When are Carryover Allocations issued by SHFAs for LIHTC projects?

Carryover Allocations for Low-Income Housing Tax Credit (LIHTC) projects are issued by State Housing Finance Agencies (SHFAs) when the developer has met the conditions of the 10% test. This test requires that, within a specified time after the allocation of tax credits, the project must have incurred a minimum of 10% of the eligible basis costs. Meeting this test verifies that the developer has made a substantial financial commitment to the project, which is essential for ensuring that the development will move forward.

By issuing Carryover Allocations once the 10% test is met, SHFAs can confidently provide tax credits to projects that are on track for development. This is crucial for planning and financing because it locks in the tax credits for the project, allowing the developer to secure the necessary funding to continue with the development process. Therefore, this timing of the issuance is a key part of ensuring that the intent of the LIHTC program, which is to promote affordable housing projects, is upheld.

The other options reflect processes or milestones that do not align with the specific timing of Carryover Allocations. For instance, completing compliance audits or project completions comes into play at later stages of the project rather than as a prerequisite