319.995 - Compliance with certain provisions during compliance period; preparation of compliance manual by Division; records and reports; annual certification; inspections; notification of noncompliance; fees
319.995. Compliance with certain provisions during compliance period; preparation of compliance manual by Division; records and reports; annual certification; inspections; notification of noncompliance; fees
1. Each project sponsor shall, for the compliance period, comply with the provisions of NAC 319.951 to 319.998, inclusive, any commitments made by the sponsor in its application for tax credits, the declaration of restrictive covenants and conditions and the Code. The failure of the project sponsor to comply with those provisions may result in a revocation of the allocated tax credits by the Internal Revenue Service and other action by the Division, including, without limitation, placing the project sponsor on probation, as set forth in the qualified allocation plan.
2. The Division will prepare and periodically revise a compliance manual specifying the forms that must be used and any other requirements for project sponsors. The Division will provide a copy of the compliance manual to each applicant when tax credits are allocated pursuant to the provisions of NAC 319.951 to 319.998, inclusive. The Division will post on its Internet website a copy of the compliance manual for the current and immediately preceding plan year. A project sponsor may obtain copies of the compliance manuals for other plan years from the Division upon the payment of a fee to cover the costs of those copies.
3. Each project sponsor shall maintain records for each building in the project. The records must include the following information for each year of the compliance period:
(a) The total number of units in the building, including the number of bedrooms and the size in square feet of each of those units;
(b) The percentage of units in the building that are low-income units;
(c) The rent charged for each unit in the building, including any allowances for utilities;
(d) The number of occupants in each low-income unit, if the rent for those units is determined by the number of occupants in each unit pursuant to the provisions of section 42(g)(2) of the Code that are in effect before the effective date of the amendments to the Code made pursuant to the Revenue Reconciliation Act of 1989, 26 U.S.C. §§ 898, 4471, 4472, 4681, 4682, 4978 B and 6662 to 6665, inclusive;
(e) The vacancies in the low-income units in the building and any information that indicates the date and each person to whom the next available units were rented;
(f) An annual certification of the income of each low-income tenant;
(g) Documentation to support the certification of the income of each low-income tenant;
(h) The eligible basis and qualified basis of the building at the end of the first year of the credit period as defined in section 42(f)(1) of the Code;
(i) The character and use of the nonresidential portion of the building included in the eligible basis of the building pursuant to section 42(d) of the Code; and
(j) The date that each resident initially occupies a rental unit.
4. The project sponsor shall maintain:
(a) The records specified in subsection 3 for at least 6 years after the date for filing the federal income tax return for that year; and
(b) The records for the first year of the credit period as defined in section 42(f)(1) of the Code for at least 6 years after the date for filing the federal income tax return for the last year of the compliance period as defined in section 42(i)(1) of the Code relating to a building in the project.
5. The project sponsor shall, at least annually, certify to the Division under penalty of perjury that, during the immediately preceding 12 months:
(a) The project was in compliance with the provisions of the declaration of restrictive covenants and conditions concerning the number of units in the project for which rent is restricted and the amount of rent for those units;
(b) The project sponsor has received an annual certification of the income of each low-income tenant and documentation to support that certification or, if the tenant receives payments for housing assistance pursuant to section 8 of the United States Housing Act of 1937, 42 U.S.C. § 1437 f, a statement from a public housing authority;
(c) The rent for each low-income unit in the project was restricted pursuant to section 42(g)(2) of the Code;
(d) Each unit in the project, other than transitional housing for the homeless provided pursuant to section 42(i)(3)(B)(iii) of the Code, was available for occupancy by a member of the public and used on a nontransient basis;
(e) Each building in the project was suitable for occupancy in accordance with local health, safety and building codes;
(f) The eligible basis of any building in the project did not change, or if there was a change, the nature of the change;
(g) The applicable fraction, as defined in section 42(c)(1)(B) of the Code, of any building in the project did not change;
(h) The facilities for tenants included in the eligible basis of any building in the project pursuant to section 42(d) of the Code, including swimming pools, parking areas and any other recreational facilities, were provided on a comparable basis without charge to each tenant in the building;
(i) If a low-income unit in the project has been vacant during the year, reasonable efforts were made to rent that unit or the next available unit of comparable or smaller size to tenants who had a qualifying income before any units in the project were rented to tenants who did not have a qualifying income;
(j) If the income of tenants of a low-income unit in the project increased above the limit specified in section 42(g)(2)(D)(ii) of the Code, the next available unit of comparable or smaller size in the project was rented to tenants who had a qualifying income; and
(k) The project remained subject to the declaration of restrictive covenants and conditions for low-income housing tax credits.
6. Each project sponsor shall, on or before the first day of each calendar quarter, provide a report to the Division on the form provided in the compliance manual. The report must include, without limitation:
(a) The number of units occupied by low-income tenants and other tenants;
(b) The number of certified units;
(c) The identification number of the building;
(d) The amount of rent for and the type of each unit; and
(e) The name, household size, annual household income and annual date for certifying the income of each tenant.
7. The Division will review each report submitted pursuant to subsection 6. The Division will periodically conduct reviews of any portion of the records of the low-income units in each project. The Division will notify each project sponsor of those units that are designated by the Division for review. The notice must include a request for copies of documents, including:
(a) Rental applications submitted by tenants;
(b) The certification of annual income for each tenant, including the documents to support the certification; and
(c) The lease agreement for each tenant.
8. The Division will review the annual certifications and quarterly reports for compliance with the requirements of the Code and compliance manual. Each year, the Division will:
(a) Review at least 20 percent of the completed projects; and
(b) Randomly review the documentation of at least 20 percent of the low-income tenants, including a copy of the certification of annual income, the documentation the project sponsor has received to support that certification and the lease and the rental record.
The Division will notify the project sponsor before it conducts the inspection. The notice will not specify the records that will be examined.
9. The Division may perform inspections of any low-income housing project and each unit in the project during the compliance period. The inspection is in addition to any review of certifications of annual income, supporting documents and rental records specified in this section.
10. If the Division determines that a project sponsor has not complied with any provision of the Code or NAC 319.951 to 319.998, inclusive, the Division will notify the project sponsor and the Internal Revenue Service of the noncompliance. The Division will notify the project sponsor in writing if the Division does not receive the annual certification or does not receive or is not allowed to inspect the certifications of annual income of the tenants, supporting documents and rental records as specified in this section or in the compliance manual, or determines that the project is not in compliance with the provisions of the Code. The Division will file Internal Revenue Service Form 8823 with the Internal Revenue Service and indicate on the form the nature of the noncompliance or failure to certify and whether the project sponsor has corrected the noncompliance or failure to certify. Any change in the applicable fraction or eligible basis that results in a decrease in the qualified basis of the project pursuant to section 42(c)(1)(A) of the Code constitutes noncompliance that will be reported to the Internal Revenue Service. The Division will notify the Internal Revenue Service of any noncompliance regardless of whether the noncompliance is corrected by the project sponsor.
11. The Division will charge such fees as are necessary to cover the costs and expenses it incurs for any review conducted pursuant to this section.
Added to NAC by Housing Div. by R057-97, eff. 1-15-98; A by R115-14, eff. 10-27-2015
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