Construction through placed-in-service — Maryland

The 10% test, placed-in-service, and the paper trail CDA requires before Form(s) 8609

Once a project holds a Carryover Allocation, CDA requires an Affidavit of Utilization of a Reservation within 12 months certifying that costs exceeding 10% of the project's reasonably expected basis have been incurred — the federal 10% Expenditure Test under IRC §42(h)(1)(E) — supported by "a third-party attorney's or certified public accountant's certification that is acceptable to CDA," itemizing the reasonably expected basis and costs incurred (2026 QAP §E.7). Missing that window cancels the Carryover Allocation outright, though a sponsor may request a paid monthly extension (2026 QAP §E.7; DHCD Multifamily Program Fees, updated 1/12/2026: $1,000 per month, up to 12 months maximum). The project must then be placed in service by the end of the second year following the Carryover Allocation to keep the allocation at all (2026 QAP §E.8).

Once placed in service, the sponsor has 90 calendar days from the first year the credit is claimed to request Form(s) 8609 from CDA, and CDA must separately receive a defined documentation package no later than three months after the close of that same first credit year — before three months elapse, not after (2026 QAP §E.8). CDA states plainly that its own review of that package "may take as long as ninety (90) days to complete," and that Form(s) 8609 will not issue until a Final Determination of Loan Proceeds is fully executed for any project with other CDA financing.

CDA's own language is explicit that the placed-in-service evaluation is a re-underwriting, not a formality: "Only the amount of LIHTC needed for financial feasibility and viability of the project as a qualified low income housing project throughout the fifteen (15) year compliance period will be allowed. Any additional LIHTC previously allocated to the project will be returned to CDA" (2026 QAP §E.8). A cost certification showing the project needs less credit than originally allocated does not just fail to help — it triggers recapture of the excess allocation.

Two cost certifications, two purposes, two clocks — and DHCD's own audit standard is a real bar

Maryland effectively runs two cost-certification processes that are easy to conflate. The QAP's own placed-in-service cost certification (2026 QAP §E.8) documents total sources, uses, and eligible basis for the 8609/allocation determination, due within the QAP's three-month-after-first-credit-year window. Separately, DHCD's Cost Certification Guide (March 27, 2023) — referenced directly in the Multifamily Rental Financing Program Guide §6.1.6 as available in the Multifamily Library — governs the CPA audit that determines the project's final DHCD loan amount and mortgagor equity, and runs on its own clock: within 180 days of Substantial Completion, which the Guide defines as 60 days past a separately-defined "cut-off date" of 120 days from Substantial Completion. This research found no language in either document stating whether one filing can satisfy both purposes or whether CDA in practice expects two distinct submissions — confirm directly with the assigned CDA underwriter rather than assuming either way.

DHCD's Cost Certification Guide sets a real bar for the CPA doing the work. The auditor "must be independent within the meaning of the code of professional ethics of the American Institute of Certified Public Accountants (AICPA)," and — critically — "[w]here Government Auditing Standards apply, the CPA must meet the auditor qualifications of Auditing Standards, including the qualifications of Independence and continuing professional education." The audit itself must be "performed in accordance with generally accepted auditing standards and audit requirements" and "auditing standards established by the General Accounting Office in its publication, Standards for Audit of Governmental Organizations, Programs, Activities and Functions" where those standards pertain. The opinion "should be an unqualified opinion addressed to DHCD"; a qualified or adverse opinion, or a disclaimer, is not acceptable "unless the reasons therefore are fully explained ... to the satisfaction of DHCD."

Pre-construction conference, DHCD's draw process, and Early Start

For deals with DHCD financing, construction normally starts after initial closing, but the sponsor and general contractor must first attend a pre-construction conference with DHCD's Multifamily Housing construction staff and the assigned Finance Manager "to fully review all construction period procedures, such as inspections by DHCD staff, draw requisition and disbursement procedures, and change order procedures" (2026 MRFP Guide §6.1.7). All other project lenders are expected to attend as well, "to ensure a smooth inspection and draw process" — DHCD staff inspections during construction are tied to DHCD's own role as a lender, not to a separate, universal LIHTC construction-monitoring mandate.

A sponsor may request an "Early Start" — beginning work before DHCD's own financing closes — but only after the commitment letter issues and only with DHCD's written approval, and only once the pre-construction conference has been held. DHCD is explicit that it "will not fund any costs incurred for work performed under an Early Start unless the loan is eventually closed" (2026 MRFP Guide §6.1.7) — an Early Start is not a guarantee those costs become DHCD-eligible.

Architectural review at each stage follows "those defined in the American Institute of Architect's (AIA) publication 'The Architect's Handbook of Professional Practice'" (2026 MRFP Guide §6.1.4). Before that, the combined Viability/Commitment package has its own clock: sponsors get up to 150 days after the kick-off meeting to submit it, DHCD has 70 days to issue its V/C report, and a sponsor with open issues gets 30 days to resolve them before the application is administratively withdrawn (2026 MRFP Guide §6.1.5).

Design, accessibility, and construction-quality standards are Threshold items, not scoring extras

The Development Quality Thresholds in MRFP Guide §3.13.1 are stated as "minimum mandatory standards" that a project "must" meet "to pass threshold" — failing them is not a lost scoring point, it is a failed application. On accessibility specifically: "All projects, regardless of the source of funding, must comply with UFAS and any other applicable laws or requirements, including without limitation Section 504 of the Rehabilitation Act of 1973 (Section 504), the regulations implementing Section 504 at 24 CFR Part 8, the Americans with Disabilities Act (ADA), and the 2010 ADA Standards (as modified by HUD)." The applicant must certify it will engage "a building accessibility consultant to work with the Development Team to ensure accessibility compliance."

Maryland adds a specific physical standard beyond the base UFAS requirement: "a minimum of 50% of UFAS units with one (1) full bathroom must have at least one roll-in shower located in a wheelchair-accessible bathroom" (2026 MRFP Guide §3.5.1), and UFAS units in family developments must be held open for persons-with-disabilities referrals for at least 60 calendar days at both initial lease-up and turnover (§3.5.2). A separate certified energy professional — a RESNET HERS rater for new construction, or a HERS rater or BPI Certified Multifamily Building Analyst Professional for rehabilitation — must "review and verify the design, provide construction quality assurance, and perform necessary in-progress performance testing and evaluation" if the project is funded (§3.13.1).

Maryland's Prevailing Wage Law: a confirmed silence in the QAP, and an unresolved reach

A full-text search of both the 2026 QAP and the 2026 Multifamily Rental Financing Program Guide found no mention whatsoever of Maryland's Prevailing Wage Law — not "prevailing wage," not "Davis-Bacon," not "labor standards." That silence is itself worth stating plainly rather than assuming it means the law never applies: DHCD's QAP and Guide simply do not address the question one way or the other for the mainstream 9%/4% LIHTC program.

The underlying state law is real and administered by a different agency than the one running the tax credit program. Maryland's Prevailing Wage Law, codified at State Finance and Procurement Article §§17-201 through 17-226, is administered and enforced by the Maryland Department of Labor's Division of Labor and Industry, Prevailing Wage Unit — not by DHCD or CDA. It applies to a "public work" contract of $250,000 or more, where "public work" means construction, reconstruction, demolition, alteration, custom fabrication, repair, or maintenance work "done under contract and paid for in whole or in part out of the funds of a public body," and coverage attaches where a State unit or instrumentality is the contracting body with any State funding present, or where a political subdivision contracts and State funds cover 25% or more of the cost (§17-202).

Whether that threshold is actually met on a given Maryland LIHTC deal is a fact-specific question this research could not resolve from the QAP or the Guide, because neither document addresses it. CDA's own RHFP, RHW, and MBP loans are unambiguously funds of a public body (CDA/DHCD, a State instrumentality); the tax credit itself is not a direct expenditure of State funds. Whether a construction contract funded partly by a CDA gap loan and partly by LIHTC equity is "paid for in whole or in part out of the funds of a public body" under §17-201's definition, and at what dollar threshold, is not addressed anywhere in the LIHTC program's own governing documents.

The clearest evidence that DHCD treats this deliberately, rather than by oversight, comes from a separate DHCD program. The Housing Innovation Pilot Program (established by 2024 Md. Laws, S.B. 203) makes an explicit "commitment to prevailing wage requirements" a threshold eligibility condition for its own projects — and in the same breath directs DHCD to "prioritize funding for projects that do not use low-income housing tax credit equity or tax-exempt volume cap." Read together, that is consistent with DHCD keeping its mainstream competitive LIHTC program at arm's length from a state-mandated prevailing-wage commitment, while building prevailing wage into a separate, non-LIHTC, publicly-owned housing vehicle instead. That is an inference from how the two programs are structured, not a confirmed statement from DHCD that Title 17 never reaches an LIHTC deal — confirm directly with DHCD's Office of Housing Finance and the Department of Labor's Prevailing Wage Unit for any specific project rather than assuming either answer.