"We're coming up on Year 15 — how long does PRHFA's restriction actually run, can we get out early through a Qualified Contract, and what changes about monitoring, fees, and property taxes once we're into the extended-use tail?"
The math: 30 years, confirmed independently — not the 55 used elsewhere in this guide
The 2025-QAP's own introduction to the LIHTC program states the commitment directly: "Under the LIHTC program, the project owner agrees to provide low-income housing for at least thirty years." A few sentences later, describing what happens once the 15-year federal Compliance Period ends and IRS jurisdiction gives way to the housing credit agency's own jurisdiction, it adds: "This extended use period is at least 30 years, beginning with the first year of the credit period." Both sentences point to the same federal floor — a 15-year Compliance Period under IRC §42(i)(1) plus a minimum 15-year Extended Use Period under IRC §42(h)(6)(D) — not a Puerto Rico-specific extension of it.
PRHFA's 2016 Compliance Monitoring Plan reaches the identical figure from its own, separately-drafted text: "Owners of qualified residential rental projects must satisfy the minimum set aside and gross rent requirements for a minimum 15-year period, and in many cases, a 30-year period, depending on the deed restrictions. Developments with allocations in 1990 and each year thereafter are required to comply with these requirements for a minimum of 30 years." Its own definitional section confirms the same 15-plus-15 structure: "these developments must comply with eligibility requirements for a minimum compliance period of 15 years and an extended use period of an additional 15 years stipulated by a recorded agreement as to restrictive covenants." Two independently-worded PRHFA documents agreeing on the same number is about as solid a confirmation as this kind of research can produce — Puerto Rico's total restriction is 30 years, the federal minimum, not 55.
The 2025-QAP's Scoring Criteria give applicants a reason to go beyond 30 years, but only as an optional, points-driven choice: "a project might earn up to 2 points for extending the term of affordability beyond the extended use period of thirty years for: At least 10 more years [2 points]. At least 5 more years [1 point]." Documentation required is a "[l]etter of intent to extend the initial 15-year period of compliance with the Tax Credits program’s income and rent restriction requirements for a minimum of 15 additional years and sign the Land Use Restrictive Covenant Agreement" — plus a separate 1-point option for converting to tenant homeownership, with a right of first refusal granted to residents, "after the compliance period expires." Neither of those is a baseline requirement; they are the only two voluntary-extension-related items this research found anywhere in the QAP.
Qualified Contract: the current QAP is silent, and PRHFA's own compliance manual explicitly declines to give guidance
A full-text search of the entire 2025-QAP — all sections, from Threshold Criteria through Scoring Criteria, Fees, and Compliance — found zero mentions of "Qualified Contract." That is a notable omission set against how many mainland state QAPs handle this same topic: some (like Georgia) now require every Applicant to waive the federal Qualified Contract exit right outright; others set out a detailed agency-run QC process. Puerto Rico's current QAP does neither. It is simply not addressed.
The only PRHFA-published document this research could locate that even discusses the mechanism is the Authority's 2016 Compliance Monitoring Plan, and it disclaims giving guidance on it in as many words: "IRC Section 42(h)(6)(E) provides exceptions to the Extended Use Period in the case of a legitimate foreclosure or deed in lieu or, for projects that have not waived this right, if the agency is unable to present a qualified contract pursuant to IRC Section 42(h)(6)(F). This Compliance Plan does not contain guidance regarding the qualified contract referenced in IRC Section 42(h)(6)(E)(i)(II)." The same document goes on to restate the federal consequence of an early termination under that provision rather than any PRHFA-specific procedure: for three years following a termination due to foreclosure, deed-in-lieu, or a failed qualified contract, PRHFA "shall not be construed to permit... the eviction or the termination of tenancy (other than for good cause) of an existing tenant... or any increase in the gross rent... not otherwise permitted by the applicable rent limits."
Put plainly: this research could not confirm whether PRHFA requires a Qualified Contract waiver, offers a defined QC process, or has simply left the federal-law-default QC exit right (available to an owner who has not waived it, starting in Year 14 under the federal statute) untouched by state policy. It is equally possible that PRHFA's actual current QC procedure lives in a document not available for this research — an updated compliance manual, the LURA/Annex K boilerplate itself, or an internal policy — rather than that no procedure exists at all. Confirm this directly with PRHFA's Financing and Tax Credit Department before assuming either that an exit right is live and unwaived, or that PRHFA has quietly adopted a waiver requirement the QAP doesn't mention.
