California Tax Credit Allocation Committee

CTCAC Process for Reviewing Placed in Service (PIS) Applications

The goal of CTCAC’s placed in service team is to prepare the regulatory agreement and complete initial review of a PIS application within 60 days of receipt. Unfortunately, over 90% of the PIS applications often have multiple deficiencies or issues to clarify or correct. Finalizing the reviews often takes months, most often due to significant changes made to a project after a reservation of credit without notice to CTCAC and/or delays by developers in responding to and addressing these items. Project owners and developers can help to ensure a timely issuance of tax forms by putting the same level of effort into a PIS application as a 9% application and by implementing internal or external quality controls.

The sections below outline placed in service requirements and explain CTCAC’s review process.

Submission of the PIS Application

Within one year of a project’s construction or rehabilitation completion, the owner must submit a PIS application to CTCAC for review. This deadline is applicable to all CTCAC awarded projects. Short extensions may be granted on a case-by-case basis when requested in advance. Absent an extension, the owner may be subject to negative points. CTCAC conducts placed in service reviews (the steps described below) in the order the applications are received.

Step One – Review for Completeness

The first step in the review is a verification that the PIS application is substantially complete and accurate. This includes verifying the general accuracy and consistency of:

  • Form B;
  • ownership documents;
  • conformity of cost certification,
  • Form B, Excel application, investor certification;
  • land cost;
  • and other items.

This also includes a review of documentation used for preparing the regulatory agreement. If an application has considerable deficiencies, it may be returned to the project owner or developer and removed from CTCAC’s list of received PIS applications.

Step Two – Regulatory Agreement Preparation

Once CTCAC staff have determined that a PIS application is sufficiently complete, accurate, and in conformance to CTCAC program requirements, the next step is the regulatory agreement preparation. CTCAC staff typically prepares regulatory agreements for PIS applications within 2 weeks of the completion of Step One above. If there are inconsistencies or missing documentation needed for the regulatory agreement, CTCAC will contact the project owner during this process to address any issues for those specific documents.

Step Three – PIS Application Review and IRS Tax Form(s) 8609

After the regulatory agreement is prepared and sent, the next step in the placed in service review is assignment to a CTCAC staff member. CTCAC reviews the placed in service checklist as well as the following: the credit calculation, cash flow limits, developer fee limit, the construction profit and overhead 14% limit, minimum construction standards, any service or sustainability points received through CDLAC, the applicable fraction used by the owner in calculating the final credit amount, etc.

The PIS application review is not assigned to a CTCAC staff member until workload permits. This is to ensure staff has adequate time to review and respond to owner correspondence for all assigned PIS applications. CTCAC is in the process of increasing staffing for this function. Currently there are two analysts working on PIS application reviews: Elaine Johnson and Alex Ninh. Prior to staff assignment, projects are in an unassigned queue in order of receipt date. Projects are placed in this queue once the regulatory agreement has been sent to the owner. Staff’s initial review does not take more than a few days. The time to complete a review generally depends on the complexity of the project, the completeness of the PIS application, its conformance with CTCAC program requirements, and the project owner’s timeliness in addressing issues.

Step Four – Management Review and Issuance of IRS Tax Form(s) 8609/3521

Once the staff review is complete, a manager or senior-level staff performs a second level review. This generally occurs within one week but can take 2-3 weeks depending on the number of PIS applications being reviewed. Upon approval of the staff’s review, CTCAC issues the IRS Tax Form(s) 8609 and, if applicable, FTB Tax Form(s) 3521 for state credits. An electronic copy is sent and the original is mailed.

Questions and Status Updates

Providing an estimate for when an individual project’s placed in service review will be completed is difficult given the current volume, but please don’t hesitate to contact CTCAC staff for status updates or with other questions if CTCAC has had the PIS application for at least three months. Questions should be directed to our Development Program Managers for the placed in service process, Marisol Parks and Diane SooHoo.