Q & A | My Utility Allowance Calculation is Late! How Bad is This?

Question from a Blog Reader

"Help! There was some confusion at our company with changes of staff and a tax credit utility allowance analysis was not done yet this year for several of our LIHTC properties. We do not use the PHA UA, so new calculations were done in March of last year, but haven't been done this year - and it is July! We have no other housing programs at the property, but I am worried about the tax credits. How much trouble are we in?"

Answer

Summary: Get the reviews done, but the tax credits are not yet in jeopardy of federal noncompliance. 

Treasury Regulation 1.42-10 (c)(2) describes the annual review rules for LIHTC utility allowances. It tells us that "a building owner must review at least once during each calendar year the basis on which utility allowances have been established and must update the applicable utility allowance" [underlined emphasis ours]. As a review was done last calendar year, technically one needs to be conducted sometime this calendar year, not necessarily by March. That means that there is still time to meet the annual requirement in July, conduct a new analysis, and adjust any rents as needed per the other timelines required in the LIHTC UA regulation.

Of course, your state allocating agency may have further UA requirements (for instance requiring analysis by the anniversary date of the last review) and you may have to work with them, but it is not a violation of the federal regulation, yet. The state will likely allow you to get "caught up" without determining that there is any noncompliance with the federal UA or rent rules.     

---

Looking for quality online on-demand Affordable Housing training for new managers? Or a great refresher for more experienced ones? Check out our Jump Start! New Manager Bundle. The bundle includes Qualifying Households for the programs that you need and Fair Housing Fundamentals. More information on this amazing bundle is HERE. 

---