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 90 days of receipt. PIS applications with multiple deficiencies or issues can delay CTCAC’s ability to complete each of the below review stages in a timely manner. 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 in responses between the project owner/developer and CTCAC to address and resolve outstanding items. Project owners and developers can help to ensure a timely issuance of tax forms by implementing internal and/or external quality controls and informing CTCAC of project changes after initial award of tax credits and prior to submission of the PIS application.

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

Submission of the PIS Application

Within one year of a new construction project’s final building placed in service date or a rehabilitation project’s rehabilitation completion date, the owner must submit a PIS application to CTCAC for review. This deadline is applicable to all CTCAC awarded projects, if a project does not meet this deadline, CTCAC may assess negative points per Section 10325(c)(2). CTCAC conducts placed in service reviews in the order the applications are received. The steps are described below:

Step One Review for Completeness

The first step in the review is a verification that the PIS application is substantially complete and accurate for CTCAC and the project owner to enter into a Regulatory Agreement. This includes verifying the general accuracy and consistency of:

  • Form B;
  • Excel application;
  • site control documents
  • ownership documents;
  • other documentation used for preparing the Regulatory Agreement

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. If an application has considerable deficiencies where CTCAC is unable to draft a complete regulatory agreement, the application may be returned to the project owner or developer and removed from CTCAC’s list of received PIS applications. For these incomplete applications, negative points may be assessed if the above placed in service deadlines are not met.

Step Two Regulatory Agreement Preparation

Once CTCAC staff have determined that a PIS application is sufficiently complete, accurate, and in conformance with CTCAC program requirements, the next step is the regulatory agreement preparation. CTCAC staff typically prepares regulatory agreements for PIS applications within 2-3 weeks of the completion of Step One above.  The final regulatory agreement is sent by email to the owner for signature and notary.

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

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 and general requirements 14% limit, minimum construction standards, any service or sustainability points received through CTCAC or CDLAC, the applicable fraction used by the owner in calculating the final credit amount, etc.

Prior to staff assignment, projects are placed in a queue in order of receipt date. The PIS application review is not assigned to a CTCAC staff member until the regulatory agreement is sent to the owner for signature and workload permits. This is to ensure staff has adequate time to review and respond to owner correspondence for all assigned PIS applications. 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 resolving any issues.

Currently CTCAC is understaffed and is in the process of increasing staffing for this function.

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

Once the CTCAC staff review is complete, a CTCAC manager or senior-level staff performs a 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) 3521A. An electronic copy is emailed and the original is mailed to the owner.

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 other questions if the PIS application has been in CTCAC’s possession at least three months. Questions should be directed to our Development Program Managers for the placed in service process, Marisol Parks and Diane SooHoo.