"I just got my Carryover Allocation Agreement -- where in this QAP is the federal 10 percent test actually spelled out, what's my real placed-in-service deadline, and which of these dates can I actually ask OHFA to move?"
The federal 10 percent test: real, enforceable, and missing from the document developers actually read
OHFA's Chapter 36 Rules spell out the test in full: "Code Section 42(h)(1)(E) provides that an Allocation may be made to a Qualified Building... which has not yet been Placed-In-Service, provided the Qualified Building is Placed-In-Service not later than the close of the second calendar year following the calendar year of the Allocation... To qualify for a Carryover Allocation, the Owner must demonstrate that the Owner's basis in the Development, at one (1) calendar year after the date of Allocation, is more than ten percent (10%) of the Owner's reasonably expected basis in the Development. Developments that fail to meet the ten percent (10%) test will not have a valid Carryover Allocation. The ten percent (10%) test must be certified by the Owner's certified public accountant, in a form acceptable to OHFA. OHFA's determination as to the satisfaction of the ten percent (10%) requirement is not binding upon the IRS and does not constitute a representation by OHFA to the taxpayer or any other party to that effect" (OAC 330:36-2-16).
The 2026 AHTC Application Instructions -- the document an Applicant assembles their whole submission against -- reference this same deadline only once, and only obliquely, inside a late-fee bullet in Attachment G: "OHFA CANNOT waive, or extend in any way, the date in which 10% of costs must be expended." That sentence never uses the phrase "10 percent test," never cites IRC § 42(h)(1)(E), and never states that the measuring date is exactly one calendar year after the date of Allocation. The substantive mechanics live only in the separate Chapter 36 Rules document -- a real gap between what the Application Instructions say and what federal law and OHFA's own rules actually require, not a contradiction between the two.
The same pattern holds for the Placed-In-Service deadline itself. The two-year federal clock under IRC § 42(h)(1)(E) is stated in Chapter 36 Rules § 330:36-2-16(a), but this research found no restatement of it anywhere in the AHTC Application Instructions text -- an Applicant relying solely on the Application Instructions would not learn the deadline exists from that document alone.
The chain of dollars-and-days deadlines the Application Instructions do spell out
| Deadline | Timing | Consequence if missed |
|---|---|---|
| Allocation fee | 14 calendar days from OHFA's notice of TCA approval; 11% of Allocation, minimum $1,000 | Carryover Allocation Agreement will not be executed and 8609s will not be issued until paid; nonpayment may result in revocation of Credits |
| Carryover Allocation Agreement | Hard deadline in the award letter, usually ~2 weeks after the Board meeting | 3 negative points plus $100/day late fee |
| Carryover Packet | Date specified in the Carryover Agreement; one 60-day extension available | $100/day late fee after the 60 days |
| 10% cost-expenditure test | 1 calendar year after the date of Allocation (Chapter 36 Rules § 330:36-2-16(c)) | Cannot be waived or extended by OHFA under any circumstances; failing it invalidates the Carryover Allocation |
| Placed-In-Service Acknowledgment | 30 calendar days after each building's Certificate of Occupancy | $10/day late fee; late filing may be viewed as part of a general capacity review |
| Final Cost Certification | February 28 after the placed-in-service year | "No exceptions, no drafts, no extensions"; $100/day late fee, continuing even on a corrected re-submission |
| LURA / Final Packet | November 1 of the placed-in-service year | 3 negative points plus $100/day late fee; required to claim Credits for that year regardless of whether OHFA's courtesy reminder arrives |
| Progress Reports | January 10, April 10, July 10, October 10, until the Form 8609 is issued | $10/day late fee per late report; 2 negative points once more than 3 reports have been late |
The Final Cost Certification, LURA, and Placed-In-Service Acknowledgment deadlines explicitly "also appl[y] to 4% Bond Developments," not just 9% Carryover deals.
Negative points accumulated against any of these deadlines are posted publicly on OHFA's website roughly 30 days before the next Application deadline and count against the Owner/Developer/Principals in the following Funding Period -- not the current one. They are "assessed on original participants," and remain even if a Development Team member is later substituted with proper documentation.
4% Credits/Bond timeline: an 18-month closing clock, plus a separate federal 730-day clock
A 4% Credits/Multifamily Bond Development must close on the bond issuance within 18 months of the date of the 4% Credit award. If a Development cannot close in that window, the only stated path forward is to appeal to the OHFA Board of Trustees for an extension -- there is no automatic or self-executing extension the way the Carryover Packet gets one built-in 60-day extension.
This 18-month closing clock is separate from the 730-day federal QCT/DDA clock discussed in Phase 8, which governs eligibility for the 130% basis boost rather than the closing deadline itself: the two run from different trigger dates (the 4% award date versus the complete-application date) and protect different things, and missing one does not automatically mean the other has been missed.
What actually counts against a future Application -- beyond just missing a date
OHFA's Chapter 36 Rules list "little or no progress" on a prior Tax Credit reservation as a factor bearing on a future Application's Capacity and Prior Performance review, and name the Placed-In-Service deadline specifically: "failure to meet the minimum Carryover Allocation requirements resulting in the return of Credits; failure to have all Buildings Placed-In-Service no later than the close of the second calendar year following the calendar year in which the Allocation is made; or involvement of a foreclosure or deed-in-lieu of foreclosure within the past seven (7) years."
The Application Instructions' own Non-Performance list, applied at Threshold Criteria § 3 on every subsequent Application, is broader still: uncured financing defaults or foreclosures, placement on HUD's debarred-contractors list, material uncorrected noncompliance with any federally or state-assisted housing program within the prior seven years, appointment of a receiver or bankruptcy within the prior seven years, removal as a general partner/managing member, failure to maintain minimum property standards, and failure to respond to OHFA Compliance Staff's requests for information -- any of which can sink a future Application's Capacity threshold, not just the current Development's post-award timeline.
Separately, uncorrected Form 8823s or OHFA Notices of Noncompliance carry their own 5-point negative-points penalty once the correction period expires, and that penalty follows a transferred Development for six months after the transfer, in addition to remaining with the entities that incurred it.
The readiness clock doesn't end at Placed-In-Service -- it rolls straight into compliance reporting
Progress Reports are required continuously from the point Credits are reserved until the Form 8609 is issued -- well before Placed-In-Service. Once the last building in a Development is Placed-In-Service, Quarterly Owner Certifications (QOCs) begin with the first full quarter afterward and continue for a minimum of four quarters regardless of occupancy achieved; a Development that reaches its minimum set-aside by the fourth QOC then switches to an Annual Owner Certification (with Unit Data Sheets) due February 15 each year, alongside a Certification Portal submission also due February 15. Copies of the first year's completed Form 8609s (with Part II filled in) are due to OHFA's Compliance Department by May 10, for the first credit year only. Annual compliance monitoring fees are separately invoiced and due January 28 each year of the Compliance and Extended Use Periods, with a 25% late fee if not paid within 30 days -- and OHFA may file a lien against the Development for nonpayment.
Where this goes wrong
- Looking for the phrase "10 percent test" anywhere in OHFA's AHTC Application Instructions -- it does not appear there. The actual mechanics live in OHFA's separate Chapter 36 Rules (OAC 330:36-2-16(c)), not the document titled "Application Instructions" that developers build their Application against.
- Assuming the 10%-of-basis date can move if the Carryover Packet itself gets a 60-day extension. The Application Instructions state plainly that OHFA cannot waive or extend the 10% expenditure date under any circumstances, independent of any Carryover Packet extension.
- Assuming a second Carryover Packet extension is available. OHFA's guidance allows "only one 60-day extension," after which a $100/day late fee applies with no stated additional grace period.
- Treating the federal two-year Placed-In-Service deadline for a Carryover-allocated building as discretionary or OHFA-set. It is a federal requirement under IRC § 42(h)(1)(E), restated in OHFA's Chapter 36 Rules (330:36-2-16(a)) but not in the AHTC Application Instructions text -- and missing it is independently listed in the Rules as a "little or no progress" factor against future Applications.
- Assuming the Final Cost Certification deadline (February 28 after the placed-in-service year) has any exception path. The Application Instructions state "no exceptions, no drafts, no extensions," and even a corrected cost certification submitted after the deadline still accrues the $100/day late fee until OHFA receives it.
- Treating the LURA deadline (November 1 of the placed-in-service year) as a soft target because OHFA sends a courtesy reminder. OHFA's own text calls the October 1 reminder "only a courtesy," and the deadline holds even if the reminder is never received; a LURA must be filed to claim Credits for that year.
- Assuming these post-award deadlines are 9%-only. The Application Instructions explicitly state that the Final Cost Certification, LURA, and Placed-In-Service Acknowledgment deadlines "also appl[y] to 4% Bond Developments."
- Confusing the 18-month bond-closing deadline (from the date of the 4% Credit award) with the separate 730-day federal QCT/DDA clock that governs eligibility for the 130% basis boost -- they run from different trigger dates and protect different things.
- Assuming a missed 4% bond-closing deadline has an automatic extension the way the Carryover Packet does. The only stated remedy is an appeal to the OHFA Board of Trustees; there is no self-executing grace period.
- Assuming late progress reports or Carryover paperwork only affect the current Development. Negative points attach to "original participants" and follow the Owner/Developer and Principals into their next Application, even if team members are later substituted.
- Assuming compliance reporting begins only once the Compliance Period technically starts. Quarterly Progress Reports run from Credit reservation until 8609 issuance -- well before Placed-In-Service -- and Quarterly Owner Certifications begin in the very first full quarter after the last building is Placed-In-Service.
- Treating a transfer of ownership as a way to shed negative points from a prior infraction. The Application Instructions state negative points remain with the Development for six months after a transfer, in addition to staying with the entities that incurred them.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies