Program election (9% vs. 4% vs. hybrid) — District of Columbia

One QAP, two federal credit tracks, two different agencies

DHCD's 2025 QAP states plainly that "[p]ursuant to Internal Revenue Code (IRC) Section 42(h)(8)(A), the Mayor delegated the authority and assigned the responsibility of administering the LIHTC Program to the District of Columbia Department of Housing and Community Development (DHCD or the Department) in Mayor's Order 87-72," and that this single QAP governs both "9% Tax Credits" (competitively awarded against the District's per-capita State Ceiling under IRC Section 42(h)(3)(C)) and "4% Tax Credits" (issued to projects financed with tax-exempt bonds, with no dollar ceiling of their own -- the QAP states the amount available for 4% Credits "is not subject to a ceiling and corresponds with the annual amount of qualified Private Activity Bond Volume Cap ... allocated to a Project"). That single-QAP structure is genuinely different from a state that splits its 9% agency from a separate bond authority with its own QAP-like rules -- DC keeps both federal credit types inside one document.

But the QAP is equally explicit that DHCD does not issue the bonds that generate the 4% credit: "Projects that apply for tax-exempt bonds are eligible to request 4% Tax Credits. Consistent with an inter-agency agreement between DHCD and the District of Columbia Housing Finance Agency (DCHFA), before the Project closes on the tax-exempt bonds, DCHFA submits the application to DHCD for the allocation of tax credits." The bonds themselves come from DCHFA -- "a corporate body which has a legal existence separate from the government of the District but which is an instrumentality of the government of the District," created effective March 3, 1979 by the District of Columbia Housing Finance Agency Act (D.C. Law 2-135, codified at DC Official Code Section 42-2701.01 et seq.). DCHFA is self-sustaining, with its own budget, procurement, and personnel system independent of the District government. This is a real, load-bearing structural fact for program election: the QAP's own eligibility test for 4% credits is "[i]f 25% or more of the aggregate basis of any building and its underlying land is financed with the proceeds of tax-exempt bonds ... issued by the DC Housing Finance Agency (DCHFA)" -- the bond issuer is named directly in the credit-eligibility rule.

Bond Cap is scarce and competitive -- and DHCD says the way DCHFA used to rank requests is being retired

DC's tax-exempt Bond Cap is not unlimited. DCHFA's own 2025 competitive-application document states: "DCHFA annually receives approximately $375MM in qualified Private Activity Bond Volume Cap ('Bond Cap') from the District through the Office of the Deputy Mayor for Planning and Economic Development ('DMPED') for housing mortgage revenue bonds. With the persistent high demand for limited Bond Cap outstripping supply, tax-exempt bonds and associated 4% LIHTCs ... remain competitive." No single project may receive more than 20% of DCHFA's total annual bond allocation, capped in dollar terms at $77.56 million for the 2025 cycle. To manage the queue, DCHFA runs Readiness Review application periods twice a year (January and July), and its published process for the 2024-2025 cycles used a project's DHCD "Threshold Review and Evaluation Score" to rank and prioritize bond-financing requests high-to-low, with a documented tiebreaker ladder (geographic location score, then percentage of units restricted at 30% MFI).

DHCD's newest published guidance -- the FY2026 Consolidated RFP, issued February 20, 2026 -- states that this mechanism has changed: "This Threshold Eligibility Review will not translate into a 'Threshold Score' for purposes of DCHFA tax-exempt bond financing requests, as was the case in previous solicitations -- rather, this review only reflects a determination of whether or not an application will move to the Evaluation stage of this Consolidated RFP." In other words, DHCD's own most current document confirms that the exact ranking mechanism DCHFA's 2025 competitive-application guidance describes has been discontinued. This research could not locate a DHCD or DCHFA document published as of this writing that states what now determines DCHFA's bond-financing priority order in its place. A developer relying on the DCHFA 2024/2025 volume-cap process description should confirm its current status directly with DCHFA before assuming a DHCD Threshold score still drives bond-cap sequencing.

Two doors onto the 4% credit, depending on whether the deal needs DHCD gap money

The QAP splits the 4% path in two, and the fork matters for sequencing. "If competitive gap financing is required in addition to 4% Tax Credits, the Sponsor/Developer is required to explain its strategy to finance the gap in the development budget, which may require submission of an application to apply for funding as part of the RFP process." That means the project must first go through DHCD's Consolidated RFP -- Threshold Review, then Evaluation -- the same competitive process a 9% applicant uses, before DCHFA will consider it. DCHFA's own guidance confirms the sequencing from its side: "Submit the project's DHCD Threshold Review and Evaluation Score. DCHFA will only review submissions that have already received a DHCD Threshold Review and Evaluation Score. You cannot submit for a DHCD Threshold Review and Evaluation Score in the same round that you apply for DCHFA Bond Cap."

"If competitive gap financing is not required and the Project wishes to exclusively request 4% Tax Credits, Sponsors/Developers must first apply to DCHFA. ... Applications for 4% Tax Credits without competitive gap financing are accepted on a rolling basis and must be submitted directly to DCHFA via its online portal at mlni.dchfa.org." DHCD's role on that track is narrower: "DHCD oversees the determination that projects comply with the QAP's Threshold Eligibility Requirements ... but relies on the DCHFA underwriting of tax-exempt bond Projects and accepts DCHFA's determinations for those Projects if competitive gap financing is not required." After placement in service, "DCHFA evaluates the request and transmits the request for IRS Form(s) 8609 to DHCD for final review and issuance" -- DHCD keeps the final sign-off on the federal tax credit itself even on a deal it never competitively scored.

The federal bond test: DC's QAP already states the OBBBA number, without all of the statute's own conditions

The 2025 QAP, published December 9, 2025, defines eligibility for the 4% credit around a flat threshold: "If 25% or more of the aggregate basis of any building and its underlying land is financed with the proceeds of tax-exempt bonds (the 25% Test) issued by ... DCHFA, Sponsors/Developers qualify to apply for noncompetitive 4% Tax Credits." The One Big Beautiful Bill Act (Pub. L. 119-21, Section 70422 (2025)) permanently lowered that federal test from 50% to 25% of aggregate basis -- but only for buildings placed in service after December 31, 2025, and only if at least 5% of the aggregate basis is financed with bonds whose own issue date is after December 31, 2025 (bonds issued on or before that date remain subject to the old 50% test). DHCD's own later document -- the FY2026 Consolidated RFP, issued February 20, 2026 -- confirms the tie explicitly: "Federal changes to how Private Activity Bonds ... are administered will theoretically boost the availability of affordable housing financing resources, due to the permanent reduction in the private activity bond financing threshold (the '50% Test') from 50% to 25% (the '25% Test')."

What neither DC document spells out is the statute's own qualifying condition -- the requirement that at least 5% of aggregate basis come specifically from bonds issued after December 31, 2025, and that the old 50% rule keeps applying to bonds issued before that date. Unlike Georgia, which layered its own flat 30% administrative ceiling on top of the federal number regardless of which federal test applied, DC's QAP does not impose any DHCD-specific cap tighter than whatever federal test governs -- it simply restates "the 25% Test" as though it already applies uniformly. A deal financed with bonds issued in 2025, or with less than 5% of its aggregate basis coming from bonds issued after December 31, 2025, should not assume the QAP's flat "25% Test" language controls without confirming its own bond issue dates against the federal statute directly.

Combining the two: "twinning"

The QAP allows a hybrid structure: "While generally a Project is awarded only 9% Tax Credits or 4% Tax Credits, it may be possible, under specific facts and circumstances, for a Project to receive both types of Tax Credits, commonly referred to as 'twinning'. In this hybrid financing structure, projects are broken down into two distinct projects where one receives the 9% credit and the other receives the 4% credit." The QAP does not further specify a minimum scale, phasing sequence, or common-area allocation methodology for a twinned deal beyond that single paragraph; those mechanics should be confirmed directly with DHCD's Development Finance Division before underwriting a specific twinned structure.

DC's own local tax credit -- a real, transferable state-style LIHTC match, plus a separate nonprofit property-tax exemption

The QAP itself flags that DC runs a second, entirely separate credit: a footnote states, "This is to be differentiated from the District of Columbia Low Income Housing Tax Credit (DC LIHTC)," pointing to DC Code Title 47, Chapter 48. That statute -- DC Official Code Section 47-4801 et seq. -- establishes "a District of Columbia low-income housing tax credit" that an owner of a qualified or eligible project may be awarded on a competitive basis, in an annual amount not exceeding 9% of the project's qualified basis, claimed in equal installments over 10 years against DC franchise/income tax (Chapter 18 of Title 47) or DC Code Section 47-2608(a)(1). The credit is non-refundable but may be carried forward up to 10 years, and -- distinctively -- it is transferable: "All or any portion of District of Columbia tax credits issued in accordance with the provisions of this section may be transferred, sold, assigned, or allocated to parties who are eligible," subject to an affidavit that the value received was used to ensure the project's financial feasibility. The FY2026 Consolidated RFP lists "DC State Low Income Housing Tax Credits" as one of the funding sources covered by that same solicitation, confirming the local credit is administered through the same DHCD application process as the federal 9% round rather than a wholly separate track.

Separately, DC runs a standing property-tax abatement for nonprofit-controlled affordable housing: DC Official Code Section 47-1005.02, the "Nonprofit affordable housing developer tax relief" program, exempts qualifying affordable housing owned by or leased to a nonprofit from the real property and personal property taxes imposed under Chapters 8 and 10 of Title 47 for as long as the property is being developed for, or used as, affordable housing restricted to tenants at or below 80% of adjusted median income and subject to the LIHTC compliance-period covenants -- effective for tax years beginning after September 30, 2012, and available "in addition to, and not in lieu of," any other tax relief. DHCD administers applications for this relief directly (dhcd.law@dc.gov), and the QAP's own Evaluation Criteria reward projects structured to use it -- the "Leverage" scoring criterion explicitly lists "property tax abatements/exemptions" among the resources applicants should pursue to reduce DHCD's own share of a project's funding stack, and any project earning maximum points under the QAP's Non-Profit Participation/Right of First Refusal criterion is separately required to apply for this same Tax Relief Program.