LIHTC Compliance

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LIHTC Compliance Real Estate Development and Tax Credit Finance 101 Conference July 29, 2014

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LIHTC Compliance. Real Estate Development and Tax Credit Finance 101 Conference July 29, 2014. - PowerPoint PPT Presentation

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LIHTC Compliance

Real Estate Development and Tax Credit Finance 101 Conference

July 29, 2014

1The 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.2As an owner or owners 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.3LHCs multi-family portfolio consists of approximately 46,900 units in 850 properties located throughout the state.

These properties were funded by Low-Income Housing Tax Credits, HOME and CDBG funding.44LIHTC 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 Requirements5Physical Inspections66Physical Inspections

Conducted at least once every 3 years

A random sample of 20% of the project's low-income units inspected (occupied & vacant)

Includes site, building exterior, building systems, common areas and dwelling units

Uniform Physical Conditions Standards (UPCS)

77Common Issues

Exposed WiresBlocked Exits and EntrancesSmoke Detector ViolationsTripping HazardsMissing or Expired Fire Extinguishers

To avoid non-compliance issues, pre-inspectionof all units is advised.

88On-Site File Review99On-Site File Inspection

A random sample of 20 % of tenant files are inspected for the following:Tenant ApplicationAll Related Verification FormsTenant Income Certification FormCertification of Student StatusLease AgreementSame Units as Physical Inspection1010Non-Compliance1111Non-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.


13Annual Reporting Requirements for LIHTC Properties141415Owners 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.

15Annual 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 yearDocuments along with reporting instructions are located at

16Compliance 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.

1717Project Size Minimum Fee1-4 units $20.005-16 units $80.0017-32 units $160.00Over 33 units *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.

1818Audited Financial Statements

Annual audits must be received no later than April 1st of each calendar year

Audits should be submitted electronically to:[email protected] Tenant Data Collection The Housing and Economic Recovery Act of 2008 (HERA) requires HUD to collect and report on the following information for LIHTC tenants:Race; Ethnicity; Family Composition; Age; Income; Use of Section 8 (or other) Rental Assistance; Disability Status; and Monthly Rental Payment20HUD Tenant Data Collection Tenant data must be submitted electronically through LHCs HDS Web Compliance Management System on or bef0re August 30th of each year.

21Extended Use Period (Post 15 Year)2222Extended 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):

2323Extended 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.

2424Extended 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 2525Upcoming Changes2626LHC successfully secured the approval of the Joint Legislative Committee on the Budget to increase LHCs 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.

2727Contact28Dione MiltonLouisiana Housing CorporationAsset Management: Desk [email protected] KimbengLouisiana Housing CorporationAsset Management: [email protected]