1. (a)

   1. (1) In order for an owner to claim tax credits, a development must have a minimum number of qualified tax credit units.

   2. (2) The owner must select one (1) of two (2) minimum set-asides, which establishes both the:

      1. (A) Minimum percentage of tax credit units at the development; and
      2. (B) Maximum income limit used to determine tenant eligibility.

2. (b)

   1. (1) The choices are 20/50 and 40/60.
   2. (2) Under the 20/50 selection, twenty percent (20%) or more of the aggregate residential rental units in the development must be occupied by persons with incomes of fifty percent (50%) or less of the area median gross income adjusted for family size.
   3. (3) Under the 40/60 selection, forty percent (40%) or more of the aggregate residential units in the development must be occupied by individuals with incomes of sixty percent (60%) or less of the area median gross income adjusted for family size.

3. (c)

   1. (1)

      1. (A) The owner selects the minimum set-aside when applying for the tax credit allocation and makes the election on Form 8609.
      2. (B) Once selected, the minimum set-aside is irrevocable.
      3. (C) The year tax credits are claimed determines when the minimum set-aside test must be met.
      4. (D) The minimum set-aside test must be maintained for the entire compliance period.
      5. (E) If the property is identified as a multiple building project on Line 8b of Form 8609, the minimum set-aside may be met across the development.
      6. (F) If the property is not identified as such, the minimum set-aside must be met building-by-building.
   2. (2) For 1987 – 1990 developments, the minimum set-aside had to be met within twelve (12) months of the placed-in-service date.
   3. (3) For 1991 and later years, the minimum set-aside must be met no later than December 31 of the second year of the initial credit period.
   4. (4) The minimum set-aside must be met before any credits may be claimed.

4. (d)

   1. (1) The federal minimum set-aside election must not be confused with other set-aside elections that may have earned extra points in the allocation process and are recorded in the development's regulatory agreement.
   2. (2) Additionally, the tax credit set-aside must not be confused with HOME fund requirements or subsidy programs such as Section 8 or United States Department of Agriculture Rural Development.
   3. (3) Owners must always determine the tax credit minimum set-aside first and review allocation documents to identify any additional set-asides.
   4. (4) If the development has layers of funding, the owner must satisfy the requirements of all programs.
   5. (5) Following the most restrictive requirement may or may not apply.

Codification Notes: "Section 8" refers to Section 8 of the Housing Act of 1937 and is codified at 42 U.S.C. § 1437f.