rent levels are determined by the area median income (AMI) and may be subject to annual adjustments.
– Tenant income limits: LIHTC properties must restrict tenancy to households with incomes at or below 60% of the AMI. Some properties may also reserve units for tenants with even lower incomes, such as those at or below 30% of the AMI.
– Compliance monitoring: TCAC conducts periodic compliance monitoring to ensure that LIHTC properties are meeting the requirements of the regulatory agreement. This may involve on-site inspections, tenant interviews, and review of financial records.
– Property management: LIHTC properties must be managed according to industry standards and best practices. This includes maintaining adequate insurance, responding to tenant complaints in a timely manner, and adhering to fair housing laws.
– Resale restrictions: LIHTC properties may be subject to resale restrictions, which limit the sale price and buyer eligibility. These restrictions are designed to ensure that LIHTC properties remain affordable for the long term.
In addition to these provisions, the TCAC regulatory agreement may contain other requirements specific to the project. For example, a project that serves seniors may have additional accessibility and safety requirements.
In order to maintain LIHTC eligibility, developers must comply with the TCAC regulatory agreement for the duration of the affordability period. This typically lasts for 30 or 55 years, depending on the type of LIHTC credit used.
Failure to comply with the regulatory agreement can result in serious consequences, including loss of LIHTC eligibility and repayment of tax credits. Developers who violate the agreement may also be subject to fines and other penalties.
In conclusion, the TCAC regulatory agreement is a critical component of the LIHTC program. By agreeing to the requirements and restrictions outlined in the agreement, developers can access tax credits that make affordable housing development financially feasible. Compliance with the agreement is essential for maintaining LIHTC eligibility and ensuring that affordable housing remains available to low-income households.