Assembling the capital stack: soft funds, the state credit, and tax abatement — Kansas

Federal soft funds through KHRC's own NOFA

KHRC layers its own HUD formula funds — HOME and the National Housing Trust Fund (NHTF) — into LIHTC deals through the same application cycle covered in Phase 4's calendar. The 2026 Federal Notice of Funding Availability for Multifamily Rental Housing Production Programs lists $2,500,000 in 2025-program-year HOME funds and $3,100,000 in 2025-program-year NHTF funds as anticipated maximums, alongside the $9,500,000 anticipated-minimum federal 9% LIHTC ceiling and the $8,800,000 state 9% credit maximum — all four on the same NOFA, with the funding window running May 5, 2026 through August 1, 2026.

CDBG is a real KHRC-administered federal resource — Kansas's broader 2026 Annual Action Plan lists roughly $14.9 million in CDBG alongside HOME, NHTF, ESG, and HOPWA — but it flows through a separate statewide Annual Action Plan process aimed largely at cities and counties and public infrastructure, not this multifamily rental production NOFA. Don't assume a competitive LIHTC applicant applies for CDBG the same way it applies for HOME or NHTF through KHRC's rental-housing cycle.

Both HOME and NHTF carry program-specific requirements layered on top of LIHTC's own rules — floating-unit designation, per-unit subsidy limits set by HUD, relocation (URA) compliance for occupied rehab, and, as covered in Phase 6, Davis-Bacon labor standards once HOME crosses 12 assisted units.

The State Housing Trust Fund is real, but it isn't a rental-gap source

KHRC's State Housing Trust Fund (SHTF), created in 1991, is a genuine, organizationally distinct KHRC program — but its own annual reporting shows the dollars go almost entirely to accessibility modification and emergency repair (the KAMP/ERP program, delivered through weatherization agencies), utility assistance, tenant-landlord counseling, Habitat for Humanity partnerships, and the Moderate Income Housing (MIH) program, not gap financing for a competitive rental LIHTC deal. SHTF also has no dedicated funding stream; it runs on infrequent and diminishing revenue such as multifamily bond issuance fees, which makes it an unreliable line to underwrite against even where it might technically apply.

Don't confuse SHTF with the Kansas Housing Investor Tax Credit (KHITC) — a genuinely different, adjacent state program. KHITC is a $13,000,000-a-year state tax credit restricted to counties with 75,000 population or less, split across three population tiers with per-unit caps of $35,000 (population 8,000 or less), $32,000 (8,001-25,000), and $30,000 (25,001-75,000), capped at 40 units per applicant. KHITC carries no tenant income restriction and is typically paired with the MIH program rather than LIHTC — it is not a standard part of a competitive 9%/4% capital stack.

The state LIHTC match: 9%-only, and running out after 2028

Phase 4 covered House Bill 2289's core change — the Kansas Affordable Housing Tax Credit (KAHTC) now matches 9% awards only. What's newly confirmed against the enacted bill's own Legislative Research Department summary: the Conference Committee Report for HB 2289 discontinues the KAHTC match for 4% developments starting with the 2026 Qualified Allocation Plan, caps the 9% match at $8.8 million annually beginning in 2026, and discontinues the match entirely after the 2028 Qualified Allocation Plan. The 2025 plan year was itself capped at $25.0 million combined. In plain terms: 2026, 2027, and 2028 are the last three QAP years carrying a state 9% match at $8.8 million each — a 9% award made under the 2029 QAP or later gets federal credit only, under the law as enacted. Credits already awarded through the 2028 QAP continue to apply through their full credit and carryforward period regardless of the sunset.

This resolves what secondary reporting had described only as a roughly six-year program ending in 2028 — that characterization is now confirmed directly against the Legislature's own Conference Committee Report Brief on HB 2289, not just a press account.

Category G: the QAP's largest scoring category runs on soft money

Below-Market Loans and Support (QAP § VII(G)) is the single largest category in the whole point system at up to 30 points — 9% proposals only — and it's built entirely around the kind of below-market financing and local commitments this phase covers. The Loans piece (up to 10 points) requires the loan or grant come from an eligible public or charitable source — HOME from a jurisdiction other than KHRC, CDBG, the Federal Home Loan Bank Affordable Housing Program, other federal/state/local/tribal housing resources, a public housing authority, or a Kansas-registered charitable organization — carry no more than a 1% interest rate, at least 20-year amortization, and no commercially unreasonable fees; KHRC may disregard a source affiliated with a Principal.

The Other Support piece (up to 20 points, 10 per category, once each) rewards four specific local commitments: Land Donation (site owned by local government, no more than $5,000 shown in the application's land/building cost lines, with the local government not having purchased the land from a Principal), a tiered Fee Waiver schedule ($20,000-$120,000 depending on unit count for 5 points, or a 100% waiver for 10 points), Historic rehabilitation tax credit eligibility, and a Sales Tax Exemption obtained through the same Industrial Revenue Bond resolution mechanism covered below.

Property tax: the nonprofit exemption doesn't fit a syndicated deal — the IRB does

Kansas has two real property-tax mechanisms, and they reach very different ownership structures. K.S.A. 79-201z grants a full property tax exemption for housing serving elderly, disabled, or limited-income residents — but only where the property is owned solely and operated by an organization KHRC recognizes as a community housing development organization (CHDO), organized nonprofit under Kansas law (or an admitted out-of-state nonprofit). Sole nonprofit ownership doesn't accommodate the customary roughly 99.99% for-profit investor-LP stake in a standard syndicated 9%/4% deal — the same nonprofit-gated pattern this project has already documented in other states, and not a mechanism a typical LIHTC ownership entity can use.

The mechanism Kansas LIHTC deals actually use is the Industrial Revenue Bond (IRB) exemption under K.S.A. 12-1740 et seq. and 79-201a. Verified directly against the statute text: a city or county may issue IRBs and lease or lease-purchase the facility to any person, firm, or corporation — ownership-agnostic, with no nonprofit requirement — for agricultural, commercial, hospital, industrial, natural resources, recreational development, or manufacturing purposes. Housing isn't its own listed category; a multifamily rental property qualifies as commercial use, which is how Kansas LIHTC deals have structured IRB financing in practice. By local resolution, the issuing city or county can grant up to a 100% property tax exemption for up to 10 years on the bond-financed portion of the property (K.S.A. 79-201a), plus a Kansas Retailers' Sales Tax Act exemption on construction materials and labor (K.S.A. 79-3601 et seq.) — the same sales-tax exemption Category G scores separately.

This is a local-option, discretionary benefit, not a statewide entitlement, and it isn't free of process: K.S.A. 12-1749d requires the issuing government to prepare a cost-benefit analysis covering the effect on state revenues, publish hearing notice at least seven days ahead, and notify the affected county and school district governing bodies before the resolution passes. It's also a live target of state scrutiny — a July 2026 Kansas Legislative Division of Post Audit review, reported by Kansas Reflector, found Kansas counties issued $18.3 billion in IRBs between 2010 and 2024 with roughly $1.1 billion in associated foregone property tax revenue, and flagged that local governments' filed cost-benefit estimates ranged from far below to many times above actual county appraiser values once properties were built. None of that blocks a Kansas IRB resolution today, but it means the terms — and the political appetite for granting one — are set jurisdiction by jurisdiction and subject to real, current legislative attention, not a fixed backstop a pro forma can assume will be there in the same form next round.