Capital stack and soft money — Pennsylvania

PHFA administers most of its own soft money, requested inside the same application

The QAP itself lists PHFA's layered resources in one place: "Other Agency resources include Tax-Exempt bonds, Agency first mortgage financing (and associated programs such as HUD Risk Share lending and FFB), PennHOMES, PHARE, HTF, the Pennsylvania Housing Tax Credit and other programs and resources that may become available. The Agency reserves the right to award the optimal mix of funding to each Development that receives an award of Tax Credits under the Allocation Plan." That last sentence is not boilerplate — PHFA explicitly reserves the right to require use of its own first mortgage financing and tax-exempt bonds as a condition of a Tax Credit award, meaning "soft money" in Pennsylvania can arrive partly as a requirement rather than a request.

PHARE: a large annual RFP funded by the realty transfer tax and the Marcellus Shale impact fee, on its own calendar

PHARE — the Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund — was established by Act 105 of 2010 "to provide a mechanism by which certain funds would be used to assist with the creation, rehabilitation and support of affordable housing throughout the Commonwealth." Act 105 itself did not appropriate money; it set the eligibility framework (including an obligation to direct a percentage of funds to households at or below 50% of area median income) and left revenue sources to later legislation. Act 58 of 2015 supplies the recurring funding mechanism: PHFA receives 40% of the amount by which realty transfer tax collections in the prior fiscal year exceed a statutory baseline, which produced a $70 million PHARE/realty-transfer-tax allocation for FY2024/25. Act 13 of 2012 separately directs $5 million per year in Marcellus Shale natural gas impact fee revenue into PHARE, drawn from counties with producing unconventional gas wells.

PHARE's most recent Request for Proposals (issued September 2025) advertised more than $85 million available statewide, with applications due by 2:00 p.m. on November 20, 2025, submitted entirely online through PHFA's phare.phfa.org portal. That $85 million figure is larger than the $70 million realty-transfer-tax plus $5 million impact-fee amounts above appear to add up to on their own — this research could not reconcile the roughly $10 million difference from the sources reviewed (it may reflect carryover, additional appropriations, or a different fiscal year's realty transfer tax calculation), so treat each RFP's own stated total as the operative figure for that round rather than reconstructing it from the underlying statutes.

Because PHARE runs its own RFP cycle rather than living inside the LIHTC application, a developer counting on PHARE as a gap source has to track two separate deadlines and two separate agencies-within-an-agency — PHFA's Tax Credit underwriting team for the LIHTC award, and PHFA's PHARE program office for the RFP — even though both ultimately sit inside PHFA.

HOME is DCED's program with a PHFA carve-out; the National Housing Trust Fund is PHFA's own

It is easy to assume PHFA administers Pennsylvania's HOME Investment Partnerships Program the same way it administers PennHOMES or the National Housing Trust Fund. It does not. The Pennsylvania Department of Community and Economic Development (DCED) is the HOME administrator of record and controls the statewide Annual Action Plan; DCED then allocates a defined share of the Commonwealth's annual HOME award to PHFA as a state recipient specifically "to develop and administer large-scale rental projects and homebuyer projects." Per the 2025 Annual Action Plan, PHFA is to receive at least 35 percent of DCED's annual HOME allocation, not to exceed 50 percent of the 2025 allocation, for rental housing construction and development and homebuyer programs. A developer requesting "HOME funds through PHFA" is therefore requesting a sub-allocation of a DCED-controlled federal grant, not a PHFA-owned resource — the money, income-targeting rules and matching requirements ultimately trace back to DCED's own HOME administrative plan, which this research did not independently verify beyond the delegation percentage above.

The National Housing Trust Fund is different: PHFA is the direct HUD grantee and administers Pennsylvania's HTF allocation itself, which is why the QAP lists "HTF" alongside PennHOMES and PHARE as one of its own resources rather than routing it through DCED. This research could not confirm Pennsylvania's current annual HTF dollar allocation from HUD's own Fiscal Year 2025 Allocation Notice (a document listing all fifty-plus grantees) and did not attempt to extract the Pennsylvania-specific figure from it — that number should be confirmed directly with PHFA before it is treated as a known input to a gap calculation.

Pennsylvania's own state Housing Tax Credit stacks directly onto a federal award — but two current PHFA documents disagree on its per-project cap

The Pennsylvania Housing Tax Credit (PHTC) is a real, independently-legislated state tax credit, not a rebranding of the federal credit. Act 107 of 2020 amended the Tax Reform Code of 1971 by adding Article XIX-G, and the QAP itself states that "this Allocation Plan meets the requirements outlined in Section 1909-G of Article XIX-G of the Pennsylvania Code which establishes the Pennsylvania Housing Tax Credit" and requires PHFA to administer PHTC "using the same guidelines, procedures and priorities used to administer the Tax Credit Program" wherever possible. A project must already be eligible for (and typically already receive) a federal 9% or 4% LIHTC award to be considered for PHTC — PHFA determines the PHTC amount "based on the merits of the qualified low-income housing project" during the same underwriting review, and expressly states that "not all applicants who are awarded an allocation of federal LIHTCs, may be awarded an allocation of PHTCs."

Both the taxpayer receiving conditional PHTC credits and its shareholders, members and partners must be in state tax compliance — filed all required returns and paid or be under appeal on any balance due — before PHFA will issue a tax credit certificate, and before the Department of Revenue will approve a sale or assignment. Fraud or intentional misrepresentation lets PHFA recapture all or part of the credit and deem the taxpayer ineligible for future PHTC awards.

Property tax relief: two narrow constitutional carve-outs, not a PILOT program — and one of them appears internally inconsistent

Article VIII, Section 1 of the Pennsylvania Constitution — the Uniformity Clause — states that "[a]ll taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be collected under general laws," and Pennsylvania courts have consistently read it to bar taxing a given class of property (such as real estate) at different rates or on different terms within the same jurisdiction. Because of that constraint, Pennsylvania has no general PILOT (payment-in-lieu-of-taxes) statute a LIHTC owner can simply elect into the way some other states do; instead, every property-tax exemption mechanism traces back to a specific amendment carving an exception into Article VIII, Section 2(b), and enabling legislation implementing that exact carve-out.

The Affordable Housing Unit Tax Exemption Act (Act of Jul. 11, 2022, P.L. 703, No. 58) is Pennsylvania's dedicated affordable-housing carve-out, and it is split into two differently-scoped chapters implementing two different constitutional subsections. Chapter 3, "Creating and Improving Affordable Housing Units in Deteriorated Areas," implements Article VIII, Section 2(b)(iii) and only applies to a formally-designated "deteriorated area" within a municipality; it lets a local taxing authority choose among several exemption schedules of up to 10 years (a graduated 100%-down-to-10% schedule, a straight 5-year schedule, a straight 3-year schedule, a flat 10-year 100% schedule, or a custom schedule up to 10 years). Chapter 4, "Creating and Improving Affordable Housing Units," implements the broader Section 2(b)(iv) and applies anywhere within the local taxing authority's jurisdiction, not just inside a designated deteriorated area — but its own exemption schedule under Section 402(b) is dramatically shorter: either 100% exempted in year one and 100% in year two, or 100% in year one and 50% in year two, with the exemption terminating after year two either way.

There is a genuine internal inconsistency in Chapter 4's own text worth flagging rather than smoothing over: Section 403(b), Chapter 4's own "Exemption incentives procedure," states that the amount of assessment eligible for exemption "shall be available for public inspection and copying so that a subsequent purchaser is informed of the amount of taxes to be paid after the 10-year exemption period" — but Chapter 4's own exemption schedule in Section 402(b) runs only two years, not ten. The identical "10-year exemption period" phrase appears verbatim in Chapter 3's parallel Section 304(b), where it correctly matches Chapter 3's up-to-10-year schedule; it looks like boilerplate copied into Chapter 4 without being updated to match Chapter 4's own two-year schedule. This research did not find any subsequent amendment or agency guidance resolving the discrepancy — a local taxing authority or applicant relying on Chapter 4 should not assume a 10-year runway based on that sentence.

A second, separate ambiguity: Section 404(b)(2) of Act 58 makes a property ineligible for the Chapter 4 exemption if "the property receives tax relief through a State program," subject to an exception in subsection (d) for a property-tax rebate under the Taxpayer Relief Act. It is not clear from the statute's own text whether a project receiving PHFA financing such as PennHOMES, PHARE, or the PHTC — all Commonwealth programs — would count as "tax relief through a State program" for this purpose, since PHFA financing is not itself a tax relief mechanism. This research found no agency guidance or case law resolving that question and did not treat it as settled; confirm directly with the local taxing authority and counsel before relying on an Act 58 exemption alongside PHFA soft financing. Separately, Act 58 bars a property from also receiving an exemption under the 1971 Improvement of Deteriorating Real Property or Areas Tax Exemption Act or under LERTA (below) for a minimum of 15 years from the date it received an Act 58 exemption, and Chapter 4 additionally requires that the new construction or improvement increase the property's value by at least 25%.

LERTA — the Local Economic Revitalization Tax Assistance Act (Act of Dec. 1, 1977, P.L. 237, No. 76) — is the older, more commonly used local option and predates Act 58 by 45 years; it lets a local taxing authority exempt the assessed value of improvements (not land) for up to 10 years, with no affordability or income targeting built into the statute itself. Act 45 of 2025 (Act of Nov. 12, 2025, P.L. 156, No. 45), effective immediately upon enactment, added Section 1799.41-E to the Fiscal Code and extended that 10-year cap to up to 20 years, but only in two specific circumstances: (a) in a county of the second class or a city of the second class (Allegheny County and Pittsburgh), the LERTA schedule generally may run up to 20 years; and (b) in a city of the first class (Philadelphia), a 20-year schedule is available specifically for improvements that convert a defined "deteriorated property" — an industrial, commercial, former-government-use, condemned, or otherwise vacant-and-economically-obsolete property — into residential housing units. Act 45's own text imposes no affordability or income requirement on either 20-year pathway; any affordable-housing set-aside on a LERTA-financed deal is a matter of local ordinance design, not state law.