Carryovers and Binding Agreements
Attention 2016 Tax Credit Award Recipients:
In order for HMFA to convert your 2016 reservation of tax credits into an allocation recognized by the Internal Revenue Service, please provide the following no later than November 30, 2016. If you cannot meet the November 30, 2016 deadline, you may request an extension and, if approved, pay an extension fee of $1,000 for every week the submission is late. This fee cannot be waived.
- One half of the allocation fee. The total allocation fee equals 2% of the allocated credit amount over the credit period. The remainder of the fee is due prior to the issuance of the IRS Form 8609;
- Notification of the project's anticipated placed in service date;
- Sponsor Certification (25k PDF)
- Carryover Allocation Form (44k DOC file) and Table B (37k DOC file) (follow the instructions (19k PDF) );
- 15-Year Operating Proforma signed by your first mortgage lender that exclusively reflects the following language verbatim: "We acknowledge that this proforma substantially matches the assumptions used in our underwriting of the mortgage." Should your project not have a first mortgage lender, your syndicator should sign the proforma. A new proforma does not have to be submitted if there have been no changes to your operating proforma since application.
- Current Breakdown of Costs and Basis. If financing sources have changed since application/binding agreement, please submit updated firm commitments.
- If available, a copy of the recorded deed conveying title to the final ownership entity. The deed book and page numbers should be clearly indicated so that NJHMFA tax credit staff can accurately complete the Deed of Easement and Restrictive Covenant for Extended Low-Income Occupancy. Upon completion, the deed restriction will be forwarded to you for review, execution and recordation.
- Tax Clearance Certification (70k PDF) - Please submit this application directly to the Division of Taxation, do not send it to HMFA. Please only include the actual tax clearance certificate in your Carryover package. A Tax Clearance Certificate is valid for 180 days. If you currently have a certificate that is set to expire before Dec. 31, you must resubmit a new application to the Division of Taxation.
- Pre-construction approval from the Green Homes division. Contact Pamela DeLosSantos at 609-278-7627 for more information.
Please note that the Independent Auditors' Report (43k DOC file) (with attachment (305k XLS file) ) showing the 10% test has been met is due six months after the carryover is signed (as opposed to Nov 30). An audited cost certification can be submitted in lieu of a 10% test.
- For projects with an award of tax credits from a future year’s allocation, please submit the “Form of Binding Agreement” in lieu of the Carryover Forms. Please submit all other items above, as applicable.
Gross Rent Floor Election
Revenue Procedure 94-57 clarifies that the gross rent an owner may charge will not fall below the rent limit that was in effect either at the time of initial allocation* (default) or at the owner’s election, the rent limit that is in effect at the placed in service date.
- *For 9% projects, the initial allocation is the date of carryover.
- *For 4% projects, the initial allocation is the date of the 42m determination.
If the owner wishes to select the rent limits in effect at the placed in service date, a notification letter must be submitted to the Frank Sciarrotta, Manager of Tax Credit Compliance BEFORE any building is placed in service.
If notice is not received, or if it is received after the placed in service date, the gross rent floor will be the rent limits in effect at the time of initial allocation.* This is a one time, irrevocable election.