"CHFA runs a single annual 9% round, a rolling 4%/tax-exempt bond lane, and a wholly separate state Housing Tax Credit Contribution program under Section 8-395 — but that state credit isn't a per-project match the way some states run theirs. So what does 'program election' actually decide here, and does the federal bond test even have a CHFA-specific number to underwrite to after the One Big Beautiful Bill Act?"
Three tracks under one QAP — and a state credit that isn't a per-project match
CHFA's 2027 and 2028 Qualified Allocation Plan — adopted by the CHFA Board of Directors on July 23, 2026 and approved by the Governor on July 28, 2026 — governs the federal 9% credit, the federal 4% credit paired with tax-exempt bonds, and describes both a "Preservation Classification" and a "New Construction Classification" that 9% Applications are sorted into. The Plan states directly that it "governs all applications... requesting 9% Credits... to be reserved from the 2027 or 2028 Credit Ceiling... or from any subsequent Credit Ceiling and/or requesting Credits in accordance with the requirements of Section 42(h)(4) of the Code (the '4% Credits')" (Section I). Unlike a state that runs two separate competitive rounds in a single year, Connecticut's 9% credit is awarded through one annual Credit Ceiling process; the 4% credit paired with tax-exempt bonds runs on its own underwriting-driven timeline with no QAP-stated annual cycle.
| Track | Cycle | Governing mechanism | State credit involvement |
|---|---|---|---|
| 9% Credits | Single annual round per Credit Ceiling year | QAP Section III — Basic Threshold Requirements, Financial Feasibility, Preservation/New Construction ranking | None automatic — HTCC must be separately applied for by a nonprofit/CDFI sponsor |
| 4% Credits + tax-exempt bonds | Rolling / underwriting-driven, no QAP-published cycle | QAP Section IV — Basic Threshold Requirements plus "underwriting criteria adopted from time to time by the State and by the Authority" | Same as above |
| Housing Tax Credit Contribution (HTCC) | Annual NOFA, separate competitive ranking | Conn. Gen. Stat. Section 8-395; CHFA HTCC Program Guidelines | Is the state credit — but a nonprofit/CDFI applies for it, not the LIHTC developer, and LIHTC developments rank as "Priority B," behind non-LIHTC "Priority A" developments, within HTCC's own general funding class |
2027 and 2028 QAP, Sections I, III, IV; CHFA Housing Tax Credit Contribution (HTCC) Program Guidelines, 2025 revision (Rev. 3/2025).
A genuinely distinctive Connecticut wrinkle sits inside Basic Threshold Requirement #10 ("Preservation Classification Construction Hard Costs"): it requires a $35,000-per-unit minimum construction hard-cost expenditure and a capital needs assessment "[f]or Proposed Developments in the Preservation Classification... or seeking an allocation of 4% Credits." Read literally, that second clause sweeps in any 4% Credit Application, including a hypothetical new-construction 4%/bond deal, even though the same sentence's "capital needs assessment of the structure to be rehabilitated" language only makes sense for a rehabilitation project. This research found no QAP or Guideline text resolving that internal tension one way or the other; a new-construction 4%/bond sponsor should confirm directly with CHFA whether Threshold #10 is read to reach it before assuming it does or doesn't.
The federal bond test: the QAP states no percentage, and this research could not confirm a CHFA-specific number
QAP Section IV ("Projects Financed With Tax-Exempt Bonds") ties 4% credit eligibility to "a specified percentage or more of the aggregate basis of a project (including land)... financed with the proceeds of such tax-exempt bonds," but never states the percentage itself in the QAP text — it incorporates the federal aggregate-basis test by reference rather than restating a number, and requires only that the project comply with "underwriting criteria adopted from time to time by the State Bond Commission for multifamily rental housing financed with bonds issued pursuant to an allocation of volume cap authority approved by the State Bond Commission" (Section IV.B) and that debt sizing "deploy 4% Credits effectively and minimally" under Section 42(m)(2)(A) (Section IV.D).
That matters directly for the One Big Beautiful Bill Act's 2025 change. The longstanding federal rule required at least 50% of a project's aggregate basis to be financed with tax-exempt volume-cap bonds; Pub. L. 119-21, Section 70422(b)(1) added a 25% alternative for buildings placed in service after December 31, 2025, available where at least 5% of aggregate basis is financed with bonds issued after that date. Because Connecticut's QAP incorporates "a specified percentage" by reference to the Code rather than stating a fixed number, the new 25% alternative should flow through automatically without CHFA needing to amend QAP text — but this research could not locate any CHFA-published document (comparable to the kind of standalone bond-fund overview or stakeholder-outreach memo some other state housing finance agencies have issued) stating a CHFA-specific administrative percentage, whether tighter than, equal to, or simply restating the new federal floor. Widely repeated figures circulating in secondary industry sources for Connecticut's post-2025 aggregate-basis practice could not be traced to any primary CHFA document in this research and are not repeated here. Confirm CHFA's current bond-underwriting parameters directly, in writing, before sizing a 2027-vintage 4%/bond deal to any percentage other than the plain federal statutory test.
The Housing Tax Credit Contribution program: a nonprofit-run, donation-funded state credit, not a per-project pairing
Conn. Gen. Stat. Section 8-395 authorizes CHFA to "administer a system of tax credit vouchers... for business firms making cash contributions to housing programs developed, sponsored or managed by a nonprofit corporation... which benefit low and moderate income persons or families which have been approved prior to the date of any such cash contribution by the authority." The mechanism is a corporate-donation credit, structurally similar to a handful of other states' donation-based housing tax credit programs — not an automatic per-project percentage match layered onto every LIHTC award the way some states pair their own state credit directly with a federal 9% or 4% reservation. CHFA's own 2025 HTCC Program Guidelines state the voucher "shall be granted in an amount equal to 100% of the value of the contribution made," and the credit may be applied against the taxes enumerated in the statute: Chapter 207 (insurance companies), Chapter 208 (corporation business tax), Chapter 209 (air carriers), Chapter 210 (railroad companies), Chapter 211 (telecommunications/cable/CATV), or Chapter 212 (utility companies) (Conn. Gen. Stat. Section 8-395(a)(1), (b)).
Eligibility to apply for an HTCC award runs to the nonprofit or CDFI sponsor, not the LIHTC developer directly — an applicant must be "a Nonprofit Corporation or a Community Development Financial Institution (CDFI)" able to "demonstrate that one if its purposes is the construction, rehabilitation, ownership or operation of housing" (HTCC Guidelines, Section I.B). Eligible uses explicitly include "LIHTC Housing Developments," but only as "Priority B" within the general funding class, ranked behind "Priority A: Non-LIHTC Housing Developments" for whatever general-class dollars remain once the Workforce and Permanent Supportive Housing set-asides are allocated (HTCC Guidelines, Section VIII.A). And in a detail that reaches directly back into the QAP's own scoring: the 2027 and 2028 QAP's "Other Permanent Funding Sources" scoring item (worth 3 of the 28 Financial Efficiency & Sustainability points) expressly lists "the State Housing Tax Credit Contribution program" among the state-administered funds that "are not eligible sources of permanent funding for purposes of qualifying for this Point" (QAP Section III.H.2(d)) — so even a sponsor who successfully layers HTCC dollars into a 9% deal's capital stack gets no scoring credit for having diversified its funding sources that way.
The hybrid pathway: CHFA's own discretion cuts both ways
The QAP defines a "Proposed Hybrid Development" as a 9% Credit Application "paired in a hybrid financing structure with a separate and simultaneous financing plan seeking an allocation of 4% Credits" (Section III.B.4), and the LIHTC Program Guideline requires that, for any hybrid structure, "an applicant must submit both the 9% LIHTC application and a concurrent 4% LIHTC application at the time the 9% LIHTC application is due" — with CHFA's review of the 4% application halted entirely if the 9% application is unsuccessful (Guideline Section IV.C.1(g)). A hybrid pairing must also clear the same $30,000-per-qualified-unit ceiling on the 9% credit amount requested (Basic Threshold Requirement #2 / Financial Feasibility item 2) and the 20%-of-population-component cap on the annual Credit Ceiling (item 1) — but for a hybrid deal specifically, the QAP directs that "all LIHTC Program qualified units in the entire Proposed Hybrid Development shall be included" in that per-unit calculation once CHFA determines the pairing is "consistent with the objectives of the Plan" (Section III.B.4) — meaning the cap is tested against the combined hybrid unit count, not just the units nominally funded by the 9% Credit request.
CHFA's discretion runs the other direction too. Basic Threshold Requirement / Financial Feasibility item 5 lets the Chief Executive Officer determine, at any point during review, that a Completed Application "appears to leverage funding or financing sources essential to the viability of the Proposed Development more effectively with an allocation of 4% Credits" and, on that basis, deem the Application "ineligible for an award or reservation of 9% Credits" outright — pushing it into the 4%/bond lane whether or not that was the sponsor's original election (Section III.B.5). "Program election" in Connecticut is therefore not purely a developer's own upfront choice: CHFA's Financial Feasibility review can override it in either direction.
Where this goes wrong
- Assuming Connecticut's state Housing Tax Credit Contribution program pairs automatically with a 9% or 4% award the way some other states' state housing tax credits do — HTCC is a separately competitive, $10 million annual pool that a nonprofit corporation or CDFI (not the LIHTC developer) must apply for directly from CHFA, then fill by soliciting business-firm contributions.
- Treating HTCC dollars raised for a LIHTC deal as a normal diversified funding source for QAP scoring purposes — the 2027 and 2028 QAP expressly excludes "the State Housing Tax Credit Contribution program," along with other state-administered funds, from the "Other Permanent Funding Sources" scoring category.
- Missing that LIHTC developments are HTCC's lowest general-class priority — CHFA's own HTCC Guidelines rank "Priority A: Non-LIHTC Housing Developments" ahead of "Priority B: LIHTC Housing Developments" for general-class dollars once the Workforce and Permanent Supportive Housing set-asides are allocated.
- Treating the $500,000 HTCC figure in Conn. Gen. Stat. Section 8-395(i) as a lifetime project cap — it is an annual, per-fiscal-year ceiling on how much any one organization or project may receive, inside a $10 million total program that already reserves $3 million off the top for two set-asides.
- Restating a specific post-OBBBA aggregate-basis percentage as CHFA's current administrative bond test — the QAP text states no percentage at all, incorporating the federal test by reference, and this research could not verify any CHFA-published number against a primary source; confirm directly with CHFA in writing before underwriting to a specific figure.
- Assuming the 4%/bond lane runs on the same annual calendar as the single 9% round — QAP Section III's Credit Ceiling process governs 9% Credits only; 4%/bond Applications are evaluated against underwriting criteria "adopted from time to time," with no QAP-stated fixed cycle.
- Reading Basic Threshold Requirement #10's $35,000-per-unit minimum hard-cost floor as limited to the Preservation Classification — its text also sweeps in "seeking an allocation of 4% Credits" as an independent trigger, even though the same sentence's capital-needs-assessment language is written for a rehabilitation project; this research found no QAP text resolving whether it reaches a hypothetical new-construction 4%/bond deal.
- Assuming a hybrid 9%/4% pairing is purely the sponsor's own election — Basic Threshold/Financial Feasibility item 5 lets CHFA's Chief Executive Officer unilaterally deem a Completed Application "ineligible" for 9% Credits and push it into the 4% lane if CHFA determines 4% financing serves the development more effectively.
- Submitting a hybrid 9%/4% Application without the concurrent 4% ConApp at the same deadline — CHFA will not complete its review of the 4% application at all if the 9% application isn't submitted simultaneously, and will drop the 4% review entirely if the 9% application fails.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies