The Tax Credit Process Once credit has been awarded

1
The Tax Credit Process(Once credit has been
awarded)

• Reservation and Carryover
• Gross Rent Floor Election Form
• Commitment
• 10 Certification
• Quarterly Progress Reports
• Placed In Service
• 8609s

2
When A Project Receives Tax Credits, The Owner
Will Receive

• Reservation Document
• Letter explaining Reservation
• Invoice listing amount of fee (The Tax Credit Fee
  is 6 of annual credit amount, half of which is
  due at the time of Reservation)
• Carryover Allocation Agreement, unless the
  project is financed with tax-exempt bonds
• Gross Rent Floor Election form.

3
Reservation Document

• The project Owner must sign the document, and the
  document must be notarized.
• Original Reservation document, along with the 3
  Reservation Fee, must be returned to LIHTC office
  within ten days of the date of the letter.

4
Carryover Allocation Agreement

• The owner must sign Page 3 of the Carryover and
  the signature must be notarized.
• If it is not already included in the document,
  the taxpayer identification number must be
  inserted on Page 1.

5

• The appropriate box in Section 10 on Page 2 must
  be checked to indicate whether the owner wishes
  to fix the percentage for the month in which the
  credit has been allocated. If the owner does not
  elect to fix the percentage, the applicable
  percentage for each building will be that for the
  month in which the building is placed in service.
• The original signed Carryover Allocation
  Agreement is due two weeks after the date of
  issuance.

6

• If the credit is allocated near the end of a
  month, and the owner wishes to fix the percentage
  for that month, the document must be received in
  our office and signed by our representative no
  later than the fifth day of the following month.
  In that instance, a Carryover document dated
  after the 21st day of a month may be given less
  than two full weeks to return the document.
• Exhibits A and B are considered part of the
  Carryover document and must be returned with the
  rest of the document.

7
Gross Rent Floor Election Form

• The owner must check a box to elect for the
  effective date of the gross rent floor to be
  either
• The date of allocation OR
• The placed in service date
• The owner must fill in all blanks and sign the
  form.
• The form should be returned with the Reservation.
• NOTE The Gross Rent Floor Election form and
  instructions comprise LIHTC Policy 1, located in
  Tab W of the Combined Application

8
What Happens Next

• Upon receipt of the signed Reservation, Gross
  Rent Floor Election and Carryover forms and the
  3 Reservation fee, the following will be sent to
  the owner
• A letter explaining what must be submitted for
  the Commitment and 10 Certification, and when
  they are due.
• Instructions for finding LIHTC information,
  including all necessary forms, on MSHDAs web
  site.

9
Commitment

• The Commitment Exhibits will be due 120 days
  (four months) after the date the Reservation
  document is signed by MSHDA. Should the date
  fall on a Saturday, Sunday or holiday, the
  information will be due the following business
  day.

10

• The exhibits required at the time of Commitment
  differ depending on whether or not the project
  received Readiness to Proceed points. The letter
  will list what needs to be submitted and when it
  is due.

11
Extension of Deadlines

• If unusual circumstances occur, the owner may be
  unable to meet the deadline to submit the
  Commitment documentation. A request for a waiver
  of the due date must be made in writing.
• If a waiver of the deadline is granted, an
  extension fee equal to 5 of the total annual
  credit amount will be charged.

12
Extension Requests

• Extension requests should be submitted as soon as
  the owner is aware that it will be necessary.
• WAITING UNTIL THE LAST MINUTE TO REQUEST AN
  EXTENSION MAY LESSEN THE CHANCES OF RECEIVING
  ONE.

13
Upon Review of the Commitment Exhibits, the Owner
will Receive

• Commitment Document
• Letter explaining Commitment
• Invoice listing amount of fee (The remainder of
  the 6 Tax Credit Fee)

14
Commitment Document

• The project Owner must sign the document, and the
  document must be notarized.
• Original Commitment document, along with the
  remainder of the 6 Tax Credit Fee, must be
  returned to LIHTC office within ten days of the
  date of the letter.

15
10 Certification

• If a project receives a Carryover, the following
  must be submitted on the due date
• Application with updated figures
• Independent Certified Public Accountants Report
  on Applying Agreed-Upon Procedures, certifying
  that 10 of the project costs will have been
  spent by the deadline
• Recorded Deed

16

• If the projects Carryover Allocation Agreement
  is dated prior to July 1 The Application, 10
  Certification and Recorded Deed are due December
  1.
• If the projects Carryover Allocation Agreement
  is dated on or after July 1 The Application,
  10 Certification and Recorded Deed are due six
  months from the date on Page 1 of the Carryover
  Allocation Agreement.
• Should the due date fall on a Saturday, Sunday or
  holiday, the information will be due the
  following business day.

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Upon Receipt of the 10 Carryover Documentation,
LIHTC staff will

• Review the Application, the Independent
  Accountants Report on Applying Agreed-Upon
  Procedures, and the Recorded Deed.
• Fill in the blanks in paragraphs 6 and 7 on Page
  1 of the Carryover Allocation Agreement.
• Send a copy of the fully executed Carryover
  document to the owner.

18
Quarterly Progress Reports

• A blank progress report form will be sent to the
  owner along with the executed Carryover.
• Quarterly progress reports must be submitted each
  April, July, October and January and must outline
  the progress of the project for the previous
  three months.
• Reports must be submitted in this manner until
  the project is placed in service.
• Failure to submit the reports may result in a
  loss of credit to the project.

19
Placed In Service

• A project must be placed in service by December
  31 of the second calendar year following the
  issuance of the Carryover Allocation Agreement.
• For projects that will be claiming credit for the
  current year, a Placed In Service application is
  due by November 1.
• If the Placed In Service application is ready
  earlier, there is no need to wait until November
  . The application may be submitted at any time
  during the year.

20

• Information regarding the Placed In Service due
  dates will be sent to the owners of all active
  projects prior to the due date.
• Should the application due date fall on a
  Saturday or Sunday, the applications will be due
  the following business day.

21
Following review of the Placed In Service
Application by LIHTC staff, the owner will
receive

• A Regulatory Agreement
• A letter explaining the Regulatory Agreement
• An invoice listing all remaining fees, including
  the Compliance Monitoring fee, due for the project

22
Regulatory Agreement

• The owner must sign the Regulatory Agreement.
• The signature must be notarized.
• The Regulatory Agreement must be recorded in the
  county in which the project is located no later
  than December 31 of the first year in which
  credit will be claimed.
• After recording, the original recorded Regulatory
  Agreement must be returned to the LIHTC office.

23
Remaining Fees Include

• Any part of the 6 Tax Credit fee that has not
  already been paid.
• The entire Compliance Monitoring Fee, which is
  calculated as 300 per Low Income Unit for
  projects whose credit was allocated on or after
  January 1, 2001.

24
Final Cost Certifications

• Final Owners and Contractors cost
  certifications should be submitted by February 1
  of the following year.
• If the figures in the final cost certifications
  do not match those in the Placed In Service
  application, UPDATED APPLICATION PAGES MUST BE
  SUBMITTED.
• 8609 forms can not be issued until this
  information is received.

25
8609s

• The 8609 forms will be issued once all of the
  following have been received by LIHTC staff
• All required Placed In Service Exhibits not
  previously submitted (including Certificates of
  Occupancy and Cost Certifications)
• Original recorded Regulatory Agreement
• All remaining fees