Easing Efforts of Servicing Tax Credit Properties

A few years ago, the challenge for the industry was enabling developers to produce an ample supply of communities to meet the demand for tax credit allocations. Syndicators enjoyed the effortless trade of tax credits at rates nearing a dollar -- and occasionally, even more than a dollar. Those days have passed. The uncertain economy continues to reduce the value of tax credits. Concerns over compliance are emerging from institutions that purchased tax credits or dedicated dollars for grants. We have witnessed a radical shift in the industry from driving development production to a focus on compliance with existing properties.

Unfortunately for many, understanding the necessary set-asides for an entire portfolio of properties remains less than obvious. This challenge is compounded when funds are received from multiple sources, since usually those sources each come with their own list of requirements. Projects may receive LIHTC funds, historic tax credit funds, and several grants or loans from various organizations. The result is a unique conglomeration of obligations for each property. Multiplying the compliance demands by dozens or hundreds of properties creates the need for a methodical means to track all obligations.

Owners with a few properties may be able to use a simple spreadsheet to track compliance requirements. However given time, the accumulation a number of units will eventually exceed the capacity for tracking with a simple tool. But, what software is most appropriate for this effort?

By nature, this industry demands flexibility. Starta once tried to develop and deliver “cookie-cutter” solutions, but we quickly discovered that every organization is extremely unique – just as most every project is unique. Granted, there are several fundamentals such as the concept of set-asides and period of compliance. Unfortunately, specifics can radically change, the number of units can differ, the compliance period can vary, and much more. A system needs to provide structured flexibility.

Starta addresses this through an extremely flexible, web-base solution. The system has thousands of data fields available, however, you can select the (for example) thirty-seven fields that are important for your business. You can automatically generate compliance reports every week, month, quarter or year with real-time set-asides, vacancy rates, and rental income received. But, regardless of whether you are a Starta client or not, the important requirement is that your chosen system needs to allow your organization to wrap the solution around the business -- not the business around the technology.

A good compliance system will be flexible enough to handle all of your current compliance needs, as well extensible enough to meet any future needs that arise -- many times, the future needs arrive more quickly than you might expect. Whatever system you choose, just make sure that it is inexpensive to extend if you later find that you need to. This should be a conversation you have with any compliance vendor. The needs of your company are growing and changing with this brave new economy, and you want to make sure that your software systems will be prepared to grow and change with you without breaking the bank.