"We have our Notice of Award -- what's the actual sequence of deadlines MaineHousing will hold us to before an 8609 gets issued, and what happens if we can't clear the 10% test in time?"
From Notice of Award to an actual Credit amount: nothing is final until Section 7 evaluation
Section 4.H is explicit that a Notice of Award is not the end of Credit-amount determination: "Upon receipt of the fully executed Notice of Award, MaineHousing will evaluate the Application pursuant to Section 7 to determine the amount of Credit, if any, to be allocated." Section 7.A layers in the mechanics behind that evaluation -- Maine's entire state is designated a Difficult Development Area under Code Section 42(d)(5)(B)(v), so Credit is calculated on 130% of Eligible Basis; rents are set at the lesser of market rent (per the Application's approved market study) and the maximum Credit rent, with a $50 add-on to the two-bedroom maximum Credit rent for three-or-more-bedroom units; and MaineHousing must "identify a gap between development sources and uses absent a Credit allocation," applying its own judgment on Intermediary Costs, re-characterized sources and uses, and federal subsidy-layering limits.
Section 7.D fixes four separate moments at which the Credit amount is (re-)determined -- Application/Notice of Award, the carryover allocation, each Qualified Building's placed-in-service date, and (for Section 9 bond deals) the date the tax-exempt bonds are issued -- and requires the Applicant to recertify "the full amounts of all funding sources" ahead of each one. Section 7.F allows additional Credit if construction costs rise for reasons beyond the Applicant's control, but caps that relief at the equity equivalent of 5% of Total Construction Cost based on the actual construction bids.
Carryover allocation: the December pair of deadlines
Section 8.B requires "a complete request for carryover allocation in the form prescribed by MaineHousing no later than the first day of December of the year in which the carryover allocation is made," accompanied by full-funding-source certification and a development progress report addressing completion likelihood. Separately, "the applicant must execute a carryover allocation and return it to MaineHousing, together with the allocation fee, no later than December 31" of that same year -- two distinct dates in the same calendar year, both stated without an express grace period.
The carryover itself is conditional: the Applicant must show "satisfactory evidence that more than 10% of the Project's reasonably expected basis is incurred within 12 months of the carryover allocation, including an audit report prepared by an independent, certified public accountant," plus any other performance conditions MaineHousing imposes. "Failure to comply with these conditions may result in termination of the carryover allocation."
The federal 10% test, folded into a QAP condition -- and a placed-in-service deadline this QAP does not restate
Section 8.B.3.a is, functionally, the federal 10%-of-reasonably-expected-basis test under Code Section 42(h)(1)(E)(ii) written directly into the QAP as a carryover condition, with its own 12-month clock running from the carryover allocation date rather than from the Notice of Award. This QAP does not separately restate the underlying federal placed-in-service completion deadline that a carryover allocation exists to satisfy -- generally, the requirement that a building be placed in service by the close of the second calendar year following the year the housing credit dollar amount was allocated. That deadline is a matter of federal law under Code Section 42(h)(1)(E), not QAP text, and should be confirmed against the Code and current IRS guidance directly rather than assumed from this document, which addresses only the carryover-and-10%-test mechanism that sits upstream of it.
Before any 8609 is issued: compliance training and a recorded Extended Use Agreement
Section 8.C requires that, "prior to an allocation," the entity that will manage the Project demonstrate sufficient Credit compliance experience and training -- completing a Credit compliance training or holding a MaineHousing-approved trainer's certification. This is a distinct, later-stage checkpoint from the Section 5.D team-capacity threshold assessed back at Application.
Section 8.D requires the Owner to "enter into an Extended Use Agreement with MaineHousing obligating the Owner to comply with Section 42 of the Code, the threshold requirements in Section 5, and commitments for which the Application was awarded points" before any allocation of Credit -- and that agreement "must be recorded in the appropriate registry of deeds prior to all mortgage liens and encumbrances on the Project and before MaineHousing issues any IRS Form 8609 for the Project." That recording sequence has to be built into closing mechanics, not treated as paperwork that trails the closing.
Section 8.A lists what actually triggers 8609 issuance: a complete allocation request in MaineHousing's prescribed form; an independent CPA's audit report on the schedule of project costs (covering commissions, due diligence, legal, accounting, reserves, and similar items); a full certification of the Project's sources across every stage of commitment, including methods for satisfying any deficits; and payment of the balance of the allocation fee and the monitoring fee (net of any allocation fee already paid at carryover).
