The Tax Credit Process (Once credit has been awarded) Reservation and Carryover Gross Rent Floor Election Form Commitment 10% Certification Quarterly Progress.

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

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.

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.

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.

• 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.

• 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.

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

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 MSHDA’s web site.

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.

• 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.

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.

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.

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)

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.

10% Certification

• If a project receives a Carryover, the following must be submitted on the due date:

• Application with updated figures• Independent Certified Public Accountant’s

Report on Applying Agreed-Upon Procedures, certifying that 10% of the project costs will have been spent by the deadline

• Recorded Deed

• If the project’s Carryover Allocation Agreement is dated prior to July 1: The Application, 10% Certification and Recorded Deed are due December 1.

• If the project’s 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.

Upon Receipt of the 10% Carryover Documentation,

LIHTC staff will:• Review the Application, the Independent

Accountant’s 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.

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.

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.

• 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.

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

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.

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.

Final Cost Certifications• Final Owner’s and Contractor’s 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.

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