"We're coming up on Year 15 — can we actually request a Qualified Contract to get out of our West Virginia deal, and what changes about the Fund's oversight once we're into the extended-use tail?"
The math: 30 years confirmed from the Plan's own definitions, not 55
The Allocation Plan's Definitions section states the Compliance Period is "the period of 15 taxable years beginning with the 1st taxable year of the Credit Period," and defines the Extended Use Period as "the period beginning on the first day of the Compliance Period and ending on the later of (1) the date set forth in the Regulatory and Restrictive Covenants for Land Use Agreement …, or (2) the date which is 15 years after the close of the Compliance Period." Run together, that is the federal floor under IRC §42(h)(6)(D): 15 years of Compliance Period plus a minimum 15 more years of Extended Use, for 30 years total from the first credit year — not the 55 years this guide's shared cross-state phase title otherwise assumes going in. This research found no West Virginia-specific enhancement that pushes the baseline commitment past that federal floor.
What can complicate that clean 30-year figure is that the Extended Use Period, as defined, is not immune from early termination. Under IRC §42(h)(6)(E)-(F) — fully incorporated into WVHDF's own Qualified Contract Request Procedure — an eligible Owner who has not waived that right may request a buyer search starting after the Compliance Period's 14th year, and if the Fund cannot present a bona fide qualified contract within its allotted time, "the Extended Use Period for the property will terminate," subject only to a narrower three-year tenant-protection tail. In other words: 30 years is West Virginia's floor for an Owner that keeps its Qualified Contract right intact only if that right is never successfully exercised to shorten the term; an Owner that specifically waives it in the LURA is the one actually guaranteed to run the full 30.
The Qualified Contract is alive in West Virginia: a full procedure, real fees, and a hard eligibility gate
West Virginia does not require every Owner to waive the Qualified Contract right as a condition of receiving an award. The Tax Credit Manual states the opposite as its default rule: "A qualified contract is not available, and this procedure is not applicable, to an Owner that waived its right to request a qualified contract in the Regulatory and Restrictive Covenants and Land Use Agreement between the Owner and the Fund" — meaning that absent that specific, LURA-recorded waiver, the process is live and available. The Manual defines a qualified contract in near-statutory terms: "a bona fide contract to acquire … the non-low-income portion of the building for fair market value and the low-income portion of the building for an amount not less than the applicable fraction … of the sum of (i) the outstanding indebtedness secured by the building, (ii) the adjusted investor equity in the building, and (iii) other capital contributions, reduced by cash distributions."
To start the process, an eligible Owner submits a Qualified Contract Notification Letter addressing a specific set of eligibility facts: that the Owner did not waive the QC right in its LURA, that the property has completed 14 years of its Compliance Period, that the property is in compliance with Section 42, that the Owner "has secured complete, unconditional waivers of all purchase options, including any rights of first refusal relating to the property," and that the Owner has never before requested a qualified contract on that property — "[t]he Owner may only request one (1) qualified contract per property." Once the Fund confirms eligibility, the actual Request package is substantial: a completed Calculation of Qualified Contract Price (Worksheets A-E) certified by an independent CPA under 26 CFR Part 1, §1.42-18; all Forms 8609 with Part II completed; three years of audited financial statements; five years of partnership tax returns; loan documents with evidence of good standing; the Partnership Agreement with all amendments; partner and lender consents; any bona fide third-party offers received in the prior year; a title search; and an executed Reimbursement Agreement.
| Item | Amount / timing |
|---|---|
| Administration fee | $3,500, non-refundable (may be adjusted for properties of five units or less) |
| Third-party cost deposit | $1,000 per unit, up to $30,000 maximum — covers physical needs assessment, appraisal, market study, Phase I/II environmental study, accountant confirmation of the QCP, and legal fees |
| Fund's obligation once a Request is accepted | One year from the date the Fund notifies the Owner it has all required information to present a bona fide contract (extendable/suspendable for cause, e.g., pending additional deposits) |
| Consequence of the Fund presenting a contract | Regardless of whether the Owner accepts, rejects, or ignores it, "any possibility of the Extended Use Period being terminated prior to its scheduled termination date … is forever nullified" |
| Consequence of the Fund failing to present a contract in time | The Extended Use Period terminates, subject to a 3-year post-termination tenant protection period under IRC §42(h)(6)(E)(ii) (no non-good-cause eviction; no rent increase beyond Section 42 limits) |
Unused portions of the third-party cost deposit are returned to the Owner without interest upon sale of the property. If additional deposit funds are requested and not received within 15 calendar days, Request processing terminates — which also suspends the Fund's one-year presentment clock.
150 of 993 points: the single largest scoring category in the QAP is a Qualified Contract waiver
West Virginia's scoring system totals 993 points across all categories (identical maximum for New Supply and Existing Low-Income Housing properties), against a stated minimum: "The Fund has set a minimum point threshold of 500 Selection and Preference Criteria points that must be met by a proposed property in order for such property to be considered any further for LIHTCP eligibility." Within that system, "Preference for Properties Obligated to Serving Qualified Tenants for the Longest Periods of Time" is worth up to 150 points — more than any other single scoring category in the entire Plan, and equal to 30% of the minimum qualifying threshold on its own.
The mechanics: "150 points will be awarded to an Applicant that commits … the property to serving qualified low-income tenants, using the elected minimum set-aside requirement for the percentage (50% or 60%) of the area median gross income, and the applicable IRS rent restrictions for 15 years beyond the close of the initial 15-year Compliance Period." That length — 15 years beyond the Compliance Period — does not exceed West Virginia's baseline 30-year Extended Use Period; it matches it. What the 150 points actually buy the Fund is certainty that the full term will run: "In the event the property commits to this scoring criterion, the Qualified Contract provision is not available or applicable to the Owner, with respect to the termination of the Extended Low-Income Housing Commitment." Properties that have separately committed to Properties Committed to Eventual Tenant Ownership are not eligible for these points.
This research did not verify how West Virginia applicants actually behave in practice, and the Plan itself frames the commitment as elective — nothing in its text requires it. But as a matter of arithmetic, forgoing 150 of 993 available points (15% of the entire scoring system, and nearly a third of the 500-point qualifying floor) is a significant competitive cost in a points-based, threshold-gated selection process. Treat that observation as analysis, not a QAP requirement: an Applicant that wants to preserve its Qualified Contract exit right can do so, but should expect to make up the 150 points elsewhere or accept a materially weaker score.
Compliance monitoring: the federal floor, an annual per-unit fee, and a real gap in what's publicly confirmable about the tail beyond Year 15
During the 15-year Compliance Period, West Virginia's Compliance Monitoring Procedure tracks 26 CFR §1.42-5 without adding a state-specific enhancement this research could confirm: annual Owner Certification of the full federal checklist (minimum set-aside test, applicable fraction, tenant income certifications, rent restriction, general-public use, habitability, vacant-unit next-available-unit rule, and more); Fund inspection of all buildings and at least 20% of low-income units and tenant files by the end of the second calendar year after the last building placed in service, and at least once every three years thereafter; and a 30-calendar-day correction period for noncompliance (extendable up to six months for good cause), with Form 8823 filed with the IRS no later than 45 calendar days after the correction period ends. RD Section 515 and tax-exempt-bond-financed properties can be partially excepted from independent tenant-file verification where RD or the bond issuer separately certifies income and rent data to the Fund.
| Item | Detail |
|---|---|
| Compliance Monitoring Fee | $35 per residential rental unit, per year — stated "for fees collected in 2025 and 2026," with the amount subject to change in subsequent years |
| Consequence of non-payment | Treated as an instance of noncompliance |
| Fund's own IRS reporting | Files IRS Form 8610 annually to report its compliance monitoring activities |
The Allocation Plan phrases this as an annual per-unit charge, not a single lump sum meant to cover the whole 15-year Compliance Period the way some other states structure their fee. Confirm the current-year rate directly with the Fund before budgeting.
On what happens after Year 15, the Allocation Plan itself is thin by design: it states only that "[t]he Fund will continue to monitor any low-income housing property, after the close of the initial 15-year Compliance Period and during the Extended Use Period," and directs readers to "the Fund's current Tax Credit Compliance Manual" for the specific post-Year-15 procedure. That Compliance Manual is a separate document from the Tax Credit Manual researched for this Phase; it sits behind a password-protected section of WVHDF's compliance-documents page, and the only version this research could locate through a public search was a 2017 edition whose current-cycle accuracy could not be verified — and which this research therefore did not rely on for any factual claim here. Do not assume West Virginia's post-Year-15 inspection cadence, cure periods, or fee structure match another state's published numbers; confirm directly with WVHDF's compliance staff or the current Tax Credit Compliance Manual before relying on any post-Year-15 detail not stated in the Allocation Plan itself.
No LIHTC-specific property tax break, and no state prevailing-wage law since 2016
Neither the Allocation Plan nor the Tax Credit Manual mentions property tax treatment, a PILOT (payment-in-lieu-of-taxes) mechanism, or any tax-abatement structure tied to LIHTC status — a genuine silence in West Virginia's own program materials, not a gap in this research. West Virginia's general property-tax exemption statute, W. Va. Code §11-3-9, lists specific categories of exempt property (government property, religious and educational institutions, cemeteries, charitable and benevolent organizations, and similar categories) and does not name low-income or LIHTC housing among them. Separately, W. Va. Code §16-15-14, part of the state's Housing Authorities Law, states that "[t]he property of an authority shall be exempt from all local and municipal taxes" — but that exemption reaches property actually owned by a public housing authority (a public corporate body under Chapter 16, Article 15), not, without more, a privately owned LIHTC ownership entity. This research found no WVHDF program document describing a structure for routing a private LIHTC deal's ownership or ground lease through a public housing authority to access that exemption. Any deal team counting on a West Virginia property-tax reduction should confirm the mechanism directly with the relevant county assessor and legal counsel rather than assume one exists.
West Virginia has had no state prevailing-wage law of its own since 2016: House Bill 4005 (2016 Regular Session), enacted over a gubernatorial veto and effective May 5, 2016, repealed W. Va. Code §21-5A-1 through §21-5A-12, the statute that had set prevailing hourly wage rates for public-authority construction. Neither the current Allocation Plan nor the Tax Credit Manual imposes an independent state prevailing-wage requirement on LIHTC construction. Federal Davis-Bacon wage requirements can still apply, but only when a deal layers in other federal financing that independently triggers them (HOME, National Housing Trust Fund, RD, or HUD-insured financing, for example) — and WVHDF's own Tax Credit Manual treats this as routine enough that, in its Adjusted Property Cost Limits discussion, it explicitly refuses to accept "the requirement to pay Davis-Bacon wage rates" by itself as justification for a property's costs exceeding the Fund's cost limits, calling it "not so unique as to constitute a justification." That single sentence is itself evidence that a meaningful share of West Virginia LIHTC deals do carry Davis-Bacon obligations in practice, via layered federal funds — even though the LIHTC program itself imposes no independent state mandate.
Where this goes wrong
- Assuming West Virginia's extended-use term runs 55 years because that is this cross-state guide's shared phase-title default. The Allocation Plan's own Definitions section confirms the floor is 30 years (15 + 15), not 55.
- Assuming West Virginia has joined the states that require every award to waive the Qualified Contract right. WVHDF's own Tax Credit Manual publishes a live, detailed QC procedure with real fees, available to any Owner who did not specifically waive that right in the recorded LURA.
- Treating the 150-point "Preference for Properties Obligated to Serving Qualified Tenants for the Longest Periods of Time" as a minor, easily-skipped scoring line. It is the single largest scoring category in the entire 993-point system — more points than any other category, and 30% of the 500-point minimum qualifying threshold on its own.
- Assuming that taking the 150-point commitment buys extra years of affordability beyond West Virginia's 30-year floor. It does not — the commitment matches the standard Extended Use Period length; what it actually forfeits is the Owner's ability to shorten that period early through a Qualified Contract request.
- Believing a Qualified Contract request can happen at any time after Year 15 closes. Under both the Code and WVHDF's own procedure, it can only be requested after the 14th year of the Compliance Period has ended, and an Owner may make only one such request per property, ever.
- Assuming presenting a qualified contract that the Owner rejects has no lasting effect. WVHDF's Manual is explicit that once the Fund presents a bona fide contract, "any possibility of the Extended Use Period being terminated prior to its scheduled termination date … is forever nullified," regardless of whether the Owner ever closes on it.
- Assuming the Compliance Monitoring Fee is a one-time charge meant to cover the full 15-year Compliance Period, the way some other states structure it. West Virginia's own Allocation Plan describes it as an annual, per-unit charge ($35/unit/year for 2025 and 2026, subject to change).
- Borrowing another state's post-Year-15 inspection cadence, cure period, or fee schedule for West Virginia. The Allocation Plan defers those specifics to the Fund's "current Tax Credit Compliance Manual," a separate, password-protected document this research could not locate in a verifiably current form — the only public copy found was a 2017 edition of uncertain current accuracy.
- Assuming any West Virginia LIHTC property automatically qualifies for a property tax exemption or PILOT arrangement. Neither the Allocation Plan nor the Tax Credit Manual mentions one, the general exemption statute (W. Va. Code §11-3-9) does not name low-income housing, and the Housing Authorities Law exemption (W. Va. Code §16-15-14) reaches property actually owned by a public housing authority, not a private LIHTC partnership, absent a specific structure this research found no evidence WVHDF's program uses.
- Assuming West Virginia has a state prevailing-wage requirement for LIHTC construction. The state's own prevailing-wage statute was repealed in 2016 (HB 4005); only federal Davis-Bacon requirements can apply, and only when other federal financing sources independently trigger them.
- Requesting a Qualified Contract without first securing "complete, unconditional waivers of all purchase options, including any rights of first refusal relating to the property." That is a stated eligibility precondition in the Notification Letter itself — an unresolved ROFR or purchase option blocks the process from starting.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies