"We're through Carryover and closing the construction loan -- what does MaineHousing actually require while we build, and what has to happen before it will issue our 8609s?"
From Carryover's 10% test to the Construction Loan Closing
A Carryover Allocation request is due no later than the first day of December of the year the carryover is made, and the executed carryover, together with the allocation fee, must be returned to MaineHousing no later than December 31 of that same year (2027-2028 QAP §8.B.1-2). The carryover itself is conditioned on "satisfactory evidence that more than 10% of the Project's reasonably expected basis is incurred within 12 months of the carryover allocation, including an audit report prepared by an independent, certified public accountant" (§8.B.3.a) -- a narrower, federally-required test distinct from the full project-cost audit MaineHousing requires later, at Final Allocation. Before the Construction Loan Closing (CLC) itself, MaineHousing's Construction Services Division reviews a pre-CLC document package: final drawings and project manual, the signed construction contract, the local building permit, the State Fire Marshal's Construction and Barrier-Free Permits (or municipal equivalent), any Department of Health Engineering water/sewer approvals, an ALTA survey, and -- depending on construction value -- performance and payment bonds (2026 Quality Standards and Procedures Manual, Part 2.A.7).
| Construction value / contract size | Requirement |
|---|---|
| Up to $150,000 of construction value | No performance/payment bonds or letter of credit required |
| $150,000 to $300,000 of construction value | Bonds or an Unconditional Irrevocable Letter of Credit may be required, case by case |
| Over $300,000 of construction value | 100% performance and payment bonds (or, at MaineHousing's discretion, a Letter of Credit) required |
| Contracts under $100,000 | No construction contract retainage required |
| Contracts $100,000-$200,000 | MaineHousing may waive retainage; if not waived, 10% on all progress payments until complete |
| New construction contracts over $200,000 | 10% retainage on progress payments until 50% complete (then reducible by agreement), or a flat 5% alternative throughout; renovation contracts over $200,000 hold 10% until fully complete |
A Letter of Credit used in place of bonds must equal 20% of the construction contract, stepping down to 5% during the warranty period.
Quality-control inspections run through the project's architect, not a MaineHousing field inspector
The Owner-Architect Agreement required for every MaineHousing project must provide for "regular on-site visitations by all designers and engineers, special inspections if required, bi-monthly (minimum) on-site project meetings, responses to requests for information, tracking of change proposals, creation of field reports, and keeping and distributing meeting minutes" (2026 Quality Standards and Procedures Manual, Part 2.A.2). During construction itself, "MaineHousing requires inspections of the construction by the designer-of-record" -- the architect, not a MaineHousing employee -- "to determine that work is proceeding according to the Standards for Construction... the contract documents, and generally accepted construction practices," while MaineHousing "reserves the option to make similar or additional inspections for the same purposes" (Part 2.C.1.D). Reports from each inspection go to the contractor and to MaineHousing, and the manual states plainly that "MaineHousing will generally rely on the Architect's field reports and/or meeting minutes for the proper documentation and tracking of all required inspections."
| Stage | What must be visible/complete |
|---|---|
| 1. Initial excavations | Footing/foundation excavation, forms and reinforcing in place, wall lines established |
| 2. Foundation preparation | Wall forms and reinforcing in place, properly braced and treated |
| 3. Foundation completed | Footings, walls, piers, rodent barriers, damp-proofing and drainage installed, prior to backfill |
| 4. Concrete slabs | Non-capillary bed, vapor barrier, below-slab insulation, embedded piping and reinforcing, prior to pour |
| 5. Thermal envelope / air-sealing | Insulation, materials, thicknesses, caulking/sealing/taping systems |
| 6. Close-in | Framing exposed, MEP roughed in, air barriers sealed, insulation and fire-stopping complete, before concealment |
| 7. Final inspection | Building complete, cleaned, ready for occupancy; grading/landscaping/walks/utilities complete; all prior non-compliances corrected |
If MaineHousing determines construction isn't proceeding to standard, it can require repair and re-inspection, stop construction in the non-compliant area, or require the design professional to establish a full-time on-site representative (Part 2.C.1.H). Change orders need MaineHousing, the architect, and the owner's sign-off before execution, and "the Construction Analyst must review all individual change order requests in excess of $20,000 with the Construction Services Manager before they will be accepted by MaineHousing" (Part 2.C.1.I).
Winter is a scheduling reality MaineHousing designs around: the Incomplete Work Escrow
The clearest documented acknowledgment of Maine's short building season in MaineHousing's own construction materials is financial rather than procedural. The Quality Standards and Procedures Manual's Incomplete Work Escrow (IWE) provision states: "When completion of site or limited building improvements is prevented by seasonal conditions or other considerations deemed by MaineHousing as being beyond the control of the Contractor, the final inspection will not include the uncompleted construction, provided MaineHousing finds that the development can be occupied without hazards caused by such uncompleted work" (Part 2.C.1.J). In exchange, MaineHousing requires a written description of the deferred work, an escrow equal to "not less than one and one half times MaineHousing's estimated cost to complete the outstanding work scope," and a firm completion date, with a required re-inspection before the escrow is released. This is the mechanism a Maine deal typically uses to close out a winter-completed building (grading, seeding, sodding, paving) without delaying occupancy or the placed-in-service date -- no separate, numeric "buildable months per year" figure or general cold-climate construction-season commentary was found in MaineHousing's own materials, so that broader framing should not be assumed beyond what the IWE provision itself documents.
Cost certification, Final Allocation, and Form 8609
MaineHousing's Form 8609 precondition is a single, compact requirement rather than a named "cost certification" standard: before issuing IRS Form(s) 8609, MaineHousing requires (1) a complete request for allocation of Credit, (2) "an audit report on the schedule of project costs prepared by an independent, third party certified public accountant including all associated costs (such as commissions, due diligence, legal, accounting, reserves, and other similar items)," (3) certification of the project's sources, and (4) the allocation fee and monitoring fee (2027-2028 QAP §8.A). Before any Form 8609 is issued, the Owner must also have executed an Extended Use Agreement with MaineHousing, recorded "in the appropriate registry of deeds prior to all mortgage liens and encumbrances on the Project and before MaineHousing issues any IRS Form 8609 for the Project" (§8.D).
| Fee | Amount | Due |
|---|---|---|
| Pre-application Fee | $2,000 | By the pre-application deadline |
| Application Fee | $2,500 | Postmarked by the application deadline |
| Allocation Fee | 7.5% of Credit | Earlier of Carryover Allocation or Final Allocation |
| Monitoring Fee | $1,100 per Credit Unit | Final Allocation |
MaineHousing may charge an additional monitoring fee to cover increased costs from income averaging or other extraordinary monitoring requirements during the Compliance Period -- so the Monitoring Fee is not guaranteed to remain a single, one-time charge in every deal.
One defined term deserves an explicit flag rather than an assumption either way: the QAP's Appendix A defines "Passive House Certification" as "certification from Passive House Institute US, Inc. (PHIUS) or Passive House Institute (PHI) prior to MaineHousing's issuance of IRS Form 8609" -- language that ties a Passive House standard directly to 8609 issuance. But a full-text review of the QAP's Section 6 scoring categories (A through S) found no Passive-House-specific scoring line, and the 2026 Quality Standards and Procedures Manual does not mention Passive House at all. This research could not confirm which projects this certification requirement actually reaches -- confirm directly with MaineHousing's Development or Construction Services staff before assuming it applies, or doesn't apply, to a specific deal.
Where this goes wrong
- Assuming MaineHousing itself performs day-to-day construction inspections the way some states' agencies do. The Quality Standards and Procedures Manual assigns inspections to the project's own "designer-of-record" (the architect); MaineHousing "reserves the option" to make its own inspections but generally relies on the architect's field reports.
- Assuming MaineHousing has a cost-certification standard modeled on HUD's HOME rule or a GAAS-audited-financial-statement requirement. The QAP's only stated requirement is a CPA-prepared "audit report on the schedule of project costs"; it never uses the phrase "cost certification" and does not specify an auditing framework.
- Treating the Carryover 10%-basis-test audit (due within 12 months of Carryover, QAP §8.B.3.a) and the Final-Allocation cost audit (QAP §8.A.2, due before Form 8609 issuance) as the same document. They are two separate CPA deliverables at two different points in the timeline.
- Assuming a fixed statutory placed-in-service calendar date applies the way some other states' QAPs publish (e.g., a specific "Dec. 31, 20XX" tied to the competitive round). Maine's 2027-2028 QAP does not publish such a table; the operative backstop found in this research is the federal IRC §42(h)(1)(E) two-year rule.
- Assuming incomplete landscaping or site work discovered in late fall will delay final inspection and the placed-in-service date. MaineHousing's own manual explicitly allows deferral through an Incomplete Work Escrow, for an escrow of at least 1.5x the estimated completion cost.
- Assuming "Passive House Certification" (defined in QAP Appendix A and tied textually to Form 8609 issuance) applies to every project. No scoring category among the QAP's Section 6 A-S list, and no reference in the 2026 Quality Standards and Procedures Manual, describes when this certification is actually required.
- Assuming Maine LIHTC construction is definitely free of prevailing-wage exposure just because the QAP and Quality Standards Manual are silent on it. Neither document mentions prevailing wage or Davis-Bacon at all, but Maine's general prevailing-wage statute (26 M.R.S. ch. 15, "Preference to Maine Works and Contractors") separately defines "public works" to include "all... structures upon which construction is funded in whole or in part by state funds" for contracts of $50,000 or more (§1304(8)) -- a definition broad enough that it is not clear from the statute's text alone whether a LIHTC deal carrying MaineHousing gap financing (e.g., a Rental Loan Program loan) would count. This is unresolved by the sources reviewed here and should be confirmed directly with MaineHousing's Construction Services Division or legal counsel on a deal-specific basis, especially whenever MaineHousing's own funds (not just the federal credit) are in the capital stack.
- Using the archived 2025-2026 QAP (dated June 18, 2024) as the current source. MaineHousing has already adopted and posted a superseding 2027-2028 QAP, effective June 3, 2026, covering the 2027 and 2028 State Ceiling rounds -- always confirm against the most recently posted QAP on mainehousing.org.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies