Many PHAs today have low-income housing tax credits. Penalties for noncompliance in the LIHTC program can be significant, and seasoned PHA staff skilled at administering HUD's housing choice voucher or public housing programs need to understand the complexities of the LIHTC program and shouldn't assume that the initial or ongoing program requirements are the same as other HUD programs.
Tip #1: Understand what your state monitoring agency's compliance manual says.
The LIHTC program was created by Congress under the Tax Reform Act of 1986 and established in the Internal Revenue Service's Internal Revenue Code, Section 42. The program provides financial incentives for the investment of private equity capital in the development of affordable rental housing. Each state agency designated as a "housing credit agency" receives an allocation of low-income housing tax credits based on that state's population.
Each state agency must provide the procedures that will be followed when notifying the IRS of noncompliance events of which it becomes aware. In addition to complying with all federal requirements under the LIHTC program, PHAs that have properties with low-income housing tax credits must also understand what their state monitoring agency requires, as outlined in the state's compliance procedures manual.
It's important to recognize that state agency compliance procedures vary widely across the country. For example, some state monitoring agencies require written third-party verification of applicant/tenant household assets in any amount, while other state monitoring agencies allow applicant/tenant households to provide a signed, sworn statement that the household's combined assets do not exceed $5,000, eliminating the need for written third-party verification of household assets.
Next: Working with the LIHTC program: Tip #2
As professional development manager, Sheryl Putnam took the lead role in designing NMA's newest certification seminar, Fundamentals of Low-Income Housing Tax Credit (LIHTC) Management. Prior to joining Nan McKay and Associates in 2011, Ms. Putnam managed the compliance department for a state housing finance agency, providing compliance oversight activities for the LIHTC, PBRA, and HOME programs. She also wrote a series for the NMA blog about blended occupancy projects.
