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LIHTC Compliance: A Q&A Interview with Tax Credit Expert, Scott Michael Dunn

Megan Thomas
February 23, 2024

Affordable Housing is seeing a lot of movement both in policy and in compliance requirements, specifically with HOTMA. We are seeing more and more properties add LIHTC (Tax Credit) programs and properties to their portfolio, with some even adding LIHTC programs to a portion of their conventional properties. Yet, many are still managing compliance manually or without the help of software.

With HOTMA implementation and impending action on WFHTC (Workforce Housing Tax Credit) legislation, we thought it was a good time to sit down with Tax Credit expert, Scott Michael Dunn, to help portfolios with LIHTC programs better understand the value of software in their efforts to manage compliance.

Hi Scott Michael! Thanks for sitting down with us. We’d love if you could tell us a bit about yourself and how you got your start in affordable housing.

Free housing! My wife took a position managing about 400 units and it included a manager's apartment. I was a bank regulatory auditor but joined her team eventually. She is great with people and I developed an affinity for the paperwork. Her portfolio had all of the major funding sources, so it was a great training ground for an aspiring housing compliance professional!

Sticking to the general Affordable housing industry for now, how do you navigate conflicting rules for multiple subsidies i.e. HUD and LIHTC on the same site?

We have developed a chart we use in our combined courses. The first step is to compare each specific provision. Then there are many possible outcomes. One program may have a provision that doesn't exist in the other program. An owner/agent then applies the rule. The programs may have similar rules that don't conflict, but one program is more restrictive. An owner agent will then apply the most restrictive rule. Some rules are so different that both program rules must be applied separately. Finally, there are several instances where programs conflict. Then, the owner/agent must do a risk analysis and decide what to do, often including contacting the monitoring agencies for the programs involved. That is where our compliance professionals really earn their paycheck!

There seem to be a lot of properties that have a mix of conventional and LIHTC units.  Why do so many LIHTC sites use software designed for Market Rate/Conventional sites and what would you tell them regarding the benefits of using Affordable Housing-specific software?  

Most property management companies feel that it is a significant investment of time, effort, and money to switch software. They often simply haven't been introduced to the benefit of affordable housing-specific software. Especially with the complexity of HOTMA, software is a major assist in avoiding very expensive noncompliance. Properties that have a mix of conventional and LIHTC units can ensure compliance by using software which provides affordable housing and conventional modules and can meet both needs.

For those who are not using software, what are the potential problems that could arise from your perspective if companies are managing their programs manually?

When I started in housing in the early 1990's, we were manual and when we finally implemented software, we saw a reduction in errors. The potential for noncompliance arising from human error is significant. Since then, programs have become more complex and the risk greater. For a recent example, HOTMAs handling of student financial assistance or assets is very complex and perfect for software.

We saw the introduction of the WFHTC (Workforce Housing Tax Credit) bill in December of 2023. Do you feel there is enough energy here for it to become a national program like the other Tax Credit programs?

There is certainly an emphasis on the needs for workforce housing. Several of my state monitoring agency clients have expressed a desire for federal legislation to support their workforce housing efforts.

In the current dysfunctional congressional environment, it is difficult to see a path forward. The Affordable Housing Credit Improvement Act (AHCIA), for instance, is reintroduced every year, over half of the House and Senate members sign in support, and yet it still hasn’t been passed. However, some provisions from the AHCIA have made it into appropriation bills currently under consideration. Historically, individual provisions are introduced into other bills for incremental success. We’ll see if that becomes true with workforce housing legislation.

What challenges do you see for the Affordable Housing industry this year (other than HOTMA implementation)?

NSPIRE changes physical inspections, and we are watching carefully to see how NSPIRE scoring impacts our properties. The LIHTC Average Income Test was stalled for two years pending very bad proposed regulation. We got workable regulations in late 2022 and rolling that out across the industry will continue to be a focus for many developers and management agents. I still feel that it will be the primary minimum set aside in the future. Finally, I think that the staffing problem that is universally an issue in all industries has hit housing hard, with a ton of associated turnover. This means we need to streamline processes to be more efficient and effective. (The implementation of) extremely targeted training for staff has become necessary. That may need to be repeated very soon with turnover.

For more information on how ResMan helps your Tax Credit properties stay compliant with ease, check out

About Scott Michael Dunn: With almost three decades of experience in all phases of affordable housing, Scott Michael enjoys both training others and designing systems to ensure regulatory compliance.
He has overseen teams that monitored compliance with HUD, RD, tax credit, and HOME rules for federal, state, and private owner entities. He has a particular passion for the Low Income Housing Tax Credit and has enjoyed working directly with over two-thirds of the state tax credit housing finance agencies to provide consulting, compliance monitoring, or training services.

After 11 years of growing the consulting firm Zeffert & Associates in St. Louis, Scott Michael returned to his roots in the upper Midwest to join the executive team of Costello Property Management (CPM) as their Director of Policy. In 2017, he was privileged to join the ownership team of the company he helped found 16 years prior, Costello Compliance. While continuing his responsibilities with CPM, he looks forward, as CEO of Costello Compliance, to growing our offerings of unique and quality compliance services. Learn more at

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