"There's no published per-unit cost cap in this QAP, just a 'comparative analysis' against other applications -- so how do I know what SDHDA will actually consider too expensive? And with winters this cold, are the energy-efficiency features scored bonuses or hard minimums I have to hit regardless of budget? Do I even need to worry about prevailing wage here?"
No published cost cap -- a relative screen instead of an absolute ceiling
Section III.E, "Comparative Analysis," states SDHDA's approach directly: "Notwithstanding the development standards and selection criteria set forth in this Plan, SDHDA will evaluate proposed projects on a comparative basis across multiple cost metrics to ensure the most effective use of tax credits. These metrics include, but are not limited to cost per square foot, cost per unit, and operating expenses per unit. Projects with costs that significantly deviate from established norms, either above or below typical ranges, may be deemed non-competitive and not advanced for further consideration." No specific dollar figure, percentage variance, or published cost table accompanies this section -- unlike agencies that publish a fixed Total Development Cost limit by unit size and geography, South Dakota's cost discipline is applied comparatively, against whatever the actual pool of applications in a given round looks like, and is not something an applicant can check against a public number in advance. Budget accordingly: a project's cost per unit or per square foot needs to be defensible against comparable South Dakota developments, not against a stated ceiling, because there isn't one to check against.
Fee caps: developer, consultant, and builder/GC, all fixed and cross-checked twice in the QAP
| Fee | Cap | Notes |
|---|---|---|
| Developer fee, 9% deals under 61 units | 12% of Total Development Cost (less developer's and consultant's fee) | Also subject to an absolute $1,000,000 cap for any 9% project |
| Developer fee, 9% deals of 61+ units | 10% of Total Development Cost (less developer's and consultant's fee) | Same $1,000,000 absolute cap applies |
| Developer fee, bond-financed (4%) deals | 12% of calculated Total Project Costs (less developer's and consultant's fee) | NOT subject to the $1,000,000 cap, regardless of unit count |
| Consultant fee | 2% of calculated Total Project Costs (less developer's and consultant's fee) | Counted inside, not on top of, the developer fee limitation; syndication-related consultant fees excluded from Eligible Basis entirely |
| Builder/General Contractor Profit | 6% of hard construction costs | Listed identically in Section III.D and again as the Underwriting Standards "Safe Harbor" in Section IV |
| Builder/General Contractor Overhead | 2% of hard construction costs | Same cross-reference |
| General Requirements | 6% of hard construction costs | Same cross-reference |
QAP Sections III.B, III.C, III.D, IV. Amounts above any cap are excluded from Eligible Basis / Total Project Costs when SDHDA issues IRS Form(s) 8609.
The Underwriting Standards table in Section IV lists a "Ceiling" above each builder profit/overhead/general-requirements safe harbor, but defines that ceiling only by cross-reference -- "HUD processing" -- without stating a specific percentage in the QAP itself. This research did not independently verify HUD's current MAP Guide profit/overhead/general-requirements ceiling percentages; a project seeking to exceed the 6%/2%/6% safe harbors needs to confirm the applicable HUD processing ceiling directly rather than assume a number.
Minimum unit sizes and baseline property standards
| Unit type | Minimum square footage |
|---|---|
| SRO | 300 sq ft |
| 0 Bedroom (efficiency) | 400 sq ft |
| 1 Bedroom | 500 sq ft |
| 2 Bedroom | 650 sq ft |
| 3 Bedroom | 800 sq ft |
| 4 Bedroom | 950 sq ft |
QAP Section III.A. Acquisition and/or rehabilitation projects are exempt from these minimums; SDHDA may allow other exceptions.
Section III.F sets baseline code and accessibility requirements applicable to all new construction: the current International Building Code, National Standard Plumbing Code, and National Electrical Code Handbook (superseded by any state or local alternative code actually adopted); 24 CFR Part 8 / Section 504 and Fair Housing Act design-and-construction requirements; ADA compliance; the greater of 5% of total units or one unit built for mobility-impaired accessibility (with roll-in showers in half of those units); and the greater of 2% of total units or one unit for sensory impairments, which "may not be consolidated with those for mobility impairments so as to provide only one unit." A rehabilitation project only qualifies for acquisition credits if substantial rehabilitation costs reach "$10,000 per unit or 20% of the original basis, whichever is greater," among other conditions. The QAP also sets a 16-unit minimum project size for tax credit eligibility (Section II.C).
Cold-climate construction: hard, mandatory minimums, not just scored bonus features
Exhibit 4 (Multifamily Project Characteristics) sets out property standards in a "Minimum Standards" / points-earned format, and the minimums for South Dakota's climate are genuinely stringent as pass/fail requirements, not optional upgrades. On the building envelope: "slab on grade construction to have a minimum R-10 vertical foundation and horizontal perimeter under slab insulation per 2021 IECC," a 6-mil-or-greater under-slab vapor barrier, "2x6 exterior wall assemblies insulated to a minimum of R-20," a minimum 12-inch energy heel truss, and attic/roof insulation of "R-30 continuous insulation above the roof deck or R-49 in the attic" for four-story buildings, or "R-49 insulation in the attic or on the roof" for buildings of three stories or fewer, with rim/band joists insulated to match the exterior wall R-value. Windows must carry a U-factor of 0.30 or lower as a minimum standard (Energy Star Northern-climate-zone glazing is a separate, scored 10-point option above that floor).
Mechanical minimums are similarly explicit and cold-climate-specific: heating must be "high efficiency cove heat" at minimum, with PTAC units "NOT allowed for new construction"; a minimum 92% AFUE gas furnace, or heat pumps rated at HSPF of 8 or greater with 13.4 SEER2 or higher; programmable thermostats are required; and any heat pump proposed as primary heat "must be submitted for approval" to SDHDA before use. Air conditioning must hit at least 13.4 SEER2. Water heaters must reach a minimum 0.92 UEF if electric, and atmospheric-vented gas water heaters are not allowed at all. Healthy-homes minimums require a passive radon system installed at construction, with testing near completion and a mandatory active/re-test cycle "until results are below 4pCi/L," plus hardwired CO2 sensors wherever gas appliances are installed, a ban on incandescent light bulbs, and mandatory broadband infrastructure installation for any new-construction or substantial-rehabilitation rental project of more than four units.
| Feature | Mandatory minimum | Scored option (points) |
|---|---|---|
| Slab insulation | R-10 vertical + horizontal perimeter, 2021 IECC | -- |
| Exterior wall insulation | R-20 (2x6 assembly) | -- |
| Attic/roof insulation | R-49 attic (≤ 3 stories) or R-30 continuous roof-deck / R-49 attic (4 stories) | -- |
| Windows | U-factor 0.30 or lower | Energy Star Northern climate zone glazing (10 pts) |
| Heating | 92% AFUE gas furnace, or heat pump at HSPF ≥ 8 / SEER2 ≥ 13.4; PTACs banned for new construction | Forced-air furnace ≥ 96% AFUE, or air-source/ground-source heat pump rated to heat down to -12°F (20 pts) |
| Cooling | 13.4 SEER2 minimum | Central AC or AHRI-certified matched system, 15.2 SEER2 or better (5 pts) |
| Whole-project energy certification | None required | HERS index ≤ 60 (20 pts), OR Energy Star whole-project certification (35 pts) -- mutually exclusive, cannot take both |
| Radon | Passive system installed; active/re-tested until below 4 pCi/L | -- |
| Lighting | No incandescent bulbs | LED lighting throughout interior and exterior (10 pts) |
QAP Exhibit 4, "Construction and Energy Efficient Design Features" and related subsections. The -12°F heat-pump performance requirement for the 20-point scored option is a direct, verifiable response to South Dakota's winter design temperatures -- this research found no equivalent cold-weather-rated heat pump standard in any other state's QAP reviewed for this library.
A separate track -- labeled "EXHIBIT 4: SINGLE FAMILY PROJECT" in the document itself, despite the table of contents listing single-family characteristics as "Exhibit 5" -- sets very similar mandatory minimums but references the 2018 IECC for slab insulation rather than the 2021 IECC used in the multifamily track, and a flat R-49 attic insulation minimum without the multifamily track's four-story R-30-continuous-roof-deck alternative. This research could not confirm from the document alone whether the 2018-versus-2021 IECC vintage difference between the two tracks is intentional (e.g., tied to when each exhibit was last revised) or an unaddressed drafting inconsistency; confirm which code vintage applies to a specific project type directly with SDHDA before finalizing an energy-code compliance path.
Prevailing wage: a real hallucination to correct -- South Dakota has no state law of its own
General web research on this exact question repeatedly surfaces a specific, confident-sounding, and wrong citation: that "South Dakota's prevailing wage statute is codified at SDCL Chapter 5-20" and applies to state-funded public works. This research traced that citation directly to the South Dakota Legislature's own statute database and found it does not hold up. SDCL Chapter 5-20 is titled "Preference for Handicapped in Public Contracts" -- a chapter about hiring preferences for people with disabilities on public contracts, not wage rates -- and its own catchline states plainly that it has been "[REPEALED]"; the individual sections within it (5-20-1 through 5-20-8) each carry the notation "Repealed by SL 2010, ch 31, § 1." There is no relationship between this chapter and prevailing wage at all; the AI-search citation is a fabrication.
Separately, and independently, South Dakota's own Department of Labor and Regulation publishes a page titled "About Prevailing Wages" that discusses only the federal Davis-Bacon Act -- "the DBA requires that each contract over $2,000 to which the United States or the District of Columbia is a party for the construction, alteration and/or repair... of public buildings or public works shall contain a clause setting forth the minimum wages" -- and directs contractors to the U.S. Department of Labor's Denver regional office for federal wage determinations. It makes no reference to any South Dakota state-level prevailing wage requirement. The U.S. Department of Labor's own state-by-state list of prevailing wage laws likewise does not list South Dakota among the states that maintain one. Taken together -- the repealed, unrelated statute some searches misidentify as "prevailing wage," the state DLR's own page discussing only the federal law, and DOL's own list -- this research concludes South Dakota currently has no state prevailing wage law of its own applicable to HTC construction.
Federal Davis-Bacon still applies independently, on its own trigger, whenever a project layers in HOME Investment Partnerships or National Housing Trust Fund dollars alongside the tax credit -- a federal requirement under 24 CFR 92.354 (HOME) and 24 CFR 93.404 (HTF), not something SDHDA's QAP creates on its own. The QAP's own procurement section reflects this layering: Section II.F states that a straight HTC deal is "not required to use the procurement process to obtain their general contractors" (only three quotes for purchases between $10,000 and $250,000, and a documented RFP-style process above $250,000, both confirmed at final allocation rather than at bid), but "if awarded HOME or HTF funds, general contractors must solicit bids from minority-owned (MBE) and female-owned (WBE) business to the extent practicable and submit to SDHDA data on the steps taken" -- a HOME/HTF-specific outreach obligation layered on top of whatever labor-standards trigger those same federal dollars independently create.
Where this goes wrong
- Assuming SDHDA publishes a fixed per-unit or Total Development Cost ceiling somewhere in the QAP -- it does not; Section III.E runs a comparative, pool-relative cost screen with no disclosed numeric threshold.
- Applying the 9% developer fee's absolute $1,000,000 cap to a bond-financed (4%) deal -- the bond track uses the same 12% TDC percentage but is explicitly exempt from the dollar cap.
- Assuming the builder/GC "Ceiling" percentages above the 6%/2%/6% safe harbors are stated numbers in the QAP -- they are defined only by cross-reference to "HUD processing" standards, which this research did not independently verify.
- Treating South Dakota's cold-climate construction minimums (R-values, heating equipment efficiency, radon mitigation) as scored, optional features -- most are mandatory minimum standards a project must meet regardless of whether it pursues any related scored points.
- Citing SDCL Chapter 5-20 as South Dakota's prevailing wage law -- it is a repealed "Preference for Handicapped in Public Contracts" chapter with no connection to wage rates; this is a confirmed AI-search hallucination, not a live statute.
- Assuming South Dakota has some other, un-cited state prevailing wage law given how common such laws are elsewhere -- this research checked SD's own Department of Labor and Regulation guidance and the U.S. DOL's own state list, and found no South Dakota state prevailing wage law in either.
- Assuming a straight HTC/bond deal with no HOME or HTF money triggers Davis-Bacon -- it does not; the federal wage-rate trigger in South Dakota runs through HOME (24 CFR 92.354) and HTF (24 CFR 93.404) financing specifically, not the tax credit itself.
- Overlooking the MBE/WBE contractor-outreach documentation requirement that applies only when HOME or HTF funds are part of the capital stack -- it is not a general HTC requirement.
- Applying the multifamily track's 2021 IECC slab-insulation standard to a single-family/four-unit-or-fewer project, or vice versa -- the document's own single-family exhibit references the 2018 IECC instead, and this research could not confirm whether that vintage difference is intentional.
- Assuming the acquisition-eligibility rehabilitation threshold ($10,000/unit or 20% of original basis, whichever is greater) also exempts a project from the minimum unit-size table -- it is a separate test; only acquisition/rehabilitation projects generally (not size-threshold-specific) are exempt from Section III.A's minimum square footage.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies