Construction standards, the in-state labor rules, and the road to Form 8609 — Rhode Island

Who actually inspects the job site: draw-tied architect inspections, not a RIHousing field team

The 2026 Underwriting Guidelines and Development Standards put RIHousing's construction-period oversight almost entirely on the project's own supervising architect rather than on a RIHousing-assigned inspector: "The Architect will perform field inspection services of a nature and frequency determined by construction progress and sound professional judgment. Field inspections will encompass all disciplines (e.g. architectural, mechanical, electrical, site, etc.)." RIHousing's own role is a broad but unscheduled right of entry -- "RIHousing and its agents or assigns, at all times during construction, have the right of entry and free access to the development and the right to inspect all work done and materials, equipment and fixtures furnished, installed or stored in and about the development" -- with no published inspection cadence (no fixed monthly or quarterly schedule of the kind some other states' housing finance agencies publish).

Payment mechanics run on standard AIA forms: "AIA Forms G702 and G703 (latest editions) will be utilized for Contractor requisitions," and the construction lender advances 95% of the value of work in place monthly, with retainage reducible from 5% to 2.5% at Substantial Completion and to as low as 1% at occupancy -- available building-by-building for multi-building developments. "The date of substantial completion shall be the date RIHousing endorses the final Development Inspection Report (RIHousing Form HF-30 "Permission to Occupy")." Field and laboratory testing (soil compaction, concrete mix and compression, pile load tests) is paid for by the contractor, with copies of test reports forwarded to RIHousing as they become available.

Two Rhode-Island-specific procurement rules that catch teams used to other states: the 50% in-state subcontractor floor and non-resident contractor withholding

The 2026 Underwriting Guidelines impose a binding in-state procurement floor on every RIHousing-financed development, not just a scoring preference: "In-state Subcontractor Requirements -- A minimum of fifty percent (50%) of the value of the construction contract shall be awarded to Rhode Island construction firms. A Rhode Island construction firm shall be defined as a contractor/subcontractor whose place of business is located in the State of Rhode Island and is registered and/or licensed in the State of Rhode Island." A general contractor building a bid around out-of-state trade partners on price alone can find that bid noncompliant with this floor after the fact.

Separately, any contractor or subcontractor who counts as a "non-resident contractor" under R.I. Gen. Laws Section 44-1-6 triggers a withholding obligation: "Lender shall withhold 3% of the cumulative value of these contracts until such time as the Borrower has complied with the provisions of this Section. All non-resident (out of state) contractors or subcontractors shall be required to furnish a 'No Tax Due' affidavit issued by the R.I. Division of Taxation as evidence of compliance with this law." That 3% sits on top of, not instead of, ordinary construction retainage, and it is triggered by contractor residency, not by the source of financing.

Prevailing wage is conditional in Rhode Island, not a standing LIHTC requirement

Unlike states that write Davis-Bacon or a state prevailing-wage requirement into every LIHTC deal, RIHousing's own plan-review checklist frames it as conditional on the funding source: at the 100% Construction Documents stage, the checklist calls to "Submit -- Current Davis Bacon Wage Determination for Developments using Federal Funds for Construction (if Applicable)." The fuller requirement appears only in the section of the Underwriting Guidelines addressing American Rescue Plan Act (ARPA) and State and Local Fiscal Recovery Funds (SLFRF): "For projects that have received funds generated from state and Local Fiscal Recovery Funds, the following section will be applicable" -- and only then must the owner and contractor certify (or, failing certification, produce a detailed wage/workforce report) that laborers and mechanics "are paid wages of at least the prevailing wage rate as determined by the U.S. Secretary of Labor in accordance with the Davis-Bacon Act (40 U.S.C. Chapter 31, Subchapter IV) as applicable to Rhode Island."

A separate general prevailing-wage statute exists in Rhode Island law -- R.I. Gen. Laws Chapter 37-13 -- which applies its own prevailing-wage schedule (keyed to federal Davis-Bacon determinations) to contracts using "state or municipal funds" above a $1,000 threshold. This research could not confirm, from RIHousing's own published materials, whether RIHousing's construction-loan proceeds alone (absent HOME, NHTF, ARPA/SLFRF, or another identifiably federal or municipal funding source layered into the deal) are themselves treated as "state or municipal funds" for Chapter 37-13 purposes. RIHousing's own underwriting practice, as written, conditions the prevailing-wage certification on ARPA/SLFRF or other identified federal funding rather than on the RIHousing loan itself -- but confirm the Chapter 37-13 question directly with RIHousing and with counsel for any deal layering in municipal or other state funding sources, rather than assuming either a blanket exemption or a blanket obligation.

The placed-in-service deadline: RIHousing's own "December 1" framing, the 10% test, and what "placed in service" means for each credit type

Federal law (IRC Section 42(h)(1)(E)) requires a building receiving a carryover allocation to be placed in service by the close of the second calendar year following the year the allocation is made. RIHousing's own 2026 Compliance Manual states the deadline in its own words, and the wording is worth reading literally rather than assuming it is identical to the federal statute: "Finally, the building must be placed in service by December 1 of the second year after carryover." That is roughly a month ahead of the federal close-of-year deadline as commonly understood -- this research did not find an explanation in RIHousing's materials for why the agency states the deadline as December 1 rather than December 31, so treat RIHousing's own December 1 framing as the operative internal deadline to plan to, and do not rely on the last weeks of December as a safety margin.

The related 10% test appears in slightly different words in the QAP and the Compliance Manual, though both describe the same federal carryover mechanism: the QAP's Eligibility Requirements state that a project must either "be able to be placed-in-service in that year or have incurred more than 10% of their reasonably anticipated project basis within 12 months of the reservation of LIHTCs," while the Compliance Manual frames it as "10% of the Reasonably Expected Basis (REB) must be incurred within one year of the date that allocation documents are issued." Both come out to the same one-year/12-month window; RIHousing has a "10% Test" documentation form for this purpose. Placed-in-service itself is defined by building type: "Placed-in-service generally refers to the issuance of the first certificate of occupancy for each building in the project" for new construction; the date the building is purchased under IRC Section 179 for acquisition credits; and, for rehabilitation credits, the point at which enough has been spent to meet the Tax Code's minimum-rehabilitation-expenditure thresholds and achieve eligible basis. RIHousing separately requires a minimum rehabilitation expenditure of $15,000 per unit for LIHTC rehab deals, on top of whatever federal minimum applies.

Cost certification and Form 8609: CPA-audited actual costs, one 8609 per building, and a 100%-file audit at lease-up

RIHousing's cost-certification standard, as written, is comparatively light: the 2026 Underwriting Guidelines simply require that "Cost certification for the developer and general contractor must be submitted at the completion of the construction period prior to the final advance of funds," and the Compliance Manual describes it as "a report on the actual project costs audited by a Certified Public Accountant for approval by RIHousing before the tax credits are allocated." Neither document specifies an audit standard beyond a CPA audit (for example, no GAAS-and-Government-Auditing-Standards / "Yellow Book" requirement of the kind some other states' agencies impose was found anywhere in the QAP, the Compliance Manual, or the Section 13 cost-certification templates this research reviewed) -- if RIHousing expects a specific audit-opinion standard beyond a general CPA audit, it was not found in any published document and should be confirmed directly with RIHousing's Tax Credit Administrator before assuming a lighter standard applies.

Once the cost certification is approved, Form 8609 issuance runs building-by-building: "Upon receiving a CPA-prepared cost certification for each LIHTC building, RIHousing will complete and execute Part I of an IRS Form 8609 and send it to the owner." If a single building carries both acquisition and rehabilitation credits, "the acquisition and rehabilitation will receive separate Forms 8609." The owner then completes and files Part II with its own tax return and must forward a copy of each fully executed 8609 back to RIHousing for its records. Separately, RIHousing prepares the Declaration of Land Use Restrictive Covenants (LURA); the QAP's own compliance-monitoring text states the LURA "must be recorded before the end of the calendar year in which credits are first claimed," while the Compliance Manual describes it as recorded "by the time it is placed-in-service" -- both point to essentially the same window in a normal deal, but confirm the exact recording deadline with RIHousing rather than assuming the two framings are always interchangeable, since a late-year placed-in-service date could pull them apart.

A distinctly demanding requirement sits right at project completion, easy to underbudget for: "Upon project completion, owners are required to obtain an independent third-party audit of 100% of the initial qualifying tenant files. This audit cannot be performed by the investor." That audit, the Initial Qualifying Tenant (IQT) report, the executed 8609(s), and the cost certification are all submitted to RIHousing together, and owners/agents are also required to attend a welcome meeting with RIHousing Asset Management and Loan Servicing staff before moving fully into the compliance-monitoring relationship covered in Phase 11.

One setup decision at this stage has downstream consequences covered in Phase 11: how a multi-building development answers question 8(b) on Form 8609 (whether all buildings are treated as one project) determines whether the owner files one Annual Owner's Certification per project or one per building (BIN) every year for the life of the compliance and extended-use periods -- get this election right at cost-certification/8609 stage, because RIHousing's own guidance points owners back to "how question 8b is answered" whenever this comes up later.