Cost containment, developer fee, and the labor question — Washington

§6.7 Cost Containment: two separate point pots

§6.7 is labeled "1-8 Points" but it's really two independent scoring pots. The first, TDC Limit points, is non-cumulative: 1 point for being under the applicable Total Development Cost limit, 3 points for being more than 5% under, or 6 points for being more than 10% under — a project claims only the highest tier it clears, not all three. Approved cost drivers, currently limited to solar energy array costs (equipment, installation, labor, engineering, site plans), can be exempted from the TDC calculation at Commission discretion, provided the applicant submits a General Contractor cost estimate clearly delineating hard cost and overhead/profit/WSST.

The second pot, Median Square Footage, is a separate 2 points scored relative to whatever every other applicant in that project's Geographic Credit Pool submits in that same allocation round — there is no fixed cost-per-square-foot target to hit; the median is calculated after all applications for the round are in. Residential Project Square Footage is measured from the outside face of exterior walls and includes everything inside the building envelope (mechanical space, common area, circulation, structured parking) but excludes balconies, rooftop decks, carports, and surface parking. A project that later misses its certified cost basis at Final Cost Certification risks having an equivalent number of points deducted from its sponsor's next complete application.

The Bond/4% program's parallel incentive, §4.1 Cost Efficient Development, is structured differently: a finer 1-10 point ladder in 2.5%-of-TDC-limit increments, topping out at 10 points for being 25% or more under the applicable limit, plus its own "boost" exemptions — capped at an aggregate 10% of TDC for commercial wage-rate cost differentials and structured parking, and uncapped for specific sustainable features (heat pump water heating, ductless/ducted heat pump HVAC, balanced ventilation with MERV-17 filtration on rehabs). The two programs reward the same underlying behavior — building under the cost limit — on two different scales, so a cost-containment strategy tuned for one doesn't translate directly to the other.

§6.8 Developer Fee: a literal price list, inside a hard ceiling

Note that §6.8's section header reads "2-10 Points," but the table it introduces runs all the way to a 0-point option at 15% of TPC — worth flagging as an internal labeling quirk to confirm with Commission staff rather than something to over-interpret; the operative numbers are the table's. That 15% figure isn't just the bottom of the points scale — it's also the hard ceiling under §3.7: developer fees, in the aggregate, are capped at 15% of Total Project Costs less reserves, Donation, Intermediary Costs, and the fee itself (10% instead of 15% for acquisition/rehab deals where rehab costs run under 25% of the building's as-is value). The identical 15% ceiling applies on the Bond/4% side under §2.6 — but the bond program attaches no points to where a project lands within it.

The fee committed for points at application isn't the fee that survives to closing. The Commission sets the final developer fee at Equity Closing based on the project's actual final budget after construction bids are accepted and sources and uses are balanced — meaning a fee percentage locked in for scoring purposes gets re-tested against real numbers months later, and any excess funds are expected to flow back to the public funders rather than the developer.

Labor: what RCW 39.12 actually requires — and what's unverified

RCW 39.12 requires prevailing wages on "public works" contracts. RCW 39.04.010 defines a public work as work "executed at the cost of the state or of any municipality, or which is by law a lien or charge on any property therein." The clearest on-point Washington authority interpreting that definition for affordable housing is a 1983 Attorney General opinion (AGO 1983 No. 2), which found that construction by public housing authorities — governmental bodies created under Chapter 35.82 RCW — is a public work subject to RCW 39.12 when funded with state or municipal money. That opinion addresses a public body constructing housing directly; it does not address a private LIHTC ownership LP or LLC receiving WSHFC bond or credit financing, which is how most 9% and 4% deals in Washington are actually structured.

Neither the 9% Competitive Housing Tax Credit Policies nor the Bond/Tax Credit Program Policies document states that WSHFC's own bond or credit financing, by itself, converts a private developer's project into a "public work" under RCW 39.12. What the sources do show is that the trigger in practice tends to come from other, specific public funders layered into the capital stack. Seattle's Office of Housing makes this explicit in its own 2024 Residential Prevailing Wage Rate Policy: "Although Office of Housing funded projects are not 'public works,' the required residential prevailing wage rates are those established by the State of Washington for residential public works projects" — meaning Seattle imposes the state residential prevailing wage schedule as a contractual condition of its own funding, not because RCW 39.12 applies of its own force. That same policy layers federal Davis-Bacon obligations on top when federal funds (HOME, HUD, Seattle Housing Authority sources) are also in the deal, with the higher of the two rate schedules controlling.

This should be read as an honest gap, not a settled rule: I could not locate a primary WSHFC or Washington Department of Labor & Industries source stating definitively whether WSHFC 9% or 4%/bond financing alone is sufficient to trigger RCW 39.12 for a privately owned deal with no other public funding layered in. The Bond Policies' own §4.1 "Commercial Wage Rates" cost-driver boost — which lets a project claim a TDC-limit exemption for "the additional cost of labor for federal, state, or local commercial wage rates (for projects that trigger a commercial wage rate)" — confirms that wage-rate triggers are a live cost issue for at least some WA LIHTC projects, without settling which specific funding layer causes it. Confirm the applicable wage requirement with L&I's Prevailing Wage Program and with every public funder in the capital stack — not just WSHFC — before pricing labor into the construction budget.

§6.21 Energy Efficiency Modeling and the new-construction line

§6.21 awards 2 points, new construction only, for selecting Option #1 "Advanced Tools" energy modeling under Evergreen Sustainable Development Standard (ESDS) §1.02, using a consultant drawn from the Commission's approved roster. The applicant must attach a commitment letter from that consultant at the time of application, attesting they'll join the project team early enough in design to actually inform decisions rather than model a finished design after the fact. Rehabilitation projects don't have access to this specific point — they're instead subject to a separate, unscored set of state sustainability and weatherization requirements (including, per the Bond Policies' §3.19, an in-unit cooling solution for rehab projects).

The Bond/4% program runs a larger, differently structured new-construction energy menu under its own §4.8 — for example, an NC Energy Efficient Building option worth 5 points and an Electric Vehicle Charging Stations option worth 2 points — rather than the 9% program's single 2-point Energy Modeling Option. As with cost containment and developer fee, this is another place where the two WA programs reward related, but not identical, construction decisions on two separate scoring systems, so a sustainability package designed for one application doesn't automatically carry its point value into the other.