"There's no per-unit Total Development Cost cap in Maryland's QAP the way there is in California — so what actually stops a budget from ballooning, does the state's own green-building tradition make anything mandatory here versus just scored, and does Maryland's real, active Prevailing Wage Law reach a privately-owned LIHTC deal financed with a CDA loan?"
No per-unit cost cap — a scoring penalty instead
Maryland does not cap eligible basis or Total Development Cost by a fixed dollar-per-unit ceiling. Instead, the Guide's Construction or Rehabilitation Cost Incentives category (worth up to negative 8 points) deducts points from any application whose construction cost per square foot exceeds a limit DHCD sets and revises before every competitive round, "based on market conditions and information provided by published cost indices, such as McGraw Hill's Engineering News Record," announced at the pre-round information session and posted at least 30 days before the application deadline. The per-square-foot figure is calculated by taking all on-site and off-site development costs plus the total construction contract, less contingencies, and dividing by the gross square footage of all buildings being built or renovated; structured parking is reported and evaluated separately, with a case-by-case waiver process. The point deduction itself is proportional — "the amount the project exceeds the applicable cost limit by the applicable cost limit" multiplied by 8 points for large projects or 6 points for small (up to 40-unit) projects — and DHCD will consider evaluating adaptive reuse of a nonresidential building, substantial historic rehabilitation, or redevelopment of housing determined to be beyond repair against the (typically higher) new-construction limit rather than the rehabilitation limit.
This research could not obtain the actual current-round dollar-per-square-foot figures: DHCD posts them on a separate, dedicated "Construction Cost Limit" webpage rather than embedding them in the QAP or Guide text itself, and that page's live figures were not retrieved in this session. A sponsor needs to pull the current limit directly from DHCD's website (or the pre-round information session materials) for the specific round and project type (new construction vs. rehabilitation, large vs. small project) before underwriting to it.
Developer fee and the professional-fee schedule: two different rulebooks for 9% and 4%
For competitively awarded 9% deals layering RHFP and LIHTC, the Developer's Fee is capped at a flat $2.5 million, with a waiver available up to $3 million for projects of 75 units or more. For 4%/MBP deals — and, more generally, whenever the Guide's formula-based approach applies — the fee instead runs on a two-tier, cost-breakpoint formula rather than a single percentage: 15 percent of the first $10 million of development costs (10 percent on acquisition costs) and 10 percent of any amount above $10 million (5 percent on acquisition costs above that line). "Total development costs" for this calculation is itself precisely defined — it includes construction/rehabilitation costs, related architecture/engineering/legal fees, financing fees and charges, and acquisition-related costs including master planning, but excludes hard/soft cost contingencies, syndication costs, funded reserve or guarantee accounts, and the Developer's Fee itself.
A sponsor can request up to an additional 5 percent above the calculated fee — pushing the ceiling to 20 percent of development costs or 15 percent of acquisition costs — but only if that extra amount is escrowed with DHCD or another lender for one of three specific purposes: funding a supportive-service reserve, funding a 20-year rent subsidy covering the gap between a 20 percent AMI rent and a 60 percent AMI rent for Targeted Population units, or repaying a sponsor note at DHCD's discretion. That additional 5 percent is explicitly carved out of the flat $2.5 million competitive cap. Twinning deals get their own, separate ceiling: the combined Developer's Fee across both the 9% and 4%/MBP components is capped at the lower of the standard formula or a flat $5 million.
| Fee category | Large Projects | Small Projects (up to 40 units) |
|---|---|---|
| Builder's Fee, aggregate (% of net construction cost) | 15% new construction / 17% rehabilitation | 20% (new construction and rehabilitation alike) |
| Builder's Profit | 10% | 10% |
| Builder's Overhead | 3% | 3% |
| General Requirements | 10% | 10% |
| Civil Engineering (% of net construction cost) | 5% | 7% |
| Architect – Design (% of construction contract) | 5% | 7% |
| Architect – Administration (% of construction contract) | 3% | 4% |
2026 Multifamily Rental Financing Program Guide, Section 3.9.8.3. Waivers are available at DHCD's sole discretion for small projects or projects requiring specialized consultants.
Rehabilitation has its own hard cost floor and its own mandatory energy test
Substantial renovation (rehabilitation that doesn't meet the Guide's own definition of gut rehabilitation or adaptive reuse) must show total hard construction costs — exclusive of fees or overhead — of at least $25,000 per unit, supported by a building evaluation report from an engineer or other qualified professional; a waiver of that floor is available only where a sponsor can demonstrate a strong preservation need, that affordable units will be lost without DHCD financing, and that adequate reserves (per a capital needs assessment) are in place.
Separately — and this is a threshold requirement, not a scored one — any rehabilitation project awarded LIHTC and/or RHFP must submit a comprehensive energy audit to DHCD within 90 days of its reservation letter (or on a schedule set by the underwriter and construction manager for non-competitive MBP/RHW deals). The audit must show the rehabilitated building achieving a minimum of 15 percent energy savings compared to its existing condition; if that 15 percent reduction isn't achievable, the project's alternative is to complete one of the green or energy certifications the Guide separately scores under its Development Quality Standards category (see below) — the certification becomes a substitute compliance path for the mandatory savings test, not an independent, optional bonus in this scenario.
Green building is mandatory before it's ever scored
The Guide's Development Quality Thresholds — a pass/fail section, not the scored Development Quality Standards category — require every new construction, gut rehabilitation, or adaptive reuse application to be certified under the current version of Energy Star Certified Homes or Energy Star Multifamily New Construction (narrow, itemized waivers exist for slab insulation, continuous exterior insulation behind existing brick veneer, or high-performance windows barred by historic preservation restrictions, provided an energy consultant certifies the balance of the program was met). Layered directly on top of that certification requirement, and tied explicitly to the Climate Solutions Now Act of 2022's Building Energy Performance Standards (BEPS), the same threshold section requires those same new-construction, gut-rehabilitation, and adaptive-reuse projects to "utilize high-performance all-electric heating/cooling and domestic hot water equipment and other in-unit or shared appliances such as dryers, cooktops, ovens, or ranges." A waiver from the all-electric requirement is available only on evidence of insufficient electrical grid capacity to serve a new all-electric building, or where on-site emergency backup generation uses high-efficiency fossil-fuel generators strictly for load testing and true power-failure emergencies.
That mandatory floor is separate from — and sits underneath — the Guide's actual scored green-building category, Section 4.6.1 (Sustainability Features, up to 10 of the 221 total competitive points). There, a project earns 10 points for pursuing full third-party certification under one of five named systems (Enterprise Green Communities, USGBC LEED Homes or Homes Midrise, Home Innovation Research Labs' ICC-700 National Green Building Standard, Southface's Earthcraft Multifamily, or GBI's Green Globes); 8 points for committing to the certifying entity's minimum score without completing the full certification; or up to 6 points, one point at a time, for an a-la-carte menu of features (permeable paving, stormwater best-management practices, recycled materials, renewable/biodegradable materials, local material procurement, reflective roofing or paving, non-vinyl/non-carpet flooring, engineered-lumber framing, recycled water use, and dark-sky-compliant lighting). A sponsor reading only Section 4.6.1 could reasonably conclude green building in Maryland is entirely elective; it is not — Energy Star certification and all-electric equipment are a gate every new-construction, gut-rehabilitation, or adaptive-reuse application has to clear before that scoring category is even reached.
Building Energy Performance Standards: a mandatory obligation independent of LIHTC funding
BEPS itself is not an LIHTC-specific rule at all — it applies, under the Climate Solutions Now Act of 2022, to any covered building of 35,000 gross square feet or more in Maryland, regardless of how it is financed, with a target of 20 percent reduced greenhouse gas emissions by January 1, 2030 (against 2025 levels for similarly constructed buildings) and net-zero direct emissions by January 1, 2040. The Guide itself flags this directly to rehabilitation applicants: "Projects that meet the definition of a covered building under BEPS regulations are strongly encouraged to factor BEPS requirements into their project design to avoid future compliance concerns. DHCD may be able to contribute funding for BEPS-compliant upgrades, based on funding availability at the time of the project's kick-off meeting." On August 11, 2026, DHCD and the Maryland Department of the Environment jointly announced a "BEPS Affordable Housing Roadmap," with DHCD acting as a "one-stop shop" intake point routing affordable-housing owners and operators to EmPOWER Maryland's Multifamily Energy Efficiency and Housing Affordability (MEEHA) program to help fund the required upgrades — a real, current (as of this research) DHCD initiative built specifically around the recognition that many existing affordable properties need significant capital to meet a standard that has nothing to do with their LIHTC status.
This is worth distinguishing from Maryland's other, better-known green-building statute. The state's High Performance Building Act (State Finance and Procurement Article §3-602.1) mandates a LEED Silver-equivalent standard for buildings 7,500 square feet or larger — but its own text limits that mandate to "capital projects that are funded solely with State funds" and community college capital projects receiving State funds. A typical LIHTC deal's capital stack — private LIHTC equity, private permanent and construction debt, and only partial state or local soft money — does not clear a "solely" State-funded test, so this particular Act does not reach LIHTC-financed private multifamily housing. BEPS, by contrast, applies regardless of funding source and reaches a sufficiently large LIHTC building whether or not any state dollars are in the deal at all.
Prevailing wage: absent from DHCD's own documents, genuinely unresolved for a privately owned deal
Maryland has a real, active Prevailing Wage Law (State Finance and Procurement Article, Title 17, Subtitle 2) — but a direct search of both the 2026 QAP and the Multifamily Rental Financing Program Guide for "prevailing wage" or "Davis-Bacon" returned zero results in this research. DHCD does not impose the state prevailing wage requirement as a threshold, scored item, or loan condition anywhere in its own governing LIHTC documents.
The Maryland Division of Labor and Industry's own published guidance states the law's actual trigger: it applies to a "public work" project — defined as "a structure... constructed for public use and benefit and... paid for in whole or in part with public money" — with a contract value of $250,000 or more, where either (1) the State or an instrumentality of the State is the contracting body and there is any State funding for the project, or (2) a political subdivision is the contracting body and 25 percent or more of the construction money is State money (also 25 percent for a political subdivision building a school). Whether a privately owned, developer-sponsored LIHTC apartment building — financed through a CDA loan, or through CDA-issued or locally issued tax-exempt bond proceeds — meets either prong is a genuinely fact-specific question the statute's own text and the Division of Labor and Industry's public FAQ do not resolve directly: the contracting body on a typical LIHTC deal is the private developer/owner, not "the State or an instrumentality of the State" or "a political subdivision," and a privately owned rental building is not self-evidently "constructed for public use and benefit" in the way a courthouse or a public school is. This research found no published DHCD or Division of Labor and Industry determination stating categorically that CDA/DHCD-financed LIHTC housing is, or is not, covered.
Given that ambiguity, and given that neither the QAP nor the Guide addresses the question, the safer course for a specific deal is to request a formal applicability determination directly from the Division of Labor and Industry's Prevailing Wage Unit (dldliprevailingwage-labor@maryland.gov) rather than assume coverage either way — particularly where a public housing authority, a city, or another political subdivision (rather than a private LLC) is the developer or borrower of record, which would more clearly implicate the political-subdivision prong of the statute.
Davis-Bacon: HOME triggers it at 12 units, the National Housing Trust Fund doesn't trigger it at all
Federal labor standards arrive through a different door than state law, and Maryland's own RHFP funding bucket makes the distinction concrete: the Guide describes RHFP as including both "the State-funded Rental Housing Program" and "the federally-funded HOME Investment Partnerships Program and Housing Trust Fund (HTF)" — two federal sources with genuinely different labor-standards consequences layered under the same state program name.
HOME funds trigger federal Davis-Bacon labor standards once a construction contract covers 12 or more HOME-assisted units in a project, under 24 CFR §92.354(a)(1) — a bright-line, unit-count threshold applied to the contract, not the whole project, so a project split across multiple contracts each under 12 HOME-assisted units is not automatically covered. The National Housing Trust Fund, financed through the same RHFP bucket, carries no equivalent trigger: its own governing regulation, 24 CFR Part 93, contains no Davis-Bacon or general prevailing-wage provision anywhere in its text, and the part's own "Other Federal Requirements" section (§93.350) cross-references only 24 CFR part 5, subpart A — nondiscrimination and equal opportunity, disclosure requirements, debarred/suspended/ineligible contractors, drug-free workplace, and housing counseling — not labor standards. A sponsor blending HOME and NHTF dollars inside the same RHFP-funded deal is dealing with two federal sources that look interchangeable on a sources-and-uses schedule but carry materially different federal labor-standards obligations.
Where this goes wrong
- Assuming Maryland caps Total Development Cost per unit the way California does — there is no such cap; DHCD instead deducts up to 8 (large projects) or 6 (small projects) competitive points for exceeding a per-square-foot construction-cost limit that DHCD revises before every round and posts on a separate webpage, not in the QAP or Guide text itself.
- Sizing a 4%/MBP developer fee using a flat 5-15% headline range alone — the real formula is tiered by a $10 million development-cost breakpoint (15%/10% below it, 10%/5% above it, on development vs. acquisition costs respectively), a materially different number for any deal of real scale.
- Treating the optional +5% developer-fee enhancement as general deferred-fee flexibility — it is conditioned on escrowing the extra amount with DHCD or another lender for one of three specific uses (a supportive-service reserve, a 20-year 20%-to-60%-AMI rent-subsidy fund, or sponsor-note repayment at DHCD's discretion), not unrestricted developer cash flow.
- Applying the Large-Project professional-fee percentages to a 40-unit-or-smaller project — the Guide runs a separate, more generous fee schedule for Small Projects (a 20% aggregate Builder's Fee ceiling versus 15%/17% for Large Projects) to reflect fixed-cost realities at small scale.
- Missing the $25,000-per-unit hard-cost floor on substantial rehabilitation, or missing that it's a threshold, not a target — a rehab budget under that line needs a DHCD waiver supported by a documented preservation need, not just a lower construction estimate.
- Treating the Guide's 10-point green-certification score (Section 4.6.1) as the whole green-building story — every new-construction, gut-rehabilitation, or adaptive-reuse application must also clear a mandatory Development Quality Threshold requiring Energy Star certification and, subject to narrow grid-capacity or historic-preservation waivers, all-electric heating, cooling, domestic hot water, and major appliances; that threshold is pass/fail, not a scoring option.
- Assuming a rehabilitation project's mandatory 15% energy-savings audit and its optional green-certification score are two separate, independent things — if the 15% savings target isn't achievable, completing one of the Section 4.6 certifications becomes the substitute way to satisfy the mandatory test, not an unrelated bonus.
- Assuming Maryland's High Performance Building Act (State Finance and Procurement Article §3-602.1) reaches LIHTC housing because of the state's broader green-building reputation — the Act's own text limits it to capital projects funded solely with State funds, a bar a typical LIHTC capital stack doesn't clear.
- Overlooking Building Energy Performance Standards (BEPS) because a deal cleared LIHTC underwriting — BEPS applies to any covered building of 35,000 gross square feet or more regardless of funding source, with its own 2030 emissions-reduction and 2040 net-zero deadlines; the Guide itself flags this directly to rehabilitation applicants.
- Assuming Maryland's Prevailing Wage Law does or doesn't apply to a CDA-financed LIHTC deal without checking — neither the QAP nor the Guide mentions prevailing wage or Davis-Bacon anywhere, and this research found no published DHCD or Division of Labor and Industry determination resolving whether a privately owned rental building financed by a CDA loan or bond proceeds meets the "public work" test; request a formal applicability determination from the Division of Labor and Industry's Prevailing Wage Unit for the specific deal.
- Assuming HOME and National Housing Trust Fund dollars carry the same federal labor-standards obligation just because both flow through the same RHFP bucket — HOME triggers Davis-Bacon once a construction contract covers 12 or more HOME-assisted units (24 CFR §92.354), while NHTF's own governing regulation (24 CFR Part 93) contains no analogous labor-standards provision at all.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies