Cost, construction type, and the labor package — Delaware

No published Total Development Cost cap -- Delaware limits eligible basis instead

This research found no DSHA-published per-unit or per-square-foot Total Development Cost ceiling of the kind several other states adopt from HUD's TDC tables. What Delaware does instead is cap eligible basis -- the depreciable cost base that generates credit -- against HUD's Section 234 Basic Mortgage Limits, the same schedule HUD uses under the HOME program: "Eligible basis limits are limitations on the depreciable costs permitted under this QAP, excluding any federal or state basis boost and costs associated with any market rate units. The limits replicate the Section 234 Basic Mortgage Limits established by HUD and utilized under the HOME Program."

Exceeding this limit is not a threshold failure. The QAP is explicit: "A project whose total eligible basis exceeds the above limit may participate in the program; however, the maximum amount of credits allocated to a development is limited to the lesser of permitted eligible basis or the eligible basis limit." A cost overrun above the limit simply stops generating additional credit -- it does not disqualify the application the way exceeding a hard TDC ceiling does in states that use one.

DSHA does police cost discipline, just through different levers than a flat cap. First, a scored "Cost Balance" category (up to 15 points) rewards developments whose Total Construction Costs make up a larger share of TDC net of land -- at least 67% for new construction, 50% for acquisition/rehabilitation/new-creation rehabilitation, with one additional point for every 1.5% (new construction) or 1% (acq/rehab) above that floor, calculated as (Construction Costs) / (TDC - Land Costs) x 100. Second, DSHA tracks cost performance across rounds: an applicant is ineligible to compete if a general partner, developer, or affiliated entity on a prior award "exceeds proposed cost per unit" from that prior application without DSHA's satisfaction -- a real, ex-post accountability mechanism separate from any per-round dollar ceiling.

Basis boosts: an automatic federal track, a discretionary state track, and a separate multiplier for bonds

A 9% development in a federal Qualified Census Tract or Difficult Development Area automatically qualifies for the standard federal boost -- described in DSHA's own definitions as an "Eligible State Basis Boost" of "an increase in eligible basis of up to thirty percent (30%)" -- bringing its eligible-basis ceiling to 130% of the Section 234 table above. Separately, DSHA reserves its own discretionary "state basis boost," also up to 30%, available to applicants serving special-needs populations or permanent supportive housing, family projects in DSHA's designated Areas of Opportunity, or any project DSHA determines needs it for financial feasibility. The two boosts are mutually exclusive by design -- DSHA's own text states the discretionary state boost "is not available for properties located in a Qualified Census Tract (QCT) or Difficult to Develop Area (DDA) since the QCT and DDA already qualify for an additional 30% boost" -- and neither the QCT/DDA-triggered boost nor the state's own discretionary boost is described as available to tax-exempt bond applicants.

Two narrower exceptions run outside that 100%/130% framework entirely. Small Preservation/Rehabilitation deals -- 40 units or fewer, meeting the definition of Substantial Rehabilitation, not in a QCT or DDA and not otherwise automatically eligible for the 130% boost, with no more than 15% of existing units reconfigured to add bedrooms -- are instead capped at 115% of the Section 234 limits. And 4% tax-exempt bond projects run on their own separate, more generous multiplier: 200% of the Section 234 Basic Mortgage Limits, regardless of QCT/DDA status, rather than the 100%/130% track that governs 9% deals.

The discretionary state boost also has a real application-stage restriction: "No applications will be accepted with a state basis boost included in the tax credit calculation, with the exception of units with permanent supportive housing or family projects located in Areas of Opportunity." Outside those two named exceptions, DSHA decides whether a state basis boost is needed for financial feasibility during its own ranking/underwriting process, not at the applicant's own election.

Contractor fee, general requirements, and contingency caps

Contingency is not a single undifferentiated fund: it splits 80% to hard costs and 20% (capped at $200,000) to soft costs, and DSHA bars reallocating between the two buckets until construction reaches 75% completion, with DSHA approval required for any contingency draw or transfer. A payment and performance bond from an approved bonding company is required before construction begins, and DSHA does not accept a letter of credit in place of that specific bond -- a contrast with the separate cash working capital reserve (2.5% of combined construction mortgages), where an LOC is an acceptable substitute for cash.

Developer fee: a genuinely different structure for 9% and 4% deals

The two tracks are structured differently, not just sized differently. On 9% deals, any deferred fee simply cannot exceed 50% of the total calculated fee. On 4%/bond deals, DSHA carves out a mandatory "cash flow fee" tranche -- 40% of the total fee (up to $800,000 / $1,200,000 / $1,600,000 across the three unit tiers) that must be deferred and paid only from operating cash flow, on top of which the remaining, ordinary deferred portion is separately capped at 50% (up to $600,000 / $900,000 / $1,200,000). A 4%/bond developer must submit a narrative demonstrating the cash flow fee plus any deferred fee can be fully paid from equity distributions within the first 15 years of operations under DSHA's own distribution caps -- if that math doesn't work, the developer must elect a lower fee rather than assume DSHA will relax the distribution caps to accommodate it.

