the REAC sampling methods . This means that often all buildings are not inspected . The HFA may not inform the owner which units will be inspected prior to the day of the inspection . Finally , the reasonable notice time that states are allowed to give of an upcoming inspection has been reduced from 30 days to 15 . All of these provisions remain in the final rule . |
begin corrections as soon as possible . If not , work should begin as soon as the letter is received . The state is required to give a limited time for corrections to be made before a form 8823 must be submitted to the IRS . |
Number of Low Income Units in the Project |
|
Number of Low Income Units in Selected for Review
( Minimum Unit Sample )
|
Here are some helpful hints to help a manager prepare for a visit from the HFA :
• Arrive on time for the audit and have all files on hand .
• Have a place prepared for the reviewer to review files . Having adequate light and a surface to work on is important . Even a folding table in a laundry room is better than nothing at a property without office or community room space .
• Find out if the auditor prefers the manager to stay close at hand to answer questions or would rather they wait to answer all their questions at once . This is a matter of individual auditor preference .
• Notify all residents of the physical inspection , giving sufficient time under the property lease and state law . Also , have keys on hand for all units . If the inspector cannot legally enter units , the state HFA is very likely to declare the units noncompliant .
• Do not be defensive or argumentative . Make sure that all interaction with the reviewer is professional . If the auditor is wrong on a point , a chance to dispute the point will come when the written report is received later . Many incorrect findings also disappear before the letter is written once an auditor has a chance to do some research of their own . Getting into a conflict does not serve anyone ’ s interests .
• Respond quickly to health and safety issues , and inform the HFA immediately when these are addressed . The inspector will provide the timeframe for corrections , generally 24 to 72 hours .
• The HFA may send the report to the owner or a key person at the property management company , and they may not be the site manager . The site manager should make sure that they ask this person if the letter has arrived regularly until it comes . This prevents unnecessary delay in getting started on the fixes .
• If the auditor conducts an exit interview ,
Due Diligence and File Audits
To maintain compliance , the IRS emphasizes the need for due diligence . Chapter 3 of the 8823 Guide explains that “ compliant behavior can be demonstrated when a LIHTC property owner exercises ordinary business care and prudence in fulfilling its obligations . Due diligence can be demonstrated in many ways , including ( but not limited to ) establishing strong internal controls ( policies and procedures ) to identify , measure , and safeguard business operations and avoid material misstatements of LIHTC property compliance or financial information .”
The guide explains that internal controls include :
1 . Separation of duties , 2 . Adequate supervision of employees ,
3 . Management oversight and review ( internal audits ),
4 . Third-party verifications of tenant income ,
5 . Independent audits , and 6 . Timely recordkeeping .
Note the importance placed on internal and external audits commissioned by the owner . Each of the measures on the list relates in some degree to these types of file reviews . Smart owners incorporate file review systems into their procedures or contract with the assistance of a reputable compliance firm . This can include audits of files prior to household move-in or spot checks of a percentage of current household files . The 8823 Guide also discloses that an 8823 is not to be turned in if an issue is discovered and corrected by an owner / agent prior to the HFA informing of an upcoming audit . This is a powerful allowance , and it is , therefore , important for all professionals to work with company systems designed to provide internal controls and increase the chances that a visit from the HFA will go smoothly .
2 2 3 3 4 4
5-6 5 7 6 8-9 7 10-11 8 12-13 9 14-16 10 17-18 11 19-21 12 22-25 13 26-29 14 30-34 15 35-40 16 41-47 17 48-56 18 57-67 19 68-81 20 82-101 21 102-130 22 131-175 23 176-257 24 258-449 25 450-1,461 26 1,462-9,999 27
From Chart in § 1.42-5 ( c )( 2 )( iii )
Scott Michael Dunn , 2019 HCCP of the Year , is the CEO of Costello Compliance and Director of Policy for the Costello Companies . The Costello Companies are developers , builders and managers of affordable housing with clients throughout the country . www . aamdhq . org OCTOBER 2021 TRENDS | 23