"We're moving into vertical construction — what does NDHFA actually require while we build, and what has to happen before it issues our 8609s?"
The federal placed-in-service clock, and how NDHFA's own Carryover and Final Allocation deadlines sit on top of it
North Dakota's 2027 Allocation Plan defines the milestones that carry a project from award to Form 8609 without restating the underlying federal placed-in-service deadline anywhere in its own text: "Carryover Allocation: Agency's allocation of LIHTCs to the Applicant. Agency shall file an IRS Form 8610. Final Allocation: Agency's final verification of Applicant's compliance to the Plan's requirements, completion of the development of the Project, and all building(s) have been Placed-in-Service. Agency shall prepare & execute for Owner, IRS Form(s) 8609" (Section 9). The federal rule that actually forces the calendar — IRC §42(h)(1)(E), requiring a building to be placed in service no later than the close of the second calendar year following the year NDHFA makes its allocation — sits underneath this structure as a matter of law; it is not something the Plan or the Compliance Manual independently reiterates, so a developer relying only on NDHFA's own documents would not learn the federal deadline from them.
What NDHFA's own Plan does spell out is the Carryover mechanism a project uses when it cannot get all 8609s issued within the allocation year itself. "Projects not able to have all 8609(s) issued prior to December 15th of the tax credit year shall submit a Carryover Package" that includes an updated Exhibit A, a signed Owner Certification of Costs (the "LIHTC 10% Test" tab), and — depending on which of two paths the owner elects — either an Independent Accountant's Report verifying the CPA's Examination and/or Agreed Upon Procedures (AUP) of Actual Basis Incurred (if using Incurred Basis at Carryover), or, if using Anticipated Basis, twelve months from the Allocation Date to provide that same verification of at least 10% of Reasonably Expected Basis incurred, or the results of the Final Cost Certification's CPA Examination (Section 9.D). The Carryover Package is due "no later than the close of the credit allocation year's December 15th business day," with a late-submission window carrying a $500-plus-$200-per-calendar-day fee capped at $3,500 — miss that window entirely and "the Conditional Commitment or Reservation will be allowed to expire, and all credits shall return to the Agency."
| Milestone | Deadline | Late fee | Cap |
|---|---|---|---|
| Reservation Package | Before the date in the Conditional Commitment; 10-day late window available | $200/calendar day during the late window | $2,000 |
| Carryover Package | Close of business Dec. 15 of the credit allocation year | $500 plus $200/calendar day | $3,500; Conditional Commitment/Reservation expires and credits return to the Agency if missed entirely |
| Final Allocation Package (with Carryover) | 180 calendar days after the last building's placed-in-service date | $200/calendar day | None stated in the Plan |
| Final Allocation Package (no Carryover, same-year PIS) | November 15 of the allocation year | Missed deadline forces a Carryover Allocation instead | n/a |
The Final Allocation Package late fee is the only one of the three stated without a maximum — the Plan says only "a late fee of $200 per calendar day" and that "[t]he Agency shall receive all assessed late fees prior to the issuance of any 8609 for a Project."
For a project that places its last building in service in the same calendar year it was awarded and does not intend to complete a Carryover Allocation, the Plan substitutes a fixed November 15 deadline for the Final Allocation Package; miss that or submit an insufficient package, and "the Applicant shall be required to complete a Carryover Allocation" instead — the same outcome as if the Agency simply cannot issue every 8609 before December 15 of that year (Section 9.E).
Construction-period oversight: progress reports and insurance, not an agency-assigned inspector
This research did not find, anywhere in the 2027 Allocation Plan or the LIHTC Compliance Manual, a dedicated NDHFA-assigned construction inspector, a scheduled quarterly site-visit program, or any comparable agency-run physical inspection requirement during construction itself — the kind of program several other states in this library run (a contracted inspector performing scheduled increment inspections billed to the agency, for example). What the Plan requires instead is self-reported progress: "Owners must regularly submit progress reports (at least quarterly for a Project which has not yet received a Carryover Allocation, monthly for a Project which has completed its equity closing) describing the Applicant's actual progress in comparison to the project development timeline and schedule," and owners "must disclose project development costs which have increased above the contingency provided in the application during the development and construction/rehabilitation of the project along with an explanation of how the gap has been or will be filled" (Section 9.B). Unlike some other states' QAPs, the Plan does not set a numeric threshold (for example, a 10% cost-increase trigger requiring Agency pre-approval before equity closing) — the obligation as written is disclosure and explanation, not a stated approval gate.
The one insurance-related construction-period requirement the Plan does impose is naming NDHFA as an additional insured on the builder's risk policy before equity closing: "Prior to equity closing, Applicant must proof of the Agency's listing as an additional insured on any builder's risk policy for the construction of the project, as well as on the property's hazard and liability insurance policy," using a specified insurance-clause format naming "North Dakota Housing Finance Agency, ISAOA" (Section 9.C). At Final Allocation, that requirement becomes a Final Allocation Package line item: "Proof of sufficient property and liability insurance coverage listing Agency as a Certificate Holder (Acord 25 and Acord 27 or 28)" (Section 9.E).
Unspent construction contingency does not simply belong to the owner at completion. "Unspent contingency at the end of the project's construction must be used either to pay down a liability of the Owner or help to fund the project's Replacement or Operating Reserve. Upon request by the Agency, the Applicant may be required to provide an accounting of a contingency and/or verification of the distribution of any unspent contingency prior to the Agency's execution of the Project's IRS form 8609(s)" (Section 2.Q) — meaning a verification request on contingency disposition can sit directly on the critical path to 8609 issuance.
