"DHCD's own Guide bundles RHFP, RHW, PRHP, and HTF together as if they're one program family — but which of these can actually stack under my 9% award, which one requires a local government or housing authority as co-owner, and does Maryland even have a state tax credit or a real property-tax break I can pencil into the pro forma?"
One agency runs the whole gap layer — RHFP, RHW, and PRHP — but not a state LIHTC
The 2026 Multifamily Rental Financing Program Guide (the QAP's Appendix A) states its own scope directly: DHCD "administers a variety of State and federal programs that finance the development of affordable rental housing," naming "the Rental Housing Financing Programs (RHFP) (which consists of the State-funded Rental Housing Program and the federally-funded HOME Investment Partnerships Program and Housing Trust Fund (HTF)), Rental Housing Works (RHW), and the Multifamily Bond Program (MBP)" alongside LIHTC itself. In other words, DHCD's Community Development Administration (CDA) is the same office that underwrites the federal HOME and National Housing Trust Fund dollars for rental housing in Maryland — there is no separate state housing finance agency splitting that function off, the way some states route HOME through a distinct entity.
| Program | Funding source | Pairing rule | Per-project cap | Term |
|---|---|---|---|---|
| Rental Housing Financing Program (RHFP) | State Rental Housing Program + federal HOME + federal Housing Trust Fund, all CDA-administered | Competitive or non-competitive; pairs with 9% or 4% LIHTC | Generally ≤$2,000,000/project, except as permitted in COMAR | Construction loan period (contract term + ~4 months for cost certification) plus up to a 40-year permanent loan |
| Rental Housing Works (RHW) | State funds (may include General Obligation Bonds) | Must be used with the Multifamily Bond Program (MBP) and non-competitive 4% LIHTC — cannot pair with competitive 9% LIHTC | $2,500,000 for up to 50 units; +$50,000/unit above 50, capped at $3,500,000 (higher only for HEAA-2024 density-bonus or CDA-approved time-sensitive local/federal leverage) | Same construction-plus-40-year permanent structure; accelerated on sale, refinancing, transfer, or default |
| Partnership Rental Housing Program (PRHP) | State | Ongoing, not tied to the competitive round; requires a local government or housing authority ownership role (or, since a 2006 amendment, a non-governmental sponsor of disability/special-needs-restricted units) | $75,000/unit for larger projects; up to $2,000,000 with no per-unit cap for "small" projects (≤40 units) | Repayment generally deferred up to 40 years, contingent on continued local ownership and income-eligibility compliance |
RHFP and RHW terms per Guide §3.7.1-3.7.6; PRHP terms per DHCD's Partnership Rental Housing Program program page. RHW's exclusive pairing with MBP/4% LIHTC is stated directly in the Guide's "Multifamily Bond Program and Rental Housing Works Threshold Requirements" callout: "RHW loans must be used in conjunction with MBP and 4% LIHTC."
A sponsor awarded RHFP or RHW selects a repayment structure at application — not a single fixed note form. The Guide lays out five options in Section 3.7, each trading off cash-flow flexibility against how quickly DHCD gets repaid.
| Structure | Interest, permanent period | Minimum DSCR | How principal is paid |
|---|---|---|---|
| Standard Surplus Cash | 2% simple | 1.15 (or senior lender's/credit enhancer's, if higher) | Lesser of 75% of surplus cash or a 40-year amortizing amount |
| DHCD Flex Rate | 1%–3% simple | 1.15 in year 1 after Interest-Only ends, 1.10 through year 15 | Full required level P&I on a must-pay basis — not tied to surplus cash — with unrestricted cash flow above debt service |
| Contingent Interest Surplus Cash | 0% stated interest | n/a (principal from surplus cash) | Principal from surplus cash; "contingent interest" (capped at what 4% simple would have accrued) paid only after deferred developer fee, partner loans, deferred investor-services fees, and tax-credit-adjuster payments |
| DHCD Minimum Required Payment | 2% simple | 1.15 in year 1 after Interest-Only ends, 1.10 through year 15 | Minimum 50% of scheduled P&I required; remainder from the lesser of 10% of surplus cash or a 40-year amortizing amount |
| Amortizing | Rate set by DHCD, case-by-case | Set by underwriter | Regular monthly P&I — used only where a project's cash flow can bear a fully must-pay loan |
The Developer's Fee is capped the same way across all five structures: 5%–15% of total development cost, but for 9% LIHTC projects with competitively-awarded RHFP and LIHTC, "the Developer's Fee may not exceed $2.5 million" regardless of the percentage that formula would otherwise produce.
No Maryland state tax credit to layer on the federal award — the one real donation credit isn't a substitute
Unlike Colorado's four state Housing Tax Credits or Georgia's state credit paired inside the same QAP, Maryland's 2026 QAP and Guide describe no state income tax credit that pairs with the federal 9% or 4% award. Every dollar of tax credit equity in a Maryland deal is federal. The closest thing Maryland has to a state credit touching affordable housing at all is the Community Investment Tax Credit (CITC), administered by DHCD but under an entirely different statute (Housing and Community Development Article, Title 6, Subtitle 4; implementing regulations at COMAR 05.14.01) and a separate annual competitive cycle that has nothing to do with the LIHTC round.
CITC is a real, verifiable program — and "Housing and Community Development" activities, including affordable housing development, are among its eligible project types — but it is not a LIHTC substitute in either mechanism or scale. It is not sized or structured as a per-unit basis boost; a $100,000 maximum award, once granted to a nonprofit's approved project, still only converts to cash when a separate third-party taxpayer donor actually contributes to that project and then claims the 50% credit on their own Maryland return. DHCD does not disburse CITC funds to the project the way it disburses RHFP or RHW loan proceeds at closing.
Property tax relief runs through the county, not DHCD — Tax-Property §7-503's negotiated PILOT
Maryland has no statewide, automatic property-tax exemption for LIHTC-financed rental housing. What exists instead is a county-optional negotiated Payment in Lieu of Taxes mechanism at §7-503 of the Tax-Property Article, Annotated Code of Maryland (part of Title 7, Subtitle 5, "County Exemptions — Optional; Payments in Lieu of Taxes"). The statute requires an affirmative agreement: "the governing body of the political subdivision where the real property is located approves an agreement between" the subdivision and the owner, and "under the agreement the owner pays the political subdivision ... a negotiated amount in lieu of the property tax." Nothing in §7-503 makes the relief automatic upon LIHTC award — it is a local, negotiated deal, county by county.
| Route | Owner must be | Additional condition |
|---|---|---|
| Nonprofit / housing-authority direct ownership | A §7-202-qualifying person, a §10-104 tax-exempt nonprofit corporation, an LLC wholly owned by such a nonprofit, or a §12-104(b) nonprofit housing corporation | Engaged solely in constructing/operating/managing rental housing "partially or totally financed under a government program that provides housing for low income families" and "operated on a nonprofit basis with the revenues ... controlled ... in order not to produce any net income" |
| Investor-LP / nonprofit-controlled GP | A limited partnership whose managing general partner is a housing authority, a §10-104(2) tax-exempt nonprofit, an LLC wholly owned by such a nonprofit, or a for-profit corporation 100% owned by such a nonprofit | "Engaged in the operation, construction, or management of a qualified low income housing project as defined in the Internal Revenue Code" — the route that fits a standard investor-LP / nonprofit-GP LIHTC syndication |
Text quoted directly from §7-503(a)-(b), as retrieved from the Maryland General Assembly's own statute database (mgaleg.maryland.gov). Any negotiated in-lieu payment is split between the State and the political subdivision "in the ratio that the tax rate of the State[] and the political subdivision each bears to the total" (§7-503(d)), and an agreement may retroactively abate tax "previously imposed" (§7-503(c)).
Baltimore City is the only jurisdiction for which this research found a fully documented PILOT process, published by DHCD's own Baltimore City office ("Affordable Housing PILOTs: Summary of Qualifications and Process," March 29, 2023). It describes two distinct tracks: a §7-503 nonprofit-owned track (the two routes above — "most frequently, Affordable Housing PILOTs are pursued" through the investor-LP/nonprofit-GP route, most commonly with the managing general partner structured as an LLC wholly owned by a nonprofit), and a separate Housing Authority-sponsored track under §12-104 of the Housing and Community Development Article, available only where the Housing Authority of Baltimore City holds an ownership stake (RAD conversions, Choice Neighborhoods projects, or deals with substantial Project-Based Voucher involvement) and reaching only the units restricted to residents at or below 80% AMI — excluding any market-rate units in a mixed-income project.
Baltimore City's process runs through DHCD's Director of Project Finance (an initial submission with an organizational chart, a project narrative on the capital stack, and a draft attorney opinion on statutory qualification), a Law Department threshold determination, an underwriting package (CDA Form 202, financing LOIs, an appraisal valuing the property with and without the PILOT, two years of audited financials), the Affordable Housing PILOT Committee (DHCD, Department of Finance, the Council President's Office, the Comptroller's Office/Department of Real Estate, and a non-voting Law Department seat), and final approval by the Board of Estimates — after which the agreement is filed with the Maryland Department of Assessments and Taxation.
This research did not find a comparably documented PILOT process for any other Maryland county. Other counties are separately authorized to negotiate PILOTs — either under §7-503 directly, or under the broader county-optional exemption authority at §7-501 (available, per that statute's own text, in "all counties except Worcester County," plus specific enumerated counties for a narrower category) — but whether, and how, any given county actually exercises that authority for a LIHTC deal was not confirmed here and should be verified directly with that county's finance office rather than assumed from Baltimore City's practice.
The QAP's own scoring criteria treat a PILOT as a scored soft-money item, not just a savings line: Guide Section 4.5.2 ("Operating Subsidies," worth up to 10 of the QAP's 221 competitive points) requires "a letter outlining the first year savings the PILOT represents compared to the projected standard tax assessment and stating the duration," values it over up to 15 years divided by the project's affordable units, and scores it on a formula that differs for Entitlement versus Non-entitlement jurisdictions — the average annual subsidy per affordable unit divided by $600 (Entitlement) or $300 (Non-entitlement), times 10 points.
The Direct Leveraging score turns the rest of the stack into up to 15 points
Guide Section 4.5.1 scores up to 15 points on the percentage of total development cost funded from non-"State resources." The Guide defines State resources narrowly — competitive LIHTC equity (excluding any basis-boost portion) plus every DHCD-administered program: "RHFP, RHW, HTF, HOME, CDBG, the Community Legacy Program, and the Partnership Rental Housing Program." Everything else — local contributions, private financing and philanthropy, non-competitive 4% LIHTC equity, MBP bond proceeds, basis-boost equity, HUD Section 202 Capital Advance funds, federal Historic Tax Credit equity (once a Part 1 application has reached the Maryland Historical Trust), and Qualified Opportunity Zone capital in excess of DHCD's own announced LIHTC-pricing assumptions — counts as leveraged.
Scoring divides the leveraged percentage (0%–100%) by .06667 for non-rural projects, or by .06 (capped at 15 points) for rural projects, rounding to the nearest hundredth of a point. The Guide's own worked example: a project with 85.6% leveraged funds scores 12.84 points non-rural, or 14.27 points rural.
One notable structural bonus sits inside this same section: a 9% LIHTC project "twinned" with a paired MBP/4% LIHTC project — combined at least 120 units, with the 4% side needing at least $5 million of MBP financing — receives two additional points on the 9% application's Direct Leveraging score, "to capture the leveraging of the MBP/4% LIHTC project," provided the applicant files a separate CDA Form 202 and LOIs for the twinned 4% deal.
What's confirmed absent, and what to verify deal-by-deal
The Maryland Affordable Housing Trust (MAHT) is a real, statutorily-created fund — created by the General Assembly in 1992 (Housing and Community Development Article, §§10-101 through 10-301), governed by its own Board of Trustees, and funded from interest earned on title-company escrow accounts rather than from an annual appropriation or a tax-credit allocation. It makes grants and loans to nonprofits, public housing authorities, local governments, and developers serving households at or below 50% of area or statewide median income (with priority to 30% AMI and below). What this research could not confirm is a defined per-project award ceiling, an active recurring competitive cycle comparable to the LIHTC round, or a documented recent role inside a typical 9%/4% LIHTC capital stack the way RHFP or RHW routinely appear. Treat MAHT as a smaller, targeted trust to investigate case-by-case with DHCD — not as a default line item in a Maryland proforma.
One eligible-basis trap is worth flagging directly from the QAP's own text: Section E.4 states that "financing from the Shelter and Transitional Housing Facilities Grant Program or Partnership Rental Housing Program may not be included in a project's eligible basis if it is funded from GO Bonds and if competitively allocated LIHTC are used" — a specific combination (General-Obligation-Bond-sourced PRHP/Shelter funds plus competitive LIHTC) that the QAP excludes from eligible basis outright, distinct from PRHP's general eligibility as a financing source.
Where this goes wrong
- Assuming RHW can pair with a competitive 9% LIHTC award. The Guide states RHW "must be used in conjunction with MBP and 4% LIHTC" — a 9% deal can use RHFP, but not RHW.
- Treating Maryland as having a state tax credit parallel to the federal LIHTC the way Colorado or Georgia do. No such credit exists in the 2026 QAP or Guide; the only state credit touching affordable housing is the Community Investment Tax Credit, an unrelated donation-based nonprofit program capped at $100,000 per organization/project and run on its own separate annual cycle under a different statute (HCD Article Title 6, Subtitle 4).
- Underwriting Community Investment Tax Credit dollars as a committed closing source before an actual third-party donor is signed. The credit only converts to cash when a taxpayer donates to the nonprofit's approved project and claims 50% of that donation on their own return — DHCD does not disburse it to the project the way it disburses LIHTC equity or RHFP proceeds.
- Assuming a Maryland LIHTC property gets property tax relief automatically. There is no statewide LIHTC property-tax exemption; §7-503 relief requires an affirmative, negotiated PILOT agreement approved by the local governing body, county by county.
- Assuming Baltimore City's documented PILOT process (DHCD's Director of Project Finance intake, Law Department threshold review, PILOT Committee, Board of Estimates approval) is how every Maryland county administers §7-503. This research found a fully documented process only for Baltimore City; other counties' actual practice under §7-503 or the broader §7-501 authority was not confirmed and should be checked directly with that county.
- Confusing Baltimore City's two PILOT tracks. The nonprofit-ownership route under Tax-Property §7-503 and the Housing Authority-sponsored route under Housing and Community Development Article §12-104 have different eligibility gates, and the §12-104 track reaches only units at or below 80% AMI, excluding any market-rate units in a mixed-income project.
- Treating the Maryland Affordable Housing Trust as a standard, sizable gap layer comparable to RHFP or RHW. It is a smaller trust funded from title-company escrow interest, targeted at households at or below 50% AMI; this research could not confirm a defined per-project ceiling or a documented recent role in a typical LIHTC capital stack — verify current MAHT capacity directly with DHCD.
- Including Partnership Rental Housing Program or Shelter and Transitional Housing Facilities Grant Program funds in eligible basis on a competitively-allocated LIHTC deal where those funds are sourced from State General Obligation Bonds. The QAP's own Section E.4 excludes exactly that combination from eligible basis.
- Assuming the Direct Leveraging score rewards any non-DHCD dollar equally, or that combining two DHCD programs adds leverage points. The Guide's definition of "State resources" nets out competitive LIHTC equity and every DHCD-administered program (RHFP, RHW, HTF, HOME, CDBG, Community Legacy, PRHP) from the leveraged-funds numerator — pairing RHFP with RHW, however common, adds zero Direct Leveraging points.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies