"We just finished construction — what does WSHFC actually need before the IRS will let us claim credits?"
Placed-in-Service Deadlines and the 90-Day 8609 Window
Federal law sets the outer deadline: a building must be placed in service by the close of the second calendar year following the year the credit is allocated (IRC §42(h)(1)(E)). Before that, the project must incur more than 10% of its reasonably expected basis within 12 months of executing the Credit Reservation and Carryover Allocation Contract (RAC), per IRC §42(h)(1)(E) and Treas. Reg. §1.42-6. WSHFC's Policies are explicit that this 10% test deadline "cannot be extended" (§7.5) — unlike other RAC deadlines, for which the Commission may grant a 30-day-advance-notice extension request.
On top of the federal deadline, WSHFC imposes its own lead time: "a project owner must submit all Placed-In-Service documentation, including the Independent Certified Public Accountants Report ('Cost Certification') and the certificates of occupancy for each building in the project at least 90 days prior to when they expect to receive the IRS Form 8609(s)" (Policies, Ch. 8 intro). Form 8609s are processed on a rolling basis throughout the year, not on a fixed cycle.
| Item | Policy section | What's required |
|---|---|---|
| Compliance training | §8.1 | Property management rep must complete a WSHFC compliance workshop (or equivalent) by the earlier of 120 days before the first building is placed in service, or before initial rent-up; certificate can't be more than 18 months old at placed-in-service. |
| Title report | §8.2 | Current title evidence showing the Regulatory Agreement in first lien position; any prior liens must be subordinated. |
| Regulatory Agreement confirmation | §8.5 | Owner must confirm project-specific terms in the Regulatory Agreement match the completed project; if the project changed, a notarized amendment must be recorded in every county where the original was recorded. |
| Occupancy permit | §8.9 | Certificate of occupancy (or temporary CO) for each building; a building is generally deemed placed in service on CO issuance. |
| Final Cost Certification | §8.10 | Independent CPA certification of eligible/qualified basis, sources and uses, with executed developer/consultant contracts attached. |
| ESDS closeout | §8.14 | Evergreen Final Architect Certification, ESDS Final Report, and backup documentation (waived for Commerce-funded projects). |
The Independent CPA Cost Certification
Per §8.10, the Applicant must provide a certification addressed to the Commission and prepared by an independent CPA, covering the eligible basis of each building and, based on the Applicant's sworn representations about low-income use, its qualified basis. The certification must explicitly flag any common areas and state whether they're in eligible basis, list all sources and uses of project funds (including tax credit equity proceeds), and be accompanied by executed copies of the developer agreement, every consultant contract, and an itemized statement of developer and consultant fees actually earned.
This final cost certification is distinct from the smaller CPA certification WSHFC requires earlier, at the 10% test stage: an itemized accounting of costs incurred to satisfy the 10% expenditure test, completed or reviewed and approved by the project's accountant. Developers sometimes conflate the two — the 10% test letter does not substitute for, or reduce the scope of, the final §8.10 certification.
Prevailing Wage: Funding-Source Dependent, Not a Blanket LIHTC Rule
RCW 39.12.020 requires prevailing wages on "public works" contracts of the state or a political subdivision. A 73-page, line-by-line search of WSHFC's current 9% Policies document turns up zero references to prevailing wage, RCW 39.12, or certified payroll — meaning a WSHFC tax credit allocation or conduit tax-exempt bond financing does not, by itself, convert a project into a "public work" under state law.
In practice, though, state prevailing wage is frequently triggered anyway — by the rest of the funding stack. Washington's own 2018 JLARC cost study documented this project-by-project in its case studies: Lariat Gardens (Walla Walla, bond/4% credits + Housing Trust Fund loan) carried a "State residential" wage requirement because of the Housing Trust Fund loan, while Rio de Vida (Prosser, 9% credits + USDA Rural Development loan) carried a Davis-Bacon (federal) requirement instead, and Vantage Point Apartments (Renton, 9% credits + HUD operating assistance) was Davis-Bacon as well. JLARC's own text: "By state law, construction contractors must pay workers prevailing wages on state-funded projects. Wage rates are established by the Department of Labor and Industries."
Because most competitive 9% WA deals layer in Washington State Department of Commerce Housing Trust Fund dollars or other local public subsidy to close funding gaps, developers should assume RCW 39.12 (or Davis-Bacon, if federal funds are present) will very likely apply to at least part of the project, confirm the trigger with each funder before construction starts, and budget for L&I certified-payroll reporting as a condition that funder — not WSHFC's own cost-cert review — will enforce.
Evergreen Sustainable Development Standard (ESDS) Close-Out
All Housing Tax Credit projects must comply with the Evergreen Sustainable Development Standard, developed by the Washington State Department of Commerce under legislative mandate (Policies §4.9). Projects without Commerce funding must submit the ESDS Checklist, Project Priorities Survey, Sustainable Development Outline, and an Evergreen Owner Certification with the Application itself, and must meet all mandatory ESDS criteria plus a minimum option-point score.
At placed-in-service, §8.14 requires the Applicant to submit the Evergreen Final Architect Certification, ESDS Final Report, and all required backup documentation confirming the as-built project actually met the criteria scored at application (Commerce-funded projects are exempt from this final submission, since Commerce tracks it separately). Failure to comply "may result in a temporary suspension from the program," considered case-by-case (§4.9) — this is a real, standalone risk distinct from cost-certification or 8609 delays.
Where this goes wrong
- Missing the 90-day pre-8609 submission window (Policies, Ch. 8 intro) — Form 8609 issuance is delayed even if construction is done and units are occupied, because the clock only starts once the full package, including the CPA cost certification, is in WSHFC's hands.
- Treating the $450/$45-per-unit Annual Compliance Monitoring Fee (§11.3, WAC 262-01-130(14)) as a one-time 8609-issuance fee — it's a recurring annual fee, and the full first-year fee is due for the entire project by the earlier of the RAC deadline or the first Monday in November of the placed-in-service year, regardless of how many days the project was actually in service that year.
- Assuming WSHFC/LIHTC financing alone triggers RCW 39.12 state prevailing wage — it doesn't by itself, but most competitive 9% deals layer in Commerce Housing Trust Fund or other public dollars that do trigger it (or Davis-Bacon, if federal funds are involved); confirm per funding source before bidding out construction.
- Treating the CPA cost certification as a formality — §8.10 requires it to be accompanied by executed copies of the developer agreement, every consultant contract, and an itemized statement of fees actually earned; incomplete backup is a common, avoidable cause of 8609 delay.
- Missing the compliance-training deadline (§8.1) — the property management representative's WSHFC compliance certificate can't be more than 18 months old at placed-in-service, and training must occur by the earlier of 120 days before the first building is placed in service or before initial rent-up activities begin.
- Skipping or under-documenting the ESDS final package (§8.14: Evergreen Final Architect Certification, ESDS Final Report, backup docs) — it was already scored at application, but WSHFC still requires proof the as-built project met it, and noncompliance risks program suspension.
- Not re-confirming that the Regulatory Agreement/Extended Use Agreement still "accurately reflects the project as completed" (§8.5) — if the built project deviates from the Application (unit mix, set-asides, etc.), a notarized amendment must be recorded in every county where the original was recorded before Form 8609 can issue.
- Assuming the 10% test/carryover deadline can be extended like other RAC deadlines — WSHFC's Policies state explicitly that this specific deadline (incurring >10% of reasonably expected basis within 12 months of RAC execution) "cannot be extended" (§7.5).
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies