Post-award readiness clock — Illinois

The 12-month initial-closing clock starts at the Reservation Letter, not later

Following Board approval, IHDA issues a Reservation Letter that sets the reserved credit amount and lists the terms, conditions, documentation, and timelines a Project must satisfy before a Carryover Allocation Letter (where one applies) and, eventually, IRS Form 8609 will issue -- including payment of a non-refundable Reservation fee. The Project's initial financial closing must occur within 12 months of the Reservation Letter's execution and the Reservation fee's payment. If that 12-month window is missed, the consequence in Illinois is notably softer than a hard, automatic bar: the QAP states that Sponsors whose Projects do not close within the 12-month period "may not be eligible for Tax Credits in the next Application round at the Authority's sole discretion" -- a discretionary consequence IHDA can choose to impose, not an automatic disqualification written into the Reservation Letter itself.

The Authority may extend the time to meet the Reservation Letter's conditions in its sole and absolute discretion, on written request with an explanation from the Owner, and Projects granted an extension may be assessed late fees. If the Owner fails to meet the Reservation Letter's conditions and does not obtain an approved extension, the Conditional Allocation may be revoked.

Carryover Allocation: required whenever the Project won't place in service in the Reservation year

A Carryover Allocation applies only to the federal 9% Tax Credit track -- Illinois has no separate state credit riding alongside it that would need its own parallel carryover mechanism the way some other states' QAPs describe, since Illinois's own IAHTC (discussed in Phase 7 of this guide) is a donation credit paid to a private donor, not a second per-project allocation that shares the federal credit's own carryover and 10 percent test machinery. A Carryover Allocation is required for every 9% Project that will not place in service in the calendar year its Reservation Letter issues, and IHDA issues the Carryover Allocation Letter near the end of that Reservation year, specifying the documentation and timeline required: a completed Carryover Allocation Checklist, an executed LIHTC election, a completed BIN Assignment Form, a completed Gross Rent Floor Election Form, a completed Reasonably Expected Basis Form, and evidence of current site control satisfactory to the Authority.

As with the Reservation Letter, the Authority may extend the time to meet the Carryover Allocation Letter's conditions in its sole and absolute discretion (written request required, late fees possible), and failing to meet those conditions -- or to obtain an approved extension -- exposes the Conditional Allocation to revocation.

Federal 4% Tax Credit Projects skip this entire mechanism. A 4% award proceeds instead through an Initial Determination -- a Section 42(m) Letter -- with its own separate extension-and-revocation logic (see Phase 8 of this guide for the 42(m) Letter's role at Application), and the QAP's Section XI (Carryover and the 10% test) is scoped to the federal 9% credit specifically. This structural split mirrors the federal statute itself: bond-financed 4% credits sit outside Illinois's per-capita volume cap under IRC Section 42(h)(4), so they were never allocated through the carryover-and-10-percent-test machinery Section 42(h)(1)(E) governs for volume-capped credits in the first place.

The 10% test runs to a fixed December 1 date, not a floating window

A Project issued a Carryover Allocation must expend more than 10% of the Project's reasonably expected basis by December 1 of the year following the Carryover Allocation -- a fixed calendar date IHDA sets internally, not a rolling number of months measured from the date the Carryover Allocation Letter actually issued. Because the Carryover Allocation Letter itself issues near the end of the Reservation year, the practical runway to the December 1 deadline can end up anywhere from roughly 12 to nearly 24 months depending on exactly when in the year the Carryover Allocation Letter is dated -- a detail worth modeling precisely rather than assuming a flat interval.

In the year following the Carryover Allocation, IHDA issues a Ten Percent Test Letter specifying the required documentation: a completed Ten Percent Test Checklist, the completed Ten Percent Test itself, a completed BIN Form, a completed Ten Percent Test Reasonably Expected Basis Form, and a Certification of Costs Incurred. The same sole-and-absolute-discretion extension mechanism applies, with the same late-fee exposure and the same revocation risk for a missed deadline or an unapproved extension request.

IHDA's internal December 1 deadline sits inside the outer boundary the federal statute itself allows: IRC Section 42(h)(1)(E)(ii) measures the 10 percent test to the close of the calendar year following the calendar year in which the carryover allocation is made -- meaning December 31 at the latest. IHDA's own administrative deadline, falling a month earlier on December 1, is the binding one for an Illinois deal regardless of what the outer federal boundary technically allows.

Revocation runs wider than a missed date -- and reaches across a Sponsor's whole IHDA portfolio

Section X of the QAP treats certain Project changes after a Conditional Allocation as "Project Modifications" requiring written disclosure and Authority approval -- potentially Loan Committee and Board approval, and a processing fee -- before they happen, not after. These include a 10 percent or greater change in total Project cost or any budget line item; any change in the Owner, Sponsor, or other Participants; and any change to unit mix or sizes, rent structure, the Project Site, construction scope, qualifying income restrictions, or financing (adding, removing, or substituting a funding source, a change in the entity providing financing, a change in financing terms, or a change in Tax Credit equity pricing). One rule inside this list is an outright bar rather than an approval process: a change in the Owner and Sponsor of the Project "will not be permitted" at all between Board approval and the issuance of the IRS Form(s) 8609 -- there is no described exception or waiver path for that specific window.

After Placed-in-Service: 8609 issuance, a 30-year Extended Use Agreement, and monitoring that can permanently disqualify a Project in year one

A Project must place in service no later than the date stated in its Carryover Allocation Letter or 42(m) Letter. If that deadline needs to move, the QAP does not describe a simple date extension; instead, the Authority may extend the timeline by revoking the existing Conditional Allocation and issuing an entirely new one, on the Owner's written request, potentially subject to a new non-refundable fee -- a materially heavier process than adding an addendum to the existing paperwork, and one where a new Conditional Allocation remains subject to both the current QAP's requirements and whatever requirements the Authority determines survive from the prior Allocation.

IRS Form 8609 documentation must reach the Authority no later than six months after the end of the year following the Placed-in-Service deadline -- a two-step calendar (first, the year after the PIS deadline; then, six more months) rather than a single fixed date from placement in service itself. At 8609 review, the Authority conducts its own final financial analysis; consistent with Section 42(m)(2) of the Code, the actual Tax Credit Allocation issued at 8609 "will never exceed the amount the Authority determines is necessary for the financial feasibility of the Project" and may come in below the Conditional Allocation amount awarded at Reservation.

The Extended Use Agreement (EUA) covers a single 30-year term -- the 15-year Compliance Period plus a 15-year Extended Use Period -- and must be recorded at the Project's initial financial closing, in the county Recorder of Deeds where the Project is located, and ahead of every other document evidencing or securing the Project's financing. Because initial closing is itself due within 12 months of the Reservation Letter, the EUA is locked in well before the Carryover Allocation, the 10% test, or placement in service occur -- it is a front-loaded commitment, not a closeout document.

Compliance monitoring continues for the length of the Extended Use Period: field inspections and tenant file reviews recur during the Compliance Period and every five years during the Extended Use Period, and a Participant found non-compliant during Construction Monitoring can see future Applications affected under the same Unacceptable Practices standard described in Phase 8 of this guide. Initial-year compliance carries the sharpest consequence in the whole QAP: a Project that fails to qualify enough units to satisfy its minimum Set-Aside requirements by the end of the first year of the credit period "will not qualify for the Tax Credit program and will not be eligible for any tax credits" -- a total, non-curable disqualification from the program for that Project, not a delay that can be fixed the following year.