Transcript Spectrum Enterprises & CHFA

Spectrum
Enterprises
& CHFA
Welcome to the Compliance Meeting
April 26, 2005
SPECTRUM Compliance Monitoring
 Our Compliance Reports to CHFA are based on the review
of:

Annual Record Keeping Submissions – This includes the
electronic Unit History Report (a.k.a. Status Report),
Owner’s Certification, and utility allowance documentation.

On Site File Review – 20% of in-place households
(minimum of 3) will be chosen at random for compliance
review.

On Site Physical Inspection – all buildings, common areas,
grounds and 20% of LIHTC units (minimum of 3). These
units will correspond to the random units selected for file
review.
SPECTRUM Compliance Monitoring
 Annual Record Keeping Submissions:

Please be sure that CHFA & Spectrum have accurate and complete
information for contacting the owner/agent of each property with
LIHTC funding. Update this information in the Unit History Report
at least annually. Contact CHFA & Spectrum immediately if there is
any change.

Owners will receive written instructions along with applicable
deadlines for completing this report.

The software is posted on our website for download.
www.spectrumlihtc.com

The electronic Unit History Report tracks development data along
with unit history statistics for all units and buildings.

This report is also used to review your initial qualified basis.
SPECTRUM Compliance Monitoring
 Annual Record Keeping Submissions:

The annual Owner’s Certification of Continuing LIHTC Program
Compliance will be reviewed for consistency from year to year.

The Unit History Report will also be reviewed for a number of items,
including the following:

Consistency with the tenant files and Schedule A reporting to the
IRS

Late annual certifications

Rent-restriction and over-income households

Initial qualifying basis and Minimum Set-Aside compliance

Vacant Unit and Next Available Unit (140%) Rules

Compliance with the Extended Low-Income Housing Commitment
SPECTRUM Compliance Monitoring

Tenant File Review:

We will schedule a visit to your project. You will be notified in advance
of this.

20% of all current LIHTC households (minimum of 3) will be randomly
selected for review.

Be sure to use all required & recommended forms, which are in Section
6 of the CHFA Compliance Manual and are also posted on our website.
Failure to do so can result in reports of non-compliance.

Be sure that everyone involved in the Tenant Certification process is
familiar with the CHFA Compliance Manual. This is available for
download on our website.

In 2003, HUD published 4350.3 REV-1. All staff personnel involved in
the tenant certification process should be familiar with this handbook.

These two manuals can answer most questions that arise in respect to
tenant files compliance.
SPECTRUM Compliance Monitoring

Tenant File Review - Make sure your on-site staff can answer the following
questions:

What is the property’s year of allocation?

How many buildings are in the project?

What is the Placed In Service date for all buildings?

What is the Minimum Set-Aside? Is it across the entire project or
building-by-building?

What percentage of the project is LIHTC? Which units are LIHTC?

In what year will credits be first claimed? Alternatively – what was the
first year credits were claimed for existing projects?

What utilities are paid by tenant? What is the applicable utility
allowance?

Are there set-aside units (designated handicapped, deep income
targeting, etc.)? If so, these must be identified.
SPECTRUM Compliance Monitoring
 Tenant File Review:

This program can be very confusing for people who are
unfamiliar with its requirements.

CHFA now requires continual industry-recognized training &
certification of all staff personnel involved in the Tenant
Certification process. There are a number of skilled and
qualified instructors who make this training available in all areas
of the US on a regular basis.

We also strongly suggest that all tenant files are approved prior
to move in. This could be performed by a third party LIHTC
specialist or by another manager with LIHTC experience within
the same company.

Reports of noncompliance most often stem from a lack of
training, lack of sufficient documentation, and confusion with the
rules of other programs in place at the same property.
SPECTRUM Compliance Monitoring
 Tenant File Review:

Please feel comfortable contacting our monitoring staff
with any questions about compliance requirements.

If you are working on a file and are unsure about a
circumstance which could be a compliance issue – please
remember to ask someone (us!) prior to occupying the
unit. Some noncompliance is not correctable; some
noncompliance is not easily correctable; and some
noncompliance can be very costly; but all
noncompliance is avoidable!

(207) 767-8000 – call anytime!
SPECTRUM Compliance Monitoring
 Tenant File Review:

It is generally a good practice to obtain as much
documentation as possible. We do not encourage
owner/agents to simply try to meet minimum
requirements.

For example, we would suggest recent tax returns, pay
stubs, and even bank account statements (showing all
deposits) be obtained to support the 3rd party verification
of income. All income data should be consistent. If it is
not – you will need to investigate further.

One caveat to this would be to maintain a sense of
structure, consistency, and organization in your files.
SPECTRUM Compliance Monitoring
 Physical Inspections – All buildings (exterior & interior), grounds,
common areas, and 20% of LIHTC units will be inspected.

HUD Uniform Physical Condition Standards as well as State
Building Code laws apply.

Fair Housing and ADA construction requirements will apply as
well.

An individual familiar to the tenants must accompany our
inspector while we inspect common areas and units.

If your property is located in a dangerous area, please identify
this to our staff when we contact you to schedule the inspection.
For the safety of all involved, arrangements should be made to
meet our inspector at a safe location.

Inspection certificates for boilers, elevators, fire extinguishers,
etc., must be available for review.
SPECTRUM Compliance Monitoring

Physical Inspections – Two types of noncompliance can result from our
physical inspection:
1) Major Violations of UPCS or local inspection standards. This would include
structural and roof detriments, blocked egresses, expired elevator or boiler
inspection certificates, non-functional or missing smoke detectors, pest
infestation, serious electrical, heating or plumbing inadequacies, common area
safety lighting problems.

There is a 24-hour window to correct any major physical inspection items

Major physical inspection findings in common areas can put all LIHTC units
in the building into noncompliance.

In some cases, isolated non-pattern physical issues that are corrected
during the inspection may not always be reported as noncompliance.
2) Minor Violations of UPCS or local inspection standards. Minor violations are
those that require correction but do not impair essential services an safeguards
for tenants.

There is a 30-day window from the date of the initial report to repair these.
SPECTRUM Compliance Monitoring
 After we review your property we will issue a report to
CHFA and the project owner.

Please note that management agents will not be provided
a copy of the report. It is the owner’s responsibility to do
so (if they wish).

There is a 30-day response period to this report.

If we note findings of potential noncompliance, please
work closely with us to resolve all issues before 8823’s
are issued.
SPECTRUM Compliance Monitoring
 After the 30 day response period has concluded, we will
issue the second – and final – report.

This will list any findings of noncompliance associated
with this review. We are required by federal law to report
any findings of noncompliance (corrected or not) that are
discovered.

At this time, Form 8823 will be generated, if needed.

There are two types of noncompliance – corrected
noncompliance and continuing noncompliance.

Part of our job is to help properties say in compliance. If
you are unsure of something, feel free to call us.
SPECTRUM Compliance Monitoring
 In Summary:

Make sure the information in your Unit History Report and the tenant files is
consistent.

Make sure that you and your on-site staff are familiar with the Connecticut
LIHTC Compliance Manual and the HUD 4350.3 REV-1.

It is often helpful to perform your own physical inspection and make any
necessary repairs prior to our arrival.

Reports are provided only to owners. It is the owner’s responsibility to
notify management of any potential findings of noncompliance.

If any potential findings are cited in the initial report, please respond to them
promptly.

We are available to answer LIHTC compliance questions: (207) 767-8000.