Rental Developers

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RCRS

Inspection Guide

Rental Asset Management Newsletter

Property Management Software Developers: Check out our RCRS Data Upload (XML) information

Planning an Opening

Extended Use Period Policies ("Y15")

Housing Credit Properties After Year 15

The federal low-income housing tax credit (“Housing Credit”) was created by Congress in 1986 and is administered in North Carolina by the N.C. Housing Finance Agency (“Agency”).

Properties awarded Housing Credits in 1987, 1988 and 1989 had a compliance period of 15 years.  A change in federal law required an additional 15 years of compliance, which is known as the extended use period.  As a result, properties that were awarded Housing Credits in 1990 or afterwards must comply with program restrictions for a total of 30 years, subject to certain exceptions. These restrictions are embodied in a recorded real estate document called the extended use agreement.

Qualified Contracts

The qualified contact option was designed to allow owners of Housing Credit properties a way to exit the program after the first 15 years.  The basic process is that owners ask the allocating agency to secure an offer to purchase the property.  If the agency is unable to present a contract for a certain price, the extended use period terminates.  For more information on this subject see our Y15 bibliography.

The IRS Code contains some of the basic provisions for handling qualified contract requests.  However, there are a number of important questions that have not been answered through federal regulation or other guidance.  Therefore the Agency has adopted rules that will allow proper administration of this process.

Owners who are interested in submitting a request should review the Agency’s qualified contract policies and application.

The Agency’s overall goal for affordable housing properties is to determine the best course of action for the tenants, owners and buildings.  Unfortunately the qualified contract option, as proscribed in federal law, does not necessarily lead to this result.  In most cases there are other alternatives that are more appropriate, such as a sale subject to the program restrictions and/or using one of the many subsidy resources available.  Agency staff is ready and willing to work with owners seeking other options.

Post Year 15 Compliance

For those owners not seeking to exit the program, the compliance rules will be greatly simplified.  Essentially the only remaining requirements will be those in the property’s extended use agreement.See the complete listing of post-Year 15 compliance policies.