Cost certification: a CPA Examination or Agreed-Upon Procedures, not a named audit standard
North Dakota's cost-certification requirement runs through two accountant deliverables rather than one back-end audit. At Carryover, if the owner elects Anticipated Basis, the Plan requires, within twelve months of the Allocation Date, "an Independent Accountant's Report verifying either: a. The results of the CPA's Examination and/or Agreed Upon Procedures (AUP) of the Owner's Actual Basis Incurred verifying at least 10% of the Project's Reasonably Expected Basis has been Incurred by the Owner. [or] b. The results of the CPA's Examination of Actual Costs and Eligible Basis of the Final Cost Certification" (Section 9.D). At Final Allocation, every project — regardless of which Carryover path it took — must submit "Owner's Final Cost Certification in PDF format" together with "An Independent Accountant's Report verifying the results of the CPA's Examination of Actual Costs and Eligible Basis of the Final Cost Certification" (Section 9.E); 4% bond-financed deals add a sixth requirement, "An Independent Accountant's Report verifying the results of the CPA's determination of the Aggregate Basis financed by Tax-Exempt Bonds."
What the Plan does not do, unlike some other states in this library, is name a specific auditing standard for that CPA engagement — there is no reference to GAAS, to Government Auditing Standards (the "Yellow Book"), or to any professional-standards citation at all. The text uses "Examination" and "Agreed Upon Procedures" as alternative, owner-selectable engagement types without further definition. Confirm directly with NDHFA's Community Housing and Grants Management Division, and with the engaged CPA firm, which engagement type and which professional standard the Agency will actually accept for a given project before assuming either option is interchangeable in practice.
8609 issuance, reissuance, and the change-control rules that reach into construction
Once NDHFA has a fully complete Final Allocation Package, "the Agency shall provide the Applicant a copy of each IRS Form 8609. Applicant is responsible for the review and approval of all 8609(s). All information in all Parts of the 8609(s) shall be fully completed and the form(s) returned to the Agency. Agency shall execute and provide all originally executed 8609(s) to the Applicant" (Section 9.E) — a review-and-return step that sits between the Agency's draft and the final executed form, with no stated turnaround deadline of its own for returning the completed form. If a fully executed 8609 later needs to be reissued, "the Agency may assess a processing fee of $50 per reissued 8609."
Ownership is locked down well before Final Allocation: "A sale or transfer of a controlling ownership interest of the Owner prior to issuance of the Final Allocation requires an amended application and payment of a non-refundable transfer fee of $2,500, or 1% of the annual credit amount currently allocated to the Owner for the proposed project, whichever is greater. Payment of this fee does not oblige the Agency to approve the transfer" (Section 4.F). Separately, a development team that has not yet placed a North Dakota LIHTC project in service is locked out of a second North Dakota application "until the initial development is, at a minimum, under construction and proceeding on schedule" (Section 4.E) — a real gate on pipeline growth for a team's first North Dakota deal, not merely a scoring consideration.
If a project ultimately cannot be completed within program requirements after a Reservation is issued, "the Applicant shall voluntarily return all credits" (Section 9.F). And if an already-awarded project later receives an additional allocation of credits for the same project in a subsequent year, NDHFA's stated preference is for the owner to return everything previously committed, reserved, or allocated and consolidate into a new award from the later year that is "not less than the sum of the credits returned plus the additionally awarded credits" — with all previously paid fees non-refundable and forfeited (Section 9.G).
Where this goes wrong
- Assuming NDHFA restates the federal placed-in-service deadline somewhere in its own materials. It doesn't — the second-calendar-year rule under IRC §42(h)(1)(E) applies as federal law regardless of what the Allocation Plan or Compliance Manual say, and neither document mentions it.
- Assuming NDHFA runs a quarterly agency-assigned construction inspector the way some other states do. This research found no such program in either the 2027 Allocation Plan or the Compliance Manual — NDHFA's construction-period oversight runs through owner-submitted progress reports (quarterly pre-Carryover, monthly post-equity-closing) and the eventual cost certification, not scheduled site visits.
- Treating the Final Allocation Package's $200/day late fee as capped the way the Reservation ($2,000 max) and Carryover ($3,500 max) late fees are. The Plan states no maximum for the Final Allocation late fee.
- Missing the November 15 same-year deadline for a project that places its last building in service in its award year and intends to skip Carryover entirely — a separate, earlier deadline from the general 180-day-after-PIS rule.
- Assuming the CPA cost-certification engagement follows a specific named standard like GAAS or Government Auditing Standards. The Plan's text specifies only "Examination" or "Agreed Upon Procedures" without naming a professional standard — confirm the expected engagement type directly with NDHFA and the engaged CPA firm.
- Assuming a construction cost increase above the application's contingency is capped or requires Agency pre-approval at a stated percentage threshold. The Plan requires disclosure and an explanation of how the gap will be filled, but states no specific approval trigger the way some other states' 10%-threshold rules do.
- Forgetting that unspent construction contingency isn't simply the owner's to keep — it must pay down an owner liability or fund the Replacement/Operating Reserve, and the Agency can require an accounting of it before executing the project's 8609(s).
- Assuming a change in controlling ownership interest before Final Allocation is a routine administrative update. It requires an amended application and a non-refundable fee of the greater of $2,500 or 1% of the annual credit amount — and paying the fee does not guarantee the Agency approves the transfer.
- Assuming a development team's second North Dakota LIHTC application will be evaluated purely on its own merits regardless of the team's first deal's status. A team that hasn't yet placed a prior North Dakota LIHTC project in service is ineligible to submit an additional application until that first project is, at minimum, under construction and proceeding on schedule.
- Assuming North Dakota's construction season is quantified or accommodated somewhere in NDHFA's own materials. This research found only a passing reference to "construction season" in the Agency's own executive-director newsletter, with no LIHTC-specific timeline, deadline extension, or seasonal guidance in the Allocation Plan or Compliance Manual.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies