Information to Obtain When Assuming Management of a LIHTC Property

When assuming management of a Low-Income Housing Tax Credit (LIHTC) property during the 15-year compliance period, there is critical information the new agent must have. The following list provides a good starting point for the information to obtain when assuming management of one of these properties:

1. Location of the Resident Files: All tenant files and other information relating to property operations must be at the site. Determine the location of the initial resident files and whether copies have been made.
2. Required Minimum Set-Aside & Applicable Fraction: Determine the applicable fraction required for each building. Keep in mind that each building has a separate Building Identification Number (BIN) and this applicable fraction is applied per BIN. The IRS Forms 8609 for each BIN are a good source for determining the Minimum Set-Aside and applicable fraction. The 8609 will also confirm whether the project is deep rent skewed. Line 8b of the 8609 will also confirm whether or not it is a multiple building project.
3. What are the requirements of the Extended Use Agreement (EUA)? A copy of the EUA should always be available at the site. This is the deed restriction between the owner and the Housing Finance Agency (HFA) that will outline any special set-asides in addition to the minimum set-aside shown on the 8609s. It is also a good idea to obtain a copy of the original LIHTC application to the HFA and clarify any differences between the application and the EUA, keeping in mind that the EUA is the legally binding document.
4. Is the property subject to any other housing programs? It is common for LIHTC properties to be involved in more than just the tax credit program. Examples are the HOME program, Tax-Exempt Bonds, Rural Development Section 515, HUD Section 8, and the Federal Home Loan Board’s Affordable Housing Program. In situations where there is more than one program present at a property, the most restrictive rules should be followed.
5. Have there been past violations and if so, were they corrected? If there are any outstanding violations (as determined by examining any prior 8823s issued against the project), determine what is needed for correction and confirm how long the HFA is allowing for the correction. Prior to assuming management of a tax credit property, a new agent should request copies of any prior 8823s.
6. Have there been any fair housing complaints against the property? If there are pending actions, get the files and talk to the attorney that is representing the property.
7. Are any low-income households over-income? If the site is mixed-income (i.e., has both low-income and market units), determine if any low-income households currently have income in excess of 140% of the currently qualifying income limit (170% if the project is deep rent skewed). Request documentation that shows the Available Unit Rule (or deep rent skewing rule) is being followed. Examine the files of all households in a BIN that moved in after a household recertified with income in excess of the 140% or 170% levels.
8. Are there any vacant units? If there are vacant units, confirm the following: (1) the last household in the unit was eligible; (2) the unit is suitable for occupancy; and (3) reasonable attempts are being made to rent the vacant units. Also, obtain copies of all marketing materials.
9. When does the compliance period end? This information can be confirmed by reviewing the 8609s. Once the 15-year compliance period has ended, the EUA becomes the governing document for the property and any HFA year-15 requirements should be followed.

All of the information outlined above is critical to obtain prior to assuming management of an existing LIHTC property. Once a new owner acquires an existing property, or a new management company assumes management, operational responsibilities shift to the new entity. Pleading ignorance of a problem at that point will not hold water with either an HFA or the IRS.