"Every other state's guide I've read assumes a 55-year LURA. Ours reads 30. Is that actually right, and does Illinois really make every sponsor waive the one legal exit -- the Qualified Contract -- before it will even close the deal?"
Illinois's real number is 30 years, confirmed twice, with no bracket to fill in
Two separate parts of the current QAP state the same figure in different words, and they agree. Appendix A defines the "Extended Use Period" as "the period beginning with the first day of the Compliance Period and ending on the date which is 15 years after the end of the Compliance Period unless otherwise indicated in the Extended Use Agreement." Section XII.C, the QAP's own Extended Use Agreement provision, states the operative commitment directly: the EUA "sets forth income and occupancy restrictions that the Project must uphold for 30 years. This 30-year term includes the initial Compliance Period and the Extended Use Period." Unlike a state that hands the recorded instrument a bracketed choice between two figures, Illinois's current QAP does not offer, and this research found no scoring incentive in the 2027-2028 QAP for, a longer voluntary commitment -- 30 years is the number for every current award, full stop.
| Clock | Length | Basis |
|---|---|---|
| Credit Period | 10 taxable years | IRC §42(f)(1); QAP Appendix A |
| Compliance Period | 15 taxable years ("notwithstanding Section 42(i)(1) of the Code") | IRC §42(i)(1); QAP Appendix A |
| Extended Use Period | 15 additional years by default | QAP Appendix A |
| Extended Use Agreement, total term | 30 years | QAP Section XII.C |
California's mandatory term, for comparison, is 55 years -- nowhere close to what Illinois's own QAP and Compliance Manual require.
Two older sources this research reviewed use the same 30-year figure and add helpful color. IHDA's 2017 Qualified Contract Process and Guidelines describes the same math historically -- "properties that were awarded LIHTCs in 1990 or later must comply with program restrictions for a minimum of 30 years, subject to certain exceptions" -- and the April 2026 LIHTC & HOME Compliance Manual's resyndication section confirms the same 30-year floor still governs a fresh allocation today, noting that "any subsequent allocation of IRC §42 credit" starts its own new 30-year Extended Use Agreement that overlaps with the first rather than replacing it.
The universal Qualified Contract waiver, and IHDA closing the pre-2020 loophole
Illinois does not leave the Qualified Contract exit open by default the way federal law contemplates. The QAP's Mandatory Components section states it in three sentences: "To ensure Project affordability throughout the Extended Use Period, all Sponsors will be required to waive their right to seek a Qualified Contract. This requirement applies to Sponsors for both 9% Tax Credit Projects and 4% Tax Credit Projects. This waiver will be included in the Project's Extended Use Agreement." Every award under the current QAP carries that waiver as a mandatory closing condition -- there is no scoring trade-off, no opt-in, and no carve-out described in the QAP text itself.
The Compliance Manual's account of the same policy is worth reading side by side with the QAP's, because the two documents do not use identical language for the 4 percent population covered. The Compliance Manual states: "effective as of the 2020 QAP, all applicants are required to waive their right to seek a Qualified Contract. This requirement applies to applicants for both 9% credits and 4% credits financed with tax-exempt multifamily bonds." The QAP's own Section VIII.Q, by contrast, applies the waiver to "both 9% Tax Credit Projects and 4% Tax Credit Projects" without the bond-financing qualifier. This research found no place where either document cross-references the other on that distinction; a sponsor closing a 4 percent deal not financed with tax-exempt bonds should confirm directly with IHDA which description actually governs, rather than assume the narrower compliance-manual phrasing controls.
IHDA has also gone further than most states in closing off the legacy population that predates the universal waiver. As of May 2024, the Compliance Manual states, "developments that have received a LIHTC allocation from IHDA and have not already expressly waived their right to request a Qualified Contract under Section 42 of the IRS code will be required to expressly waive that right when submitting a Portfolio Risk Management Request. This includes but is not limited to requests for loan modification, changes in limited or general partner, and changes in ownership interest, among other transactions. Extended Use Agreements will be amended to reflect the waiver." In practice, the only Illinois deals that can still reach a live Qualified Contract are pre-2020 awards that have not touched IHDA for any loan modification, ownership change, or partner transfer since May 2024 -- a shrinking, and increasingly narrow, population.
| Step | Mechanic |
|---|---|
| Earliest eligibility | After the 14th year of the compliance period of the last building placed in service, or of the most recent of multiple allocations to the same property |
| Threshold conditions | No existing waiver of Qualified Contract rights in the recorded Extended Use Agreement; no outstanding purchase options or rights of first refusal; property not subject to affordability restrictions from other financing (HOME, Trust Fund, Section 8, etc.); property in good physical and financial compliance |
| IHDA's search obligation | A one-year period to present a qualified contract for purchase at the statutory price; if IHDA cannot, the Extended Use Period can be terminated |
| Post-termination tenant protections | Income targeting, rent restrictions, and a prohibition on evictions without cause continue for 3 years from the end of the one-year search period, per 26 U.S.C. §42(h)(6)(E) |
| Ongoing obligations during that 3-year window | Continue submitting annual rent/utility-allowance reports, IHDA's Annual Consolidated Certificate of Compliance, tenant event reporting, and pay annual tax credit compliance fees |
A new notice regime: tenants are told the clock is running, starting Year 28
Effective January 1, 2026, IHDA added a tenant-notification requirement to the back end of the Extended Use Period that this research did not find described in any other state's guide in this library. Beginning in year twenty-eight of the Extended Use Period, IHDA requires owners to deliver written notice to all existing tenants and new move-in households that the property will be exiting the tax credit program -- delivered to each tenant individually, posted visibly throughout the property, and given to every new applicant. By January 15 of each year, owners must send existing tenants updated notice of the upcoming expiration, and any household moving in during years 28 through 30 must be told at move-in that rent restrictions will end at the close of that period. In the final year -- year 30 -- owners must give each LIHTC tenant six months' advance written notice, and a copy of every notification letter must go to IHDA's Senior Preservation Officer, Asset Manager, and Compliance Analyst.
Because this policy only took effect in 2026, no Illinois property has yet run the full sequence from Year 28 through the final six-month notice in Year 30 -- the earliest current-generation deals reaching Year 28 would be properties allocated credits in the late 1990s under the older 15-plus-15 structure. A sponsor approaching this window should confirm current mechanics directly with IHDA's Asset Management group rather than assume the policy is well-tested in practice.
Monitoring halves at Year 15, but not every simplification carries over evenly
IHDA's cadence for both tenant file reviews and physical inspections is identical and switches at the same boundary: at least once every three years during the 15-year Compliance Period, dropping to at least once every five years during the Extended Use Period. Physical inspections follow local health, safety, and building codes plus HUD's National Standards for the Physical Inspection of Real Estate (NSPIRE), sampling no fewer than the lesser of 20 percent of program units or the minimum set by 26 CFR 1.42-5(c)(2)(iii); IHDA may expand the sample or the frequency if it finds extensive noncompliance.
Recertification paperwork loosens during the Extended Use Period, but not uniformly across every rule. Households can self-certify their income annually rather than undergo full third-party verification, with source-document verification required again only every fifth year; the Next Available Unit Rule continues to apply on a mixed-income property, while a 100-percent-affordable property is exempted from post-move-in income monitoring altogether because it always satisfies that rule by default. The Student Rule, however, is a genuine exception to the general pattern of relief: the Compliance Manual states outright that "the student rule is not in effect" during the extended use period for a standard deal, but immediately qualifies that properties that elected a 30-year federal compliance period (an uncommon election under IRC §42, distinct from Illinois's standard 15-plus-15 structure) "must continue to enforce the student rule... This requirement is NOT waived after year 15" for those properties.
Illinois's noncompliance-reporting language leaves the same kind of open question this research has flagged in other states' post-Year-15 monitoring. Both the QAP and the Compliance Manual condition the duty to file IRS Form 8823 on the finding occurring "within the 15-year compliance period": "if the issues raised in a compliance review impact eligibility under the federal Tax Credit program, and the Project is within the 15-year Compliance Period, the Authority must file IRS Form 8823." Neither document states in as many words what happens to a comparable finding made after Year 15 -- the phrasing strongly implies Form 8823 reporting stops once the Compliance Period ends, but that is an inference from the structure of the text, not something IHDA has stated outright. Treat it as likely, not confirmed.
Compliance monitoring fees are a flat schedule, and they run for the life of the Extended Use Period
| Program units | Federal (LIHTC) | State (IAHTC)* |
|---|---|---|
| 1 - 10 | $75.00 flat | $75.00 flat |
| 11 - 19 | $150.00 flat | $150.00 flat |
| 20+ | $25.00 per unit | $7.50 per unit |
*The IAHTC (state donation tax credit) fee only applies if the development has no active federal LIHTC award. The Compliance Manual confirms these fees continue to be assessed throughout the Extended Use Period, not just during the 15-year Compliance Period, and that owners who fail to report or correct substantial noncompliance face additional penalty fees and possible placement on IHDA's No Further Participation list.
Property tax relief has nothing to do with IHDA -- and one of its two mechanisms is Cook-County-specific by the statute's own terms
Illinois's Property Tax Code addresses LIHTC valuation directly, in language confirmed against the statute's own current text. Section 10-235 states a policy, not a self-executing formula: "It is the policy of this State that low-income housing projects developed under Section 515 of the federal Housing Act or that qualify for the low-income housing tax credit under Section 42 of the Internal Revenue Code shall be valued at 33 and one-third percent of the fair market value of their economic productivity to the owners of the projects," adopted so that property-tax valuation does not force rents up to cover the tax bill. Section 10-260 goes further, but only for the counties the statute names: "emphasis shall be given to the income approach" statewide, and then, specifically "in counties with more than 3,000,000 inhabitants" -- Illinois has exactly one, Cook County -- the assessment officer "must consider the actual or projected net operating income attributable to the property, capitalized at rates for similarly encumbered Section 42 properties," for any building with 7 or more units, and must reassess on the same basis for buildings of 6 units or fewer, after the owner certifies its Section 42 eligibility to the local assessment officer.
Outside Cook County, an owner is relying on Section 10-235's stated policy and the local assessor's own practice, not an equally explicit statutory mandate to use income-approach, NOI-capitalized valuation the way Section 10-260 requires in Cook County by its own terms. Neither section is administered by IHDA; both run entirely through the property's county assessment officer.
A separate, newer statute layers an additional assessed-value reduction on top -- and it is one a downstate county can decline. Section 15-178, enacted in 2021 and since amended, directs each county's chief assessment officer to reduce the assessed value of eligible new construction or qualifying rehabilitation for 10 taxable years, but "any county with less than 3,000,000 inhabitants may decide not to implement one or both of the special assessment programs... upon passage of an ordinance by a majority vote of the county board" -- and may later opt back in the same way. Only Cook County cannot opt out.
| Tier | Set-aside required | Assessed-value reduction | Term |
|---|---|---|---|
| Tier 1 | ≥15% but <35% of units at or below area maximum rents, occupied by qualifying households, for 10 years | 25% reduction in assessed value | Initial 10 years, renewable twice (up to 30 years total) with annual certification |
| Tier 2 | ≥35% of units at or below area maximum rents, occupied by qualifying households, for 10 years | 35% reduction in assessed value | Initial 10 years, renewable twice (up to 30 years total) with annual certification |
| Tier 3 ("low affordability community" projects only) | ≥20% of units, for 30 years, in a qualifying low-affordability community | Graduated: 100% of the assessed-value increase for years 1-3, stepping down to 20% for years 13-30 | 30 years, with a one-time renewal option before expiration |
Eligibility requires a qualifying development of 7 or more units (or, in counties over 3,000,000 people, a qualifying portfolio); the owner applies directly to the county assessor, not to IHDA, and the statute lets a chief county assessment officer accept an IHDA-issued certification in lieu of the standard application if the assessor independently verifies it with IHDA.
None of this runs through the LIHTC award or the Extended Use Agreement. A developer has to pursue Section 10-235/10-260 valuation treatment and any Section 15-178 assessed-value reduction as separate, assessor-administered tracks, and -- outside Cook County -- has to check the specific host county's own posture on Section 15-178 before assuming the reduction is available at all.
What the sources don't settle
Four things below should be confirmed directly with IHDA, the relevant county assessment officer, or a specific deal's own recorded documents rather than treated as settled by this guide.
Whether the universal Qualified Contract waiver reaches every 4 percent deal, or only 4 percent deals financed with tax-exempt multifamily bonds, is described differently in the QAP ("both 9% Tax Credit Projects and 4% Tax Credit Projects") and the Compliance Manual ("4% credits financed with tax-exempt multifamily bonds"). Neither document cross-references the other on this point.
Whether IRS Form 8823 filings genuinely stop once a property passes Year 15 is a reasonable inference from both the QAP's and the Compliance Manual's identical "within the 15-year Compliance Period" phrasing, but neither document states that consequence outright.
The Year-28 tenant notification policy took effect January 1, 2026 and has not yet run a full cycle on any Illinois property; its practical mechanics -- exactly what IHDA expects in the notice letters, and how strictly the copy-to-IHDA-staff requirement is enforced -- should be confirmed with IHDA's Asset Management group directly rather than assumed from the Compliance Manual's summary.
Whether a specific county outside Cook has opted out of the Section 15-178 assessed-value reduction (or opted back in after previously opting out) is a local, county-board-level fact this research cannot resolve at the state level -- confirm directly with that county's chief county assessment officer before underwriting the reduction into a specific deal's operating pro forma.
Where this goes wrong
- Assuming Illinois's LURA runs 55 years like California's. The QAP's own Appendix A definition and Section XII.C both confirm a flat 30-year Extended Use Agreement -- a 15-year Compliance Period plus a 15-year Extended Use Period -- with no scoring path in the current QAP to a longer voluntary term.
- Assuming the Qualified Contract is a live option on an Illinois deal. Every Sponsor -- 9% and 4% alike -- has been required to waive that right in the Extended Use Agreement since the 2020 QAP, and as of May 2024 even a pre-2020 deal that never waived will be forced to on its next loan modification, ownership change, or partner transfer submitted to IHDA.
- Treating the QAP's plain "both 9% Tax Credit Projects and 4% Tax Credit Projects" waiver language and the Compliance Manual's narrower "4% credits financed with tax-exempt multifamily bonds" phrasing as obviously describing the same population. The two IHDA documents do not cross-reference each other on this distinction -- confirm which one controls for a 4% deal that is not bond-financed.
- Missing the new Year-28 tenant notification requirement. Effective January 1, 2026, IHDA requires written notice to tenants beginning in year 28 of the Extended Use Period, annual notice to new move-ins through year 30, a 6-month advance notice in the final year, and copies to three named IHDA staff roles.
- Assuming every post-Year-15 compliance simplification applies uniformly. The Student Rule is a genuine exception for properties that elected a 30-year federal compliance period -- the Compliance Manual states that requirement "is NOT waived after year 15" for those properties, even while most other simplifications (self-certification, reduced verification) do apply broadly.
- Treating the Compliance Manual's Form 8823 language as confirmation that noncompliance reporting to the IRS stops after Year 15. Both the QAP and the Compliance Manual tie the filing duty to a finding occurring "within the 15-year Compliance Period," but neither states outright what happens to a post-Year-15 finding -- that is an inference, not a stated rule.
- Assuming the 35 ILCS 200/10-235 "33 and one-third percent" valuation is a self-executing exemption a developer can simply claim. The statute frames it as a declared state policy; the specific mandatory income-approach/NOI-capitalization assessment mechanics in 35 ILCS 200/10-260 are, by that statute's own text, required only "in counties with more than 3,000,000 inhabitants" -- Cook County. Elsewhere, an owner is relying on the policy language and local assessor practice, not an equally explicit statutory formula.
- Assuming the 35 ILCS 200/15-178 assessed-value reduction is automatically available statewide. Any county with fewer than 3,000,000 inhabitants may opt out of one or both special assessment programs by a simple county board ordinance -- and may later opt back in. Confirm the specific county's current posture rather than assuming availability.
- Underwriting the full 35% Tier 2 assessed-value reduction without checking the set-aside math. The 25% reduction applies to a 15%-but-under-35%-unit set-aside; the full 35% reduction requires at least 35% of units to meet the rent-and-income test for the full 10-year term.
- Confusing IHDA's 8609-package "Compliance Monitoring Agreement" and IHDA's ongoing annual compliance monitoring fee. The Compliance Monitoring Agreement is a one-time signed document required before 8609 issuance; the $75/$150/per-unit fee schedule is a separate, recurring annual charge that continues for the life of the Extended Use Period.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies