Cost, construction type, and the labor package — Wisconsin

The cost ceiling: a regression model with a hard absolute cap, not a flat number

WHEDA's Appendix F, the "Maximum Cost Model," states its purpose and consequence bluntly: "WHEDA limits total development cost for any one development for both HTC and lending. This is a threshold item and applications exceeding the allowed maximum will be rejected." Public housing authorities are exempt if they are the primary applicant and HOPE VI or Choice Neighborhoods Initiative funding is a source, and Tribal housing authorities are exempt if they are the primary applicant with NAHASDA or similar funding; Community Service Facility costs and any 4%-transaction developer fee amount above the current 9%-transaction limit are excluded from the calculation entirely.

The model itself is not a published per-unit dollar figure — it is a regression built on "historical data from Wisconsin's HTC program," using inputs including unit counts by type (acquisition-rehab, new construction, adaptive reuse), location (City of Milwaukee, City of Madison, other Metro counties, Tribal lands), whether the development includes new construction or adaptive reuse, gross square footage, and — for 4% transactions only — any developer fee claimed above the 9% transaction limit. The model automatically adds a 30% allowance above its predicted cost, and Appendix F states the resulting absolute ceilings directly: "The absolute cost maximum is $519,710/unit for New Construction and Adaptive Reuse, or $473,672 for Acquisition/Rehab." Supportive Housing developments, and projects addressing rehabilitation of foreclosed or abandoned single-family homes or duplexes, automatically receive a further 10% allowance, raising those absolute ceilings to $571,681 per unit (New Construction/Adaptive Reuse) and $521,039 per unit (Acquisition/Rehab).

Contractor fees, general requirements, and the identity-of-interest penalty

Appendix D sets a cluster of hard percentage caps on the soft-cost side of the budget. Architectural fees included in eligible basis (design and supervision combined) are capped at 3.00% of a defined cost-basis formula. Construction contingency must be budgeted at a minimum of 5% for new construction or 10% for adaptive reuse and acquisition/rehab (a weighted average applies to projects mixing types). General Requirements, Contractor Overhead, and Contractor Profit combined are capped at 12% in the aggregate of a defined construction-cost base, with Contractor Profit itself separately sub-capped within that 12%: the QAP states the profit component alone must satisfy "5% >= Contractor Profit / (...)" against the same cost base — meaning the aggregate ceiling and the profit sub-ceiling both bind simultaneously, not just the combined 12% figure.

A materially tighter compound cap applies when the general contractor isn't functioning as an arm's-length business: "When an Identity of Interest... exists between the developer, owner and general contractor, and the auditor performing the cost certification determines that the general contractor entity is not a legitimate operating concern, the combined total of the general requirements, contractor's profit, contractor's overhead, consultant's fee, developer's fee, and developer's overhead will be limited to 17%." That 17% figure folds developer fee itself into the same ceiling as the construction-side fees — a meaningfully different (and generally more restrictive) test than the ordinary 12% GR/OH/profit cap plus a separately-calculated developer fee cap, and it only triggers on the auditor's affirmative finding, not automatically from the mere existence of an identity of interest.

Parking is treated as a basis-exclusion item rather than a straightforward eligible cost: applicants must deduct from eligible basis a minimum of $7,500 per underground parking space or $2,000 per above-ground surface-lot space (other parking construction types may use an alternative deduction supported by a cost description). Construction-start documentation requires a specific contract form — "An executed AIA form 102 Cost-Plus Guaranteed Maximum Price construction contract" — meaning a straightforward lump-sum AIA A101 does not satisfy WHEDA's own construction-start checklist as written.

Developer fee: caps by credit type, with a real deferral trade for a higher ceiling

Appendix D sets developer fee caps that vary by credit type, by new construction versus rehabilitation, and — for the higher "Additional Fee" tier — by calendar year within the 2027-2028 cycle itself. In every case, "developer fee includes any amounts paid to application or development consultants, plus construction supervision and developer overhead," and adaptive reuse is treated as new construction for these calculations.

The deferral trade is real, not cosmetic: failing to actually defer the promised share of the fee through to the Form 8609 application "may result in penalties," and — outside the Noncompetitive Federal 4% exception discussed in the rents/pro forma phase of this guide — every deferred fee must still be projected to fully repay within the 15-year compliance period at initial application. A developer competing later for an Allocation of Additional Credit on the same project also cannot request a Total Developer Fee, or Developer Fee Received, higher than what was already approved at Carryover or Tier One.

Green building: mandatory baseline plus a genuinely separate scored tier

Green building in Wisconsin is not simply a scored, optional category — it is both a mandatory threshold requirement for every awarded project and a separately scored category worth up to 25 of the QAP's total points, and the two operate independently of each other. Appendix M's mandatory baseline requires, at minimum, that "each project must obtain a pre-approved certification of achieving 200 points or greater through Wisconsin Green Built Home program," that every HTC awardee participate in Focus on Energy's Energy Design Assistance (EDA) program or an equivalent Energy Co-op program where EDA isn't available (waived without penalty where a project isn't EDA-eligible), and — for rehabilitation projects specifically — a HERS Index score of 80 or less for buildings built in or after 1980, 100 or less for buildings built before 1980, or a post-rehab HERS score at least 15% lower than pre-rehab, with an ASHRAE 90.1-2013-equivalent energy-model alternative available in each case.