Monitoring and fees: a real drop after Year 15, on a fee schedule the current QAP has updated since 2016
| Requirement | Years 1-15 (Compliance Period) | Years 16+ (Extended Use Period) |
|---|---|---|
| Inspection cadence | At least every 3 years; the lesser of 20% of low-income units or the Rev. Proc. 2016-15 minimum-sample table; first inspection by end of Year 2 of the credit period | Every 5 years; a random 10% sample of low-income units (2016 Compliance Monitoring Plan §VI.C) |
| Correction period for noncompliance | 90 days from notice, extendable to 180 days for good cause | Up to 90 days, extendable by an additional 90 days for good cause |
| Form 8823 filing | Required — filed no later than 45 days after the correction period ends | Not required — IRS jurisdiction and recapture exposure end when the Compliance Period does |
| Annual Owner Certification | Required, due January 31 | Required for the full Extended Use Period, due January 31 |
| Tenant income/rent data reporting | Required; full annual recertification with asset verification | Continues, but simplified — no asset re-verification at annual recertification, no student-status rule, revised Available Unit Rule (2016 manual §VI.B) |
| Consequence of noncompliance | Recapture risk; Form 8823 to IRS | No recapture risk; PRHFA's own "Good Standing"/"Not in Good Standing" designation, which can cut off future PRHFA funds and Tax Credits |
The current 2025-QAP states the fee directly: "If a credit allocation is made, the Authority will charge ninety dollars ($90) ($40 for monitoring plus $50 for Asset Management) per LIHTC unit during the compliance period (first 15 years). During the extended period, the Authority will charge thirty-five dollars ($35) for monitoring per LIHTC unit. This amount will be due and payable by January 31st of each year" (Section 11.3). PRHFA's 2016 Compliance Monitoring Plan cites lower, older figures — a $25-per-unit annual compliance monitoring fee during the Compliance Period and $20 per unit during the Extended Use Period — confirming the schedule has been revised upward since 2016. Treat the 2025-QAP's $90/$35 figures as the current, controlling amounts, and the 2016 manual's dollar figures as superseded even where its procedural framework (inspection cadence, certification timing, the Good Standing designation) still appears to be the operative policy incorporated into the current QAP as its referenced Compliance Monitoring Plan (Annex O).
A separate, easy-to-miss tail sits after a Declaration actually expires or is terminated: under the 2016 manual, for three years after that point, owners must still "annually submit a list of all low-income households that occupied a unit at the end of the term of the Declaration... along with a certification that no low-income residents have been evicted or displaced for other than good cause," due each January 31 — but "[n]o monitoring fees will be due during this 3-year period and PRHFA is not required to perform inspections." That mirrors the federal three-year anti-eviction, anti-rent-increase protection described above, but applies to an ordinary end-of-term expiration as well as an early termination.
Property tax during the extended-use period: PRHFA doesn't administer a CRIM exemption — it just asks owners to disclose whatever exists
Unlike agencies that cite a specific statutory property-tax exemption for LIHTC housing, Puerto Rico's 2025-QAP names none. Twice, in different sections, it simply requires applicants to document whatever tax-exemption status already applies to their deal: "[w]ritten evidence for projects claiming and/or receiving (or not) tax exemptions (e.g., property tax waivers, rental income exemptions)" (Section 5.1.5.13), repeated almost verbatim in the development-budget review section (Section 5.2.1). Both instances treat a property-tax exemption as a fact about the specific project's financing structure that has to be disclosed — not a benefit PRHFA itself grants, administers, or guarantees through the Tax Credit program.
The only place CRIM (Puerto Rico's municipal property-tax collection agency) actually appears in PRHFA's own published materials found for this research is at the tenant level, not the property level: the 2016 Compliance Monitoring Plan's tenant-file checklist requires, for every adult household member at initial certification and the first annual recertification, a "CRIM Certification or Negative CRIM Certification" alongside other asset and income certifications. That reads as a real-property-ownership check used to verify a household's assets and income eligibility — not a property-tax exemption or abatement mechanism for the owner.
This research found no PRHFA-published CRIM exemption, abatement, or PILOT program specifically tied to LIHTC or extended-use restricted housing. Independent web research surfaced general references to Puerto Rico municipal property-tax exemption provisions for socially-oriented or affordable housing, but this research was not able to directly read and verify the applicable statute's text or confirm it actually reaches LIHTC-restricted rental developments — so nothing about it is asserted here. Do not assume a CRIM exemption applies to a Puerto Rico LIHTC property without confirming it directly with CRIM or a Puerto Rico tax attorney, and document whatever status actually exists per the QAP's own disclosure requirement.
Davis-Bacon and labor law: a HOME-funding trigger, not a blanket Tax Credit rule — and it has no role once construction ends
The 2025-QAP lists Davis-Bacon and several companion federal labor statutes under its Accessibility Requirements subsection: "Davis-Bacon and related acts (40 USC. §§ 276a-276a-7)... Contract Work Hours and Safety Standards Act... Copeland (Anti-Kickback) Act... Fair Labor Standards Act of 1938... Section 3 of the Housing and Urban Development Act of 1968" (Section 5.5.6). Read on its own, that list doesn't repeat the carve-out the QAP states one subsection earlier for environmental review — that "if the project only applies for Tax Credits, the [federally-triggered requirement] is not required" — so Section 5.5.6, taken alone, is genuinely ambiguous about whether it reaches a Tax-Credit-only deal.
PRHFA's 2016 Compliance Monitoring Plan resolves that ambiguity, at least for Davis-Bacon: it lists Davis-Bacon under "Special HOME Requirements" that apply only "[w]hen combining these two sources of funds" (LIHTC and HOME), stating directly: "Projects with 12 or more HOME-assisted units must pay federal Davis-Bacon wage rates for construction labor." Read together with the current QAP, the better-supported reading is that Davis-Bacon attaches to a Puerto Rico LIHTC deal only when it also draws HOME funds on 12 or more HOME-assisted units — not to a stand-alone 9% or 4% Tax Credit award. That reading is not certain, however, since the current 2025-QAP's own Section 5.5.6 doesn't state the carve-out as explicitly as its environmental-review section does; confirm directly with PRHFA before assuming either way for a specific deal's construction contracts.
In any event, Davis-Bacon (wherever it applies) is a construction-labor wage requirement, not a compliance-period or extended-use obligation — it governs the wages paid to construction workers building the project, and this research found nothing in the QAP or the compliance manual suggesting it has any role once the building is placed in service. This research also found no Puerto Rico-specific local labor law that PRHFA's QAP or compliance manual ties specifically to post-construction property operations (on-site management or maintenance staff). Ordinary Puerto Rico and federal employment law would apply to a LIHTC property's operating staff the same as it would to any other rental property in the Commonwealth, but that is a general labor-law matter outside PRHFA's LIHTC-specific rules, and nothing PRHFA-specific on it was found in the sources reviewed for this research.
Where this goes wrong
- Assuming Puerto Rico's extended-use term runs 55 years because that's this cross-jurisdiction guide's shared default phase framing. Two independently-worded PRHFA sources — the 2025-QAP's program overview and the 2016 Compliance Monitoring Plan — confirm the floor is 30 years (15+15), the federal minimum, not a state-enhanced figure.
- Assuming PRHFA requires (or offers) a Qualified Contract waiver the way a growing number of mainland agencies now do. A full-text search of the current 2025-QAP found zero mentions of "Qualified Contract," and PRHFA's own 2016 Compliance Monitoring Plan states outright that it "does not contain guidance" on the mechanism — confirm PRHFA's actual current policy directly rather than assuming a waiver, a live QC process, or an untouched federal default right.
- Relying on the 2016 Compliance Monitoring Plan's dollar figures for the monitoring/asset-management fee. The current 2025-QAP's own Section 11.3 sets $90/unit/year during the Compliance Period and $35/unit/year during the Extended Use Period — both well above the 2016 manual's $25/$20 figures.
- Assuming Form 8823 filings and IRS-facing compliance monitoring continue past Year 15. Per PRHFA's own compliance manual, IRS jurisdiction and Form 8823 reporting end when the 15-year Compliance Period ends; PRHFA instead tracks its own "Good Standing"/"Not in Good Standing" status during the Extended Use Period, with real consequences (no further PRHFA funds or credits) but no federal recapture exposure.
- Assuming a CRIM property-tax exemption automatically applies to a Puerto Rico LIHTC property. PRHFA's own materials only require applicants to disclose whatever exemption status already exists; the only CRIM reference in PRHFA's own compliance manual is a tenant-level asset-verification certification, not a property-level tax benefit — confirm any actual exemption directly with CRIM or a Puerto Rico tax attorney.
- Assuming Davis-Bacon applies to every Puerto Rico Tax Credit deal. PRHFA's 2016 compliance manual frames it as a "Special HOME Requirement" triggered only by 12 or more HOME-assisted units, not a blanket Tax Credit rule — though the current 2025-QAP's own Section 5.5.6 text, read alone, doesn't repeat that carve-out as clearly as its environmental-review section does, so confirm before assuming either way.
- Treating the Compliance Period's on-site inspection cadence (at least every 3 years) as continuing unchanged into the extended-use tail. PRHFA's 2016 compliance manual drops this to every 5 years with a 10% random unit sample once in the Extended Use Period.
- Assuming the correction period for noncompliance shortens once in the extended-use period. PRHFA's manual gives 90 days (extendable by another 90) in both the Compliance Period and the Extended Use Period — it does not tighten the way some other states' cure windows do after Year 15.
- Treating Year 15 (and therefore Year 30) as a fixed, easily-calculated date without first resolving which of the QAP's own two placed-in-service framings applies (see Phase 10). Since the extended-use clock runs from "the first year of the credit period," an uncertain start date compounds into an uncertain Year-15 and Year-30 date.
- Relying on the 2016 Compliance Monitoring Plan as PRHFA's complete, fully current compliance policy. It is the only PRHFA compliance manual this research could locate, it is nine years old relative to the 2025-QAP that incorporates a Compliance Monitoring Plan by reference (as "Annex O"), and its own dollar figures have already been superseded — treat its procedural framework as the best available evidence, not as confirmed-current in every detail, and verify directly with PRHFA's Audit & Compliance Department.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies