Tax Credit Compliance

Compliance Reviews – Do you have a Section 42 LIHTC property that is either about to lease-up or was just completed? We have extensive experience in file reviews, both “real-time” reviews and “after the fact” reviews.

Following is information about tax credit compliance experience of Paul Malinowski.

Direct Experience

Paul Malinowski has been managing Section 42 LIHTC properties since 1997 when the non-profit he was employed by opened up its first tax credit property. For the next three years he expanded the number of tax credit properties he managed when other non-profits started requesting he also manage their tax credit properties.

As CEO of Pillar Property services, LLC from 2000 to 2015, Paul’s reputation for understanding tax credit compliance grew. Through Pillar, he managed dozens of Section 42 communities throughout the years for a variety of owners. Never once was an IRS-8823 issued against any property managed by Pillar.

Initial File Reviews-3rd Parties

Also during this time, Paul and Pillar began to be recognized by its peers for tax credit compliance expertise and was, in fact, been retained by a number of them for consulting in this area. In particular, owners retained Paul to review the ever-critical first year files. Mistakes in initial occupancy of every unit can potentially disqualify an investor from taking credits for the entire duration of the credit period. Following are a sampling of file review clients:

• Initial File Review – 2015 – Redtail Ponds (Section 42 property) – Fort Collins Housing Authority (“real-time” file reviews of all 40 units)
• Initial File Review – 2014 – Village on Plum (Section 42 property) – Fort Collins Housing Authority (“real-time” file reviews of all 95 units)
• Initial File Review – 2012 – WestView Community (Section 42 property) – Boulder Housing Partnership (“real-time” file reviews of all units)
• Initial File Review – 2011 – Golden Point (Section 42 property) – Archdiocesan Housing Corporation of Denver
• Initial File Review – 2010 – Stanford Village (Section 42 property) – FirstBank, the limited partner, retained us
• Initial File Review – 2006 – Pinecrest Apts (Section 42 property) – Newcastle Properties – Commerce City, CO
• Initial File Review – 2004 – Palermo Village (Section 42 property) – Black Creek Capital – Denver, CO
• Initial File Review – Residences at Sixth Avenue (Section 42 property) – Aurora Housing Authority – Aurora, CO
• Initial File Review – 2003 – Foothills (Section 42 property) – Boulder Housing Partnership – Boulder, CO

References for any of these can be provided upon request

Expert Witness in Trial

In September of 2004, Paul was retained by Denver-based developer as an expert witness in a lawsuit against its co-general partner, a national real estate company. The co-general partners were owners in a development in a large 100% tax credit property in Colorado. The lawsuit was broad in scope and covered everything from the plaintiff’s claims that revenue was not maximized, expenses ran high, and potential compliance violations left the property vulnerable for IRS 8823’s. Our role was to review all tenant files for compliance with whatever the most recent certification or recertification was. We only took a “snapshot” of the condition of the files at that time; we were not charged with ensuring corrections were made.

Not all files were made available to us and there were vacancies that obviously were not reviewed. The review was conducted over a three-month period by Paul Malinowski. Of the almost 200 files we reviewed we found only three files that were in complete compliance. We wrote up a summary report as well as handed in review sheets of every single file we reviewed. Shortly after our report was given to the defendant they in turn hired an expert witness to do a file review. Their expert witness was a nationally recognized tax credit compliance consulting firm that also performs national training in this area. By the time they started their review, some of what we had found in the individual files were corrected by the site staff. However, in their final report submitted to the court, they also revealed about a 97% failure rate on their first review. That is significant from a compliance knowledge standpoint in that Pillar Property Services, LLC and the nationally recognized consulting firm found the same percentage of compliance failures and we had the disadvantage of performing our review first. Thus they verified our finding! (Indeed, the focus of their testimony in the actual trial in December, 2005 was on the alleged speed of corrections made by the defendant; they did not dispute that the files were atrocious).

Other

Paul has also been asked to train other property management companies, which we have done. We conducted one-day trainings for the entire staffs of both Newcastle Properties and Coughlin & Company. The trainings included their upper management and site personnel. In addition, we have performed shorter-duration webinars for site staffs.

Early on in management of tax credit properties, Paul recognized that site managers, no matter how well trained, tended to make more errors of calculations than understanding, say, sources of income. Thus, he developed Pillar’s own proprietary software for calculating a Tenant Income Certification, Cert-Check®. The program generates a TIC (Tenant Income Certification) and a Resident Statement of Assets and was used by all Pillar employees as well as some clients. Representatives of the Colorado Housing Finance Authority (CHFA) know that Pillar TICs were always accurate.

Although the Cert-Check® program is helpful to Site Mangers, they obviously also need to understand the requirements behind the numbers, such as how to calculate income, assets, etc. To do that, we developed our own Compliance Manual for when new personnel are hired and don’t have the luxury to wait until a CHFA training is offered somewhere.

Paul has also developed specific verification forms that have been used by CHFA as model forms for their purposes.

Contact us when you are ready to move your organization forward of just want to explore ideas.