Filed together, governed apart: Hawaii's LIHTC capital stack — Hawaii

One Consolidated Application, but at least four different HHFDC financing tools inside it

The QAP's own scoring criteria treat LIHTC, RHRF, and DURF as a single blended request: Criterion 1A and 1B both compute a ratio using "HHFDC resources (LIHTC, RHRF, DURF, or any other Permanent Financing provided by or through HHFDC)" as one combined numerator, first against the number of LIHTC units (1A, Efficiency) and then against total project cost (1B, Leveraging), each worth up to 5 points. That framing is accurate for how the application is assembled, but it obscures how differently these tools are actually governed once awarded.

Bond financing: HHFDC's own new ceiling, and a federal test that just got easier

The Reference Guide's Hula Mae Multi-Family Bond Program criteria add a "Bond Financing Limitation (New for 2026 Funding Round)": Applicants requesting tax-exempt private activity bond financing must demonstrate that no more than 30% of the aggregate basis of the building and land is financed, directly or indirectly, by tax-exempt bond proceeds, with applications exceeding that threshold simply not considered for the HMMF program. That is HHFDC's own volume-conservation policy — not the federal minimum-bond-financing test.

The federal test itself changed materially and recently: the One Big Beautiful Bill Act (Pub. L. 119-21) permanently lowered the long-standing 50%-of-aggregate-basis bond-financing threshold under IRC § 42(h)(4)(B) to 25%, for bonds issued after December 31, 2025. Neither the 2026 QAP nor the Reference Guide's HMMF criteria restate this federal change — HHFDC's own 30% ceiling sits comfortably above the new 25% federal floor, but that interaction should be confirmed against HHFDC's own underwriting guidance rather than assumed from the 30% figure alone.

HOME and the National Housing Trust Fund split the state two different ways

HHFDC's own HOME Investment Partnerships Program page lists Hawaii, Kauai, and Maui counties as "State Recipients" administering HOME funds locally under HHFDC's statewide Participating Jurisdiction designation — the City and County of Honolulu is conspicuously absent from that list. That is because Honolulu independently qualifies for, and receives, its own direct annual HOME allocation straight from HUD as its own Participating Jurisdiction; its Department of Community Services, Community Based Development Division administers that money through a competitive RFP process to 501(c)(3) organizations, with at least 15% reserved for Community Housing Development Organizations. HHFDC's own HOME allocation — roughly $3,000,000 a year by HUD formula, per HHFDC's program page — covers only the three neighbor-island counties; a project in Honolulu simply is not eligible for it.

The National Housing Trust Fund runs the opposite way. HUD allocates NHTF only to states, never to local entitlement jurisdictions — so even Honolulu, despite running its own independent HOME program, gets its NHTF dollars as a subgrant from HHFDC rather than directly from HUD. HHFDC's own NHTF page states the state has received $3,000,000 a year in HTF funding "since 2016." A HHFDC PY2023 HTF Allocation Plan describes the subgrant mechanism in more detail: after retaining 5% for administration, HHFDC has subgranted 50% of its HTF allocation to the City and County of Honolulu, with the remaining 50% rotating annually among the neighbor-island counties of Hawaii, Kauai, and Maui. This research treated that 50/50 rotation as HHFDC's general administrative mechanism as of the most recent Allocation Plan obtained, not as a figure fixed in statute — confirm the current-year split against HHFDC's most recently published Allocation Plan before relying on it.

The state LIHTC piggyback and the GET exemption: two more filings, two more agencies

Hawaii's state low-income housing credit (HRS § 235-110.8) equals 50% of the federal credit allocated to the building for the ten-year federal credit period, for buildings placed in service after December 31, 2020, and can be claimed whether or not the taxpayer claims the federal credit. It is not a state-return checkbox: per Hawaii Department of Taxation's own Tax Facts 99-2 (Revised May 2025), "all claims for allocation of the low-income housing credit are filed with the Hawaii Housing Finance and Development Corporation (HHFDC), the State housing credit agency," which determines the amount and returns a certificate the Applicant must attach to Form N-586 along with a copy of the federal Form 8586 — a second filing on top of, not instead of, the federal claim.

Separately, HRS § 237-29 exempts from Hawaii's General Excise Tax (GET) "the gross income received by contractors and other businesses for the planning, design, financing, construction, sale, or lease of a qualified low or moderate income housing project." Per Hawaii DOTAX's Tax Facts, that exemption reaches further than construction alone: it covers sales by vendors to contractors of building materials incorporated into the project, management fees received by the project's managing agents, and rents. HHFDC's own GET exemption page cites Hawaii Administrative Rules § 15-306-3 as the certifying framework and lists current fees (effective July 2026–June 2027) of $613 for the initial project exemption and claimant certification, $368 for each subsequent claimant certification, and $368 for annual rental income certifications — all filed on Form G-37 with an HHFDC GET Certification Form attached. Hawaii DOTAX's own guidance states Form G-37 is "submitted to the HHFDC for a State project, or to the respective counties for approval" for a county-approved project; this research could not confirm the specific county-level certification procedure for the latter path.

County-administered property tax relief: real, but not uniform across islands

Hawaii's counties, not the state, administer real property tax — so any exemption has to be confirmed county by county. The City and County of Honolulu has the most developed program this research found: Revised Ordinances of Honolulu § 8-10.33 exempts qualifying affordable rental dwelling units provided under a ROH Chapter 29 project, a Planned Development–Transit permit (or Interim PD-T) project, an HRS § 201H-36(a)(5) project, or a ROH Chapter 32 ("Bill 7") project renting to households at or below 80% AMI at HUD-limited rents. The exemption is not a flat 100% write-off on every parcel — Honolulu's own annual claim form has the appraiser enter a separate exempt percentage for the land and for each building, which points to a proportional exemption tied to the project's share of qualifying affordable units rather than an automatic full exemption on a mixed-income property.

Filing this exemption is not a one-time event. An initial claim filed within 60 days of the Certificate of Occupancy takes effect on the COO date; missing that window pushes the start to the next tax year, provided the claim is filed by September 30 preceding it. After the first year, the claim must be refiled annually with Honolulu's Real Property Assessment Division by September 30 of each year of the regulated or affordable period, with a $500 penalty grace period to November 15 before the exemption is canceled outright. This research located secondary reporting describing a recent extension of the exemption period from 10 years to 15 years, but could not fetch the underlying ordinance's primary text (site access was blocked) to confirm the exact ordinance number or effective date — confirm the current duration directly with Honolulu RPAD before modeling it.

The other three counties do not appear to run the same program. As of a January 2026 news report, Maui County had only given initial council approval to Bill 168, a proposed new real property tax exemption for parcels rented at or below 70% of HUD fair market rent (full exemption if the property's value is $500,000 or less), which would not take effect until the tax year beginning July 1, 2027, if ultimately enacted — this research could not confirm final passage. Hawai’i County was found to operate a favorable "long-term rental" tax rate classification, but this research did not confirm a dedicated LIHTC-relevant exemption ordinance comparable to Honolulu's § 8-10.33. Kaua’i County's equivalent, if any, was not researched. Do not assume Honolulu's exemption terms transfer to a neighbor-island deal — confirm directly with that county's Real Property Assessment office.

The state historic rehabilitation income tax credit: lapsed, with its revival unconfirmed

Hawaii's historic preservation income tax credit (HRS § 235-110.97) equals 30% of qualified rehabilitation expenditures on a certified historic structure, capped at $1,000,000 in aggregate credits per year, certified by DLNR's State Historic Preservation Division, and claimed on Form N-325. Per Hawaii DOTAX's own Tax Facts 99-2 (Revised May 2025): "This credit may be claimed for taxable years beginning after December 31, 2019, and will not be available after December 31, 2024." That is the Department's own current published guidance — the credit has lapsed for expenditures in taxable years beginning after that date.

This research also found evidence of a 2025 bill (SB1462) that would have re-established the credit for taxable years 2025 through 2030 at a $1,000,000-per-year cap, open to both private residential dwellings and income-producing (commercial, LIHTC-eligible) properties, and separate 2024 bill activity (SB2300) describing a different structure (sunset extended to 2030, cap ramping to $4,000,000). This research could not confirm from a primary legislative-status source whether either bill, or any equivalent, was actually enacted before the 2026 tax year — do not underwrite a historic rehabilitation tax credit into a Hawaii LIHTC deal without confirming its live status directly with DLNR's State Historic Preservation Division or Hawaii DOTAX first.