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LIHTC Applications

Friday, March 1st, 2013

Written by Cathy Turner, Spectrum Enterprises




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According to the IRS 8823 Audit Guide (page 4-30) an LIHTC certification and supporting documents are not sufficient unless at a minimum the file includes an application, verifications, student status, and a TIC form.  The first step to having a qualified household and a solid certification is a complete application that is current to the certification.  The application is the document completed by all members of the household that the owner uses to gather information to determine eligibility.

In a perfect world, a household would fill out an application, all income and assets would be easily verified and the household would move-in within a short period of time.  However, as we all know there are many circumstances that delay a move-in.  It could be anything from construction delays, a lengthy waiting list, or difficulty gathering income or asset verifications.    No matter what the reason, having an application or a questionnaire that is completed within 120 days of the certification is very important.

During a recent C3P class I attended many of the attendees in the room had high anxiety regarding application dates.  They had properties in the middle of lease up and they were having either existing tenants or new prospective tenants filling out applications.  In one case, there had been repeated construction delays which resulted in applications being over 120 days old.  On more than one occasion, all the applications were tossed in the trash and management started the process all over again.  Throwing the applications away is completely unnecessary.    A better solution would have been to update the out of date application with an Interview Checklist.  The Interview Checklist covers all compliance questions including income, assets, and student status.  Use this form to clarify all aspects of tenant eligibility. So the original application can be over 120 days old as long as you updated within 120 of the certifications.    The Interview Checklist (and our other forms)  is located on our website for your use.

Ask us your questions!

Friday, October 12th, 2012

Written by Cathy Turner, Spectrum Enterprises

Writing Blogs is not my forte. I am almost always scrambling for a good topic. Sometimes it seems like everything has already been discussed. So how about getting in touch with me and telling me what you want us to write about? What’s an issue that you want discussed? Is there something in the program that you’ve never quite understood or you can’t see the logic in the way something is done (or supposed to be done)? Let me know. I promise your identity will NEVER be revealed. When I write about your question, I promise I will start with “Good Question!” SO touch base with me somehow and give me a good topic to discuss. If I don’t get anything, I’m going to start making stuff up. Like this:

Dear Cathy,

I am a property manager in a small town. Everybody knows everybody else and it’s hard to find good quality tenants to fill my vacancies. When Spectrum comes out they always ask about extended vacancies and I always worry that my marketing efforts will be considered inadequate. What should I do?

Signed, Small Town Manager

Dear Small Town Manager,

Small towns can really prove to be a challenge for even the best managers. And your concern about being able to show good marketing attempts is appropriate. If units stay vacant for too long, they lose their qualified status unless “reasonable” attempts are made to re-rent. So here are some good ideas for ensuring the credit worthiness of your units despite the vacancies.

1- Turn ‘em. Get those vacant units rent ready ASAP. Don’t steal the fridge from one to get another one ready. Keep copies of work orders in your file. Then you will be able to show the date the unit became vacant and when the turnover was completed.

2- Market them. If you’re not using Craigslist then you’re not trying very hard. And it’s cheap! Contact the PHA, Newspapers, put flyers on windshields, whatever it takes. Keep copies of everything and be sure to note the dates they were posted.

3- Freebies! Count up all the vacant units and figure out how much lost revenue it equals. Consider free rent for the 12th month of a new lease or maybe gift certificates to local eateries for timely rent payments. 4. Lower rent. You wouldn’t have a problem filling your units if you gave them away for free would you? You probably don’t have to go all the way down to free but nothing says your rents are too high than a high vacancy rate.

5- Clean up the place. Take a good look around. Is there broken glass on your sidewalk? Cigarette butts? Is grass growing out of your gutters? These things limit curb appeal. My point is: Be creative. Incentivize and take a good long look at what your place offers. And be sure to document everything you do to market LIHTC units.

Take a Walk!

Thursday, July 19th, 2012

Written by Cathy Turner, Spectrum Enterprises

I spend approximately 10 to 12 weeks a year inspecting LIHTC properties in several States.  As I walk through various sites it often surprises me how unfamiliar property managers are with the sites they manage.    They are often shocked to see what has been left in basements, boiler rooms, and storage closets.  I realized the job of a site manager is enormous.   However, I strongly encourage all property managers to take the time to walk the property as often as possible.

Here are some of the areas often overlooked.


  • Check for uneven pavement and trip hazards.
  • Closely inspection the condition of playground equipment. Check for broken equipment, sharp edges, and trip hazards.  Could a parent or child in a wheelchair enter the playground area?


  • Check for garbage and debris left by staff and tenants.
  • Storage items/trash should not be located near boilers and water heaters.
  • Be sure gasoline cans are properly stored.  We often find gas cans with covers missing.
  • Does your maintenance staff have a fire proof cabinet for flammables?

Common Halls

  • Check back up systems for emergency lights and exit signs.  Don’t forget to check the lights in the management office and community room.  These lights are often overlooked.
  • Are the electric panel breakers clearly labeled?
  • Check all storage areas/janitor’s closets.  You may be surprised about what you find.
  • Do the trash chute doors self close?
  • All fire doors must self close and latch.  Is the hardware intact and working properly?
  • Fire Extinguishers must be re-inspected annually.  Check the tags.  When were the fire extinguishers inspected last?  Are any of the extinguisher tags missing?
  • Check laundry rooms.  Are unused sewer drains capped?

The site staff has access to grounds and common area every day.   I encourage you to take advantage of the lovely summer weather and take a walk around the property.

Spectrum Symposium Trivia!

Thursday, April 26th, 2012

Written by Cathy Turner, Spectrum Enterprises

If you were fortunate enough to attend the 2011 Spectrum Symposium in NYC you will know that Friday morning started with a fun game of LIHTC Trivia. I think I can clearly say that fun was had by all! Plus there were great prizes! I am now seeking your help to make the 2012 Trivia Game an even bigger success!

I am looking for FUN, INTERESTING, and CREATIVE trivia questions. Questions can be related to:

  • Tax Credits
  • HUD
  • Section 42
  • Physical Inspections
  • Training
  • Forms

Here are some of the questions used last year:

  • What year was the LIHTC program signed into law? What President signed the bill?
  • On July 18, 2011, what Senator, from what state released a deficit reduction proposal entitled “Back in Black” in which he called for the elimination of the LIHTC program?
  • What celebrity LIHTC investor played first base and designated hitter (DH) for the Boston Red sox and was awarded the American League MVP in 1995?
  • Name the 12 cities that have held the annual Spectrum Symposium?

Have fun and be creative!

Please email your question with the correct answer to cturner@spectrulihtc.com! or leave them in the comment section below. Thank you for your assistance. I hope to see all of you in Washington, DC.

If you are looking for registration information please refer to www.spectrumseminars.com. The 2012 Spectrum Symposium will be held in Washington DC on November 14-16 at the Grand Hyatt Washington.

LIHTC Units Vacant for an Extended Period

Thursday, September 1st, 2011

Written by Cathy Turner, Spectrum Enterprises

As a monitor for compliance in two states I review the vacancy period of low income units on a regular basis. You may be surprised that it not uncommon for me to see units that have been vacant for five or more months. It is our practice to inquire about these units; generally checking for violations of the Vacant Unit Rule. We are checking to see if your units are actively marketed, habitable and rent ready.

Per Treas. Reg. §1.42-5(c)(1)(ix) the owner of a low income project must be required to certify at least annually to the agency that, for the preceding 12 months period: “If a low-income unit in the project became vacant during the year, that reasonable attempts were or are being made to rent that unit or the next available unit of comparable or smaller size to tenants having a qualifying income before any units in the project were or will be rented to tenants not having a qualifying income.”

Units can have an extended vacancy period for a multitude of reasons. However, it is important to document that reason and what measures you have taken to rent the unit in a timely manner.

Does your property have a waiting list? Are you actively processing the applications on the top of the list? Will the next household on the list be ready to move in quickly? How are the units being marketed? Be able to provide examples of how low income units are advertised. What kind of outreach are you doing in the community? How quickly are vacant units becoming rent ready? Don’t wait to complete the turnover work until the unit is leased. Be sure to document your file with a work order showing the date of move-out and the rent ready date.

The goal here is to fill vacancies as quickly as possible with households in need of a low income unit. A failure to provide documentation of reasonable attempts to re-rent low-income units will result in a report of noncompliance.

Original Household No Longer Occupies Unit

Thursday, July 14th, 2011

Written by Cathy Turner, Spectrum Enterprises

During a recent training I attended there seemed to be quite a bit of confusion regarding adding additional household members to a lease. It is extremely important to thoroughly verify the income of any new occupants even if the original occupant has lived in the unit for many years.

One reason this verification is so important is that you must determine if the new occupant would be income eligible if living in the unit by themselves. If the original occupant moves from the unit leaving just the new household member you could end up with an over income household.


  1. Verify income of the new household member. Add this income amount to the most recent certification including all supporting back up.
  2. Determine whether or not this person qualifies for the unit by themselves based on the current income limit. Document the file so you have the information if needed in the future.
  3. If the applicant is income eligible you will have no worries if the original occupant decides to leave. The new household member can continue to reside in the unit.
  4. If you determine that the new occupant would not qualify by themselves you must take additional action. You can still allow the move-in. However, your lease agreement should clearly state that the new occupant does not have rights to the apartment if the original household members were to vacate the unit. Please remember that it is always best to consult your attorney when you make changes to your lease agreement.

For additional information on the subject see the Audit Guide page 4-5.

Avoid 8823’s When Tenants Commit Fraud

Thursday, March 10th, 2011

Written by Cathy Turner, Director of State Monitoring in West Virginia

The IRS stated in the October 2009 Audit Guide that if a tenant has committed fraud and the owner addresses the issue prior to notification of a state agency review then the noncompliance is not reportable. (Audit Guide page 25.2)

So how do you avoid getting an 8823 when a tenant misrepresents themselves?

The first step is having strong move-in procedures.  Be sure all income and assets are fully verified.  Be sure that the file addresses all anticipated changes in the next twelve months.  You do not want to run into a situation where the tenant starts a new higher paying job the day after they sign the move-in certification.

Generally, fraud is found during the first annual certification.  It is important to have procedures in place so that the site staff is not only verifying income and completing a TIC but actually reviewing and comparing the information to the move-in certification.

While interviewing the tenant, compare the current circumstances to the prior year.  If changes have occurred, document WHEN the change happened.  Be sure to document the file as to when the change took place.   

 For example:

  • If tenant changed employment from part-time to full-time.  When did the change occur? 
  • If the tenant was not employed at move-in, when did they start the new job?
  • The tenant is working over-time each week.  When did the increase in hours occur?
  • Tenant is receiving child support.  When did payments begin?

If you find that the tenant deliberately misrepresented their income, then it is time to act! Legal action may be necessary.

As State monitors we look very closely at households that have a significant increase in income during the first twelve months of occupancy. Owners/Managers should be looking at the files closely as well.  Do not wait for us to ask the questions.    

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