(a)

1. (1) Rev. Rul. 92-61, 1992-2 C.B. 7 [Section A], effective September 9, 1992, allows a unit for a full-time staff member to be considered part of a development's common area.
2. (2) Such units are not classified as residential rental units and thus are not included in either the numerator or denominator of the applicable fraction under I.R.C. § 42(c)(1)(B) for purposes of determining the building's qualified basis.

(b)

1. (1) Two (2) options apply:

   1. (A)

(i) If the staff unit is a rental unit and is to be counted as part of the qualified basis, then the staff must be income-eligible, be certified, and sign a lease the same as any LIHTC tenant.

1. (ii) In this case, if the staff member receives free rent or a rental discount, the imputed value of the rent or discount must be included as income; or

   1. (B) If the unit is not a residential unit but used as common area by full-time staff, then the staff does not have to be:

      1. (i) Income eligible;
      2. (ii) Certified;
      3. (iii) Leased; or
      4. (iv) Considered a tenant.

2. (2)

   1. (A) The bottom line is that the staff person must be full-time for the unit to be common area.
   2. (B) The owner's application and allocation documents should specify the number of common area units set aside for staff.

   3. (C) The Revenue Ruling does not apply to any building placed in service prior to September 9, 1992, or to any building receiving an allocation of tax credits prior to that date, unless the owner filed a tax return that is consistent with this ruling.

      1. (c)

3. (1) When contacted with a request to convert a tax credit unit to a manager's unit or security officer's unit, the Arkansas Development Finance Authority will send the owner:

   1. (A) A copy of Rev. Rul. 92-61; and
   2. (B) Other information on the definition and discussion of functionally related facilities and functionally related and subordinate facilities.

4. (2)

   1. (A) If, based on the information, the owner (not the site manager) determines that the unit or units may be converted, then the owner must submit a written request to the authority.

   2. (B) The request must include a:

      1. (i) Statement of approval from the syndicator/investor (limited partner whose credits are at issue);
      2. (ii) Description of why the conversion is needed; and
      3. (iii) Statement that the staff will be full-time and indicates how the unit will be functionally related and subordinate to the development.
   3. (C) Within thirty (30) days of receipt of your request and pertinent information, the authority will review your request.
   4. (D) The owner will receive written notification of the authority’s decision.