Construction through placed-in-service — New Mexico

A calendar that runs through three tax years, not one construction schedule

Housing New Mexico/MFA anticipates delivering Reservation Letters in May of the Application year, and everything that follows is governed by the 2026 9% Post-Award Processes and Requirements Handbook — an appendix to the QAP that fixes each subsequent submission to a specific date rather than to a milestone the developer controls. The Handbook is explicit that MFA "has no obligation to provide any further notice to Applicants of these requirements and failure to submit any one or more of the items may cause the Reservation to be terminated or the Carryover Allocation to be cancelled."

Two features distinguish this calendar from a simple construction-loan draw schedule. First, several deadlines are keyed to the initial Allocation (Reservation) year, others to the Carryover year, and others to the Project's first taxable year of the Credit Period — three different clocks that can drift out of sync if a Project's carryover timing or fiscal year doesn't match the Handbook's assumed sequence. Second, the failure mode for missing most of these dates isn't a fee — it's loss of the tax credit allocation itself. On the Placed In Service Application specifically, the Handbook states plainly: "Failure to meet this requirement will result in the loss of tax credits."

The 10% test is a CPA's opinion on cost, not a self-certified worksheet

Federal law (Code Section 42(h)(1)(E)) sets the substantive 10% test; New Mexico's Handbook sets how MFA wants it proven. By August 31 of the year following Carryover, "the Applicant must submit evidence that the basis in the Project exceeds 10% of the reasonable expected total basis in the Project," and that evidence must include an independent auditor's report expressing an opinion on the attached cost certification, using MFA's designated forms. A Project Owner may substitute an alternative format only if the CPA separately signs an opinion certifying that the alternative meets Section 42's requirements — MFA does not accept a bare CPA-signed cost schedule with no opinion attached.

The 10% test submission travels with a companion package that documents construction has actually begun, not just that basis has been incurred: building permits and site photographs at minimum, ideally the general contractor's application and certificate for payment; a fully executed partnership agreement (and, for a Qualified Nonprofit Organization Eligible Project claiming the federal nonprofit set-aside, the full agreement with all exhibits); evidence the Project Owner has taken ownership of the land and any depreciable real property involved (for a tribal Project, fully executed master and sub-lease agreements with Bureau of Indian Affairs filing evidence); and the Architectural Services Representative's written approval to begin construction. All of it lands on the same August 31 date as the CPA's 10% test opinion.

MFA inspects at 33%, 66%, and 100% construction — and Form 8609 waits on the third one

New Mexico bundles construction inspection into the non-refundable $12,000 Base Portion Design Review fee paid with the Initial Application, not a separate line item negotiated later. That fee covers, as one package: a preliminary Design Standards compliance review at Application, a construction drawing review, a specification review, an environmental study and HERS modeling projections review, a contract-document review (construction contract, permit, schedule) — and three scheduled site inspections, at 33%, 66%, and 100% of construction completion. Additional site visits or document reviews beyond that bundle are billed separately at $1,500 each, due within 20 calendar days of MFA's invoice.

The 100% inspection is not a formality. The QAP states that MFA "will not issue the IRS Form 8609 before Housing New Mexico's Architectural Services Representative indicates that the Project has been built as proposed and that all outstanding issues... have been resolved," and the Handbook restates the same gate from the other direction: "Housing New Mexico must approve the final construction inspection in writing prior to issuance of IRS Form 8609." A Project can clear every financial and compliance checkpoint below and still not receive its 8609 if the final architectural sign-off is outstanding.

Three conditions gate the start of construction itself, and they're evaluated together, not independently: the Applicant must have MFA's written approval of complete construction documents; the Applicant must request and post MFA-provided English/Spanish fraud-hotline signs/banners at the work site, kept in place for the entire duration of construction; and the Applicant must close on all Project financing except the permanent mortgage. A financing commitment letter submitted with the November 15 Carryover Application is not the same thing as a closed loan — the Handbook requires the latter before construction can begin.

Differences between the Application's plans and the final construction documents count as Material Design Changes and require MFA's written approval plus a detailed change narrative and the QAP's $500 Change Fee (Section III.C.10) — the same fee schedule applies whether the change is a design substitution or an ownership change made before Form 8609 is issued.

A mandatory meeting at the 50% mark, before lease-up begins

At or around the 50% construction completion mark, the Applicant must organize an in-person meeting with both MFA's Asset Management and Housing Development departments — with the developer, owner, nonprofit representative (if applicable), management company staff, and any service providers all required to attend. MFA requires this meeting before lease-up, and requires a specific document package delivered ahead of it: a Related Party Affidavit and a Compliance Affidavit for the property management agent, the management agent's resume, a Schedule I for the agent, any Memorandums of Understanding or service contracts memorializing the service commitments made in the Initial Application, and updated service-provider resumes. It functions as a hard checkpoint on the management and services side of the deal, timed to construction progress rather than to a calendar date.

Two cost certifications, a 20%-testing standard, and a basis figure MFA can override

Before issuing Form 8609, MFA requires two separate Cost Certifications: one prepared by an independent CPA and executed by both the CPA and the Project Owner, and a second prepared and executed by the general contractor. The two can diverge in what they capture — under a Maximum Guaranteed Price or Stipulated Sum contract, the general contractor's real costs may not match the owner-incurred costs on the CPA document, and the Handbook resolves that by keeping the owner-incurred figures in the CPA certification regardless. If the Project used a Stipulated Sum Contract or Maximum Guaranteed Price, "a Cost Certification does not need to be prepared by the general contractor" at all.

None of this caps MFA's own discretion. Section III.C of the Handbook reserves the right to "challenge the costs provided in the Cost Certification, impose the limitations set forth in this QAP and in its sole discretion, determine the maximum Qualified Basis against which credit is allocated" — an independent auditor's opinion narrows MFA's review, it doesn't foreclose it. And MFA's audit right doesn't end at Form 8609: from Reservation through the entire 15-year Compliance Period and the Extended Use Period beyond it, MFA may audit any Project's costs, invoices, third-party contracts, construction pay applications, and general-contractor selection records, chosen at random or at MFA's discretion — which is the reason an escrowed general-contractor cost certification still has to be producible on demand.

Contingency, reserves, and the one route to more credits mid-build

MFA's Universal Multifamily Underwriting Supplement sets construction contingency floors that apply at underwriting and carry through the build: new construction is underwritten to a minimum 5% construction contingency on hard construction costs, while Adaptive Reuse and rehabilitation projects are underwritten to a minimum 10% — calculated on the Schedule D "Total Construction Costs" figure, excluding contractor overhead and profit, general requirements, and gross receipts tax. On the operating side, reserves must be funded at a minimum of six months of operating expenses (including replacement reserve payments and social-service delivery costs) plus six months of must-pay debt service, with replacement reserves funded in the operating budget at no less than $250 per unit per year for senior new-construction Projects and $300 per unit per year for every other new-construction, rehabilitation, or Adaptive Reuse Project. MFA can require larger reserves at its discretion for a Project showing a declining debt coverage ratio in its 15-year projections or carrying rental assistance contracts.

If hard construction costs still run over both the contingency and the original award, the QAP provides exactly one path back to MFA for more credit — Supplemental Tax Credits for Cost Increases — and it's narrow by design. Only one supplemental allocation is permitted per Project, generally capped at 10% of the original 9% award (an amount above that requires a defined Casualty event and Housing New Mexico Board approval), and the Applicant must demonstrate that "the development contingency has been exhausted," that no other MFA gap financing was available, that "the Developer fee has been deferred to the extent which would allow for repayment through Project cash flow within 15 years," and that "the Project was value engineered, where possible, to reduce construction costs" — all submitted through a streamlined application competing in a later round, not the original one. Critically, the QAP states the supplemental credits "will not extend the Placed In Service deadline for the original award" — a cost overrun buys more credit, never more time.

Getting to Form 8609: LURA, subordination, and a 120-day final package

Three things have to converge before MFA will issue Form 8609, and they're each independently gating. First, the executed and recorded LURA must be in MFA's hands before December 31 of the Placed In Service year — MFA prepares the LURA itself from an Applicant-submitted Request form due October 15 of the second year after initial Allocation. Second, subordination agreements giving the LURA's tax-credit restrictions lien priority must be received from every lender before MFA will issue Form 8609 — a requirement stated as a precondition, not a closing-table courtesy. Third, the Project Owner must submit a complete Final Allocation Application no later than 120 calendar days after the close of the Project's first taxable year of the Credit Period, which is where the CPA-prepared Cost Certification is formally delivered (the general contractor's version, if applicable, may still be held in escrow but must be producible for audit).

The Final Allocation checklist runs well beyond cost certification: a completed compliance-fee payment ($50 per set-aside Unit per year, or the full 15-year Compliance Period paid in a lump sum at Final Allocation); a Project Owner's independent tax attorney opinion on firm letterhead; an "As Built" architect certification that the Project was built to the Design Standards and every Initial Application commitment; a fully executed final contractor's application and certificate for payment (AIA G702 or equivalent); an updated 15-year cash flow pro forma; and — a detail easy to miss on a multi-year construction timeline — compliance training certificates for both the owner and management company, valid only if completed no earlier than two years before the Final Allocation Application is submitted.

One narrow escape hatch exists if a Project can't use its full allocation: a Property Owner may voluntarily return a valid tax credit allocation between October 1 and December 15 and receive a same-amount reallocation from the current year's ceiling instead, but only if the returning Project's Principals sit out the following year's round, all financing needed to place the Project in service is already secured, and the Project will still place in service by the applicable December 31 deadline — recycling buys a different year's credit, not more calendar time.

What EZFeasi doesn't do yet for this phase in New Mexico

Everything above is deadline logic and document requirements pulled directly from Housing New Mexico/MFA's own Post-Award Handbook, QAP fee schedule, and Underwriting Supplement — not a construction-management system. Whether a general contractor actually hits the 33%/66%/100% inspection thresholds on schedule, whether a lender will sign a subordination agreement on the timeline MFA expects, or whether a cost overrun is real versus a budgeting error is deal-specific judgment no dataset should synthesize.

EZFeasi has no New Mexico post-award deadline tracker, no New Mexico-specific cost certification or Form 8609 checklist tooling, and no construction-draw or reserve-funding calculator wired to these thresholds today. This phase, for a New Mexico project, is currently a place to record the Handbook's dates and requirements against a specific deal — not to automate compliance with any of them.