Beyond that certification-level baseline, Appendix M layers a long list of mandatory, item-level design and efficiency requirements onto every awarded new-construction or rehabilitation project regardless of scoring strategy: 1.75 gpm or lower low-flow showerheads and 1.5 gpm or lower faucet aerators on every fixture, 1.6 gallon-per-flush toilets, ENERGY STAR-rated LED lighting and ENERGY STAR appliances/HVAC where an ENERGY STAR option exists, programmable setback thermostats, hard-wired high-speed internet in each unit (wireless permitted for acquisition/rehab), and a building envelope that must "exceed the State of Wisconsin Department of Safety & Professional Services Building Envelope Requirements by a minimum of 2%" under the 2021 IBC-based energy code, verified through REScheck or COMcheck modeling. Minimum average unit sizes are also mandatory for new construction and adaptive reuse — 400 SF for an efficiency unit up to 1,200 SF for a 4-plus bedroom unit — though rehabilitation of existing units is exempt from this requirement.

The labor package: a real, comprehensive prevailing-wage repeal, and where federal Davis-Bacon still reaches

Wisconsin's WHEDA QAP itself never mentions prevailing wage or Davis-Bacon anywhere in its main text or the appendices reviewed for this guide — the only labor-adjacent requirements the QAP imposes directly are that "all contractors doing work related to a Project (including general contractors, subcontractors and sub-subcontractors) must be registered with, and have all licenses and certifications required by, the State of Wisconsin," and the separate Strategic Business Program (formerly the Emerging Business Program), which sets county-level participation dollar goals — calculated as a percentage of allowable construction cost across trades including general contracting, grading, excavation, concrete, paving, framing, electrical, carpentry, roofing, masonry, plumbing, painting, asbestos removal, trucking, and landscaping, plus planning, architectural, and engineering soft costs — for contracting with economically disadvantaged businesses and union contractors. Developers who meet those participation goals receive a refund of one-third (33%) of their Reservation Fee.

The QAP's silence on prevailing wage reflects a real, and by this research's reading a genuinely comprehensive, state-law repeal rather than an oversight. Wisconsin's Department of Workforce Development states directly, in its own current public guidance, that "the 2017-2019 state budget repealed Wisconsin's prevailing wage laws," and that "Prevailing Wage rates applicable to state agencies will be those issued by the U.S. Department of Labor under the Davis-Bacon Act." That budget act — 2017 Wisconsin Act 59 — is the vehicle most sources point to for completing the repeal on the state side; the Wisconsin Department of Transportation's own current guidance states the repeal reached state highway and bridge work as well as general state public works, on a slightly later effective date than the general repeal: "Effective September 23, 2017, state prevailing wage requirements on state funded highway projects no longer apply for projects advertised for bid after September 23, 2017." This research also found references to an earlier 2015 measure (2015 Wisconsin Act 55) as the vehicle that first repealed prevailing wage on local government projects; this session read WHEDA/WisDOT/DWD's own current guidance pages directly rather than the amended statutory text of Wis. Stat. §§ 103.49 and 103.50 as it stands today, so the sequencing across the 2015 and 2017 acts should be treated as WHEDA-guidance-level confidence, not a verified reading of the statute sections themselves. What this research did not find, across any source consulted, is any surviving Wisconsin project category — including state highway and transportation work — that still carries an independent state-law prevailing-wage floor.

Because a Housing Tax Credit development is privately owned and privately financed, it was arguably never within either repealed statute's "public works" scope in the first place — the practical relevance of the repeal here is mainly that it forecloses an assumption some developers or contractors carry over from other states: Wisconsin construction is not otherwise subject to a state-law wage floor merely because it receives a state tax credit allocation. That said, the repeal changes nothing about a fully separate, federal trigger that attaches independent of Wisconsin law: under 24 CFR 92.354, any construction contract covering 12 or more HOME-assisted units in a project must pay Davis-Bacon prevailing wages, and once triggered, that wage requirement extends to the entire construction contract, not merely the HOME-assisted units — deliberately splitting a project into multiple contracts to stay under the 12-unit threshold is not permitted. The National Housing Trust Fund program incorporates the same HOME labor-standards framework by reference (24 CFR 93.404), so an NHTF-layered deal should expect the same practical trigger logic. A Wisconsin LIHTC deal that layers HOME or NHTF soft funds at that scale owes federal Davis-Bacon wages on its construction contract regardless of the state's own 2017 repeal — the repeal removed a state-law floor that would otherwise have applied on top of Davis-Bacon, it did not touch the federal trigger itself.