"PHFA caps my per-unit basis, my developer fee, and my general contractor's fee separately, my green-building obligations are split between a mandatory floor and a competitively-scored ceiling, and somewhere in my capital stack Pennsylvania's own prevailing wage law might already apply before Davis-Bacon ever does. Where exactly does the labor-standards line actually sit?"
Maximum per-unit basis and the developer fee ladder
PHFA sets separate eligible-basis ceilings by credit type: "The Agency has established a maximum basis per unit limit of $320,000 for developments with Competitive 9% Tax Credits and $380,000 per unit for developments with 4% Tax Credits and Tax-Exempt bonds" ("Maximum Basis"), excluding developer fee and acquisition cost, with waivers available for documented high-cost conditions (QAP Section 3.4).
| Element | Cap |
|---|---|
| Base fee formula | 15% of the first $10 million of replacement cost (less acquisition) + 10% of replacement cost above $10 million |
| Related-party re-syndication (same/related GP as original award) | 12% of replacement cost less acquisition |
| Acquisition-basis fee (rehab/preservation claiming Acquisition Tax Credits) | 10% of purchase price less land value (lesser of arm's-length price or MAI appraisal); reduced to 5% if buyer/seller are related parties |
| Per-project dollar cap, Competitive 9% | $2,000,000 (60+ units with ≥51% two-bedroom-or-larger mix, OR supportive housing) / $1,750,000 otherwise — no waivers granted on this cap or its calculation method |
| Per-project dollar cap, 4%/Tax-Exempt Bonds | $2,550,000 — a waiver to exceed it is available if the excess is reinvested as deferred fee and/or capital contribution |
| Additional supportive-services fee | Up to 5% more, 9% deals only, fully equity-funded (not loan-structured), contingent on an Agency-approved services plan |
No increase to the maximum base developer fee is permitted after the initial Tax Credit award, and no additional fee is available for "Additional Tax Credit" requests; a subsequent phase's fee may be reduced if the Agency determines the phasing strategy warrants it.
Contractor fee caps: three separate ceilings, not one blended GC fee
PHFA's Development Cost Limits schedule (revised 1/17/2025) prices general contractor compensation as three independent percentages of hard construction costs rather than one combined cap: "General Requirements will be limited to 6% of hard construction costs. Builder's overhead, builder's profit, bond premium, construction contingency and building permits are not included in this calculation." Builder's Overhead is separately "limited to 2% of the hard construction costs, which does not include General Requirements," and Builder's Profit is separately "limited to 6% of the hard construction costs, which does not include General Requirements" — General Requirements, Overhead, and Profit together can reach up to 14% of hard costs, but only by clearing all three caps independently, not by trading room between them.
Bonding is mandatory on every application, not just large ones: "the contractor must procure a Performance Bond and a Payment Bond, each in the amount of 100% of the Construction Contract Sum, or an unconditional and irrevocable letter of credit in the amount of 25% of the contract sum," from a bonding company carrying "an 'A' rating or better."
Green building: a mandatory floor, plus a separately-scored ceiling
PHFA's green building requirements operate on two distinct tiers, and conflating them will misstate what's actually required versus merely rewarded. The mandatory floor sits in Threshold Criteria 3.3.6 ("Development Sustainability and Energy Conservation Measures"): "All newly constructed multifamily buildings shall comply with the requirements of the 2020 Enterprise Green Communities program Criteria 5.1a. All substantially rehabilitated multifamily buildings shall comply with...Criteria 5.1b," unless the applicant instead commits to one of the higher, competitively-scored certifications below, in which case this specific threshold is waived. On top of the Enterprise Green Communities baseline, the QAP separately mandates a building-envelope performance standard — the exterior envelope's U-value "must exceed the requirements of the International Energy Conservation Code...Chapter 4 by 10% for buildings three stories or less" (verified by REScheck) or "Chapter 5 by 7%" for taller buildings (verified by COMcheck) — plus Energy Star-labeled appliances, HVAC, and fixtures where such equipment exists, and 100% LED or high-efficiency lighting throughout units and common areas.
| Tier | Standard | Status |
|---|---|---|
| Mandatory (Threshold 3.3.6) | 2020 Enterprise Green Communities Criteria 5.1a (new construction) / 5.1b (substantial rehab) | Required unless the applicant instead pursues one of the certifications below |
| Mandatory (Threshold 3.3.6) | Envelope U-value beats current IECC Ch. 4 by 10% (≤3 stories) or Ch. 5 by 7% (4+ stories) | Required for new construction and rehabilitation (not applicable to preservation) |
| Competitively scored (Selection Criteria C.2, up to 10 pts) | National Green Building Standard (ICC 700-2020 Silver / ICC 700-2015 or 2020 base) | Optional — earns points, does not replace mandatory measures unless it substitutes for the Enterprise Green Communities threshold |
| Competitively scored (up to 8 pts) | DOE Zero Energy Ready Home, full certification | Optional; a 3-point self-certification alternative also exists |
| Competitively scored (up to 10 pts, the single highest green award) | Passive House Certification (national or international standard) | Certification required — no self-certification alternative available for Passive House points |
2025/2026 QAP, Threshold Criteria 3.3.6; Selection Criteria C.2.
Pennsylvania's own prevailing wage law — and where it actually reaches a Tax Credit deal
Pennsylvania has a real, active state prevailing wage statute independent of federal Davis-Bacon: the Pennsylvania Prevailing Wage Act, Act of Aug. 15, 1961, P.L. 987, No. 442 (43 P.S. § 165-1 et seq.). It covers "public work," defined as "construction, reconstruction, demolition, alteration and/or repair work other than maintenance work, done under contract and paid for in whole or in part out of the funds of a public body" where the estimated total project cost exceeds $25,000 — a threshold unchanged since 1963, and still the subject of active but unpassed 2025-2026 legislative reform proposals to raise it. "Public body" is defined broadly: "the Commonwealth of Pennsylvania, any of its political subdivisions, any authority created by the General Assembly of the Commonwealth of Pennsylvania and any instrumentality or agency of the Commonwealth of Pennsylvania" — a definition that reaches PHFA itself, since PHFA is a Commonwealth instrumentality/agency.
The trigger, in other words, is the source of the money paid for construction, not the mere presence of a federal tax credit. A Tax-Credit-only capital stack — LIHTC equity plus conventional private debt, with no PHFA loan, grant, or bond proceeds funding the construction contract — is not obviously "paid for...out of the funds of a public body," since the federal 9%/4% credit itself is a tax expenditure PHFA administers rather than a direct disbursement of PHFA's own funds. This research found no PHFA document stating that a Tax-Credit-only deal, standing alone, triggers the state Act. PHFA's own newer materials draw the line explicitly at its own soft money: the March 2026 draft Affordable Housing Tax Credit Program Guidelines require an AHTC-funded eligible project to, "[t]o the extent applicable, comply with Labor Standards, including state and/or Federal Prevailing Wage as applicable," citing "24 CFR 92.354; Davis-Bacon Act (40 U.S.C. 3141; 3701); Contract Work Hours and Safety Standards Act (40 U.S.C.-3701); and 34 PA Code 9.101-9.112" side by side — meaning PHFA itself treats AHTC Loan/Grant dollars (and, by the same logic, PennHOMES, HTF, and PHARE dollars, which are equally PHFA's own funds) as capable of triggering the state Act's own implementing regulations at 34 Pa. Code §§ 9.101-9.112.
What this research could not resolve is the tax-exempt bond case specifically. A 4% deal's bonds are issued by a public-body issuer — PHFA or a local authority — and the proceeds are then loaned to a private developer; that is a genuinely different fact pattern from a direct PHFA grant or loan, and no PHFA document read in this research states one way or the other whether bond-only financing (with no other PHFA soft money in the stack) independently triggers the state Act's "funds of a public body" test. Treat that as an open question for a bond-financed 4% deal with no PennHOMES/HTF/PHARE/AHTC layering, and confirm directly with the bond issuer and counsel rather than assuming either answer.
Where federal Davis-Bacon layers on independently
Federal Davis-Bacon labor standards apply on their own federal trigger, regardless of whether Pennsylvania's state Act applies to the same deal — most commonly when HOME funds are layered in at 12 or more HOME-assisted units (24 CFR § 92.354) or when National Housing Trust Fund dollars are present. PHFA's own AHTC guidelines list the state Act and the federal Davis-Bacon/HOME triggers side by side rather than treating one as displacing the other, which means a deal layering PHFA soft money with HOME or NHTF funds should expect both regimes to potentially apply to the same construction contract. This research did not find a PHFA document spelling out a specific PA rule for reconciling the two pay scales trade-by-trade (e.g., an explicit "pay the higher of the two" rule stated for Pennsylvania); confirm the applicable reconciliation approach directly with PHFA and labor counsel on any deal layering both state and federal sources rather than assuming the general Davis-Bacon-Related-Acts practice used elsewhere applies verbatim in Pennsylvania.
Where this goes wrong
- Using a single blended "GC fee" percentage instead of PHFA's three separate caps. General Requirements (6% of hard costs), Builder's Overhead (2%), and Builder's Profit (6%) are independently capped and cannot borrow room from one another.
- Assuming the Enterprise Green Communities threshold and the competitively-scored green certifications are the same requirement. The 2020 Enterprise Green Communities Criteria 5.1a/5.1b standard (plus the envelope U-value and Energy Star measures) is mandatory at Threshold; National Green Building Standard, Zero Energy Ready, and Passive House certifications are optional and separately scored, though committing to one of them can substitute for the Enterprise Green Communities threshold specifically.
- Assuming Passive House points are available via self-certification. Unlike the Zero Energy Ready Home category (which offers a 3-point self-certification alternative), full Passive House Certification is required to earn its 10 points — there is no self-certification path.
- Assuming any Pennsylvania LIHTC deal automatically triggers the state Prevailing Wage Act because a state housing finance agency is involved. The Act is triggered by construction "paid for in whole or in part out of the funds of a public body," not by tax-credit involvement alone — a Tax-Credit-only capital stack with no PHFA loan, grant, or bond proceeds funding construction is not clearly covered, and this research found no PHFA document stating otherwise.
- Assuming PHFA soft money never triggers the state Act. PHFA is itself a Commonwealth "instrumentality or agency" under the Act's own definition of "public body," and PHFA's own March 2026 AHTC guidelines explicitly flag state prevailing wage (34 PA Code §§ 9.101-9.112) as potentially applicable to AHTC-funded projects — the same logic plausibly extends to PennHOMES, HTF, and PHARE dollars.
- Treating the tax-exempt bond financing itself as clearly outside the state Act. This research could not confirm whether bond-only 4% financing (with no other PHFA soft money) independently triggers the Act's "funds of a public body" test; it is a genuinely open question that should be confirmed with the bond issuer and counsel rather than assumed either way.
- Assuming Pennsylvania's $25,000 public-work threshold has been raised. It has not — the figure is unchanged since 1963, notwithstanding active 2025-2026 legislative proposals to increase it that had not passed as of this research.
- Assuming a HOME- or NHTF-layered deal follows a specific, PHFA-stated rule for reconciling state prevailing wage against federal Davis-Bacon rates trade-by-trade. This research found no such PA-specific reconciliation rule stated by PHFA; confirm the applicable approach directly with PHFA and labor counsel.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies