"The deal closed and I signed a Land Use Restriction Agreement that runs 30 to 75 years depending on what I elected. What am I actually on the hook for, and is there really no way out at Year 15?"
Four clocks, and the New Hampshire number that isn't fixed
A New Hampshire deal runs the same three federal clocks as any LIHTC deal, plus a fourth one that -- unlike California's flat 55 years -- is set project by project at application.
| Clock | Duration | Citation |
|---|---|---|
| Credit period | 10 taxable years, beginning the year the building is placed in service or, by election, the following year | IRC § 42(f)(1) |
| Compliance period | 15 taxable years, beginning with the first taxable year of the credit period | IRC § 42(i)(1) |
| Federal extended use period | Ends on the later of the agency-specified date or 15 years after the close of the compliance period -- a 30-year federal floor | IRC § 42(h)(6)(D) |
| New Hampshire Land Use Restriction Agreement (LURA) | 30 to 75 years from recordation at construction loan closing, set by project type and a scoring election | NH Housing 2027-2028 QAP (HFA 109) § HFA 109.10.A |
Years 11 through 15 break naive models here for the same reason they do everywhere: credits stop flowing at year 10, but the full federal certification burden, recapture exposure, and the cash flow waterfall keep running through year 15 and well beyond it. What's different in New Hampshire is how much further "beyond it" actually goes, and that the answer is a project-level election rather than a statewide constant.
| Project type | Minimum affordability period |
|---|---|
| 4% LIHTC with tax-exempt bonds, no NH Housing capital subsidy | 30 years |
| 4% LIHTC with tax-exempt bonds and NH Housing capital subsidy | 45 years |
| 9% LIHTC (competitive) | 60 years |
| 9% LIHTC electing the longer-term scoring points (3 points, QAP § HFA 109.07.A item 19) | 75 years |
The 30-year floor for an unsubsidized 4% bond deal is exactly the federal minimum under IRC § 42(h)(6)(D) -- New Hampshire adds nothing there. Every other project type in the state commits to more, up to two and a half times the federal floor.
The LURA is executed and recorded at construction loan closing, and its term runs from that recordation date -- not from placed-in-service, which is when the federal compliance period and extended use period start running. Store the LURA's recorded term and expiration date as the canonical field; derive everything else, including which vintage of compliance rules and fee schedule apply, from it.
The annual machine: certification, monitoring, training and the 8823
New Hampshire Housing's compliance monitoring runs almost entirely off Treasury Regulation 1.42-5, restated in Appendix I of the QAP, with one addition the federal rule doesn't require: mandatory annual staff training during the 15-year compliance period.
| Milestone | Timing | Citation |
|---|---|---|
| First on-site inspection and file review | By the end of the second calendar year following the year the last building in the project is placed in service | QAP Appendix I § B; 26 CFR § 1.42-5(c)(2) |
| Compliance-period inspections and file reviews | At least once every 3 years | QAP Appendix I § B |
| Advance notice of an inspection | No more than 15 days | QAP Appendix I § B |
| Project size | Minimum unit sample size |
|---|---|
| 10-11 low-income units | 8 |
| 68-81 low-income units | 20 |
| 102-130 low-income units | 22 |
| 258-449 low-income units | 25 |
| 450-1,461 low-income units | 26 |
The rule is the lesser of 20% of low-income units (rounded up) or this fixed minimum-unit table -- the more owner-favorable of the two federal formulas. That's a real difference from California, which layers a flat 20% on top of the federal table regardless of which number is smaller.
| Step | Rule |
|---|---|
| Standard correction period | 30 days from the date of notice |
| Extension for good cause | Available in writing, but the total correction period may not exceed 6 months under any circumstances |
| Form 8823 filing window | No earlier than the end of the correction period, no later than 45 days after -- filed whether or not the noncompliance was corrected |
| Corrected-in-time follow-up | If noncompliance is corrected within 3 years after the end of the correction period, NH Housing must file a second 8823 reporting the correction |
New Hampshire's 30-day standard correction period is a fraction of California's 90 days. An owner used to California's timeline and building a correction plan on that assumption will already be past NH Housing's default window.
The training requirement is a New Hampshire addition with no equivalent in the federal regulation or in the California guide: at least one staff member at each management company must hold a nationally recognized LIHTC compliance designation and complete at least 6 hours of LIHTC-specific training per year, certified to NH Housing annually by March 1. It applies only during the 15-year compliance period -- NH Housing's own guidance says the requirement, unlike almost everything else, actually stops at Year 15.
Two quiet traps. First, "100% affordable means no recertifications" is only half true here too: the annual income recertification exemption for 100%-low-income projects took effect August 1, 2008, but household composition and full-time student status must still be certified annually, no later than the anniversary of the initial certification, for the entire 15-year compliance period. Second, the IRS treats each LIHTC building as its own project unless the owner makes the multiple-building election on Form 8609 Part II, line 8b -- a property with some 100%-affordable buildings and some mixed-income buildings loses the 100% exemption on all of them unless that election is on file and confirmed.
| Area | Post-Year-15 rule |
|---|---|
| Unit sample size | 10% of LIHTC units, for both file review and physical inspection -- down from the lesser-of-20%-or-table standard |
| Full exemption from routine review | Available if 3 consecutive years of clean tenant data uploads plus a satisfactory MOR or another agency's inspection within the past 3 years, and NH Housing is aware of no potential issues |
| Alternative physical inspection | A REAC score of 70 or higher within the past 3 years, with confirmation that all Life Threatening and Severe deficiencies were corrected |
| Annual training requirement | Ends -- no longer required after Year 15 |
| Mixed-income annual recertification | May shift to household self-certification on a completed TIC form |
| Annual Owner Certification and Special Conditions certification | Continue, due March 1 every year through the full LURA term |
NH Housing's own guidance flags the failure mode explicitly: because compliance transitions building by building based on each building's own placed-in-service date, applying the relaxed post-Year-15 rules before a given building has actually finished its 15-year period is itself noncompliance NH Housing is required to report on Form 8823.
Recapture, and what actually enforces the LURA after Year 15
| Element | Definition |
|---|---|
| Trigger | Qualified basis at the close of any taxable year in the compliance period is less than at the close of the preceding taxable year |
| Recapture amount | The aggregate decrease in prior-year credits that would have resulted had the accelerated portion not been allowed, plus interest at the § 6621 overpayment rate running from the due date of each prior year's return |
| Interest deductibility | No deduction is allowed for that interest |
This is identical federal law in every state, New Hampshire included -- the credit is earned over 10 years but vests over 15, and the accelerated portion under § 42(j)(3) is the gap between the two schedules, not a flat fraction. A calculator has to run both schedules and subtract.
| Provision | Effect | Citation |
|---|---|---|
| Casualty loss | Restored within a reasonable period | § 42(j)(4)(E) |
| De minimis change | A de minimis floor-space-fraction change | § 42(j)(4)(F) |
| Disposition safe harbor | Reasonably expected the building will continue in qualified use for the remaining compliance period | § 42(j)(6)(A) |
| Assessment statute of limitations | Extended to 3 years from IRS notification | § 42(j)(6)(B) |
| Large-partnership rule | Partnerships with 35 or more partners are treated as the taxpayer for recapture | § 42(j)(5)(B) |
Recapture exposure ends at year 15. What keeps running is the LURA itself, recorded as a covenant on the land -- and here New Hampshire's enforcement toolkit reads differently from California's. Nothing in the QAP publishes a per-violation fine schedule or lien-authority provision comparable to California's $500-per-violation table. NH Housing's own Post Year 15 policy states its remedies as legal action for LURA noncompliance and a negative impact on the owner's future scoring and funding eligibility across NH Housing's other programs -- and it explicitly preserves the point for later: any waiver NH Housing grants under that policy remains "subject to the rights of any third-party beneficiary of the applicable LIHTC LURA to seek enforcement," meaning a tenant or nonprofit partner may be able to enforce provisions NH Housing itself agreed to relax.
New Hampshire's money layer: fees keyed to credit type, not to the LURA term
NH Housing's Fee Schedule for Multifamily Housing Development (effective for applications received on or after February 28, 2024, and still the version posted on NH Housing's website) keys the upfront LIHTC monitoring fee to which credit type the project was awarded -- 4% or 9% -- not to the length of the LURA the project elects. The fee is due with the final allocation package, before IRS Form 8609 issues -- the same pay-before-8609 timing California uses -- but it is a flat per-unit number tied to credit type, not a schedule that climbs with the 30-to-75-year affordability election.
| LIHTC type | Fee per unit |
|---|---|
| 4% LIHTC | $675 |
| 9% LIHTC | $850 |
The fee schedule does not vary by the LURA term elected -- a 9% deal owes $850/unit whether it took the 60-year floor or the 75-year scoring election. On a 100-unit 9% deal that's $85,000 before Form 8609 either way; the LURA-term choice moves scoring points and the affordability period, not this bill. (There is also no separate annual monitoring fee for applications submitted on or after the effective date -- that structure applied only to 2021-2024 vintage allocations.)
| Allocation years | Fee structure |
|---|---|
| 1987-1995 | Annual fee, due January 1 each year, set by that vintage's QAP schedule |
| 1996-2007 | Upfront fee of $500 per LIHTC unit, paid before Form 8609 |
| 2008-2020 | Upfront fee of $600 per LIHTC unit, paid before Form 8609 |
| 2021-2024 | Upfront fee of $690/unit (9%) or $530/unit (4%) at final allocation, plus a separate annual fee assessed over 15 years |
Acquiring an existing NH LIHTC property means checking which vintage's fee regime it was allocated under -- the fee structure itself changed at least four times between 1987 and today, not just the dollar amount.
| Fee | Amount | Timing |
|---|---|---|
| LIHTC Allocation Fee | 7% of the total LIHTC allocation amount | 1% due upon submission of application (refundable, less $1,000, if the application is withdrawn or fails to secure a reservation; no fees are refundable once a reservation has been made); 6% due with final allocation package submission, before Form 8609 |
NH Housing's current Fee Schedule does not publish a separate standing-dollar line item for regulatory-document amendments, management-company changes, or transfer/refinance requests the way California's schedule does -- those are handled case-by-case rather than through a posted fee.
One structural gap worth flagging honestly: the current QAP contains no California-style percentage cap on year-over-year rent increases. Where California's AB 846 caps increases at the lesser of 5% plus CPI or 10% of the prior 12 months' rent, New Hampshire's ceiling is simply the federal LIHTC gross rent limit itself, tied to area median gross income and published annually by HUD. A rent trend in a New Hampshire pro forma is bounded by that limit and by the unit's income designation, not by a separate state cap on the increase from the prior year's rent.
Year 15 (and 30, and 45, and 60): a developer's actual options in New Hampshire
California blocks the federal qualified contract exit by statute. New Hampshire gets to the same result by contract: NH Housing makes the owner sign it away.
| Provision | What it says |
|---|---|
| Federal request window | After year 14, an owner may ask the agency to find a buyer (§ 42(h)(6)(I)) |
| Federal consequence if no buyer is found | If no qualified contract is presented within the one-year period, the extended use period terminates (§ 42(h)(6)(E)(i)(II)), at the price formula in § 42(h)(6)(F) |
| Statutory override clause | § 42(h)(6)(F) provides that it shall not apply to the extent more stringent requirements are provided in the agreement or in State law |
| New Hampshire's mechanism | The owner must waive the right to submit a qualified contract as a condition of receiving the LIHTC allocation; the written waiver is Section 9 of the recorded LURA itself -- NH Housing QAP § HFA 109.10.A |
NH Housing backstops the waiver with a scoring penalty, which is itself a tell that the agency doesn't treat a signed-away right as fully self-enforcing: a Sponsor who has pursued a qualified contract in New Hampshire in the prior five years loses 5 points on its next application (QAP § HFA 109.07.A, item 14.c) -- unless it can show NH Housing that the pursuit was investor-driven rather than general-partner-driven, in which case NH Housing may waive the penalty at its discretion.
| Layer | Requirement |
|---|---|
| Federal (§ 42(i)(7)) | Protects a ROFR held by tenants, a resident management corporation, a qualified nonprofit, or a government agency, at not less than the § 42(i)(7)(B) minimum purchase price |
| New Hampshire mandate (QAP § HFA 109.06.J.2) | The nonprofit ROFR must run for a term of at least 24 months from the end of the compliance period, at a price equal to the § 42(i)(7)(B) statutory minimum |
Where the sponsor or co-sponsor is a nonprofit, NH Housing requires the partnership agreement to spell out that the nonprofit's § 42(i)(7) right is distinct from a common-law right of first refusal: it isn't conditioned on investor consent, it can be triggered by any third-party offer, and the investor's return is understood to be the tax benefits alone -- not a share of the sale-price appreciation the ROFR exercise forecloses. Threshold criteria separately require sponsors to disclose any history of investor-aggregator activity undermining a LIHTC ROFR, and bar syndicators involved in such activity.
New Hampshire also has an option California's guide doesn't: a structured path to tenant (resident) ownership. A project can be designed from the application forward to convert to tenant ownership after the 15-year compliance period, exercised through the same § 42(i)(7) ROFR -- but only if a Tenant to Homeowner conversion plan was submitted and approved with the original application (QAP § HFA 109.06.M). That plan has to include tenant protections for households who don't want to buy, tenant training and counseling, a financial plan covering the LP's exit and reserve disposition, a physical needs assessment before title transfers, and an estimated Year 15 purchase price low enough that post-purchase housing costs don't exceed what the household paid as a renter. This cannot be bolted on after Year 10 -- it has to be underwritten from day one.
A second New Hampshire-specific lever: NH Housing will consider a case-by-case equity take-out on a stabilized, existing NH Housing-financed property, but only where the proceeds further an affordable-housing mission, a capital needs assessment shows the property's needs are addressed, any NH Housing capital subsidy loan is repaid or resubordinated, and -- the real price of admission -- the existing LURA is extended, "generally not for less than an additional 10 years" (Underwriting Standards § 2.11). It's a live refinance path through the Year-15 wall, at the cost of pushing the affordability commitment further out.
Exit tax works the same way it does anywhere: when the LP's capital account has gone negative, disposition triggers gain, and the industry rule of thumb -- negative capital account times the marginal rate, divided by one minus the marginal rate -- is a common approximation, not authority. It applies here exactly as it would in any state, and it routinely turns an expected zero-dollar buyout into a real number.
What this phase reaches backward into underwriting
Almost everything binding at Year 15 in New Hampshire was elected at application, when it looked like a scoring or fee decision rather than a 30-to-75-year commitment.
| Election made at application | What it locks in |
|---|---|
| LURA term (30 / 45 / 60 / 75 years) | The regulatory affordability period and, for a 9% deal, 3 scoring points if the 75-year term is elected -- the upfront monitoring fee is set separately, by credit type (4% vs. 9%), not by the LURA term chosen |
| Average Income Test unit designations, if taken as additional set-aside commitments | Must be maintained for the full duration of the LURA, not just the 15-year compliance period |
| 100% affordable vs. mixed-income structure | Determines both the annual income-recertification exemption during compliance and eligibility for self-certification after Year 15 |
| Nonprofit sponsor/co-sponsor structure | Triggers the mandatory 24-month post-compliance-period ROFR and the investor-acknowledgment provisions |
| Tenant-ownership structuring | Must be elected and approved at application via a Tenant to Homeowner conversion plan -- unavailable if not built in from the start |
| Developer fee loan structure | Capped generally at 50% of the maximum allowed developer fee, interest-free, and must be projected to pay off within the 15-year compliance period ahead of any NH Housing deferred loan |
The federal mechanic underneath all of it doesn't change state to state: qualified basis and the applicable fraction are fixed at the close of the first year of the credit period (IRC § 42(c)(1)(A)), so an unqualified household in a unit in year 1 permanently reduces the fraction for the entire compliance period -- and, per NH Housing's own Post Year 15 guidance, the applicable fraction must then be maintained for the entire term of the LURA, not just the 15 years. Lease-up risk in New Hampshire is a 30-to-75-year fact, not a stabilization-year one.
With a LURA that can run to 75 years and a Year-15 exit the owner waived in writing at closing, an IRR-and-exit-cap model is even less useful here than in a 55-year state. What the tail actually answers in New Hampshire is narrower and more mechanical: does the developer fee loan clear within 15 years, what do the reserve deposits and the monitoring-fee bill actually total, and -- for the small subset of deals built for it -- does the tenant-ownership or equity-take-out path apply.
Where this goes wrong
- Assuming New Hampshire blocks the qualified contract by statute, the way California does. It doesn't -- NH Housing makes the owner waive the right in writing, in Section 9 of the recorded LURA, as a condition of getting the allocation (QAP § HFA 109.10.A), backed by a 5-point scoring penalty for pursuing one anyway in the prior five years (QAP § HFA 109.07.A, item 14.c).
- Hardcoding a single LURA term across the state. It runs from 30 years (an unsubsidized 4% bond deal, exactly the federal floor) to 75 years (a 9% deal that took the scoring points) -- a 2.5x spread, and it's an application-time election, not a fixed statewide number the way California's 55 years is.
- Assuming the LIHTC monitoring fee scales with the LURA term the way it might in another state. It doesn't -- NH Housing's Fee Schedule sets a flat $675 per unit for 4% LIHTC and $850 per unit for 9% LIHTC, regardless of whether the project elected the 30/45/60/75-year LURA term; the term choice moves scoring points and the affordability period, not the monitoring-fee bill.
- Assuming the correction period matches California's 90 days or some other state's default. New Hampshire sets it at 30 days from notice, with any extension for good cause capped so the total correction period never exceeds 6 months.
- Applying a flat 20% unit-sampling rule as if it were universal. New Hampshire uses the lesser of 20% of low-income units or the federal minimum-unit table -- the more owner-favorable of the two federal formulas, unlike a flat state-imposed 20% regardless of the table.
- Assuming a 100%-affordable New Hampshire property has no ongoing certification burden. Annual income recertifications were dropped for 100% projects effective August 1, 2008, but household composition and full-time student status must still be certified every year of the 15-year compliance period, no later than the certification anniversary.
- Missing the LIHTC training line item entirely. New Hampshire requires at least one staff member per management company to hold a recognized LIHTC designation and complete 6 hours of training annually, certified by March 1 -- a real compliance cost during the 15-year period that most states don't impose and that stops at Year 15 either way.
- Applying compliance-period sampling and inspection rules to a property that has already crossed into the extended use period, or the reverse. NH Housing's Post Year 15 policy cuts the review sample to 10% of units and can exempt a clean-history property from routine review entirely, transitioning building by building based on each building's own placed-in-service date -- applying the wrong ruleset early is itself a reportable Form 8823 event.
- Treating Average Income Test unit designations as a 15-year commitment. NH Housing's own guidance states that additional low-income set-aside commitments made at application must be maintained for the entire duration of the LURA, which can run to 75 years.
- Modeling a California-style percentage cap on rent increases in a New Hampshire pro forma. The current QAP has no equivalent to AB 846 -- the only ceiling is the federal LIHTC gross rent limit itself.
- Overlooking the tenant-ownership pathway as something that can be added at Year 12 when a GP starts planning the exit. It can't -- QAP § HFA 109.06.M requires the Tenant to Homeowner conversion plan to be submitted and approved with the original application.
- Assuming an equity take-out refinance is unavailable after Year 15 in New Hampshire the way it effectively is in a 55-year California hold. NH Housing will consider one case-by-case, but only against a capital needs assessment, repayment or resubordination of any NH Housing subsidy loan, and an LURA extension generally of at least 10 more years -- read: it extends the tail, it doesn't shorten it.
- Releasing the operating reserve to fund the replacement reserve before Year 15. NH Housing generally won't allow the transfer earlier, and even then only against a capital needs assessment and the HFA 204.12 performance benchmarks.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies