CA Tax Credit Allocation Compliance
Division Presents
AHMA-PSW Compliance Workshop
Rose Guerrero – Compliance Section Chief
rguerrero@sto.ca.gov
Shannon Nardinelli – Compliance Program Manager
snardinelli@sto.ca.gov
CA Tax Credit Allocation Committee
915 Capitol Mall, Room 485
Sacramento, CA 95814
P: 916.654.6340 F: 916.654.6033
www.treasurer.ca.gov/ctcac.asp
Role of the State
Monitoring Agency
• Keep up with changing regulations,
program requirements, laws and
industry discussions that affect
LIHTC
• Work in partnership with the owners
and management agents who own
and operate LIHTC properties
Role of the State
Monitoring Agency
• Monitor LIHTC Properties for compliance to
IRC Section 42
• Report incidents of noncompliance to the
IRS on Form 8823
• Provide guidance, information, and training
to the users of the LIHTC program
CTCAC/CDLAC Listening
Sessions
• 2 months of meetings with
stakeholders
– Ideas and issues
– Possible regulation changes
• end of 2015
WASHINGTON DC UPDATES
• 2015: California Joins the Federal
Alignment PILOT on Physical
Inspections
• Conflicting Program Requirements
– IRS withdraws stance
•
Welfare Exemption
WASHINGTON DC UPDATES
• LIHTC projects layered with HUD funding:
• Tenants not income qualifying for the
LIHTC program cause the project to be
“mixed-use”
• Owner must perform annual re-certifications
on the anniversary move-in date
to correctly track the next available unit
rule
State Regulations Update
• Accessible Unit Priority
– Mobility, hearing , vision or other sensory
impairments.
• 1st Priority: persons with a disability in a nonaccessible unit
• 2nd Priority: to a qualified applicant on the
waiting list with a handicap requiring
accessibility features.
State Regulations Update
• Accessible Unit Priority (cont.)
– If Renting to a tenant without handicap:
• Requires written agreement to be
moved to non-accessible unit.
– Owner/Manager must assure
information about available accessible
units reaches those that might need
them.
State Regulations Update
Senior Housing - Accessibility
– Effective 2015 - new projects
– New construction: 50% of all units
on an accessible path shall be
mobility accessible*. (ground floor and
elevator-serviced)
– Rehabilitation: 25% of all units
• *California Building Code (CBC) Chapter
11(B).
State Regulations Update
Senior Housing - Age
• Beginning in 2015 – New Projects
• Senior Housing will be 62+
• Special needs, SRO, At- Risk
projects for seniors can be 55+
or 62+
State Regulations Update
California Utility Allowance Calculator
• Will be available to LIHTC
rehabilitation projects that have:
Multifamily Affordable Solar
Housing (MASH) program awards
that off-set tenant load
Key Compliance Documents
• Form B for each Building in Project
• Form 8609 Part I and Part II for
each building
• Recorded Regulatory Agreement
Federal
Minimum
Set-Aside
Vs.
Deeper
Targeting
Set-Aside
IRS
Reportable
Federal
Minimum
Set-Aside
Requires an
IRS Private
Letter Ruling
(PLR) to
Change
Maintained
through the
Compliance
Period
140% NAU
Rule
State-based
Deeper
Targeted
Set-Aside
Failure to
meet is a
Negative
Points Issue
Must be
Maintained
through the
Compliance
Period
General FAQ
The basic concept of whether the owner
can claim tax credits on a unit requires
the unit to meet three basic
requirements:
• Income Eligible
• Rent Restricted
• UPCS Standards
– Safe
– Habitable
– Good Condition
General FAQ
• Section 42 is silent on the requirement
for SSN# and Citizenship
• CTCAC is not authorized to use the
HUD Enterprise Information Verification
(EIV) System
General FAQ
• CTCAC Compliance Website:
– www.treasurer.ca.gov/ctcac/compliance
• Online Compliance Manual
• Policy Memos
• Forms
• 2015 Monitoring List
– Note: CTCAC cannot give advance
notice of inspection dates
General FAQ
Transfers
• You must ensure you know how the
owner made this election on their filed
Form 8609’s
• A NO, would mean you must income
qualify a household anytime they might
need to transfer to a different building
• A YES, means you may transfer easily
among buildings
General FAQ
Transfers
• Medical reasonable accommodation
• Permissible to transfer from one building to
another building on a project with a NO
election on Line 8b
• Only if there is a request, a doctor’s note
must be in tenant file
General FAQ
Vacant Units
Credits allowed on a vacant unit as long as:
• Previously occupied by an income qualified
household
• Turn-key ready for immediate occupancy
– CTCAC allows a 60 day grace period
• please note the IRS considers a 2 week
period sufficient
• Unit must be available to the General Public
General FAQ
Vacant Units
• CTCAC Requires 3 methods of
Advertising:
• Newspaper
• Internet
• Signage
• Reported to the IRS if vacant more than
60 days:
– Unit not being advertised
– Not Turn Key Ready
– Waiting for a referral from an Agency
General FAQ
Odds and Ends
• CTCAC does not have “Occupancy
Restrictions”
– most owners/management companies follow the
industry standards
• CTCAC does not “approve files for movein”
– our obligation is to audit the owners records for
tenants that are already in place
• CTCAC does not mediate in tenant
evictions
General FAQ
Odds and Ends
• CTCAC requires “wet signatures”
on all our required forms (tenants
and management)
• IRS requires the owner keep a
copy of the files for the original
qualifying households for the first
year of the credit period for a
period of 22 years
General FAQ
Odds and Ends
• IRS Audit Technique
Guide (ATG)
– IRS Agents are performing
audits on Tax Credit
Properties
General FAQ
Odds and Ends
• IRS requires the owner to keep:
– Master file with records showing the
applicable rent and utility allowance for
the project on a yearly basis for each
year in the Federal Compliance Period.
