Expense Certification Guide

As part of the final application process, the applicant must submit an itemized list of project costs. All project costs, both eligible and ineligible for credits, should be listed.

Expense documentation, such as invoices, receipts, or a final draw sheet, must also be included with your submission. The applicant will be required to show proof of payment.

Projects over $250,000 that have State Historic Tax Credits (HTC) and NPA tax credits MUST refer to the HTC expense guidelines and complete the HTC cost certification first.  One cost certification will suffice for projects using both HTC and NPA credits on the same property.

*PLEASE NOTE:  The Department of Economic Development has put the guidelines in place to expedite the amount and issuance of the tax credit.  Submissions other than information requested may take longer to process and could be asked for resubmission.

Expense Guidelines: Total Project Costs Less Than $250,000 

For applications with a total project cost less than $250,000, the applicant must prepare the expenditures list using the NPA-E form or a spreadsheet with identical column headings as the NPA-E form

  • Separate expenses by date paid in ascending order. (Example of a completed NPA-E form attached below)

  • Submit back-up documentation. Group the paid invoices, receipts and/or cancelled checks in the order in which they appear on the list of itemized expenditures (NPA-E form). Back-up documentation may include, but is not limited to, the following:

    • Invoices or other documents that show expenses were incurred, AND

    • Final Bank and/or Title Company disbursement sheets and/or draw statements, OR

    • Copies of cancelled checks, bank statements, credit card statements, money orders or other documents that show the invoices were paid.  This statement must include the payee, date paid, and amount of the check.

    • Please highlight applicable items on all cost certification information.

      • Note 1: Cash Payments will be disallowed.

      • Note 2: Unpaid Costs will be disallowed unless a legal document is submitted to DED and meets DED’s approval.

 

Expense Guidelines: Total Project Costs Greater Than $250,000

PLEASE NOTE: 

  1. Projects over $250,000 that have State Historic Tax Credits (HTC) and NPA tax credits MUST refer to the HTC expense guidelines and complete the HTC cost certification first.  One cost certification will suffice for projects using both HTC and NPA credits on the same property.
  2. Projects over $250,000 using only NPA credits and not using both HTC and NPA credits follow the expense guidelines below.

For a project of more than $250,000, an audit by an independent Certified Public Accountant is required. The CPA must perform a 100% review and verification of all available invoices and proof of payment documentation to ensure that 100% of all project costs were incurred and paid. The CPA firm must also document, for review by DED, any and all accrued expenses. If an expense has been incurred and not yet paid, the applicant must submit a legal agreement outlining the scope of work and time for payment.

  • A Certified Public Accountant (CPA) must perform an Audit of the project expenses. The Audit must include a 100% review and verification of all available invoices and proof of payment documentation to ensure that 100% of all project costs were incurred, paid, and are qualified or non-qualified rehabilitation expenses.  The CPA’s list of project expenditures must be submitted in the format of the NPA-E form.

  • Submit back-up documentation. Proof of payment is required. Back-up documentation may include, but is not limited to, the following:

    • Development Fee and Partnership Agreements last signed, if appropriate

    • Final signed AIA documents and supporting schedules if appropriate

    • EITHER Final Bank and/or Title Company disbursement sheets, draw statements OR

    • Copies of cancelled checks, credit card statements, bank statements, invoices or other documents that show proof of payment.

      • Note 1: Cash Payments will be disallowed.

      • Note 2: Unpaid Costs will be disallowed unless a legal document is submitted to DED and meets DED’s approval.

      • Note 3: Audit of total project costs by independent CPA must include a 100% review and verification of all available invoices and proof of payment documentation to ensure that 100% of all project costs were incurred and paid. The CPA must also document, for review by DED, any and all accrued expenses.

There are six columns on the NPA-E form. The column headings are listed and explained below:

  • Date Paid: Enter the date the expense was paid in ascending order.
  • Vendor: Who was paid?
  • Method of Payment: For each expense enter the payment method, such as check, credit card, or draw number.
  • Description of Expenditure: Briefly explain the work.  For example, if a plumber charged $300 to replace interior water pipes, include that description in this column.
  • Eligible Amount: Enter the dollar amount of each ELIGIBLE expenditure in this column.  Total all eligible costs at the end of the list.
  • Non-Eligible Amount: Enter the dollar amount of each NON-ELIGIBLE expenditure in this column.  Total all eligible costs at the end of the list.

An example of how to fill out the NPA-E form is shown below:

DATE PAID VENDOR METHOD OF PAYMENT DESCRIPTION OF EXPENDITURE ELIGIBLE AMOUNT NON-ELIGIBLE AMOUNT
09/28/2003 Bill's Cabinet Shop Discover Card Built-in Cabinets Deposit $924.24  
10/15/2003 Lowe's VISA Kitchen Flooring $2,847.22  
10/23/2003 Jones' Architecture Firm Check #1456 Architectural drawings and plans for application $2,300.45  
10/31/2003 Bill's Cabinet Shop Check #1502 Built-in cabinets Second Payment $800.00  
11/3/2003 Home Depot Check #1724 Paint and Supplies $1,200.00  
11/15/2003 Smith Lawncare Check #1822 Seeding, Landscaping   $1,600.00
11/26/2003 Bill's Cabinet Shop Check #1755 Cabinet Installation, Labor $2,149.28  
Eligible & Non-Eligible Totals $10,221.19 $1,600.00
Total Project Costs $11,821.19