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Year 15 Documentation Issues

Year 15 Documentation Issues

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Year 15 Documentation Issues

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  1. Year 15 Documentation Issues Michael Kotin Kay-Kay Realty Corp.2007

  2. Understand the Parameters

  3. Understand the Parameters Recap of Critical Documents:

  4. Understand the Parameters Recap of Critical Documents: • Its still Real Estate

  5. Understand the Parameters Recap of Critical Documents: • Its still Real Estate Don’t let the tax tail wag the economic dog

  6. Understand the Parameters Recap of Critical Documents: • Seller’s Partnership Structure

  7. Understand the Parameters Recap of Critical Documents: • Seller’s Partnership Structure • LP Splits • Ultimate Tax Credit Investor

  8. Understand the Parameters Recap of Critical Documents: • Seller’s Partnership Structure • LP Splits • Ultimate Tax Credit Investor It’s a small world.

  9. Understand the Parameters Recap of Critical Documents: • Land Use Restriction Agreement

  10. Understand the Parameters Recap of Critical Documents: • Land Use Restriction Agreement • Extended Use provisions continue • May restrict or define Target Population • May restrict or define Income Limits

  11. Understand the Parameters Recap of Critical Documents: • Land Use Restriction Agreement Example: LURA provides 100% income restriction at 50% incomes. New contemplated tax credit structure at “40/60” will not supercede 50% income limitation

  12. Transfers with Credits Remaining • As it pertains to Compliance three areas:

  13. Transfers with Credits Remaining • As it pertains to Compliance three areas: • First Year Files • Current Files • State Housing Agency

  14. Transfers with Credits Remaining • First Year Files • Tenant Files • 8609s • 8609As • LURA

  15. Transfers with Credits Remaining • Current Files • Tenant Files • Back to initial qualification • Utility Allowances

  16. Transfers with Credits Remaining • State Agency: • Last annual report • Open compliance issues • Non-corrected 8823s

  17. Year 15 Transfers Don’t Need:

  18. Year 15 Transfers Don’t Need: • Initial Tenant Files

  19. Year 15 Transfers Don’t Need: • Initial Tenant Files • Resolution of 8823s

  20. Year 15 Transfers Don’t Need: • Initial Tenant Files • Resolution of 8823s • Annual Reports

  21. Year 15 Transfers Don’t Need: • Initial Tenant Files • Resolution of 8823s • Annual Reports Why? No credits to lose !! Only ongoing requirement is in LURA

  22. Year 15 Transfers Do Need: • Current Tenant Files • LURA

  23. Key Dates

  24. Tenant Qualification as of Transfer Date NOT Tenant Qualification as of Tenant Move-in Date NOT Tenant Qualification as of last Recertification Date Key Dates

  25. Last Certification date can be use to ESTIMATE Qualified Occupancy Does not actual determine Qualified Status. Key Dates

  26. Last Certification date can be use to ESTIMATE Qualified Occupancy Does not actual determine Qualified Status. 2007 is year 15. Tenant is Qualified at May-07 move-in. Property purchased Jan-08. Key Dates

  27. Last Certification date can be use to ESTIMATE Qualified Occupancy Does not actual determine Qualified Status. 2007 is year 15. Tenant is Qualified at May-07 move-in. Property purchased Jan-08. May-07 irrelevant Status at Jan-08 relevant May-07 qualification does not “warm body” unit for new owner Key Dates

  28. Critical factor is whether Tenant is Qualified as of Transfer Date. Key Dates

  29. Critical factor is whether Tenant is Qualified as of Transfer Date. May wish to obtain “Interim Certification” do better estimate qualified percentage. Key Dates

  30. Critical factor is whether Tenant is Qualified as of Transfer Date. May wish to obtain “Interim Certification” do better estimate qualified percentage. Application and verifications may be obtained in advance of transfer. Key Dates

  31. Critical factor is whether Tenant is Qualified as of Transfer Date. May wish to obtain “Interim Certification” do better estimate qualified percentage. Application and verifications may be obtained in advance of transfer. TIC must be certified to new owner. Key Dates

  32. Critical factor is whether Tenant is Qualified as of Transfer Date. May wish to obtain “Interim Certification” do better estimate qualified percentage. Application and verifications may be obtained in advance of transfer. TIC must be certified to new owner. Doesn’t matter if same management company. Key Dates

  33. Tenant Qualification

  34. Tenant Qualification • Three Possibilities • Tenant income is below move-in limits

  35. Tenant Qualification • Three Possibilities • Tenant income is below move-in limits • Tenant income is above 140% recertification limits

  36. Tenant Qualification • Three Possibilities • Tenant income is below move-in limits • Tenant income is above 140% recertification limits • Tenant income is above move-in limits but below 140% recertification limits

  37. Tenant Qualification • Tenant income is below move-in limits:

  38. Tenant Qualification • Tenant income is below move-in limits: • May income qualify existing resident as initial “warm body” tenant for new tax credits.

  39. Tenant Qualification • Tenant income is below move-in limits: • May income qualify existing resident as initial “warm body” tenant for new tax credits. • Application and verification may be completed before transfer date but certification must be to new owners after transfer date.

  40. Tenant Qualification • Tenant income is below move-in limits: • May income qualify existing resident as initial “warm body” tenant for new tax credits. • Application and verification may be completed before transfer date but certification must be to new owners after transfer date. • May retroactively complete qualification after transfer within first 120 days of ownership.

  41. Tenant Qualification • Tenant income is below move-in limits: • May income qualify existing resident as initial “warm body” tenant for new tax credits. • Application and verification may be completed before transfer date but certification must be to new owners after transfer date. • May retroactively complete qualification after transfer within first 120 days of ownership. • Existing lease may transfer and does not need to be rewritten.

  42. Tenant Qualification • Tenant income is below move-in limits: • 6 month non-transient safe harbor rule does not apply.

  43. Tenant Qualification • Tenant income is above 140% of applicable move-in limit:

  44. Tenant Qualification • Tenant income is above 140% of applicable move-in limit: • Unit is no longer technically a tax credit unit.

  45. Tenant Qualification • Tenant income is above 140% of applicable move-in limit: • Unit is no longer technically a tax credit unit. » Prohibition against no-cause evictions do not apply.

  46. Tenant Qualification • Tenant income is above 140% of applicable move-in limit: • Unit is no longer technically a tax credit unit. » Prohibition against no-cause evictions do not apply. » 3-year trailer for rent protection does not apply.

  47. Tenant Qualification • Tenant income is above 140% of applicable move-in limit: • Tenant may be non-renewed at lease expiration

  48. Tenant Qualification • Tenant income is above 140% of applicable move-in limit: • Tenant may be non-renewed at lease expiration » Does not override protection offered by state and local ordinances which may apply.

  49. Tenant Qualification • Tenant income is above 140% of applicable move-in limit: • Tenant may be non-renewed at lease expiration » Does not override protection offered by state and local ordinances which may apply. » Does not override protection offered to project-based or voucher-based Section 8 tenants.

  50. Tenant Qualification • Tenant income is above 140% of applicable move-in limit: • Credits may commence after existing Tenant is gone and a new qualified household occupies the unit.