One agency runs LIHTC, HOME, HTF, and HIF -- but a PILOT only works if a nonprofit controls the deal — North Dakota

Four programs, one Division, one annual round

NDHFA's own "Multifamily Funding Demand" reporting to the legislature describes a single application cycle doing quadruple duty: "NDHFA holds an annual application round for all multifamily funding sources. This includes federal Low-Income Housing Tax Credit (LIHTC), HOME, Housing Trust Fund, and state HIF." In the September 2025 round, 23 applications requested over $396 million in total development costs against that combined pool; six new projects and one additional-funding request were funded, a 30% approval rate, and the LIHTC program alone was oversubscribed by $15 million in credits -- roughly $150 million in equity/gap financing NDHFA could not cover.

HOME is a smaller pool than the acronym suggests. North Dakota's FY2025 annual HUD HOME allocation was $3,014,372.26; after the mandatory CHDO set-aside ($452,155.84), single-family homeowner rehabilitation ($840,000 plus $60,000 administration), homebuyer down payment assistance ($500,000), and NDHFA's own PJ administration draw, only $1,580,202.51 was left in the "Rental Production and Rehabilitation" pool that can actually pair with a LIHTC multifamily deal. Recipients are expected to meet a 25% local match "unless specifically waived by NDHFA," and projects with five or more HOME-Assisted Units must restrict at least 20% of those units to HOME's 50% AMI limit at Low-HOME rent for the full period of affordability.

The National Housing Trust Fund runs on a tighter mandate still: its "primary affordability target" is Extremely Low-Income (ELI) households, funds may cover new construction, rehabilitation, acquisition, or adaptive reuse of a multifamily project (including up to 18 months of rent-up reserve capital), and any rehabilitation project must perform at least $15,000 per unit in rehab work to qualify. HTF cannot touch a project already under construction, and the maximum award for any single project is capped at the lesser of the subsidy figure produced by the selected HOME Cost Allocation Method or the amount actually needed to close the feasibility gap -- NDHFA reserves case-by-case discretion to exceed that only to serve overall program goals.

The Housing Incentive Fund: real gap money, but no longer a tax credit

The 62nd Legislative Assembly created the Housing Incentive Fund in 2011 to address workforce housing needs, codified at N.D.C.C. ch. 54-17. The fund's current operating statute, § 54-17-40, describes it as "a special fund in the state treasury administered by the housing finance agency," with money "appropriated to the housing finance agency on a continuing basis." Eligible uses include new construction, rehabilitation, preservation, or acquisition of multifamily housing; gap assistance, matching funds, and accessibility improvements; and assistance limited to the amount "necessary to qualify for a loan using underwriting standards acceptable for secondary market financing or to make the project feasible." Individuals may not receive direct assistance, and except for the "does not exceed the amount necessary" gap-assistance category, all other assistance is subject to repayment or recapture. NDHFA may charge an administrative fee, capped at 5% of the project award for grant recipients, and the statute requires at least 10% of the fund be used to "assist developing communities to address an unmet housing need."

This is the point where a lot of secondary material about HIF is out of date. A separate state income tax credit for private contributions to HIF once existed under N.D.C.C. § 57-38-01.32 -- a dollar-for-dollar credit for taxpayers who donated to the fund, which is the mechanism widely-cited older writeups (including a 2014 Federal Reserve Bank of Minneapolis article still in circulation) describe. The current North Dakota Century Code lists that section's text as simply "Expired by S.L. 2015, ch. 14, § 20" -- the substantive credit language has been removed from the code entirely, confirming the credit no longer exists as active law. A secondary tax-research summary of the pre-expiration statute describes it as having been allowed only for the 2011 through 2016 tax years, with any credit actually earned in that window carryable for up to 10 years afterward; this research confirmed the expiration itself directly against the current Century Code but did not independently verify that exact 2011-2016 window against the repealed statute's original text. Either way, no new contribution generates a new HIF tax credit today. Since the credit's expiration, and reaffirmed by a 2025 amendment removing language describing HIF as "a special revolving fund at the Bank of North Dakota" in favor of "a special fund in the state treasury," HIF has run on direct, continuing legislative appropriation to NDHFA rather than investor tax-credit contributions. A screen or pitch deck that still describes HIF as a donor-tax-credit vehicle is describing a program that no longer operates that way.

Property tax relief: a statutory PILOT, gated to nonprofit or political-subdivision control

N.D.C.C. § 57-02-08(43) exempts "all residential rental property, inclusive of land and administrative and auxiliary buildings, used as affordable housing" from taxation "for the property's period of affordability" -- but only if NDHFA certifies to the county director of tax equalization that three conditions hold: (1) the property is subject to and in compliance with a land use restriction agreement enumerating mandatory income and rent restrictions; (2) the property is owned by a qualified nonprofit entity as defined in IRC § 42, or, if a for-profit limited partner holds an ownership interest, the partnership agreement gives the nonprofit a right of first refusal and requires any transfer by the for-profit entity to be "without financial gain"; and (3) "the general partner or other ownership entity is owned or controlled by a nonprofit entity or a political subdivision."

The exemption is not a free ride: "in lieu of the ad valorem taxes that would otherwise be assessed, the project owners shall make a payment equal to five percent of the balance of the total annual rents collected during the preceding calendar year, minus the utility costs for the property paid by the owner of the property." That in-lieu payment is a real, statutorily-defined PILOT, not a naming convention for a full exemption. If only part of a property's units are eligible for local, state, or federal affordable-housing assistance, the exemption is pro-rated by dividing the number of income- and rent-restricted units by the total unit count. For projects beginning after December 31, 2012, the exemption starts the first taxable year after the owner receives a building permit; NDHFA must notify the county director of tax equalization and the state supervisor of assessments by March 15 of any year the property falls out of compliance.

This is a meaningful gate for deal structuring: a standard for-profit-sponsor, 99.99%-investor-limited-partner LIHTC deal, with a nonprofit holding only a minor co-GP interest, does not clearly satisfy condition (3) as written -- the statute requires the ownership entity to be "owned or controlled by" a nonprofit or political subdivision, not merely to include one. A deal that wants this exemption should be structured with genuine nonprofit or public-agency control from the outset, and confirm eligibility with NDHFA before assuming it.

The QAP's own "Committed Leverage" scoring category (up to 4 points) rewards "signed, firm commitments of funding source(s)... which reduce the project's need to carry debt with a reasonable expectation of repayment or" -- in the 2027 Allocation Plan's language -- "subsidize the operations by substantively reducing the project's operating expenses." The 2026 Allocation Plan named a PILOT explicitly as an example of that second category ("such as a PILOT"); the 2027 Allocation Plan dropped that parenthetical example, though the surviving "substantively reducing the project's operating expenses" language would still appear to describe a PILOT's economic effect. This research could not confirm from the 2027 text alone whether NDHFA still scores a § 57-02-08(43) PILOT under this category as a matter of practice -- worth confirming directly with the Agency rather than assuming the removed example changed scoring intent.

The closest thing to a state historic credit: a local Renaissance Zone opt-in, not a statewide program

North Dakota's Renaissance Zone Act, N.D.C.C. ch. 40-63, lets a city apply to the state for designation of part of itself as a renaissance zone; the ND Commerce Department's Division of Community Services grants zone status and administers zone creation generally, while the Office of State Tax Commissioner administers the resulting income tax incentives. Nothing under this Act is available anywhere in North Dakota by default -- a property has to sit inside a specific, city-proposed, state-approved zone boundary, and not every city has established one.

Within an approved zone, N.D.C.C. § 40-63-06 allows an income tax credit "for making an investment in the preservation or renovation of zone project property consisting of historic property" -- property the State Historical Society certifies as listed or eligible for listing on the National Register of Historic Places, or as a contributing structure in a National Register or certified state/local historic district. "The credit equals 25% of the amount invested in the project, up to a maximum credit of $250,000 per project," first available in the tax year the local zone authority determines the work was completed, with a five-year carryforward for any unused credit. Applying requires two copies of an application and supporting documentation (plans, specifications, original photographs) to the Historic Preservation Division of the State Historical Society of North Dakota, and work started before SHSND and National Park Service conditional approval may not qualify -- the project also cannot be phased.

The same Renaissance Zone project can separately qualify for a property tax exemption of up to eight years under § 40-63-05 (five years standard, extendable for qualifying-cost commercial rehabilitation) and a business/investment income tax exemption under § 40-63-04(2) of up to $500,000 per year for five to eight years -- but both require the same city zone-authority and Division of Community Services approval as the historic credit itself, on top of whatever LIHTC underwriting the deal already carries.

The QAP's own "Historic Properties" scoring item (4 points) awards points to "properties that are on the National Register of Historic Places and receiving Historic Rehabilitation Tax Credits" -- unchanged between the 2026 and 2027 Plans. The Plan text does not specify whether "Historic Rehabilitation Tax Credits" means the federal 20% credit under IRC § 47, North Dakota's own 25% Renaissance Zone credit under § 40-63-06, or either -- this research could not resolve that ambiguity from the QAP text alone and it should be confirmed directly with NDHFA before assuming a federal-only historic credit satisfies this scoring item, or that it does not.

What's absent: no state LIHTC, and a developer-fee deferral schedule that functions as a built-in soft source

This research found no North Dakota state low-income housing tax credit that twins with the federal 9%/4% credit the way roughly two dozen other states have enacted. North Dakota's own gap tools are HIF (direct appropriation, described above) and the Renaissance Zone historic credit (a local-option program not specific to LIHTC deals) -- there is no third, LIHTC-paired state credit to layer in.

The QAP's own Maximum Developer Fee rule (Section 2.C) doubles as a mandatory soft-money source: for 4% deals, if Developer fees (or the combined Developer-plus-contractor fee, when they share an Identity of Interest) run between 15% and 25% of total eligible basis, everything above 15% must be deferred; at 25% or more, everything above 10% must be deferred. Combined with the outright caps (15% of eligible basis for 9% deals, 30% for 4% deals, with separate acquisition-basis and combined-entity sub-limits), this schedule forces a meaningful slice of the developer fee into deferred-fee status on larger-fee deals -- effectively a state-mandated soft loan from the developer to the deal, independent of any external gap source discussed above.