Compliance, Year 15, and Virginia's 30-year floor — not 55 — Virginia

Virginia's real number: 30 years, uniformly — with elective stretches to 40 or 50

The federal floor is a 10-year Credit Period under IRC Section 42(f)(1), inside a 15-year Compliance Period under Section 42(i)(1), followed by an Extended Use Period of at least 15 more years under Section 42(h)(6)(D) — 30 years minimum, nationwide. Virginia's own program does not lengthen that mandatory floor by credit type: the same 30-year minimum applies whether the allocation is 9% or 4% credits. What Virginia adds instead is a purely elective path to a longer term, priced in competition points rather than imposed as a baseline.

Virginia Housing's own Manual states the baseline directly and without qualification: 'Developments must comply with federal Housing Credit program requirements for a minimum of 30 years, beginning with the taxable year in which the respective development is Placed in Service or, at the election of the taxpayer, the succeeding taxable year' (Manual §5.1.5). The codified QAP arrives at the same number mechanically rather than by naming it: the extended low-income housing commitment every applicant must execute and record 'shall provide that the extended use period will end on the day 15 years after the close of the compliance period (as defined in the IRC) or on the last day of any longer period of time specified in the application' (13VAC10-180-70.D) — fifteen plus fifteen, unless the applicant affirmatively committed to more in its own application.

The elective longer term is a named, priced bonus-point item, not an assumption to read into the QAP's silence. The QAP awards points for a 'commitment by the applicant to maintain the low-income housing units in the development as a qualified low-income housing development beyond the 30-year extended use period (as defined in the IRC)... (40 points for a 10-year commitment beyond the 30-year extended use period or 70 points for a 20-year commitment beyond the 30-year extended use period)' (13VAC10-180-60.E.7.c). The Manual's own bonus-point table restates the same choice in total-year terms: 40 points for '10 years beyond the standard Extended Use Period (40 years of total compliance),' or 70 points for '20 years beyond the standard Extended Use Period (50 years of total compliance)' (Manual §6.13.1). A Virginia deal's actual extended-use term is therefore always one of exactly three numbers — 30, 40, or 50 years — and it is discoverable from that specific development's own application and recorded Extended Use Agreement, not from a program-wide assumption in either direction.

Qualified Contract: closed by a mandatory waiver at the front door, not a statutory sunset

Virginia does not rely on the federal Qualified Contract process expiring on its own for current-vintage deals; it requires every applicant to give up the right before an allocation is ever made. The QAP's mandatory application commitments include an agreement 'to waive its right to request to terminate the extended low-income housing commitment through the qualified contract process, as described in the IRC' (13VAC10-180-50.G.2). The Housing Tax Credit Manual states the same rule in plainer terms: 'All Applicants that receive an Allocation of either 9% or 4% Credits waive the right to pursue a Qualified Contract' (Manual §10), and separately, as a minimum program requirement, 'Applicants receiving Credits must waive their right to pursue a Qualified Contract ("QC")' (Manual §5.1.11).

The consequence for not honoring that waiver reaches further than the individual deal. Both the QAP and the Manual bar a principal from any future Virginia allocation for merely requesting a Qualified Contract, regardless of outcome. The QAP states that an application containing a principal 'that was a principal in an owner that has previously requested, on or after January 1, 2019, a qualified contract in the Commonwealth (regardless of whether the extended low-income housing commitment was terminated through such process) shall be rejected from further consideration and shall not be eligible for any reservation or allocation of credits' (13VAC10-180-50.G). The Manual restates it as a permanent bar: 'any Principal in a development that pursues a Qualified Contract after January 1, 2019 will not be eligible to apply for an Allocation of Credits in any subsequent rounds' (Manual §10). The request itself — not whether it actually terminated the extended use commitment — is what triggers the disqualification.

A narrow population of legacy deals can still theoretically have an unwaived right: the Manual acknowledges that '[m]any owners have chosen to waive the right to request a Qualified Contract and have committed to thirty years or more of operation as low-income rental housing,' and directs an owner to 'review the QAP, Tax Credit Application, Carryforward Agreement and Extended Use Agreement to determine whether a waiver is in place for the Development' (Manual §10) — confirming that eligibility turns on that specific development's own paper trail, not on the award year alone. For a deal that can confirm an unwaived right, the Manual describes the federal mechanics that would govern a Request for Qualified Contract: the agency must find a buyer willing to operate the property as qualified low-income housing at a price calculated under IRC § 42(h)(6)(F); if the agency cannot present a qualified contract within one year, the Extended Use Period terminates, but the development remains subject to IRC § 42(h)(6)(E)(ii)'s three-year post-termination tenant protections — no eviction without cause, and no rent increase beyond what Section 42 would otherwise allow — 'as well as the requirements of the Extended Use Agreement' (Manual §10). A qualified purchaser can be either a nonprofit or a for-profit entity willing to maintain the units and fulfill the Extended Use Agreement's requirements.

A materially restructured 2027 QAP was in the pipeline as of this research and deserves a clear, forward-looking flag rather than being folded into current guidance. Virginia Housing's own final draft proposes replacing the current regulatory chapter (13VAC10-180) with an entirely renumbered one (13VAC10-181), adding a dedicated 'Qualified contracts' section (proposed §13VAC10-181-110) with a more detailed application and pricing procedure, and broadening the authority's discretion to reject applications from principals connected to a foreclosure or deed-in-lieu of foreclosure 'arranged for the primary purpose of terminating an extended use agreement,' in addition to the existing post-2019 Qualified Contract bar. According to a Home Builders Association of Virginia summary published in advance of the vote, the Virginia Housing Board of Commissioners was scheduled to consider adopting the 2027 QAP on September 16, 2026, with a stated effective date of January 1, 2027. This research could not confirm whether the Board actually adopted the plan at that meeting or verify the draft's exact final wording — and even a plan adopted that day would not take effect, or govern any current deal, until January 1, 2027 at the earliest. Treat every 2027-QAP detail above as pending and unconfirmed until checked directly against Virginia Housing's own adopted text.

Right of First Refusal and homeownership conversion — Virginia's other exit path, and it can't be stacked with the extended-use bonus

Virginia's QAP offers a second, unrelated bonus-point path built around IRC § 42(i)(7)'s right-of-first-refusal safe harbor rather than extended affordability. An applicant can earn 60 points (plus 5 more with a satisfactory homeownership plan) for participation by a local housing authority or a qualified nonprofit organization holding at least a 10% ownership interest in the general partnership, paired with 'a commitment by the applicant to sell the proposed development pursuant to an executed, recordable option or right of first refusal to such local housing authority or qualified nonprofit organization... at the end of the 15-year compliance period... for a price not to exceed the outstanding debt and exit taxes of the for-profit entity,' recorded 'immediately after the low-income housing commitment' (13VAC10-180-60.E.7.d). Local housing authorities are not held to the 10% ownership test that applies to a qualifying nonprofit (Manual §6.13.2).

The QAP and the Manual are both explicit that this path and the extended-use bonus are mutually exclusive, not additive. The QAP states that an applicant taking the purchase-option points 'may not receive bonus points' under the extended-use-restriction item, and vice versa (13VAC10-180-60.E.7.c–d). The Manual's own note on the purchase-option item puts it even more plainly: 'If points are requested for extended compliance above, no points will be awarded for a purchase option or right of first refusal' (Manual §6.13.2). An applicant has to choose a single long-term affordability strategy at the scoring stage — either a longer elective extended-use term, or a nonprofit/LHA exit ramp at Year 15 — not layer both into the same application.

Compliance monitoring: NSPIRE inspections for every property, and a fee that halves at Year 16

Virginia Housing's compliance-monitoring obligation traces to the same federal source as every other state's: the Omnibus Budget Reconciliation Act of 1990 amended the IRC to require state allocating agencies to monitor developments for noncompliance under § 42(m)(1)(B) and to report violations to the IRS on Form 8823. Virginia Housing's own description of its process states that 'the initial on-site inspection of buildings and units in the Development, and compliance monitoring review of project records and tenant certification files will be completed by the end of the second calendar year following the year the last building in the Development is Placed in Service and at least once every three years thereafter,' with 'reasonable notice of inspection and compliance monitoring review of not more than 15 days' (Manual §5.2). The MDCR's separate, unqualified statement that 'all developments utilizing LIHTC are subject to REAC Inspections utilizing the NSPIRE standard' means this recurring physical-condition review runs against HUD's own inspection protocol rather than a Virginia Housing-specific checklist, for every property in the portfolio.

Virginia Housing's compliance-monitoring webpage offers a real, if narrow, due-diligence break: 'Noncompliance discovered and corrected before receiving notice of a Virginia Housing compliance monitoring audit is not reportable to the IRS and shows due diligence in managing the program requirements.' The same page names — by title and date only — a set of standing guidance memos that govern specific compliance mechanics: an 'NSPIRE Memo' (effective 10/1/2023, updated 2/7/2025), a 'Post-Year 15 Compliance Monitoring Guidance' (updated 11/10/2025), an 'HOTMA Guidance Summary' (updated 10/15/2025), a 'Tax Credit 15-Day Notice of Compliance Audits' memo (published 5/17/2023), a 'State-Required Decontrol Period Guidance' memo, and 'Smoke Alarm and Carbon Monoxide Detector Requirements' guidance (effective 12/29/2024). This research located and confirmed the existence and titles of these documents directly on Virginia Housing's own site but did not retrieve or verify their substantive contents — in particular, the specific post-Year-15 monitoring procedures the guidance by that name presumably describes. Anyone relying on a specific post-Year-15 compliance mechanic should pull that named document directly from Virginia Housing rather than infer its contents from the title alone.

Property tax: no LIHTC exemption — a mandatory statewide assessment rule that excludes tax-credit value instead

Neither the QAP nor the Housing Tax Credit Manual mentions property taxes, assessments, or exemptions anywhere — consistent with the pattern in other states, Virginia's real estate tax treatment of LIHTC properties runs entirely outside the tax-credit allocating agency, through the Code of Virginia and local real estate assessors rather than through Virginia Housing. The operative statute is Va. Code § 58.1-3295, 'Assessment of real property; affordable rental housing,' sitting in Title 58.1's assessment-and-valuation-procedure article rather than its exemptions article — a real, mandatory statewide rule, but a valuation methodology, not a tax exemption.

Section 58.1-3295(A) requires a real estate assessor determining fair market value for a property operated as affordable rental housing under any of a named list of federal programs — including 26 U.S.C. § 42 (the Housing Credit itself), § 142(d) tax-exempt bond financing, USDA Rural Development's 42 U.S.C. § 1485 (Section 515), and several HUD/Section 8 authorities — to consider 'the contract rent and the impact of applicable rent restrictions,' 'restrictions on the transfer of title or other restraints on alienation of the real property,' and 'the actual operating expenses and expenditures and the impact of any such additional expenses or expenditures,' rather than valuing the property as if it were unrestricted market-rate housing. Subsection C adds the specific rule that eliminates a tax-credit deal's biggest assessment-inflation risk: 'Federal or state income tax credits with respect to affordable rental housing property within the purview of subsection A shall not be considered real property or income attributable to real property.' Subsection E further requires that once such a property is generating income, it 'shall be assessed using the income approach... based on: the property's current use, contract rent, income restrictions, provisions of any arm's-length contract... and actual operating expense and capitalization rate data from comparable affordable housing.'

This is deliberately not framed as an exemption, and shouldn't be treated as one: a property assessed under § 58.1-3295 still owes real estate tax, calculated off its actual restricted rents, actual operating expenses, and a capitalization rate drawn from comparable affordable housing — with the paper value of the tax credits themselves stripped out of the number, and (per subsection B) an owner-initiated application path available where the locality's own affordable-housing definition is met and 'the real property does not have any pending building code violations at the time of the application.' Subsection D limits the statute's reach on a mixed-income property to only the portion actually operated as affordable rental housing.

Separate, narrower local-option partial exemptions exist elsewhere in Title 58.1 that some Virginia localities may apply to a specific LIHTC deal, but they are not tracked or administered by Virginia Housing and were not exhaustively mapped in this research. Virginia Code § 58.1-3221.7 authorizes a locality, by ordinance, to grant a partial exemption for a rehabilitated, renovated, or replacement structure converted to residential use where at least 30% of the units are reserved for households at or below 80% of the locality's median per capita income; the general nonprofit- and charitable-use exemption-by-designation authority in § 58.1-3651 is a separate, broader local option that some jurisdictions apply to nonprofit-owned affordable housing. Whether either applies to a specific Virginia LIHTC property is a locality-by-locality question for that jurisdiction's commissioner of the revenue or real estate assessor's office, not something resolved by Virginia Housing's own program documents.