States Report Numerous Applications With Deficiencies, Differ in How They Handle Errors
By A. J. Johnson & Caitlin Jones
4 min read
Tax Credit Advisor July, 2006: More than one-half of the state agencies responding to a recent Tax Credit Advisor survey said they receive a substantial number of low-income housing tax credit applications that have mistakes or are incomplete.
The most common types of mistakes that they reported seeing varied widely, as did how agencies said they deal with incomplete or error-ridden applications.
States, though, were generally united in their advice to developers on how to avoid common application mistakes. They said applicants should read the state’s qualified allocation plan and application carefully before filling out the application, proofread and double-check their completed application before submitting it, read their market study, attend workshops and similar sessions offered by the state agency, and call state agency staff with any questions they have – well before the application deadline.
Degree of Problems
Of the 32 state housing credit agencies (HCAs) that responded to the broader TCA survey on credit allocation activity, 24 answered the questions about application mistakes. Of these 23, 13 responded yes to the question about whether they receive “many” applications that are incomplete or have mistakes.
Wisc. estimated 10-20 percent of the applications it receives have deficiencies. The remaining 12 states answering yes were Ala., Ill., Kan., Mass., Md., Miss., N.Y., Ohio, Pa., R.I., S.C., and Va.
Other states responding indicated that error-ridden or incomplete applications are generally not a problem, or that they only have some deficient applications.
Common Mistakes
The states differed widely in what they cited as the most common mistakes that they see in the applications they receive.
Pa., for instance, said the most common mistakes were required documentation not submitted, application pages not completed as required, and inconsistent information throughout the application. At New York’s DHCR, the list included missing original signatures, inconsistencies among schedules, and not providing enough of required documentation for additional points such as social services plan, documentation of committed green building elements, or evidence of site control.
In Ariz., math errors were the most common mistake; in Colo., HOME funds not characterized correctly, budget numbers not matching documentation, and utility allowances improperly documented; and, in S.C., failure to adhere to the minimum requirements, exceeding the maximum fees (i.e. developer fees), and “misunderstanding how to remove the taint of federal funds in order to get the 9% credit.”
Response to Deficiencies
States also differed in their treatment of applications that have errors or are incomplete.
A small number are lenient or have a cure period or similar mechanism. For instance, Kan. said the agency corrects addition errors in applications, Del. said staff doesn’t penalize and is able to contact applicants for additional or missing information, and R.I. tries to work with developers to rectify problems.
Wash. has a correction period during which applicants can fix mistakes, Vt. requires pre-application meetings, and Ohio says errors may be corrected during the application review process. S.C. provides a seven-day cure period and imposes a $1,000 penalty for applications with no more than three or four missing/incomplete documents, but if an application has more errors or if enough errors aren’t corrected during the cure period the application can be disqualified.
Most states, though, indicated they use their point scoring system to penalize applications for mistakes or missing/incomplete documents, either not providing points in certain categories, or else subtracting points.
However, if the deficiency is of a threshold item or requirement, many states will reject an application from further consideration. Ill., for instance, says if an application fails to meet its mandatory application requirements, it will fail the application.
N.M. takes a slightly different twist on points, giving extra points to applications for being fully complete. However, the state added that it will reject an application if a mistake falls under its threshold requirements.
