The California Tax Credit Allocation Committee recently released a memo reminding tax credit properties of existing regulations. For reservations of tax credits received in or after 1997, unexpended reserve accounts must remain with the property for the benefit of the property or residents.
The only exception comes when a minimum annual debt service ratio of 1.15 is reached for three consecutive years following stabilized occupancy at which point this funds may be used for the sole purpose of paying deferred developer fees.
This regulation must be followed regardless of what is written in a limited partnership agreement.