Payment timing is fixed regardless of credit type: 50% of the non-deferred fee comes from construction loan proceeds (25% at 50% construction completion, 25% at permanent closing), the remaining 50% comes from the equity contribution, and "in no case shall the developer be allowed to receive greater than fifty percent (50%) of the non-deferred developer's fee prior to the conversion date." Any environmental remediation costs not already budgeted must be paid from the developer fee, not from contingency.

Green building: a mandatory baseline, plus a separate scored certification track

Green building in Delaware is not purely a scoring bonus. DSHA's Design and Construction/Rehabilitation Standards -- which apply to "all LIHTC developments...regardless of financing source(s), including tax-exempt bond" -- mandate specific Energy Star-rated components as a threshold construction requirement: Energy Star-certified appliances (with the exception of microwaves and stoves), Energy Star- and wind-rated windows and doors, Energy Star LED lighting fixtures and ceiling fans, an Energy Star-qualified dehumidifier in each unit, and IECC air-sealing details, among other component-level specifications. None of this is optional or scored -- it is a baseline every development must meet.

Layered on top of that mandatory baseline is a genuinely separate, optional scoring category: "Energy Conservation Measures," worth up to 10 points, for developments that pursue a full third-party green certification. The QAP describes a tiered structure -- a base 3 points for selecting one of Enterprise Green Communities 2020, National Green Building Standard 2020, or LEED for Homes Multifamily; an intermediate 2 additional points for Passive House certification or a DOE Zero Energy Ready Home (new construction) or a HERS index of 70 or less (acquisition/rehabilitation), available only if a base certification is also elected; and an advanced 3 additional points for Integrative Design and Resilient Construction/Operating Energy or Building Design and Construction Certification, available only if both the base and intermediate criteria are elected. A separate, up-to-2-point bonus is available to rehabilitation projects currently using gas appliances and mechanical systems that agree to convert to all-electric systems as part of the renovation.

Prevailing wage: a real Delaware statute, a real scope question, and Davis-Bacon's separate federal trigger

Delaware does have its own state prevailing wage law -- 29 Del. C. Sections 6960-6969 -- so this is not a state that never enacted one. But its own statutory language scopes coverage narrowly: Section 6960(a) applies prevailing wage requirements to "every contract or aggregate of contracts relating to a public works project in excess of $500,000 for new construction...or $45,000 for alteration, repair, renovation, rehabilitation, demolition or reconstruction" to which "this State or any subdivision thereof is a party" and "for which the State appropriated any part of the funds." That "State is a party to the contract" language is the operative test -- it is not simply "the project received state funding." An ordinary LIHTC development is privately owned and privately contracted: the developer, not DSHA, signs the construction contract with the general contractor, even when DSHA is a lender or tax-credit allocator on the deal. This research could not confirm, from the statute's own text or from Delaware Department of Labor guidance, that a privately-contracted LIHTC construction contract makes the State a party to that contract merely because DSHA provided HDF, ARHP, or tax-credit financing. Some secondary Delaware Division of Industrial Affairs guidance frames coverage more broadly as reaching any project "funded in whole or part by the State," which does not obviously match the statute's own "State is a party" language -- this discrepancy between the statute's text and the agency's own plain-language summary was not resolved in this research. A Delaware developer should confirm directly with the Division of Industrial Affairs whether a specific DSHA-financed LIHTC construction contract is covered, rather than assume it is or is not.

Federal Davis-Bacon operates independently of that open question and is much better documented in DSHA's own materials. DSHA's Guidelines are explicit that its own HDF and ARHP funds do not, by themselves, carry a Davis-Bacon requirement. HOME funds are different: DSHA may provide HOME financing for up to eleven units without triggering Davis-Bacon, but "HOME financing for more than eleven (11) units may be offered to a development at DSHA's sole discretion, but may trigger additional federal requirements, including Davis-Bacon prevailing wage requirements" -- a precise, DSHA-controlled threshold. National Housing Trust Fund (NHTF) financing does not require Davis-Bacon wages on its own: "payment of Davis-Bacon wages is not required under this program except as may be required by combination with other sources of federal funding." HOME funds may separately trigger Section 3 and Build America, Buy America (BABA) requirements, in addition to Davis-Bacon, once the most-restrictive-rule-applies principle DSHA states for combined funding sources kicks in.