LIHTC Compliance
Real Estate Development and Tax
Credit Finance 101 Conference
July 29, 2014
• The Louisiana Housing Corporation is
responsible for monitoring compliance of
reporting requirements, regulatory
compliance and ensuring the ongoing
physical and financial viability of all LIHTC
properties in our portfolio.
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• As an owner or owner’s representative of a
LIHTC development, it is your responsibility
to ensure that your properties comply with
the requirements of all funding agreements,
covenants, and other funding conditions.
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• LHC’s multi-family portfolio consists of
approximately 46,900 units in 850 properties
located throughout the state.
• These properties were funded by LowIncome Housing Tax Credits, HOME and
CDBG funding.
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• LIHTC properties are monitored in
accordance with:
– Internal Revenue Code § 42, Low-Income
Housing Credit
– Treasury Regulations § 1.42-5, Monitoring
Compliance with Low-Income Housing Credit
Requirements
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Physical Inspections
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Physical Inspections
• Conducted at least once every 3 years
• A random sample of 20% of the project's lowincome units inspected (occupied & vacant)
• Includes site, building exterior, building
systems, common areas and dwelling units
• Uniform Physical Conditions Standards
(UPCS)
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Common Issues
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Exposed Wires
Blocked Exits and Entrances
Smoke Detector Violations
Tripping Hazards
Missing or Expired Fire Extinguishers
To avoid non-compliance issues, pre-inspection
of all units is advised.
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On-Site File Review
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On-Site File Inspection
• A random sample of 20 % of tenant files are
inspected for the following:
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Tenant Application
All Related Verification Forms
Tenant Income Certification Form
Certification of Student Status
Lease Agreement
• Same Units as Physical Inspection
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Non-Compliance
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Non-Compliance
• A written notification of non-compliance is
provided to the property /owner listing the
violation and correction period
• Form 8823, Low Income Housing Credit
Agencies Report of Noncompliance is
required to be filed with the IRS.
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LIHTC
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Annual Reporting Requirements
for LIHTC Properties
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Owners Certification
• Under the certification provision, the owner of a
low-income housing project is required to certify at
least annually to the Agency that, for the preceding
12-month period the project met the requirements
listed in Treasury Regulations § 1.42-5.
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• Annual Owner Certification of Continuing Program
Compliance (Exhibit B to Compliance Monitoring Agreement)
• Annual Owner Tax Credit Compliance Submission
(Exhibit C to Compliance Monitoring Agreement)
• Schedule II (A) – Low Income Unit Determination
– (one [1] per BIN).
• Documentation to support Utility Allowance
• If this is the first year of the compliance period, IRS Form
8609 with Part II completed (one [1] per BIN)
• Due on or before February 15th of each year
• Documents along with reporting instructions are located at
www.lhc.la.gov
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Compliance Monitoring Fee
• The LIHTC Regulatory Agreement states:
– The owner agrees to pay to the Credit Agency, on
or before February 15th of each year in the
Compliance Period.
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Project Size
1-4 units
5-16 units
17-32 units
Over 33 units
Minimum Fee
$20.00
$80.00
$160.00
*Minimum fee is equal to 50% of units
in the Project times $10.00 or $5.00
per unit.
• The first payment is due on or before February 15th
following the first year in which the project is placed in
service.
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Audited Financial Statements
• Annual audits must be received no later than April 1st of
each calendar year
• Audits should be submitted electronically to:
[email protected]
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HUD Tenant Data Collection
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The Housing and Economic Recovery Act of 2008
(HERA) requires HUD to collect and report on the
following information for LIHTC tenants:
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Race;
Ethnicity;
Family Composition;
Age;
Income;
Use of Section 8 (or other) Rental Assistance;
Disability Status; and
Monthly Rental Payment
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HUD Tenant Data Collection
• Tenant data must be submitted electronically through
LHC’s HDS Web Compliance Management System on or
bef0re August 30th of each year.
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Extended Use Period
(Post 15 Year)
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Extended Use Period (Post 15 Year)
• Properties that were awarded Housing Credits
on or after January 1, 1990 must comply with
Internal Revenue Code Section 42(h)(6):
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Extended Use Period (Post 15 Year)
• The period beginning on the last day of the
Compliance Period in which such building is
part of a qualified low-income housing project
and ending on the date which is 15 years after
the end of the Compliance Period or the date
specified by the Corporation in the LIHTC
Regulatory Agreement.
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Extended Use Period (Post 15 Year)
• During the extended use period, the project must
comply with rent and income restrictions
• The extended use period may be terminated
pursuant to the terms in the IRC Section
42(h)(6)(E):
– Foreclosure; or
– The Agency is unable to present a Qualified Contract
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Upcoming Changes
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• LHC successfully secured the approval of the Joint
Legislative Committee on the Budget to increase LHC’s
monitoring compliance fee from the nation's lowest at $5
per unit to the national average of $33 per unit.
• LHC will soon implement an online system for ALL
annual reporting requirements.
• Property owners / managers will receive notification
upon implementation, along with reporting instructions.
• Training will be provided on reporting requirements and
the electronic submission process.
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Contact
Dione Milton
Frankline Kimbeng
Louisiana Housing Corporation
Asset Management:
Desk Monitoring
[email protected]
225.763.8700
Louisiana Housing Corporation
Asset Management:
Compliance
[email protected]
225.763.8700
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LIHTC Presentation - Compliance lhc