Cost, construction type, and the labor package — Montana

The cost ceiling: one hard number, not a formula

Montana doesn't size the cost cap off the round's average request or a published per-square-foot schedule the way some states do. Instead: "Total Project Cost may not exceed $395,000 per Unit (Total Project Cost Per Unit Limit) unless and to the extent that Owner obtains a waiver from the MBOH Board" (2027 QAP Section VIII.G.1). The waiver trigger isn't limited to the initial Application — a Project that starts under the cap but later increases past it, or that increases 20% or more in Total Project Cost per Unit from the time of Award, must separately request a Board waiver each time.

A softer notification duty sits below the waiver threshold: any increase greater than 10% in Total Project Cost per Unit from the amount at Award must be disclosed and explained to MBOH in the Quarterly Report for the period in which it occurs, and "failure to notify and explain such cost increases to MBOH may result in being ineligible for a waiver" later — the QAP treats the notification duty and the waiver eligibility as linked, not independent obligations.

The limit itself follows the deal across QAP cycles rather than resetting: "All Development Cost Limitations in this QAP will apply to all current Applications and Projects and to all Projects awarded Credits under a prior QAP. In the event a more favorable limit was used in a prior QAP the project ... will be allowed to use it" (2027 QAP Section VIII.G). A Project can elect to keep an older, more generous per-unit cap from the QAP under which it was actually awarded, but the current QAP's other limitations otherwise reach backward onto every open Project regardless of award year.

Meeting the $395,000 cap does not end MBOH's cost review — the QAP is explicit that "even for those projects meeting specific QAP limitations, MBOH will evaluate cost per Unit and cost per square foot for all Projects for reasonableness," and "MBOH may decline to Award Credits to a Project where it determines that costs do not reflect the optimal use of Housing Credits" (2027 QAP Section VIII.G.1). A separate Community Service Facility cost exclusion lets qualifying community-service space be backed out of the per-unit calculation, subject to a specific documentation and CPA-certification process the Applicant must agree to in advance.

Builder and developer fee caps: independent percentages, not a combined ceiling

The Developer Fee definition is broad on what counts against the 15% cap: HC Consultant fees "must be disclosed" and "will be included as part of and subject to the limit on Developer Fees." Architectural, engineering, and legal services, by contrast, "are considered to be professional services, and fees for such services are not included as Developer Fees for purposes of this limitation" (2027 QAP Section VIII.G.2) — a Development Team that mislabels a consulting arrangement to keep it out of the Developer Fee bucket risks having MBOH recharacterize it during cost review.

Related-party transactions get their own disclosure duty layered on top of the fee caps: "Applicants and Owners must disclose all transactions with Related Parties; failure to do so may result in the Project not receiving an Award," and MBOH "may reduce Developer Fees, Builder Profit or other Soft Costs on Projects involving Related Party transactions" — a related-party general contractor or consultant arrangement doesn't automatically violate the caps, but it does expose the deal to a discretionary MBOH reduction the arms-length equivalent wouldn't face.

Soft cost ratio and the substantial rehabilitation floor

The Soft-Cost-to-Hard-Cost Ratio may not exceed "40% for 9% or 45% for 4% or Twinned Projects," measured against the Application's Proforma (Excel) (2027 QAP Section VIII.G.2). An Application over the applicable ratio must justify the excess in a narrative, and if MBOH doesn't accept the justification, the Applicant gets exactly ten business days to specify in writing how and by how much Soft Costs will be reduced — miss that window and "MBOH will return the Application." This limit is checked at Pre-Application, Full-Application, 10% Cost Certification, and Final Cost Certification, not just once at the front end, and a Board waiver is available case-by-case.

For Acquisition/Rehabilitation and Rehabilitation Projects, the Substantial Rehabilitation Standard requires "$50,000 of Hard Cost Per Unit for 9% & 4% Projects," with a staff discretionary waiver available for newer-construction Acq/Rehab projects seeking a lesser per-unit amount. Rehabilitation Projects must separately meet all Capital Needs Assessment requirements and include a unit-by-unit list of items to be replaced, refinished, repaired, or upgraded (2027 QAP Section VIII.B).

Design and accessibility: a 5% fully-accessible-unit floor that exceeds the federal minimum

Montana's Design Requirements Appendix sets its own accessibility floor above the federal Section 504 baseline: "At least 5% of Project total number of Units must be 'accessible' as defined in the International Building Code (IBC) AND THE ADOPTED ICC A117.1 as well as the applicable adopted governing code; even when project funding does not require section 504 compliance." The QAP is explicit that this exceeds the ordinary code baseline: for new construction, "5% of the overall unit count is to be a fully accessible unit not just a Type A design" (2027 QAP Appendix B, "Project Accessibility Requirements").

Green building and energy: pick a specific standard, then get architect-certified

Unlike a pledge-and-photograph approach, Montana's Green Initiatives requirement forces a specific, binary choice among named standards, verified by sign-off rather than third-party certification review. For new construction, the Applicant must "choose 1 of the following 3": building envelope components (windows, doors, insulation) exceeding the adopted IECC by 5% in each category; Energy Star Certification under the current Energy Star Homes Program; or Enterprise Green Communities certification (2027 QAP Appendix B, "Green Initiatives — Energy Conservation").

For Rehabilitation, the choice narrows to two energy-testing protocols rather than a design-standard election: a Blower Door test verifying 50% of units meet the adopted Montana IECC air-changes-per-hour level, with MBOH staff entitled to observe the testing, or an Infrared test on 50% of units before and after work, with before/after reports submitted to MBOH within 30 days. Whichever path is elected, "the architect and the Owner must each certify the Project ... that indicates all mandatory and discretionary work is completed and installed" at Project completion (2027 QAP Appendix B, "Certification") — Montana verifies its green requirement through this architect/owner sign-off rather than requiring a formal outside certification body's stamp.

What the QAP never says: prevailing wage

A full-text review of the adopted 2027 QAP found zero occurrences of "prevailing wage," "Davis-Bacon," or "labor standards" anywhere in the document. Neither the underwriting standards, the Development Cost Limitations, nor the Threshold Requirements reference a wage requirement of any kind — a developer relying only on the QAP for labor-cost planning will find nothing there on the subject either way.

Montana does have its own state prevailing-wage statute — sometimes called Montana's "Little Davis-Bacon" law — codified at Mont. Code Ann. §§ 18-2-401 through 18-2-432. Its core "public works contract" trigger, defined at § 18-2-401, reaches contracts "let by the state, county, municipality, school district, or political subdivision" over $25,000 — a privately-owned LIHTC deal, standing alone, is not itself let by one of those government bodies and so would not appear to be a "public works contract" on that definition alone.

A separate provision, however, reaches beyond true public works contracts to certain bond-financed private projects: "A contract, other than a public works contract, let for a project costing more than $25,000 and financed from the proceeds of bonds issued under Title 17, chapter 5, part 15, or Title 90, chapter 5 or 7, must contain a provision requiring the contractor to pay the standard prevailing wage rate ... unless the contractor performing the work has entered into a collective bargaining agreement covering the work to be performed" (Mont. Code Ann. § 18-2-403(7)). Montana's own Board of Housing Act — the statute under which MBOH issues its conduit bonds for the 4% program — is codified at Title 90, Chapter 6, not Chapter 5 or Chapter 7. On the statute's plain text as reviewed for this guide, MBOH's own housing bonds are not among the bond authorities § 18-2-403(7) names.

This is a textual reading of the statute, not a legal determination, and this research could not locate any Montana Department of Labor & Industry guidance, case law, or MBOH program document that directly addresses whether a Board of Housing-financed 4% deal is treated as reaching prevailing wage through some other cross-reference not captured in this review. Treat the question as genuinely open and confirm it with Montana counsel or the DLI's Compliance and Investigations Bureau before pricing a 4% deal's labor costs either with or without Montana prevailing wage built in.

Separately, federal Davis-Bacon obligations can still attach through the funding source rather than through Montana's own statute — most commonly when HOME or National Housing Trust Fund dollars are layered into a deal (see Phase 7 of this guide for how those federal programs are administered in Montana). That federal trigger runs independently of whatever Montana's own state law does or doesn't require.