Compliance, Year 15, and Hawaii's 45-year extended-use floor -- not 55 — Hawaii

The real number: 45 years, confirmed -- not 55, and not the bare federal 30

The QAP's Minimum Thresholds state the requirement without qualification: "Applicants requesting an award of LIHTCs must commit to a minimum affordability period of 45 years." A second clause adds a rehab-specific floor on top of that: for "Acquisition/Rehabilitation of an Existing Building used for housing: affordability period must also exceed any pre-existing affordability period by no less than 30 years." Both sit inside Section III.B, the general Minimum Thresholds that Section III.C confirms apply to tax-exempt-bond-financed 4% deals too -- bond applicants "must submit all documentation required in the application and will be subject to all feasibility reviews but are not subject to scoring under the Criteria Point System." In other words, the 45-year floor is a threshold requirement for every LIHTC award HHFDC makes, not a competitive-round-only figure.

That 45-year floor is 15 years past the federal statutory minimum. HHFDC's own Compliance Manual reprints the underlying federal definition verbatim in its IRC Section 42 appendix: the "extended use period" is "the period beginning on the 1st day in the compliance period on which such building is part of a qualified low-income housing project, and ending on the later of ... the date specified by such agency in such agreement, or ... the date which is 15 years after the close of the compliance period" -- i.e., a 15-year Compliance Period plus a 15-year minimum Extended Use Period, 30 years total at the bare federal floor. Hawaii's own 45-year Minimum Threshold is the state-added extension Section 42 explicitly permits: "each individual state has the power to impose additional requirements over and above the federal standards ... inclusive of extending the period for which the property is kept as affordable housing," as the Compliance Manual's introduction puts it in its own (federally-focused, not Hawaii-number-specific) framing.

Qualified Contract: waived for every award -- but the manual's older language hasn't caught up

The same Minimum Threshold item that sets the 45-year floor also disposes of the Qualified Contract exit entirely: "All owners will waive their right to request a qualified contract." Because this sits inside the Minimum Thresholds rather than the scoring criteria, failing to include that waiver is grounds for outright rejection of the application, the same as missing any other threshold item -- not a point deduction.

To understand what's being waived, HHFDC's own Compliance Manual reprints the federal mechanism in full. The extended use period "shall terminate ... on the last day of the [one-year] period ... if the housing credit agency is unable to present during such period a qualified contract for the acquisition of the low-income portion of the building by any person who will continue to operate such portion as a qualified low-income building," with the statute adding that this override "shall not apply to the extent more stringent requirements are provided in the agreement or in State law" -- exactly the kind of override Hawaii's blanket waiver represents. A "qualified contract" is federally defined as "a bona fide contract to acquire ... the non low-income portion of the building for fair market value and the low-income portion of the building for" a formula price keyed to outstanding debt, adjusted investor equity, and other capital contributions, net of distributable cash. None of that federal machinery is reachable for a Hawaii award made under the current QAP, because the waiver forecloses the request that would trigger it in the first place.

One currency note worth flagging rather than treating as settled: the Compliance Manual's own general narrative about extended-use termination -- "the extended use period may terminate for any building if ... the housing credit agency is unable to find a buyer in the 1-year period following the current owner's request in the last year of the compliance period to acquire the owner's interest" -- describes the federal mechanism in generic terms and does not itself state that Hawaii now requires every owner to waive it. That sentence reads as unrevised boilerplate describing what Section 42 allows nationally, not a statement about Hawaii's current policy. The QAP's own Minimum Threshold language is the controlling, current instrument on this point; unlike some other states' published compliance manuals, this research found no separate HHFDC-published Qualified Contract fee schedule (eligibility-determination fee, request fee, or inspection fee) anywhere in the materials reviewed -- plausibly because the blanket waiver leaves no live process to price, but that reasoning is inference, not something HHFDC's own text states directly.

After Year 15: the Additional Use Period's lighter rulebook

HHFDC's QAP defines what changes once the initial 15-year Compliance Period ends: "After the initial 15-year compliance period of the Extended Use Period ('Additional Use Period'), HHFDC is no longer required to report instances of non-compliance to the IRS," and oversight shifts to "enforcing the requirements of the LIHTC program through the term of the Declaration of Restrictive Covenants." The Additional Use Period Compliance Policy "shall be effective on the first day after the expiration of the initial 15-year compliance period for the last building placed in service in the project," generally beginning "January 1 of the year after the expiration" of that period.

Fees, non-compliance correction, and recapture -- mostly deferred to the IRS

The compliance monitoring fee is "$25 per unit for all units within each project ... charged annually," submitted with the Annual Report, effective as of the first building's placed-in-service date, and subject to HHFDC adjustment each January 1. On non-compliance, the QAP gives owners "forty-five (45) days to correct any discovered violations," and separately states HHFDC "will be required to notify the IRS within forty-five (45) days after the end of the thirty-day correction period, whether or not the non-compliance is corrected" -- two different day counts (a 45-day owner correction window and a 30-day correction-period reference tied to the IRS notification clock) that appear in the same paragraph of the QAP's own text; HHFDC may extend the correction period up to six months total for good cause. During the Additional Use Period, the correction window is likewise 45 days, extendable up to six months case by case, and owners "may request HHFDC to review all outstanding non-compliance issues for a property once per calendar year after the initial correction period."

Recapture itself is not an HHFDC action. The Compliance Manual is explicit: "The most serious action the IRS can take against an ownership is the recapture of credits previously claimed. Only the IRS determines this course of action. Consequences to issues of reported noncompliance are not governed by the monitoring agency," and separately, "HHFDC's obligation to monitor for compliance and report any issues of noncompliance with Section 42 regulations to the IRS does not make HHFDC liable for an owner's noncompliance." Records retention runs long past any individual finding: the Annual Report and its supporting documentation must be kept "for a minimum of six (6) years after the due date (with extensions) for filing the federal income tax return for that year," while first-year records must be retained "at least 6 years beyond the due date (with extensions) for filing the federal income tax return for the last year of the compliance period of the building" -- effectively decades, not just six years, for the file that originally qualified the project.

Adjacent exit-related scoring options: a right of first refusal and a state-conveyance option

Two optional scoring criteria touch what happens at the far end of the affordability tail, distinct from the mandatory Qualified Contract waiver. Criterion 17, Opportunity for Home Ownership (0 or 1 point), requires that "the owner will offer tenants a right of first refusal to acquire the property in accordance with Section 42(i)(7) of the Code," supported by a feasibility analysis of tenants' ability to purchase and a homeownership-conversion plan. Criterion 22, State Conveyance (0 or 1 point), awards a point for "agreeing to offer to sell the project to a state agency for fair market value (as determined by a third-party appraisal), subject to commercially standard terms, no later than three years before the end of the Section 42 extended use period," with the agreement reflected in the Declaration of Restrictive Covenants. Both are elective, single-point scoring options for 9% competitive applications -- not Minimum Thresholds, and not available at all to 4%/bond deals scored outside the Criteria Point System.

Two things HHFDC's own materials do not address -- flagged rather than guessed at

Property tax and PILOT treatment: neither the 2026 QAP nor the LIHTC Compliance Manual contains any provision addressing real property tax exemptions or payment-in-lieu-of-taxes arrangements during the extended-use period. That silence is consistent with how Hawaii's government is structured -- real property tax in Hawaii is levied and administered entirely by the four counties (City and County of Honolulu, and the Counties of Hawaiʻi, Maui, and Kauaʻi), not by the state, so it falls outside HHFDC's own jurisdiction and outside the QAP/Compliance Manual's scope. That structural point about county administration is general background on how Hawaii's government divides this responsibility, not something read verbatim in either document reviewed here -- a developer needs to confirm any property-tax exemption or reduction directly with the specific county the project sits in, since this research found nothing in HHFDC's own published materials to rely on for that question.

Prevailing wage: this research found no statement anywhere in the 2026 QAP or the LIHTC Compliance Manual about prevailing-wage or Davis-Bacon obligations, whether during construction or continuing into the compliance/extended-use period. If a wage requirement attaches to a specific Hawaii LIHTC deal, it would most plausibly come from the deal's other funding sources -- federal Davis-Bacon obligations tied to HUD-assisted financing, or Hawaii's own state prevailing-wage law for public-works contracts -- rather than from anything in HHFDC's own LIHTC program documents. Treat this as an unconfirmed, deal-specific question to raise with counsel and with whichever other funding source is layered onto the project, not as something Hawaii's LIHTC compliance framework itself imposes.