The post-award clock: reservation to carryover to placed-in-service — Montana

Three signatures, three deadlines, before Carryover is real

An Award Determination isn't a Carryover Allocation. After the Board awards Credits, MBOH sends the Owner a Reservation Agreement, and the Owner must return it signed by March 1 of the year following the Award — or by whatever earlier date MBOH specifies as necessary to preserve the Credits (2027 QAP Section X.A). That alone doesn't produce a Carryover Allocation; it only sets up eligibility for one.

MBOH's own Fee Schedule calls the December 1 deadline the date the "Reservation fee" is due — but the QAP text makes clear that's shorthand for a four-part package, not a standalone payment: the executed Reservation Agreement, Proof of Ownership, the executed and recorded LURA, and the fee itself all have to arrive together to produce a Carryover Allocation (Section X.B).

No acceptance deposit at Award — but a real penalty for missing the next one

Montana doesn't charge anything at Award itself comparable to a 1-to-4-percent reservation deposit some states collect within weeks of a competitive win. The first money due is the Reservation Fee — 10% of annual credits reserved — and it isn't due until the Carryover package, roughly a year or more after Award (MBOH Housing Credit Fee Schedule). That absence removes an early financial checkpoint that, elsewhere, signals a deal is genuinely moving.

That 25%-of-Reservation-Fee penalty is the closest thing Montana has to an early skin-in-the-game requirement — it just falls on the back end of the Reservation Agreement step (due March 1 of the year following Award) rather than at Award itself, and it's priced as a percentage of a fee that, at that point, still hasn't been paid.

The 10% test: MBOH's paperwork deadline is longer than the federal floor

MBOH's own text sets the 10% Cost Certification submission deadline at "no later than the first anniversary of the date on which MBOH executed the Carryover Allocation Agreement" (2027 QAP Section X.C) — roughly a full year after Carryover. That is MBOH's paperwork deadline for proving the test to MBOH. It is not the federal deadline for actually incurring the basis, and the two run on different clocks.

Federal law splits the 10% test's incur-by date on when in the calendar year the carryover allocation itself was made: if before July 1, the basis must be incurred by the close of that same calendar year; if after June 30, the taxpayer has only 6 months from the allocation date (26 CFR Section 1.42-6(a)(2)). Because MBOH's Carryover Allocation Agreements are structurally dated in December — the QAP requires execution and return "prior to December 31" of the year the package was filed — a typical Montana deal falls squarely in the after-June-30 bucket. That puts the real federal floor around six months after the December carryover date, roughly six months earlier than MBOH's own first-anniversary paperwork deadline.

A developer working only from MBOH's own QAP text could reasonably plan around a full year to reach 10% of reasonably expected basis. Federal law doesn't give that year on a typical Montana timeline — meeting MBOH's submission deadline for the paperwork doesn't retroactively fix a project that didn't actually incur the basis by the earlier federal date. Confirm both dates with MBOH and count from the Carryover Allocation Agreement's actual execution date, not the December 1 package-submission date.

Placed in Service runs on federal time, not an MBOH-specific one

Nothing in the QAP's Section X restates a Montana-specific Placed in Service deadline — it relies on federal law directly. Under IRC Section 42(h)(1)(E) (a building-based carryover allocation) or Section 42(h)(1)(F) (a project-based allocation covering a multi-building Project), every building has to be Placed in Service no later than the close of the second calendar year following the calendar year in which the carryover allocation was made. For the worked example above — a Carryover Allocation Agreement executed in December 2027 — that puts the federal Placed in Service deadline at the close of 2029.

MBOH does re-underwrite the deal along the way rather than treating Carryover as a formality: the same feasibility analysis MBOH runs at Application is repeated "at the time of 10% Cost Certification and at Final Cost Certification prior to issuing IRS Form(s) 8609" (Section III.I) — three separate feasibility checkpoints across the life of the award, not one at Application and then silence until closeout.

The QAP's only stated flexibility on any of these dates is general, not a defined hardship or extension procedure: MBOH may extend or change QAP deadlines by posting a change on its website (Section III.E), and both the Reservation Agreement and Carryover Allocation deadlines are independently qualified with "or by such other date specified by MBOH as necessary to preserve the Credits" (Section X.A–B). There's no published Montana-specific disaster or hardship extension policy comparable to what some larger states publish — a developer needing relief has to ask MBOH directly rather than point to a QAP provision.

Credit Refresh: Montana's own release valve for a stalled award

A Project that's fallen behind schedule isn't limited to losing its Credits outright. Once MBOH has issued a Carryover Allocation and approved the 10% Cost Certification, the Owner can apply for a Credit Refresh — converting the previously awarded Credits from their original Credit year to a more recent one (2027 QAP Section X.E). The request needs a revised Proforma (Excel), a narrative justifying it, and the applicable fee; the Owner or a representative has to appear before the Board to answer questions, and the Board weighs the Development Team's diligence, factors outside its control, and the likelihood the Project gets built either way.

A Credit Refresh can't be used to grow the award — the refreshed amount is capped at whatever was originally allocated or the maximum Credit Award under the Applicable QAP, whichever is lower — and every requirement of the Applicable QAP applies to the refreshed Reservation exactly as if it were the original.

Final Allocation and Form 8609 — and what follows a sponsor afterward

Final Allocation of all Credits requires payment in full of the applicable Fee Schedule amounts, and MBOH may conduct a site visit and file audit before issuing Form(s) 8609 (Section X.F). Two clocks run in opposite directions at the finish line: MBOH assesses a late fee if it hasn't received all required 8609 items within 6 months of the last building's Placed in Service date, and separately requires the Owner to send back a copy of each signed Form 8609 within 3 months of MBOH's issuance — miss either window and the Fee Schedule prices it directly ($5,000 and $1,000, respectively).

The post-award discipline doesn't end at 8609. An Applicant whose first-ever Montana 9% Project is still "In-Process" — no Form(s) 8609 issued, and Credits not returned or rescinded — cannot receive another 9% Award unless it partners with an Experienced Developer entitled under written agreement to at least 50% of the Developer Fee on the new deal (Section II.A). And Appendix D's disqualification provisions reach directly into the post-award record: a debt coverage ratio that "changed significantly" between Application and 10% Cost Certification or Final Allocation, a Development Team member who requested additional Credits more than once, or delinquent late fees owed to MBOH are each independently listed as grounds to disqualify a Development Team member for up to five years — in Montana or, per the same Appendix, on a deal in another state entirely.

Substantial Changes carry their own 30-day advance-notice requirement that spans the whole post-award period through Placed in Service — a list of 20 items in Section X.H, from a Development Team change to a swing in Total Project Cost Per Unit to a shift in income or rent targeting. One item on that list is worth flagging specifically: any change that "would have resulted in a lower Development Evaluation Criteria score" if known at Application is itself a reportable Substantial Change, which means MBOH is asking a sponsor to self-report the kind of drift that would have hurt its own Application.