• This information would be crucial for
the owner to produce in case of an
IRS audit
Start to Finish Resyndication
New
Allocation
of Credits
Preparation
Application
Process
Resyndication - Preparation
Resyndication is:
• When an existing tax credit
property with a current regulatory
agreement receives a new
allocation of tax credits
• Project could have a new owner or
same owner and will have a new
tax credit investor
Resyndication – Definition of
Grandfathering
The initial Regulatory Agreement is the
“authority” that prohibits the eviction without good
cause.
• Households determined to be income qualified
during the initial 15-year compliance period are
considered concurrently income qualified for
the purposes of the Extended Use period.
• Any household determined to be income
eligible at the time of move-in for purpose of
the extended use agreement is a qualified
household for any subsequent allocation of
credits.
Resyndication - Preparation
• Pre-planning meeting with
owner, investor, and
management company
• Discuss what the plan is for
the project under the new
allocation of credits
Resyndication - Preparation
• Will Line 8b election will owner
elect this time?
• Will unit mix remain the same?
• Will this be considered the same
housing type project? (large family,
senior, special needs)
Resyndication - Preparation
• Do I need to start a new file for
each household?
• Do I need a new application for
each household?
• What date do I recertify households
at?
32
Resyndication - Preparation
• Will project have the same federal
set-aside?
• What type of rehab will be taking
place?
• Major
• Minor
Resyndication - Preparation
• Do not purge old recertification
records of existing tenants
• If you don’t have verification of initial
income, you will need to review
subsequent recertifications.
Resyndication - Preparation
• If Tenant Household Information
Form (THIF) is used
• Doesn’t verify income and
assets
• May not be able to
grandfather
Resyndication - Preparation
• Relocation • Should not exceed a 6 month
period
• Tenants cannot incur extra costs
• Never temporarily move tenants into
vacant tax credit units in a different
tax credit property
– Ok to move them into vacant units/different
buildings at same tax credit property
Resyndication - Preparation
Meet with Tenants:
• Explain resyndication plan
• Explain how “grandfathering”
works
• Explain consequences of all Fulltime Students
Resyndication - Preparation
• Check with CTCAC for any questions
• Resyndication Clarification Form for all
over-income households
• Check with the tax credit investor –
they might have specific standard they
want you to follow
• Investor will audit the files prior to
Agency Review
Resyndication
Application Process
Developer provides on Application:
• Same items as NC & Acq/Rehab
apps plus:
• Existing Rents
• Newly Proposed Rents
• Relocation Plan
Resyndication – PIS
Resyndication Placed in Service:
• New Regulatory Agreement in Place
• If new rents are less deeply
targeted, old targeting carries
forward for remainder of time left
on old regulatory agreement
• Other items, cash flow
restrictions, etc. may also carry
over to new regulatory
agreement.
Resyndication
New Allocation
• New Credit Period
• New Regulatory Agreement
• New 8609’s Issued
• New Monitoring Cycle
Rent and Income Limits
New Construction
Gross Rent Floor Election
• Compare:
• Year of Allocation
• Current Limit
• You must use the Income limits
in effect:
• They might have changed from
pre-lease up period
• Rents may exceed the 30%
income to rent ratio due to GRF
Acquisition / Rehab
Rent and Income Limits
Which set of Rent and Income Limits
does the Owner use for an Acq/Rehab
Property?
• Based on Acquisition Date
– Even if limits change before the rehab
is completed/placed in service
– IRS has stated the limits the owner
relied on to certify the households
become the limit tables to use
Acquisition / Rehab
Rent and Income Limits
Example –
Owner acquired a building on 10/31/13. Received
Preliminary Reservation letter on 12/11/13.
• All the initial income certs of existing residents are
completed within 120 days using the 2013 limits.
• New limits go into effect on 12/18/13 and the
income/rent limits decrease.
– The IRS has stated that since the owner relied on
the 2013 Income and Rent limits, the 2013 rent
limits become the base the property uses.
Thank
You