If something slips: converting a carryover, forward allocations, and the waiver valve
Section 8.E allows MaineHousing to "convert a carryover allocation to the year in which it is terminated or the following year if there are extenuating circumstances beyond the Applicant's control" -- by mutual rescission between MaineHousing and the Applicant, with no design or financing change that would otherwise trigger Section 4.I's Application-withdrawal rule, and with the Project remaining subject to the QAP vintage in effect at the time of the original allocation. Section 8.F separately allows MaineHousing to issue a binding forward-allocation commitment against the following year's State Ceiling if the current year's is insufficient.
Underneath all of these dates sits Section 11.E: "Upon a determination of good cause, the director of MaineHousing or the director's designee may, subject to statutory limitations, waive any provision of this rule," provided the waiver is in writing and supported by documentation of the pertinent facts and grounds. That is a discretionary power the director exercises, not a right an Applicant can invoke unilaterally by simply asking.
After placed-in-service: the compliance-period clock starts overlapping the readiness clock
Section 10.C requires an Annual Report to MaineHousing by March 1 of each year throughout the Extended Use Period, certifying compliance with IRS Treasury Regulation Section 1.42-5(c)(1) and MaineHousing's own Owner's Certificate of Continuing Program Compliance (Appendix D); "a completed and executed IRS Form 8609 for each Qualified Building must be submitted with the first certification."
Section 10.D gives MaineHousing up to 2 years following the year the last Qualified Building is placed in service to complete its own review of tenant records for new LIHTC Projects, with no more than 15 calendar days' prior notice where IRS regulations require it. Section 10.E requires MaineHousing's first inspection "by the end of the second calendar year following the year the last Qualified Building is Placed in Service," and every 1 to 3 years thereafter. Section 10.G requires written notice of any noncompliance, a reasonable correction period, and then a Form 8823 filing with the IRS "within 45 calendar days of the end of the correction period" if the noncompliance is not resolved.
The same placed-in-service date that starts this monitoring clock also starts several separate, longer compliance clocks discussed in the capital-stack research for this state: the LIHTC Extended Use Agreement's own affordability period, the state historic tax credit's 30-year certified-affordable-housing-project clock (36 M.R.S. Section 5219-BB(3)), and the state LIHTC-piggyback credit's 45-year/15-year recapture clock (36 M.R.S. Section 5219-WW(7)) -- three independently enforced recapture or repayment triggers that can all be running on the same building at once.
Where this goes wrong
- Treating the Notice of Award as a locked Credit number. Section 4.H and Section 7 make the actual Credit amount subject to further MaineHousing evaluation, and it can still move with construction-cost increases under Section 7.F, capped at the equity equivalent of 5% of Total Construction Cost from bids.
- Collapsing the December 1st carryover-request deadline and the December 31st executed-carryover-and-fee deadline into one date. They are two distinct requirements in the same section, both stated without an express grace period.
- Assuming the 10% test's 12-month clock starts at the Notice of Award or at Application. It runs from the carryover allocation itself (Section 8.B.3.a), a distinct and later event.
- Assuming the QAP states a placed-in-service completion deadline. It does not -- Section 8's only completion-adjacent language is the carryover/10%-test framework, and the federal 2-years-after-allocation placed-in-service rule has to be sourced to Code Section 42(h)(1)(E) directly, not to this document.
- Sequencing the Extended Use Agreement's recording after loan closing or after other mortgages are recorded. Section 8.D requires it recorded ahead of "all mortgage liens and encumbrances" and before any 8609 issues -- closing counsel needs this built into the closing checklist, not treated as trailing paperwork.
- Assuming Tax Credit Compliance Experience is only checked once, at Application. Section 8.C is a separate, later-stage requirement checked again before allocation, distinct from the Section 5.D team-capacity threshold assessed at Application.
- Assuming a missed deadline is automatically fatal, or conversely that a waiver is available on request. Section 11.E gives the director a documented, written, good-cause waiver power across the whole rule, and Section 8.E allows converting a terminated carryover in "extenuating circumstances beyond the Applicant's control" -- but both are MaineHousing's discretionary calls, not an Applicant entitlement.
- Confusing the ongoing March 1st Annual Report obligation (Section 10.C, recurring throughout the Extended Use Period) with the one-time carryover/10%-test sequence (Section 8.B). They are different clocks serving different purposes -- ongoing compliance monitoring versus one-time readiness-to-proceed.
- Treating the LIHTC Extended Use Agreement's compliance period, the historic credit's 30-year clock, and the state LIHTC-piggyback credit's 45-year/15-year clock as the same clock. All three can run concurrently on one building from the same placed-in-service date but carry independent, separately enforced recapture or repayment triggers.
- Assuming a Form 8823 gets filed the instant noncompliance is identified. Section 10.G requires written notice, a reasonable correction period, and only then a 45-calendar-day-from-end-of-correction-period IRS filing clock.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies