"HHFDC doesn't publish a per-unit or per-square-foot cost cap the way mainland agencies do -- so how does it actually keep an over-budget deal from winning, is green building mandatory, and does Hawaii's own prevailing wage law reach a privately owned LIHTC job?"
No dollar cost cap: HHFDC ranks your budget against everyone else's in the same round
Criterion 3, "Reasonableness of Development Costs" (0 to 12 points on the 9% LIHTC scale), is purely relative. Existing Building projects used for housing receive zero points automatically; New Building projects and Existing Buildings not used for housing are ranked twice over -- 0 to 6.0 points based on total development cost per residential square foot, and a separate 0 to 6.0 points based on total development cost per unit -- with the lowest-cost project in the round earning the full 6.0 points on each measure, the highest-cost project earning zero, and everyone else interpolated by the QAP's own stated formula: (1 - ([Subject Project's cost] - [Lowest Cost]) / ([Highest Cost] - [Lowest Cost])) x 6.0. Because the comparison set is only that round's own pool of Applications, there is no absolute dollar ceiling a developer can look up in advance the way a mainland per-unit cost cap works -- the practical ceiling is whatever the rest of that year's applicants bid, and in Hawaii's cost environment even the cheapest project in a given round can still be expensive in absolute terms.
The Hula Mae Multi-Family Bond Program runs a separate, more lenient version of the same idea for bond-financed deals: Criteria 9, "Reasonableness of Development Costs" (0 to 2 points), is a binary determination made "at HHFDC's sole discretion," weighing total development cost per unit and per square foot, the ratio of hard to soft costs, total developer fee, site location, project size and type, target population, and cost feasibility relative to scheduling -- with Existing Building projects used for housing again receiving zero automatically. Both cost-reasonableness tests carry a real post-award consequence: once a project's costs are deemed reasonable, HHFDC's exhibits warn that "any increase exceeding five percent (5%) of the total development cost prior to the construction phase can render the initial cost projection unreasonable," forfeiting the points awarded and potentially triggering revocation of the award.
Mixed-use projects with substantial non-residential space, and non-HHFDC-financed portions of a mixed-income project, may have their cost basis adjusted for this test: the QAP allows total development costs to be evaluated "without the non-residential component by proportionately reducing the total development costs based upon the gross floor area of the non-residential" use, and allows a comparable discount for units not considered affordable under the program where a clear cost breakdown supports it.
Contractor profit: one 14% cap, computed by a stated formula -- not three separate stacked caps
The QAP's Threshold requirement is a single number: "Contractor's profit, including general requirements and overhead, shall not exceed 14.0% of hard construction costs." That is structurally different from mainland QAPs that stack separate caps for profit, overhead, and general requirements (which can add up to the same combined ceiling but are tracked and reported as three distinct limits) -- Hawaii states and tests it as one unified 14.0% figure from the start, calculated by an explicit formula: the numerator sums Site Work and New Building/Rehabilitation contractor profit, overhead, and general requirements, plus payment and performance bond costs; the denominator is Site Work plus New Building/Rehabilitation construction cost, excluding contractor profit. Where a project has multiple prime contractors, each contractor's own profit, overhead, and general requirements may not exceed 14.0% of the hard construction costs under that contractor's own contract -- the cap applies contractor by contractor, not only in the aggregate. Compliance must be evidenced at both Application and, again, at audited final cost certification.
Developer fee: a base formula plus a basis-percentage add-on for 4%/bonds deals, and no stated deferral cap
| Credit type | New Building | Existing Building |
|---|---|---|
| 9% LIHTC | Lesser of $55,000 per LIHTC-and-management unit or $4,750,000 | Lesser of 40% of rehabilitation hard costs or $4,750,000 |
| 4% LIHTC + Bonds | 9% formula above, PLUS 5% of net eligible basis (not including DDA/QCT boost), less total developer fee already counted; the $4,750,000 cap does not apply to this add-on | 5% of total acquisition cost, up to a maximum of $750,000 |
2026 QAP, Section III.B.12. Exceeding the applicable threshold results in immediate rejection of the Application. HHFDC's own "Prohibited Fees" clause separately bars treating application/development-consultant, guarantor, or similar fees as project development costs.
