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The National Council of State Housing Agencies (NCSHA) represents the state-level allocating agencies that administer the LIHTC program. From the early days of the program, NCSHA has maintained “Recommended Practices for Housing Credit Administration.” The first version of the document was cited by the General Accounting Office (GAO) in its 1997 report to Congress on the LIHTC program, and it helped give Congress confidence in states administering the program.
Section 42 of the Internal Revenue Code requires state housing agencies to conduct on-site inspections of all buildings by the end of the second calendar year following the year the last building in the project is placed in service. In addition, the code says that an agency must also conduct on-site inspections and low-income certification review at least once every three years after the initial on-site inspection.
On Feb. 26, the IRS issued final regulations for LIHTC compliance monitoring. The regulations replace the temporary compliance monitoring regulations under which state housing agencies have been operating since 2016. The new regulations make several changes to compliance monitoring requirements, including in some cases increasing the number of units in a property that housing agencies will need to monitor. The final regulations became effective immediately.
The National Council of State Housing Agencies (NCSHA) recently issued the Task Force on Recommended Practices in Housing Credit Administration’s final report, which updates the organization’s guidance on administering the LIHTC. In 2000, NCSHA published its first recommended practices relative to LIHTC compliance monitoring, and in that same year, provided further updates to recommendations relating to allocation and underwriting, with additional recommendations provided in 2009 and 2010.
The IRS recently issued guidance on LIHTC developments and their compliance with fair housing rules at the local level. Notice 2016-77 relates to allocations of housing credits to projects located in a qualified census tract. A qualified census tract (QCT) is a geographic area defined by the Census Bureau and designated by HUD in which at least 50 percent of households have an income less than 60 percent of the area median gross income or have a poverty rate of 25 percent or more.
The IRS recently issued final and temporary regulations relating to LIHTC compliance monitoring. The temporary regulations expire Feb. 22, 2019. The amendments revise and clarify the requirement to conduct physical inspections and review low-income certifications and other documentation.
On June 25, the U.S. Supreme Court held in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. that a state’s “Qualified Allocation Plan” (QAP) implemented by an allocating agency violates the Fair Housing Act if it “disparately impacts” a protected minority even though the allocating agency did not intend to discriminate.
Sites awarded low-income housing credits prior to 1990 had a compliance period of 15 years. Beginning in 1990, a change in federal law required an additional 15 years of compliance, which is known as the extended use period. As a result, IRC Section 42(h)(6) establishes that sites that were awarded housing credits in 1990 or later must comply with restrictions for a total of 30 years or more, subject to certain exceptions. These restrictions are embodied in a recorded real estate agreement.
As the federal agency that’s responsible for administering the tax credit law, the IRS issues regulations, rulings, and other guidance; audits sites for noncompliance; and decides what penalties to impose for noncompliance. And state housing agencies monitor compliance with the tax credit law in a particular state. They’re also responsible for reporting noncompliance to the IRS so that it can take appropriate action.
The state of Maine is giving developers who apply for tax credits incentives to build smoke-free housing projects. The incentives are provided in accordance with the state's qualified allocation plan (QAP) for fiscal year 2008–09.
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