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The Oregon Administrative Rules contain OARs filed through July 15, 2015
 
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HOUSING AND COMMUNITY SERVICES DEPARTMENT

 

DIVISION 90

LOW-INCOME HOUSING TAX CREDIT PROGRAM

813-090-0005

Purpose

The rules of OAR chapter 813, division 90, are promulgated to carry out the provisions and enforce ORS 456.515 through 456.720, and specifically 456.559(1)(f). These rules implement the Low-Income Housing Tax Credit (LIHTC) Program. The program’s objective is to assist and encourage the development of affordable housing rental units for low-income households through the allocation of housing tax credits as provided by Section 42 of 1986, as amended of the Internal Revenue Code (IRC). The department has been designated as the housing tax credit allocating agency for the state of Oregon. Additional LIHTC program policies and instructions are outlined in the LIHTC program manual dated June 2, 2014 (the “LIHTC Manual” or “Manual,” and the General Policy and Guideline Manual may be accessed online on the department’s website.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 183 & 456.515 - 456.720
Stats. Implemented: ORS 456.559(1)(f)
Hist.: HSG 13-1987(Temp), f. & ef. 9-28-87; HSG 1-1988, f. & cert. ef. 3-8-88; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 18-1989, f. & cert. ef. 11-3-89; HSG 12-1990(Temp), f. & cert. ef. 5-29-90; HSG 14-1990, f. & cert. ef. 10-26-90; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 7-1991, f. & cert. ef. 12-19-91; OHCS 10-2013(Temp), f. & cert. ef. 6-21-13 thru 12-18-13; Administrative correction, 2-5-14; OHCS 27-2014(Temp), f. & cert. ef. 6-5-14 thru 12-2-14; OHCS 38-2014, f. & cert. ef. 12-2-14

813-090-0010

Definitions

All words and terms used in OAR chapter 813, division 90 are as provided in 813-005-0005 and herein. As used in these rules:

(1) “Applicant” means a person or entity that applies for an allocation of Housing Credit from the Department by completing an application provided by the Department.

(2) “Carryover allocation” means an allocation of housing credit made to a proposed project owner by the department for a proposed project which is not yet eligible to receive an allocation form 8609 and which is over ten percent completed as of the end of the calendar year in which the allocation is made.

(3) “Credit authority” means the dollar amount of housing credit available for allocation by the department for any calendar year and may include estimates of future amounts.

(4) “Housing credit” means the low-income housing tax credit available to a project pursuant to IRC section 42. The amount of low income housing tax credit available for allocation to a project is that amount which the department determines is necessary to make the project financially feasible but in no instance may it be greater than the applicable percentage of the qualified basis of each qualified low income building.

(5) “Housing credit agency” means designated state agency that will implement Section 42 on behalf of the Internal Revenue Service.

(6) “IRC” means the Internal Revenue Code of 1986, as amended.

(7) “Oregon agency” and “Department” mean the Oregon state agency of the state of Oregon.

(8) “Project” means a qualified low income housing project as defined in IRC Section 42(g). A project may include one or more buildings and any associated common area and may be located on scattered sites, if each of the dwelling units within each building is rent-restricted as required in IRC Section 42(g).

(9) “NOFA” means Notice of Funding Availability.

(10) “Reservation and extended use agreement” is a contract between the department and the proposed project owner whereby the proposed project owner agrees, among other things, to provide and maintain the project and to guarantee its compliance with the requirements of IRC Section 42 and the department by executing and recording the Declaration of Land Use Restrictive Covenants on the project in return for an allocation of housing credit in accordance with IRC Section 42(h)(6). It will also include by reference the carryover allocation agreement.

Stat. Auth.: ORS 183 & 456.515 - 456.720
Stats. Implemented: ORS 456.559(1)(f)
Hist.: HSG 13-1987(Temp), f. & ef. 9-28-87; HSG 1-1988, f. & cert. ef. 3-8-88; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 18-1989, f. & cert. ef. 11-3-89; HSG 12-1990(Temp), f. & cert. ef. 5-29-90; HSG 14-1990, f. & cert. ef. 10-26-90; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 7-1991, f. & cert. ef. 12-19-91; OHCS 10-2013(Temp), f. & cert. ef. 6-21-13 thru 12-18-13; Administrative correction, 2-5-14; OHCS 27-2014(Temp), f. & cert. ef. 6-5-14 thru 12-2-14; OHCS 38-2014, f. & cert. ef. 12-2-14

813-090-0015

Allocation of Credit Authority

(1) The department may, to the extent of its credit authority, allocate housing credits pursuant to a qualified allocation plan of the department approved by executive order.

(2) The department shall allocate the housing credit in compliance with the requirements of IRC Section 42, applicable regulations and revenue procedures enacted or adopted thereunder, ORS 456.559(1)(f) and the rules of this division. Applications will be solicited during specified periods within the department’s Notice of Funding Availability (NOFA). The department may also select from a pool of qualified applicants, or such other process the department deems appropriate.

(3) The department shall maintain a record of allocations and the balance of credit authority remaining for each calendar year. The records shall account separately for credit authority set-aside under OAR 813-090-0067 and 813-090-0027.

Stat. Auth.: ORS 456.555
Stats. Implemented: ORS 456.508, 456.510, 456.513, 456.559, 456.605, 456.626, 456.722
Hist.: HSG 13-1987(Temp), f. & ef. 9-28-87; HSG 1-1988, f. & cert. ef. 3-8-88; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 18-1989, f. & cert. ef. 11-3-89; HSG 12-1990(Temp), f. & cert. ef. 5-29-90; HSG 14-1990, f. & cert. ef. 10-26-90; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 7-1991, f. & cert. ef. 12-19-91; OHCS 10-2013(Temp), f. & cert. ef. 6-21-13 thru 12-18-13; Administrative correction, 2-5-14; OHCS 27-2014(Temp), f. & cert. ef. 6-5-14 thru 12-2-14; OHCS 38-2014, f. & cert. ef. 12-2-14

813-090-0025 [Renumbered to 813-090-0067]

813-090-0029 [Renumbered to 813-090-0039]

813-090-0030 [Renumbered to 813-090-0037]

813-090-0031

Application Requests and Charges

(1) The department may solicit applications for an allocation of housing credit from interested parties when such credit is available.

(2) The department may require a non-refundable application charge from any applicant requesting low income housing tax credits through the consolidated funding cycle or otherwise.

(3) The department may require a supplemental application charge from applicants requesting additional resources for projects that have already been funded by the department.

(4) The department may require a transfer application charge from owners of projects that receive grants or tax credits through the department, who request the department's approval of a change in project ownership. Exempt from this is an initial transfer of ownership occurring in the first year after the placed-in-service date of the project. The department may assess a transfer review charge to project owners and transferees who effect a change in project ownership without prior written department approval.

(5) The department may require a recipient charge from any applicant prior to the execution of a reservation and extended use agreement.

(6) The department may assess additional late charges to an applicant if its LIHTC final application is received by the department after established deadlines. The department also may assess a supplemental charge to an applicant if the department determines that a re-evaluation of the applicant's final application is necessary or warranted.

(7) If the housing credits awarded to a project cannot be used by the end of the calendar year of the tax credit allocation and the owner is expected to incur 10% of project costs, an application for a carryover allocation of housing credits must be made by the deadline established by the department for the credit year or the credits will be lost. The department may require a supplemental application charge from an applicant who submits an LIHTC carryover application after the deadlines established by the department. The department also may assess a supplemental charge to an applicant if the department determines that a re-evaluation of the applicant's carryover application is necessary or warranted.

(8) The carryover requirements do not apply to LIHTC projects using tax-exempt bond financing.

(9) The applicant shall submit an application for final allocation of housing credits when the project is placed in service. The department shall prescribe the period for submitting a final application. The department may assess a late charge for applicants that submit applications after the prescribed deadline. The department also may assess a supplemental charge to an applicant if the department determines that a re-evaluation of the applicant's final application is necessary or warranted.

(10) The department may charge the project owner reasonable charges for the department's costs of monitoring the project owner's compliance with restrictions established by the department and IRC Section 42 or applicable law.

(11) The department shall evaluate completed applications based on a ranking system consistent with IRC Section 42(m)(l), established by the department and set forth in the department's qualified allocation plan.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 456.515 - 456.720
Stats. Implemented: ORS 456.559(1)(f)
Hist. HSG 12-1990(Temp), f. & cert. ef. 5-29-90; HSG 14-1990, f. & cert. ef. 10-26-90; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 7-1991, f. & cert. ef. 12-19-91; OHCS 9-2006(Temp), f. & cert. ef. 8-4-06 thru 1-30-07; OHCS 8-2007, f. & cert. ef. 1-11-07; Suspended by OHCS 10-2013(Temp), f. & cert. ef. 6-21-13 thru 12-18-13; OHCS 27-2014(Temp), f. & cert. ef. 6-5-14 thru 12-2-14; OHCS 38-2014, f. & cert. ef. 12-2-14

813-090-0035

Applications for Low-Income Housing Tax Credits

(1) Applicants must submit an application form along with any applicable charges as given in Section 813-090-0031, to qualify for an allocation of Low-Income Housing Credits. The application required by the Department may request, among other information, the following:

(a) The amount of Housing Credit requested;

(b) Building location: state, county, town, street address and legal description;

(c) An initial statement based on waiting list information from the local public housing authority indicating whether or not there is a need for the proposed project;

(d) The qualified basis as defined in IRC Section 42, including the amount of substantial rehabilitation, if any;

(e) What elections under Section 42 the proposed Project owner will be making or has made to qualify for an allocation of Housing Credit, and when the housing units will be/were placed in service;

(f) Complete financial information about the proposed Project showing all sources and uses of funds;

(g) Operating proforma statement on a cash flow basis showing net operating income before debt service;

(h) Evidence of a commitment for financing, federal loan insurance, or other major source of funds;

(i) A detailed summary of the proceeds or receipts expected to be generated by reason of tax benefits; and

(j) Other financial information regarding grants, subsidies, or tax-exempt financing for the proposed Project.

(2) Before the Department makes an offer of a Housing Credit allocation to a proposed Project owner it shall:

(a) Review all applications;

(b) Determine the amount of Housing Credit each proposed Project needs to receive to be financially feasible;

(c) Rank the applications pursuant to the Department’s qualified allocation plan and IRC Section 42;

(d) Notify the chief executive officer (or the equivalent) of the local jurisdiction with in which the proposed Project is located and provide such individual a reasonable opportunity to comment on the proposed Project to the Department. When a proposed Project is located outside an incorporated community, the county commissioners for the county of jurisdiction shall be contacted; and

(e) Notify Applicants whether or not they will receive an offer to execute a Reservation and Extended Use Agreement with the Department.

Stat. Auth.: ORS 456.555
Stats. Implemented: ORS 456.508, 456.510, 456.513, 456.559, 456.605, 456.625, 456.722
Hist.: HSG 13-1987(Temp), f. & ef. 9-28-87; HSG 1-1988, f. & cert. ef. 3-8-88; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 18-1989, f. & cert. ef. 11-3-89; HSG 12-1990(Temp), f. & cert. ef. 5-29-90; HSG 14-1990, f. & cert. ef. 10-26-90; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 7-1991, f. & cert. ef. 12-19-91; OHCS 9-2006(Temp), f. & cert. ef. 8-4-06 thru 1-30-07; OHCS 8-2007, f. & cert. ef. 1-11-07; OHCS 10-2013(Temp), f. & cert. ef. 6-21-13 thru 12-18-13; Administrative correction, 2-5-14

813-090-0036

Procedures for Allocation of Low-Income Housing Tax Credit (the “Carryover Allocation Agreement”

(1) Applicants selected for an offer under OAR 813-090-0035 must execute with the department a reservation and extended use agreement in a form satisfactory to the department. The reservation and extended use agreement will include, among other things, a provision for financial evaluation of the project based on cost certification and will incorporate a declaration of land use restrictive covenants to be executed and recorded prior to the department completing a form 8609 and delivering a copy thereof to the applicant.

(2) If the housing credit cannot be used in the year of allocation but the proposed project in the next calendar year is expected to be over 10 percent completed, a carryover allocation may be made. If a carryover allocation has been made, the owner shall submit the application for final allocation of housing credit when the project is placed in service. The department shall limit at the time of the extension/provision of a carryover allocation, the maximum annual allocation of credit which the proposed project may receive.

(3) Upon receipt of a certified copy of the recorded declaration of land use restrictive covenants in a form satisfactory to the department, the department shall complete and issue Part I of Internal Revenue Service Form 8609 to confirm final allocation of housing credits.

(4) The project owner shall be responsible for filing the required IRS Form with his or her tax return.

(5) An allocation may not be rescinded or reduced by the department except as provided under OAR 813-090-0080. Proposed project owners may return unneeded housing credit by completing and filing with the department, forms supplied by the department.

Stat. Auth.: ORS 456.515 - 456.720
Stats. Implemented: ORS 456.559(1)(f)
Hist.: HSG 12-1990(Temp), f. & cert. ef. 5-29-90; HSG 14-1990, f. & cert. ef. 10-26-90; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 7-1991, f. & cert. ef. 12-19-91; OHCS 9-2006(Temp), f. & cert. ef. 8-4-06 thru 1-30-07; OHCS 8-2007, f. & cert. ef. 1-11-07; Suspended by OHCS 10-2013(Temp), f. & cert. ef. 6-21-13 thru 12-18-13; OHCS 27-2014(Temp), f. & cert. ef. 6-5-14 thru 12-2-14; OHCS 38-2014, f. & cert. ef. 12-2-14

813-090-0037

Qualified Allocation Plan and Project Evaluation

(1) The department shall develop and maintain a capitalized Qualified Allocation Plan for the allocation of housing credit.

(2) The department may periodically solicit applications or select projects from a pool of qualified applications for the allocation of housing credit pursuant to the department's capitalized Qualified Allocation Plan (“QAP”), program manual and General Policy and Guideline Manual. Applications will be evaluated consistent with IRC Section 42, ORS 456.559(1)(f), the rules of this division and procedures consistent with the department goals to provide long term affordable housing.

Stat. Auth.: ORS 456.515 - 456.720
Stats. Implemented: ORS 456.559(1)(f)
Hist.: HSG 12-1990(Temp), f. & cert. ef. 5-29-90; HSG 14-1990, f. & cert. ef. 10-26-90; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 7-1991, f. & cert. ef. 12-19-91; Renumbered from 813-090-0030 by OHCS 5-2013, f. & cert. ef. 6-21-13; OHCS 10-2013(Temp), f. & cert. ef. 6-21-13 thru 12-18-13; Administrative correction, 2-5-14; OHCS 27-2014(Temp), f. & cert. ef. 6-5-14 thru 12-2-14; OHCS 38-2014, f. & cert. ef. 12-2-14

813-090-0039

Reservation and Extended Use Agreement Low-Income Commitment

(1) No allocation shall be made by the department to an applicant until or unless the department and the applicant enter into a reservation and extended use agreement (“REUA”). The reservation and extended use agreement shall specify, among other things, a minimum applicable unit fraction as defined by IRC Section 42(c)(1)(B) and the rent formula to be maintained for the project to continue to qualify for housing credit.

