"Our first mortgage closed through HDC and our subsidy came from HPD — so whose construction draw rules, whose cost certification, and whose 8609 do we actually answer to?"
Four agencies, two very different construction relationships
DHCR processes competitive 9% applications under the QAP at 9 NYCRR Part 2040 and runs the LIHTC monitoring office that construction-period compliance ultimately reports to. HFA processes 4% credits tied to tax-exempt private-activity bonds "under its own procedures" — a separate underwriting and closing track from DHCR's 9% process, not a subset of it.
For a New York City-sited deal, HCR sub-allocates administration inside the city to HPD and HDC, and the two run genuinely different functions: HDC issues the tax-exempt bonds and originates the construction/permanent first mortgage (its New Construction Program pairs a bond-funded first mortgage with a second-mortgage HPD/HDC subsidy layer and the 4% credit), while HPD holds the subsidy loan and regulatory agreement and runs its own Tax Credit and HOME Compliance unit, separate from DHCR's or HFA's own monitoring.
| Agency | Role | Construction-period touchpoint |
|---|---|---|
| DHCR | Statewide 9% competitive allocating agency | Reservation Letter/Binding Agreement conditions, cost-certification approval, 8609 issuance, ongoing LIHTC monitoring office |
| HFA | Statewide 4% bond-credit processor | Own underwriting/closing procedures, separate from DHCR's 9% track (QAP §2040.4(a)) |
| HPD (NYC only) | Subsidy lender / regulatory-agreement holder | Own Tax Credit and HOME Compliance unit; Asset Management oversight of financial and physical condition |
| HDC (NYC only) | Tax-exempt bond issuer / construction and permanent lender | Construction-loan draw administration; its own annual Owner Certification of Compliance for LIHTC projects |
The 8609/DTF-625 package is the real construction-period finish line
DHCR's own framing matters here: project monitoring is "initiated upon an owner's receipt of a final credit allocation" (Form 8609 for LIHTC, DTF-625 for the parallel state credit) — meaning substantial completion isn't the finish line the deal is actually managed toward. The document checklist is.
| Requirement | What DHCR actually wants |
|---|---|
| Cost certification | CPA-prepared, HCR-mandated Excel template submitted unlocked in draft; only after DHCR approves the draft does the CPA publish a locked, password-protected final PDF |
| Investor/syndicator letter | Written concurrence with the cost certification's final credit amount, gross equity, syndication fees, and net equity |
| Permanent financing | Evidence all permanent sources have closed, or will close coterminous with 8609 issuance |
| Placed-in-service evidence | Certificate of Occupancy, or an owner letter if actual first-occupancy is used instead; an occupied acquisition/rehab building needs separate evidence for two distinct PIS dates |
| Green building/energy certification | Certifying-body confirmation the project met the program named in the Reservation Letter, plus an architect certification listing installed features (pre-Fall 2022 RFP rounds only) |
| Lead-based paint clearance | Pre-1978 rehab buildings need third-party work-area clearance testing plus a separate domestic water-supply lead test |
| AIA G702/G703 | Final Application for Payment |
| Debarment & accessibility | Debarment compliance certification and an executed Affidavit of Project Compliance with Accessibility Requirements |
For an occupied building acquired for rehabilitation, DHCR recognizes two separate placed-in-service dates: the acquisition date, fixed at closing, for acquisition-basis credit; and, for the rehab-basis credit, any date the owner selects within a 24-month window of aggregated eligible rehabilitation expenditures. Which date gets picked directly affects how much of the rehab spend actually counts.
Prevailing wage is not automatic just because the deal is LIHTC
N.Y. Labor Law §224-a makes a private construction project "covered" — and subject to state prevailing wage — when project costs exceed $5 million and public funds cover at least 30% of total construction cost. But §224-a(4)(c) excludes a wholly privately owned multiple residence where at least 25% of the units are affordable and subject to a regulatory agreement restricting affordability for at least 15 years. That description fits most standard LP/LLC-owned LIHTC deals, which are typically far more than 25% affordable and carry a regulatory agreement running decades, not 15 years — meaning a garden-variety private LIHTC deal is often not independently subject to §224-a purely by virtue of being LIHTC.
That doesn't take certified payroll off the table. Federal Davis-Bacon obligations attach independently whenever HOME, CDBG, or public housing capital funds are layered into the deal — common in preservation and NYC-subsidized transactions — and HPD/HDC term sheets can impose their own city labor conditions as closing requirements regardless of §224-a's outcome. Any ownership structure that isn't cleanly "wholly privately owned" (some HDFC-titled deals, for example) should get counsel review of whether the §224-a(4)(c) exclusion still applies at all.
Where this goes wrong
- Assuming DHCR's 9% construction and cost-certification process automatically governs a 4% bond deal — HFA processes 4% credits under its own separate procedures, and a NYC deal adds HPD/HDC compliance layers DHCR's checklist doesn't touch.
- Submitting a locked, CPA-published final cost certification before DHCR has approved the unlocked draft Excel version — the checklist requires the draft-then-final sequence, and skipping it gets the package returned.
- Using a generic or prior-round cost-certification template instead of the current underwriter-assigned, HCR-mandated customized format — DHCR states only that format will be accepted.
- Conflating the fixed acquisition-portion placed-in-service date with the flexible, up-to-24-month rehab-portion window on an occupied acquisition/rehab building — treating them as one date can misstate eligible basis.
- Assuming LIHTC status alone triggers Labor Law §224-a prevailing wage — most privately owned deals with ≥25% affordable units and a long-term regulatory agreement fall into the §224-a(4)(c) exclusion, while a layered federal HOME or public-housing-capital source can independently trigger Davis-Bacon regardless of §224-a's outcome.
- Treating HPD's regulatory-agreement/subsidy compliance and HDC's bond-financed construction-loan compliance as one unified NYC process — they're separate agencies, and HDC runs its own annual Owner Certification of Compliance for LIHTC projects on top of HPD's.
- Requesting 8609 issuance without lining up evidence that all permanent financing sources have closed, or will close coterminously — DHCR requires that regardless of whether construction itself is complete.
- Skipping the pre-1978 lead-based-paint work-area clearance testing or the separate domestic water-supply lead test on a rehab/acquisition deal — these are two distinct checklist requirements, not one combined test.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies