Housing Tax Credit Program Compliance Guide Revised 12/2020 MINNESOTA HOUSING – HOUSING TAX CREDIT PROGRAM COMPLIANCE GUIDE The Minnesota Housing Finance Agency does not discriminate on the basis of race, color, creed, national origin, sex, religion, marital status, status with regard to public assistance, disability, familial status, gender identity, or sexual orientation in the provision of services. An equal opportunity employer. This information will be made available in alternative format upon request. 1 MINNESOTA HOUSING – HOUSING TAX CREDIT PROGRAM COMPLIANCE GUIDE Table of Contents Introduction .................................................................................................... 5 Foreword ........................................................................................................ 6 Background and Overview ............................................................................... 7 Chapter 1 – Program Summary ........................................................................ 8 1.01 Minimum Set-aside Election ................................................................................................................... 8 1.02 Rent and Income Requirements .............................................................................................................. 9 1.03 Rent and Income Figures ........................................................................................................................ 9 1.04 Building Regulations ............................................................................................................................ 10 1.05 Full-time Resident Manager’s Unit ....................................................................................................... 11 1.06 Calculating the First Year Applicable Fraction ....................................................................................... 12 1.07 Qualified Basis ..................................................................................................................................... 13 1.08 Claiming Credits ................................................................................................................................... 13 1.09 Compliance Period and Extended Use Period ........................................................................................ 13 1.10 Outline of Minnesota Housing Compliance Process ............................................................................... 13 1.11 Owner’s Responsibility ......................................................................................................................... 14 1.12 Noncompliance .................................................................................................................................... 15 Chapter 2 – Internal Revenue Service Reporting Requirements ....................... 16 2.01 Low Income Housing Allocation Certification (IRS Form 8609) .............................................................. 16 2.02 Low Income Housing Credit (IRS Form 8586) ........................................................................................ 16 2.03 Declaration of Land Use Restrictive Covenants .................................................................................... 16 2.04 Recapture of Low Income Housing Credit (IRS Form 8611) ................................................................... 17 Chapter 3 – Recordkeeping and Records Retention Requirements ................... 18 3.01 Recordkeeping .................................................................................................................................... 18 3.02 Records Retention ............................................................................................................................... 18 Chapter 4 – Monitoring: Certification and Review........................................... 20 4.01 Annual Certification ............................................................................................................................ 20 4.02 Annual Submission Requirements ........................................................................................................ 21 4.03 Compliance Monitoring Review Requirements ..................................................................................... 22 4.04 Procedure for Compliance Inspection ................................................................................................... 23 4.05 Compliance Forms............................................................................................................................... 26 2 MINNESOTA HOUSING – HOUSING TAX CREDIT PROGRAM COMPLIANCE GUIDE 4.06 Corrections to Documents ................................................................................................................... 27 4.07 Annual Monitoring Fees ...................................................................................................................... 27 4.08 Minnesota Housing Records Retention ................................................................................................ 27 4.09 Liability ............................................................................................................................................... 27 Chapter 5 – Project Rental Requirements ....................................................... 28 5.01 Allowable Fees and Charges ................................................................................................................ 28 5.02 Section 8 Rents ................................................................................................................................... 29 5.03 Minimum Lease Requirements/Good Cause Termination ..................................................................... 29 5.04 Household Size .................................................................................................................................... 31 5.05 Utility Allowance ................................................................................................................................. 32 5.06 Submetering and Renewable Energy ................................................................................................... 36 5.07 Physical Requirements of Qualified Units, Suitable for Occupancy ........................................................ 36 5.08 Fair Housing Policy, Affirmative Marketing, and General Public Use ..................................................... 37 5.09 Vacant Units ....................................................................................................................................... 39 5.10 Other Stipulations ............................................................................................................................... 39 5.11 Student Eligibility ................................................................................................................................ 40 5.12 Loss of Eligibility Upon Becoming a Full-time Student .......................................................................... 41 5.13 Unit Transfers ..................................................................................................................................... 41 5.14 Violence Against Women Act .............................................................................................................. 42 Chapter 6 – Income Determinations ............................................................... 44 6.01 Income Certification/Recertification .................................................................................................... 44 6.02 Tenant Income Certification ................................................................................................................ 51 6.03 Government Data Practices Act Disclosure Statement ......................................................................... 52 6.04 Miscellaneous Forms to Verify Income ................................................................................................. 52 6.05 Annualized Income .............................................................................................................................. 53 6.06 Annual Income .................................................................................................................................... 54 6.07 Exclusions from Annual Income ........................................................................................................... 59 6.08 Income Excluded by Federal Statute .................................................................................................... 61 6.09 Income from Assets ............................................................................................................................. 63 6.10 Household Assets Do Not Include ........................................................................................................ 66 6.11 Assets Owned Jointly ........................................................................................................................... 66 6.12 Instructions for Valuing Assets ............................................................................................................ 66 6.13 Example of Calculating Income from Assets ......................................................................................... 67 6.14 General Income Verification Requirements .........................................................................................