"I can't find a per-unit or total development cost cap anywhere in this QAP the way some states publish one -- so how does SC Housing actually control costs, what are the real contractor and developer fee ceilings, is green building mandatory or just scored, and does any prevailing-wage rule reach my contractor at all?"
No published cost cap -- SC Housing polices cost through outliers and ratios instead
This research searched the 2026 QAP and every downloaded 2026 appendix for a numeric Total Development Cost limit or a per-unit dollar cost ceiling -- the kind of HUD 221(d)(4)-linked table some states (Georgia among them) publish and update annually -- and found none. What SC Housing does instead is a case-by-case reasonableness review layered on top of a hard-cost floor. On the reasonableness side: "The Authority will determine which new construction projects show development budget amounts outside the standard deviation, and require all such applicants to provide explanations. Inability to explain the costs may result in a reduction of tax credits awarded or a disqualification of the application" (2026 QAP, Section IV.P.1.a). More broadly, "The Authority will evaluate development costs and may adjust costs for reasonableness, necessity, and eligibility or disqualify applications not reflecting an efficient use of federal and/or state LIHTCs" (Section IV.P.1.b).
On the ratio side, every application must reflect "a minimum hard cost ratio of not less than sixty percent (60%) of total development costs at full application and PIS application unless specifically waived at initial application" (Section IV.P.14, current figure -- amended down from an original 65% before the 2026 cycle's amendments were finalized). If a state-published numeric cost cap exists somewhere outside these two 2026 documents, this research did not locate it; treat the absence as a confirmed finding from the materials reviewed, not an assumption.
Contractor and developer fee caps -- and a flat, larger cap on the bond side
Contractor compensation is capped as a package: "The combined total of Contractor Profit, Overhead, and General Requirements (the 'Contractor Fees') shall be limited to fourteen percent (14%) of Hard Construction Costs, of which 6% is contractor profit, 2% is overhead and 6% is general requirements" (2026 QAP, Section IV.P.5). Contingency runs separately and by construction type: "the contractor contingency may not exceed five percent (5%) of hard construction costs" for new construction, or "ten percent (10%)" for rehabilitation and adaptive reuse.
The developer fee formula differs meaningfully between the two federal credit programs. For the 9% program, the fee is "the lesser of" 15% of Total Development Costs (net of land, project consultant fees, developer fees/overhead, other developer costs, and reserves) or a cumulative per-unit schedule that steps down by unit count: "$30,000 per unit for the first 50 units[,] $25,000 per unit for units 51-100[,] $20,000 per unit for any units more than 100" (Section IV.P.3). For 4%/TEB deals, Appendix C2 sets a different formula entirely -- the lesser of "a. $5 million; b. 15% of Total Development Costs less Land, Project Consultant Fees, Developer Fees, Developer Overhead, Other Developer Costs and Reserves; or c. $30,000 per unit" (Appendix C2, Section II.B.7) -- a flat $30,000-per-unit figure with no step-down, plus an absolute $5 million ceiling the 9% program's formula does not carry (a reflection of bond deals running up to 200 units, versus the 9% program's much smaller per-application credit caps).
| Program | Formula (lesser of) | Citation |
|---|---|---|
| 9% LIHTC | 15% of TDC-less-exclusions, OR $30,000/unit (units 1-50) + $25,000/unit (51-100) + $20,000/unit (>100), cumulative | 2026 QAP, Section IV.P.3 |
| 4% Credits/Tax-Exempt Bonds | $5,000,000 flat cap, OR 15% of TDC-less-exclusions, OR $30,000/unit flat (no step-down) | Appendix C2, Section II.B.7 |
Both programs cap deferral of the fee at 50% of the total at application submission, with a higher deferral allowed at Placed-in-Service if needed for feasibility (2026 QAP, Section IV.P.4; Appendix C2, Section II.B.7).
Deferred developer fee is capped the same way in both programs: "The deferred portion does not exceed fifty percent (50%) of the total at full application submission. This limitation will not apply when the Placed-in-Service application is submitted if a greater deferral of developer fee is necessary for project feasibility" (Section IV.P.4.a; Appendix C2, Section II.B.7 cross-references the same rule). Nonprofit applicants must include "a resolution from their Board of Directors authorizing a deferred payment obligation," and the cost certification must include a promissory note documenting the deferred amount and repayment terms.
Green building: a mandatory Energy Star floor, and a 9%-only 5-point ceiling above it
Sustainability requirements run on two separate tracks in SC Housing's materials. The mandatory floor sits in Appendix B's "Mandatory New Construction Design Criteria," not in either program's scoring section: every new-construction multifamily development must "be built to meet and receive the Multi Family New Construction Energy Star Certification. This includes all mandatory measures; MFNC Rater Design Review Checklist, MFNC Rater Filed Checklist, MFNC HVAC Functional Testing Checklist, MFNC Water Management System Requirements," while new-construction single-family, townhouse, and duplex developments must instead "be built to meet and receive the Version 3.0 Energy Star Certification" (Appendix B, Section III.R.1-2). This is a threshold requirement, not a scoring option, and it carries a real financial consequence for noncompliance: "If the development fails to meet the requirements outlined in this section, the Authority may adjust the allowable costs for construction and may reduce the LIHTC allocation" (Section III.R.3). Nothing in Appendix B or the core QAP limits this Energy Star mandate to the 9% program -- Appendix C2 requires TEB developments to meet "all criteria in the 2026 Low-Income Housing Tax Credit Manual, except" three named carve-outs unrelated to design (Appendix C2, Section II.D), so this research treats the Energy Star floor as applying to both programs.
Above that mandatory floor sits a separate, optional, 9%-only scoring criterion worth 5 points: "Applications will earn 5 points for committing to meet green and energy efficiency sustainable building requirements for one of the following sustainable building certifications: Enterprise's Enterprise Green Communities certification program ...; US Green Building Council's LEED for Homes certification program; Home Innovation Research Lab's National Green Building Standard, meeting Bronze level or higher; Southface Energy Institute and Greater Atlanta Home Builders Association's EarthCraft certification programs ...; High Performance Building Council of the BIA of Central SC, Certified High Performance (CHiP) HOME Program" (Appendix C1, Section III.E). This criterion sits inside Appendix C1, the 9%-only appendix -- this research found no equivalent scoring option inside Appendix C2 for bond deals, meaning a 4%/TEB applicant appears to face only the mandatory Energy Star floor with no additional scored green-building tier available. That is an inference from where the criterion is placed, not an explicit statement in Appendix C2 that TEB deals are excluded from it, so it should be confirmed directly with SC Housing before assuming a bond deal cannot earn any green-building consideration.
Labor: no state prevailing wage law, an unresolved local-preemption question, and Davis-Bacon only if HOME/NHTF money shows up
The U.S. Department of Labor's own published list of state prevailing wage laws confirms South Carolina has never enacted one. DOL's table states: "Twenty-four states do not have prevailing wage laws. These States are Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, New Hampshire, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Utah, West Virginia, Wisconsin" (U.S. DOL, Wage and Hour Division, "Dollar Threshold Amount for Contract Coverage Under State Prevailing Wage Laws," last revised Jan. 1, 2023). Unlike several peer states on that list (Arkansas, Florida, Kentucky, and others), which affirmatively repealed an earlier prevailing wage statute, DOL's companion list shows South Carolina with no repeal date attached -- consistent with South Carolina never having had one in the first place, not with a law that was later taken off the books.
South Carolina is a separate but related labor-law data point: it has a right-to-work statute (S.C. Code Ann. Title 41, Chapter 7), which bars union-security agreements and compulsory union membership as a condition of employment. That statute addresses union security, not wage-setting, and should not be conflated with the (nonexistent) state prevailing wage question.
Whether a South Carolina city or county could impose its own prevailing-wage-style requirement on its own public contracts is genuinely unresolved from the statutes this research reviewed. S.C. Code Section 6-1-130 bars a "political subdivision" from mandating "a minimum wage rate that exceeds the federal minimum wage rate" set by the Fair Labor Standards Act -- but the same section carves out contract wage-setting specifically: "This section does not limit the authority of political subdivisions to establish wage rates in contracts to which they are a party" (Section 6-1-130(C)). Read on its own text, that carve-out means South Carolina's minimum-wage preemption law does not, by itself, forbid a city or county from requiring its own contractors to pay a locally set wage rate on a locally funded public contract. This research found no separate South Carolina statute specifically preempting local prevailing-wage ordinances (as distinct from local minimum-wage ordinances), and also found no evidence that any South Carolina municipality has actually adopted one. Both absences should be treated as open questions, not as confirmation either way -- a developer whose deal touches a city- or county-funded contract should confirm directly with that local government rather than assume state law forecloses the issue.
SC Housing's own QAP and every 2026 appendix reviewed for this research never mention "Davis-Bacon," "prevailing wage," or "labor standards" anywhere (confirmed by direct text search) -- the state LIHTC program itself imposes no wage requirement of its own. The federal Davis-Bacon Act reaches an SC LIHTC deal only if certain other federal subsidies are layered in. Under HUD's HOME program regulations, "Davis Bacon requirements are applicable to contracts for construction covering 12 or more HOME-assisted units" (24 C.F.R. Section 92.354(a)(1)), and once triggered, labor standards apply "to the construction of the entire project," not just the HOME-assisted units. The National Housing Trust Fund carries an analogous unit-count trigger under its own program regulations. Notably, Appendix C2 states that "Tax exempt bond developments are not eligible to apply for Authority HOME funds" (Appendix C2, Section II.B.6) -- but that restriction is specific to SC Housing's own HOME allocation; it does not by its terms bar a TEB deal from layering HOME funds administered by a different participating jurisdiction (a city or county HOME program), and CDBG funds specifically remain an eligible, points-earning leveraging source for 9% deals under Appendix C1 (Section III.F). A deal that brings in HOME or NHTF money from any source, SC Housing's own allocation or another PJ's, should independently confirm whether the 12-unit Davis-Bacon trigger applies.
Where this goes wrong
- Looking for a published Total Development Cost limit or per-unit cost cap in South Carolina's QAP -- this research found none; SC Housing polices cost through a standard-deviation outlier review on new-construction budgets, general reasonableness authority, and the 60% minimum hard-cost ratio instead.
- Underwriting to a 65% minimum hard-cost ratio -- the current, amended figure is 60% (2026 QAP, Section IV.P.14); an older draft or cached copy will show the superseded number.
- Applying the 9% program's tiered per-unit developer fee schedule ($30,000/$25,000/$20,000 by unit-count bracket) to a 4%/TEB deal -- Appendix C2 sets its own flat $30,000-per-unit figure with a $5 million absolute ceiling and no step-down.
- Assuming Energy Star certification is only a scoring option -- it is a mandatory Appendix B design requirement for every new-construction development, with a real consequence for noncompliance (the Authority may reduce allowable construction costs and the LIHTC allocation itself).
- Confusing the mandatory Energy Star floor (Appendix B, Section III.R) with the separate, optional 5-point "Sustainable Building" scoring criterion (Appendix C1, Section III.E) -- the scored criterion requires a materially higher-tier certification (LEED, Enterprise Green Communities, NGBS Bronze+, EarthCraft, or CHiP), not the baseline Energy Star certification.
- Assuming the 5-point Sustainable Building scoring criterion is available to 4%/TEB applicants -- it sits inside Appendix C1, the 9%-only appendix; this research found no equivalent option in Appendix C2, though that is an inference from placement, not an explicit exclusion stated in the bond appendix.
- Asserting South Carolina has a state prevailing wage law, or that it once had one and repealed it -- DOL's own list confirms South Carolina has never enacted one, distinct from several peer states that did and later repealed theirs.
- Conflating South Carolina's right-to-work statute (Title 41, Chapter 7, governing union-security agreements) with the separate question of prevailing wage law -- the two address different subjects entirely.
- Assuming S.C. Code Section 6-1-130 forecloses a South Carolina city or county from adopting its own prevailing-wage-style contract requirement -- the statute preempts local minimum-wage mandates above the federal floor but expressly preserves local authority to "establish wage rates in contracts" the locality is a party to; this research found no separate statute resolving the prevailing-wage-specific question either way.
- Assuming Appendix C2's bar on TEB deals applying for "Authority HOME funds" means a bond deal can never trigger Davis-Bacon through HOME -- the restriction is specific to SC Housing's own HOME allocation, not to HOME funds administered by a city or county PJ, which remain a legitimate leveraging source.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies