15 Ark. Code of Rules § 86-301
Minimum set-aside
Operative Text
15 CAR § 86-301. Minimum set-aside. (a)(1) In order for an owner to claim tax credits, a development must have a minimum number of qualified tax credit units. (2) The owner must select one (1) of two (2) minimum set-asides, which establishes both the: (A) Minimum percentage of tax credit units at the development; and (B) Maximum income limit used to determine tenant eligibility. (b)(1) The choices are 20/50 and 40/60. (2) Under the 20/50 selection, twenty percent (20%) or more of the aggregate residential rental units in the development must be occupied by persons with incomes of fifty percent (50%) or less of the area median gross income adjusted for family size. (3) Under the 40/60 selection, forty percent (40%) or more of the aggregate residential units in the development must be occupied by individuals with incomes of sixty percent (60%) or less of the area median gross income adjusted for family size. (c)(1)(A) The owner selects the minimum set-aside when applying for the tax credit allocation and makes the election on Form 8609. (B) Once selected, the minimum set-aside is irrevocable. (C) The year tax credits are claimed determines when the minimum set-aside test must be met. (D) The minimum set-aside test must be maintained for the entire compliance period. (E) If the property is identified as a multiple building project on Line 8b of Form 8609, the minimum set-aside may be met across the development. (F) If the property is not identified as such, the minimum set-aside must be met building-by-building. (2) For 1987 – 1990 developments, the minimum set-aside had to be met within twelve (12) months of the placed-in-service date. (3) For 1991 and later years, the minimum set-aside must be met no later than December 31 of the second year of the initial credit period. (4) The minimum set-aside must be met before any credits may be claimed. (d)(1) The federal minimum set-aside election must not be confused with other set-aside elections that may have earned extra points in the allocation process and are recorded in the development's regulatory agreement. (2) Additionally, the tax credit set-aside must not be confused with HOME fund requirements or subsidy programs such as Section 8 or United States Department of Agriculture Rural Development. (3) Owners must always determine the tax credit minimum set-aside first and review allocation documents to identify any additional set-asides. (4) If the development has layers of funding, the owner must satisfy the requirements of all programs. (5) Following the most restrictive requirement may or may not apply.
Section 86-301 of the Arkansas tax credit regulations establishes that a housing development must meet a "minimum set-aside" requirement before its owner can claim Low-Income Housing Tax Credits (LIHTC). Owners must choose between two thresholds — the 20/50 option (at least 20% of units reserved for households earning 50% or less of area median income) or the 40/60 option (at least 40% of units reserved for households earning 60% or less of area median income). This election is made at the time of application, recorded on IRS Form 8609, and is permanent and irrevocable for the entire compliance period. When a development has multiple funding sources, all program requirements must be satisfied independently.
Plain English — not legal advice.
Under 15 Ark. Code R. pt. 86 § 86-301, compliant owners select their minimum set-aside election — either 20/50 or 40/60 — at the time of application and record it on Form 8609, understanding that this choice cannot be changed once made. Operators generally track whether the set-aside threshold is met on a building-by-building or development-wide basis depending on how the project is designated on Form 8609, and they ensure the threshold is satisfied before claiming any credits. When a development carries multiple funding layers — such as HOME funds or Section 8 — owners are expected to identify and satisfy each program's requirements separately, reviewing all allocation documents to surface any additional set-asides beyond the federal minimum.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Section 86-301 governs how many units in a tax-credit development must be reserved for lower-income households and at what income levels, which directly shapes tenant eligibility at LIHTC properties. Tenants in these developments have a right to understand which set-aside election applies to their building, as it determines the maximum income limits used to qualify residents. Those who believe a property is not maintaining its required income-restricted units may contact a local tenant-rights organization, reach out to the Arkansas Development Finance Authority (which administers the state's LIHTC program), or consult a housing attorney to explore available options.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated October 22, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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