Low-Income Housing Tax Credits & Cost Containment in Hawaii, 2016-2017

Hawaii Housing Finance and Development Corporation (HHFDC) establishes a number of cost-containment measures in their 2016-2017 Qualified Allocation Plan (QAP), for both 9% (volume cap) housing tax credits and 4% (non-volume cap) credits. 

Cost containmnet measures are spelled out in Hawaii's 2016-2017 Qualified Allocation Plan as either threshold requirements which must be satisfied for a project to be considered or as point incentives towards the competive scoring of projects. 

Threshold Requirements

As is stated in the Threshold Requirements, Contractor’s profit, including general requirements and overhead, shall not exceed 14.0% of hard construction costs.

The Threshold Requirements also place limits on Developer Fees - Developer Fee includes developer fee, developer overhead, management fee, consultant fee, etc. (as indicated in the Developer Fee section of Exhibit A of the Consolidated Application).

  1. 9% (volume cap) LIHTC:
    • New Construction – maximum developer fee of 15% of the total development costs (excluding developer fee) or $3,750,000 (whichever is less).
    • Acquisition/Rehabilitation – maximum developer fee of 10% of the acquisition costs and 15% of the rehabilitation costs (excluding developer fee) or $3,750,000 (whichever is less). 
  1. 4% (non-volume cap) LIHTC:
    • Maximum developer fee of 15% of the total development costs (excluding developer fee) if the applicant waives its right to a qualified contract.
    • Maximum developer fee of 5% of the total development costs (excluding developer fee) or $250,000 (whichever is less) if the applicant does not waive its right to a qualified contract. 

Point Incentives

  • Up to 5 points will be awarded for projects that provide the most units for the annual LIHTC amounts. The ratio used in this assessment is derived as: “Total Federal Tax LIHTC Requested (Annual)/Total Number of Proposed LIHTC Units.” A ratio of $24,000/LIHTC unit or more will earn zero points. A ratio of $10,000/LIHTC unit or less will earn 5 points.
  • Up to 4 points will be awarded for projects that most effective leverage their LIHTC funding. The ratio used in this assessment is derived as “Total Federal Tax LIHTC requested (annual multiplied by ten years)/Total Project Cost.” A ratio of great than 80% will earn no points while a ration of less than 40% will earn 6 points.
  • Up to 4.5 points will be awarded to projects based upon lowest total development cost (without land) per gross building square foot.
  • Up to 4.5 points will be awarded to projects based upon the lowest total development cost (with land) per unit.
Contributed By: 
National Housing Trust

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