(2) An executed reservation and extended use agreement shall be enforceable in any state court by any individual who qualified for occupancy by virtue of the income limitation set for such buildings; shall be binding on all successors of the applicant; and the declaration of land use restrictive covenants incorporated within the reservation and extended use agreement shall be recorded pursuant to state law as a restrictive covenant.

(3) The housing credit allocation may not exceed the amount necessary for the financial feasibility of those units of the project represented by the applicable fraction at the restricted rents specified in the reservation and extended use agreement.

(4) The reservation and extended use agreement shall include a commitment to meet the applicable fraction and restricted rent requirements for 15 years or more beyond the initial 15

year compliance period and may postpone for a specific time the project owner's rights under IRC Section 42(h)(6) to terminate the commitment after the initial 15 year compliance period.

Stat. Auth.: ORS 456.515 - 456.720
Stats. Implemented: ORS 456.559(1)(f)
Hist.: HSG 14-1990, f. & cert. ef. 10-26-90; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 7-1991, f. & cert. ef. 12-19-91; Renumbered from 813-090-0029, OHCS 5-2013, f. & cert. ef. 6-21-13; OHCS 10-2013(Temp), f. & cert. ef. 6-21-13 thru 12-18-13; Administrative correction, 2-5-14; OHCS 27-2014(Temp), f. & cert. ef. 6-5-14 thru 12-2-14; OHCS 38-2014, f. & cert. ef. 12-2-14

813-090-0040

Qualified Basis Limited by Application

The qualified basis established for the Project at the time the Housing Credit is allocated may not be increased without the Applicant submitting another application for an additional Housing Credit allocation in accordance with OAR 813-090-0031.

Stat. Auth.: ORS 456.555
Stats. Implemented: ORS 456.508, 456.510, 456.513, 456.559, 456.605, 456.625, 456.722
Hist.: HSG 13-1987(Temp), f. & ef. 9-28-87; HSG 1-1988, f. & cert. ef. 3-8-88; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 18-1989, f. & cert. ef. 11-3-89; HSG 12-1990(Temp), f. & cert. ef. 5-29-90; HSG 14-1990, f. & cert. ef. 10-26-90; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 7-1991, f. & cert. ef. 12-19-91; OHCS 10-2013(Temp), f. & cert. ef. 6-21-13 thru 12-18-13; Administrative correction, 2-5-14

813-090-0055

Amount of Tax Credits

The department’s determination of the amount of low-income housing tax credits for a project may not exceed the amount necessary for the financial feasibility of the units of the project that are represented by the applicable fraction at the restricted rents specified in the agreement under OAR 813-090-0031. The amount of LIHTC available may further not exceed the applicable percentage of the qualified basis of each qualified low-income building.

Stat. Auth.: ORS 456.555
Stats. Implemented: ORS 456.508, 456.510, 456.513, 456.559, 456.605 & 456.722
Hist.: OHCS 38-2014, f. & cert. ef. 12-2-14

813-090-0060 [Renumbered to 813-090-0080]

813-090-0064

Set-Aside

The department shall set aside ten percent of the amount of its competitive annual authority issued by the Internal Revenue Service to the department for tax credit reservations to applicants involving the participation of a not-for-profit entity in the development or operation, or both, of a low-income housing project.

Stat. Auth.: ORS 456.555
Stats. Implemented: ORS 456.508, 456.510, 456.513, 456.559, 456.605 & 456.722
Hist.: OHCS 38-2014, f. & cert. ef. 12-2-14

813-090-0065

Representations

The Department shall rely on representations of the Applicant, including all agents and parties of interest, in reviewing applications and evaluating the amount of Housing Credit needed and whether a proposed Project qualifies for a Housing Credit allocation, and shall not validate the financial feasibility of a proposed or established Project, credit worthiness of the Applicant, or tax consequences of the Housing Credit for the Project, the Applicant or any other interested party.

Stat. Auth.: ORS 456.515 - 456.720
Stats. Implemented: ORS 456.559(1)(f)
Hist.: HSG 12-1990(Temp), f. & cert. ef. 5-29-90; HSG 14-1990, f. & cert. ef. 10-26-90; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 7-1991, f. & cert. ef. 12-19-91; Suspended by OHCS 10-2013(Temp), f. & cert. ef. 6-21-13 thru 12-18-13

813-090-0067

Non-Profit Set Aside

Ten percent of the Credit Authority for any calendar year shall be reserved for allocations to Projects involving a qualified non-profit low-income housing organization.

Stat. Auth.: ORS 183 & ORS 456.515 - 456.720
Stats. Implemented: ORS 456.559(1)(f)
Hist.: HSG 13-1987(Temp), f. & ef. 9-28-87; HSG 1-1988, f. & cert. ef. 3-8-88; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 18-1989, f. & cert. ef. 11-3-89; HSG 12-1990(Temp), f. & cert. ef. 5-29-90; HSG 14-1990, f. & cert. ef. 10-26-90; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 7-1991, f. & cert. ef. 12-19-91; Renumbered from 813-090-0025, OHCS 5-2013, f. & cert. ef. 6-21-13; OHCS 10-2013(Temp), f. & cert. ef. 6-21-13 thru 12-18-13; Administrative correction, 2-5-14

813-090-0070 [Renumbered to 813-090-0095]

813-090-0080

Revocation or Reduction of Housing Credit

(1) The department may refuse to make an offer, may revoke an offer of a housing credit allocation, or may terminate a reservation and extended use agreement, if the department determines that:

(a) The proposed project owner will not obtain a construction loan or building permit, or close its equity agreement for the proposed project in a timely manner;

(b) The proposed project will not be placed in service by the date mutually agreed upon;

(c) The proposed project financing is not committed as indicated; or

(d) The applicant has supplied misleading information.

(2) The department may reduce the allocation amount identified in the reservation and extended use agreement prior to the issuance of a copy of a carryover allocation or Form 8609 to the project owner if the department determines that the project requires a lesser amount of housing credit to be financially feasible, as required in IRC Section 42(m).

(3) When the department has issued a carryover allocation, the department may reduce the allocation amount identified in the carryover allocation prior to the delivery of a copy of a Form 8609 to the project owner if the department determines that the project requires a lesser amount of housing credit than previously determined to be financially feasible.

(4) The department may revoke a carryover allocation if the department determines that at least 10% of the total project cost will not be expended in accordance with the carryover requirements in Internal Revenue Code Section 42, or that the project will not be placed in service within two years following the calendar year in which a carryover allocation is made or by the dates mutually agreed upon.

Stat. Auth.: ORS 183 & 456.515 - 456.720
Stats. Implemented: ORS 456.559(1)(f)
Hist.: HSG 13-1987(Temp), f. & ef. 9-28-87; HSG 1-1988, f. & cert. ef. 3-8-88; HSG 3-1989(Temp), f. & cert. ef. 6-8-89; HSG 18-1989, f. & cert. ef. 11-3-89; HSG 12-1990(Temp), f. & cert. ef. 5-29-90; HSG 14-1990, f. & cert. ef. 10-26-90; HSG 2-1991(Temp), f. & cert. ef. 8-7-91; HSG 7-1991, f. & cert. ef. 12-19-91; Renumbered from 813-090-0060, OHCS 5-2013, f. & cert. ef. 6-21-13; OHCS 10-2013(Temp), f. & cert. ef. 6-21-13 thru 12-18-13; Administrative correction, 2-5-14; OHCS 27-2014(Temp), f. & cert. ef. 6-5-14 thru 12-2-14; OHCS 38-2014, f. & cert. ef. 12-2-14

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