This research found no stated cap on the percentage of total developer fee that may be deferred, and no stated repayment-period limit, anywhere in the QAP text -- a real gap compared with mainland QAPs that commonly cap deferral at a fixed percentage (often 50%) repayable within a stated number of years. Confirm HHFDC's actual, current deferral practice directly rather than assuming either an unlimited deferral or a mainland-style cap applies by default in Hawaii.
Green building: a scoring incentive, not a mandatory Threshold item -- but skipping the certification has a real cost
| Certification path | Bronze/Certified | Silver | Gold | Platinum/Emerald |
|---|---|---|---|---|
| EPA Energy Star v3 / Enterprise Green Communities / USGBC LEED for Homes v4 (BD&C) / National Green Building Standard (NAHB) | 1 point (9% LIHTC) / 0.25 point (HMMF bonds) | 2 points / 0.50 point | 3 points / 0.75 point | 4 points / 1.00 point |
2026 QAP, Criterion 9 (9% LIHTC, 0-4 points); HHFDC 2026 Funding Round Application Exhibits, HMMF Bond Program Criterion 11 (0-1 point). Applicants may score under only one certification path -- electing more than one forfeits all points in this criterion.
Unlike QAPs that make a green building or energy standard a mandatory Threshold requirement every project must clear, HHFDC's version is opt-in and points-only on both the LIHTC and HMMF scales. It still carries a real financial consequence for electing it and not following through: an architect's certification that the Project can meet the selected standard is required at application, and "failure to provide the certification may result in forfeiture of the good faith deposit" if the completed project doesn't ultimately deliver the certification claimed.
Island logistics: not addressed in HHFDC's own materials
This research did not find any discussion of inter-island shipping, barge logistics, shipping-container costs, or mainland material importation anywhere in HHFDC's 2026 QAP or its funding-round exhibits -- a direct search of both documents for those terms returned nothing. HHFDC's cost-control mechanism (the relative cost-per-unit and cost-per-square-foot ranking under Criterion 3, discussed above) appears to let each round's actual bid data absorb whatever premium island logistics adds, implicitly, rather than address it through any dedicated freight allowance, contingency guidance, or procurement-timeline provision. A developer should plan island-logistics cost and schedule risk independently -- HHFDC's own competition materials do not walk through it.
Prevailing wage: a real, active state law that reaches Chapter 201H housing -- and the QAP never says so
Checked directly against the U.S. Department of Labor's own state-by-state list, Hawaii has an active state prevailing wage law -- unlike several sibling states already documented in this library that have none at all. Hawaii Revised Statutes Chapter 104, "Wages and Hours of Employees on Public Works," applies to every contract over $2,000 for a covered project, administered by the Department of Labor and Industrial Relations' Wage Standards Division through periodically updated wage rate schedules.
The statute's own applicability language is broader than "government owns the project." HRS Section 104-2(a) states that the chapter "shall apply to every contract in excess of $2,000 for construction of a public work project to which a governmental contracting agency is a party; provided that this chapter shall not apply to experimental and demonstration housing developed pursuant to section 46-15 or housing developed pursuant to chapter 201H if the cost of the project is less than $500,000 and the eligible bidder or eligible developer is a private nonprofit corporation." The same subsection defines "governmental contracting agency" to include "any person or entity that causes either directly or indirectly the building or development of a public work" and any public-private partnership, and defines "party" to include "eligible bidders for and eligible developers of any public work and any housing under chapter 201H."
Chapter 201H is Hawaii's own Hawaii Housing Finance and Development Corporation statute -- the same chapter behind the 201H entitlement/exemption process much of the State's affordable and LIHTC housing pipeline uses to get sited (referenced directly in this QAP's own Applicant's Readiness criterion, which asks about outstanding "land use/zoning including Chapter 201H exemptions"). Because HRS 104-2(a) expressly sweeps in "housing developed pursuant to chapter 201H" as covered "public work," and because the only carve-out is a project costing less than $500,000 built by a private nonprofit developer -- a threshold essentially unreachable for an actual Hawaii apartment building given the State's construction costs -- Chapter 104 prevailing wage exposure should be the default assumption for Chapter-201H-entitled LIHTC construction in Hawaii, not an exception to chase down only if something flags it.
The statute does carry a narrower escape valve, but it does not fit a typical layered LIHTC deal. Subsection (i) lets the prevailing-wage terms of a collective bargaining agreement or project labor agreement -- approved under HRS Section 201H-36(a)(5) -- stand in for the general wage schedule, but only when three conditions are all met, including that "the qualified person or firm has received no other direct or indirect financing for the construction project from any other governmental contracting agency, including the Hawaii housing finance and development corporation." A project financed with HMMF bonds, an RHRF loan, or any other HHFDC resource -- which describes most real LIHTC deals in this QAP -- fails that condition and falls back to the general Chapter 104 rule under subsection (a), not the narrower CBA/PLA alternative in subsection (i).
Confirmed by direct search of both documents: neither the 2026 QAP nor the 2026 Funding Round Application Exhibits mention "prevailing wage," "Davis-Bacon," "Chapter 104," or "HRS 104" anywhere in their own text. HHFDC's own competition materials will not flag this exposure -- a Hawaii developer has to trace it independently to state law. Separately, and unrelated to Chapter 104, a project that separately layers in federal HOME funds (from any source) would trigger the federal Davis-Bacon requirement under 24 C.F.R. Section 92.354 once a contract covers 12 or more HOME-assisted units, regardless of state law; this research did not confirm whether HOME funds are typically routed through this same HHFDC Consolidated Application or through a separate state or county process in Hawaii.
Where this goes wrong
- Looking for a fixed Hawaii per-unit or per-square-foot Total Development Cost cap the way mainland QAPs publish -- none exists; Criterion 3 instead ranks each Application's cost per unit and per residential square foot only against the other Applications in the same funding round.
- Assuming the "cheapest" project in a given Hawaii funding round is inexpensive by mainland standards -- it only has to be the lowest of that round's own pool, which in Hawaii's cost environment can still be extremely high in absolute dollars.
- Treating contractor profit, overhead, and general requirements as three separate stacked caps as in some mainland QAPs -- Hawaii runs one unified 14.0% ceiling on the combined total, computed contractor-by-contractor under the QAP's own formula.
- Assuming the $4,750,000 alternative developer-fee ceiling applies to the 4%/bonds basis-percentage add-on -- the QAP states explicitly that it does not.
- Assuming a deferred-developer-fee percentage cap or repayment window applies by default -- none was found in the QAP text; confirm directly with HHFDC before modeling a mainland-style deferral limit.
- Treating Hawaii's green building certification as a mandatory Threshold item -- it is a scoring criterion only (0-4 points on the 9% LIHTC scale, 0-1 on the HMMF bond scale), though electing a tier and failing to deliver the completion certification risks forfeiting the good faith deposit.
- Expecting HHFDC's own QAP or funding-round materials to address inter-island shipping or mainland material-importation cost and schedule risk -- this research found no such discussion in either document; plan for it independently.
- Assuming Hawaii has no state prevailing wage law because the QAP never mentions one -- Hawaii is on the U.S. DOL's own list of states with an active prevailing wage law (HRS Chapter 104, $2,000 threshold), and neither the QAP nor the funding-round exhibits mention it anywhere in their own text.
- Assuming Chapter 104 reaches only government-owned construction -- HRS Section 104-2(a) expressly extends "governmental contracting agency" and "party" status to housing developed under Chapter 201H, carved out only for projects under $500,000 developed by a private nonprofit, a bar essentially unreachable for a real Hawaii apartment building.
- Assuming the subsection (i) collective-bargaining/project-labor-agreement prevailing-wage alternative is available to a typical HMMF-bond- or RHRF-financed LIHTC deal -- it explicitly requires the project receive no other financing from HHFDC, which most LIHTC deals in this QAP will not satisfy.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies