Program election (9% vs. 4% vs. hybrid) — Delaware

One QAP, two federal tracks -- and a document DSHA updated mid-cycle for a federal law

The governing document is the "State of Delaware Low Income Housing Tax Credit Qualified Allocation Plan 2025-2026," originally adopted January 3, 2025 by then-Governor John Carney and DSHA Director Cynthia Karnai. DSHA's own currently-posted copy of that same document carries a second line beneath the adoption date: "Updated January 7, 2026," now signed by Governor Matt Meyer and Director Matthew Heckles -- reflecting a gubernatorial and DSHA-leadership transition that occurred inside this QAP's own two-year cycle. A direct text comparison of DSHA's original 2025 posting against its current posting confirms the update is substantive, not cosmetic: DSHA added a sentence directly to the Introduction stating, "The One Big Beautiful Bill Act of 2025 changed the minimum bond financing requirement to 25%; DSHA has adopted updates to the minimum bond financing requirement effective with the 2026 application cycle," and then rewrote its own Tax-Exempt Bond-Financed Developments section accordingly (detailed below). A handful of smaller changes rode along with it: the minimum score to receive non-competitive 4% credits rose from 75 to 95 points, the rolling-application trigger date for oversubscribed 4% DSHA funding moved from a May to an April submission date, and several Target Unit and Design and Construction Standards provisions were revised. Anyone building against a cached or downloaded copy of the original January 2025 file should confirm they are instead working from DSHA's current posting.

Structurally, both credit types run through the same document and the same defined pools, but they are not decided the same way. The 9% credit is a fixed annual dollar amount awarded through DSHA's competitive, scored, ranked process. The 4% credit is sized by a development's own eligible basis and the tax-exempt bonds actually issued to it, and splits into two distinct sub-paths depending on whether the applicant also wants DSHA's own funding (HDF, ARHP, HOME, or NHTF).

The 9% round: three pools and a waterfall, not a single ranked list

Every 9% applicant competes first inside its own pool -- Nonprofit, Preservation/Rehabilitation, or New Housing Creation -- not against the full field at once. The QAP's own allocation order is specific: "The highest ranked nonprofit application will receive the first allocation of credits, up to the lesser of the amount requested, the amount required for financial feasibility, or the maximum permitted allocation per development. The remaining credits will be divided equally between the New Housing Creation and Preservation/Rehabilitation pools." If the top-ranked project in either of those two pools needs more credit than the pool has left, DSHA can make a forward commitment against a future year's authority rather than force the applicant to redesign around a partial award. A single development entity -- counting any consultant, co-developer, or joint-venture partner with an ownership stake -- cannot receive more than 50% of the state's total annual credit authority; DSHA can eliminate that entity's next-ranked development to enforce the cap, though it may instead let the entity voluntarily shrink its request.

To qualify for the Nonprofit Pool, the nonprofit partner must hold 100% ownership of the general partner or managing entity throughout the compliance period -- a nonprofit/for-profit joint venture that doesn't meet DSHA's Qualified Nonprofit definition can still apply, just not inside this pool. The Preservation/Rehabilitation Pool has two distinct qualifying paths: an existing tax-credit development that needs substantial rehabilitation and is at risk of losing affordability within five years, or a currently-occupied subsidized (non-tax-credit) development that is either substantially rehabilitating or at risk within two years and commits to reapplying for project-based assistance for as long as possible. The New Housing Creation Pool is restricted to family (non-senior) developments unless the project is a senior development with a rental-subsidy contract on at least 25% of new units, or restricts 25% of new units to 30% AMI households.

The 4% path and DSHA's own post-OBBBA bond-financing test

The Consolidated Appropriations Act of 2021 set a permanent 4% minimum rate for acquisition credits and for bond-financed Housing Credit developments (buildings allocated acquisition credits or financed with bonds issued after December 31, 2020). Layered on top of that federal floor is the separate aggregate-basis test under IRC Section 42(h)(4): historically, at least 50% of a project's aggregate basis had to be tax-exempt-bond financed to receive credit on the full amount of eligible basis rather than a prorated amount. The 2025 One Big Beautiful Bill Act (OBBBA) added a more favorable alternative -- 25% of aggregate basis, provided at least 5% of that basis is financed by bonds issued after December 31, 2025. DSHA's QAP does not merely acknowledge this change in passing; its Introduction states plainly that OBBBA "changed the minimum bond financing requirement to 25%" and that DSHA "has adopted updates to the minimum bond financing requirement effective with the 2026 application cycle."

Note what DSHA did and did not do: it did not simply adopt OBBBA's 25% number. It set its own floor at 30% -- still stricter than the federal alternative -- and, new in this update, added a ceiling that bars a request above 55% of aggregate basis. A Delaware 4%/bond deal therefore has to land inside a 30%-55% band, a materially narrower range than either the old 50% federal floor or OBBBA's 25% alternative would suggest on their own.

Beyond the bond-financing percentage itself, non-competitive 4%/bond eligibility requires: a determination that the development satisfies IRC Section 42(m)(1)(D); a complete application approved by DSHA before the bonds are sold; an application for tax credits made before construction or rehabilitation begins; an acceptable market-study demand analysis if a competing tax-credit property is proposed in the same area; the 95-point minimum score; and, for re-syndication projects, that the prior Year-15 compliance period has already been completed. Eligible project types are re-syndications, preservation/rehabilitation deals with no prior allocation, and new creation (new construction or conversion).

Who actually issues the bonds: DSHA, not DEDA -- and Delaware's own volume-cap math

The QAP is unambiguous on this point in both its original and updated text: "DSHA will be the bond issuer." DSHA's own enabling statute backs this directly -- 31 Del. C. Section 4010 creates DSHA as a public corporation, and Section 4016(a) authorizes it to "issue bonds...from time to time in such amounts as it may deem advisable for any of its corporate purposes," with Section 4017(d) exempting those bonds from state taxation. The Delaware Economic Development Authority (DEDA) is a separate instrumentality, created under 29 Del. C. Chapter 87A, Subchapter VII (Section 8751A), and its own statutory findings describe its purpose as financing "commercial, industrial and agricultural facilities" and, separately, "medical facilities, nursing facilities and facilities for the residence or care of the aged" -- not ordinary multifamily rental housing. DEDA can and does issue private activity bonds, but not as an alternative housing-bond issuer for LIHTC deals; DSHA holds that role alone under the QAP.

DEDA still matters to a Delaware bond deal indirectly, through the state's private-activity-bond volume cap. Under 29 Del. C. Section 8791A(a), Delaware's annual volume cap is split 50% to the State and 50% to local governmental issuers (New Castle County 17.5%, City of Wilmington 12.5%, Kent County 10%, Sussex County 10%, each as a share of the total cap). Section 8791A(b) gives the Governor authority to allocate the State's own half among DSHA and other governmental issuers; by long-standing executive practice (not by the statute naming DEDA specifically), the Governor splits that state share evenly between DSHA and DEDA.

Is there a Delaware state tax credit for affordable housing? Three real programs, none of them a state LIHTC match

Unlike roughly two dozen other states, Delaware has not enacted a dollar-for-dollar state low-income housing tax credit paid to a project's investors. What a Delaware developer will actually encounter is three separate, real programs that are easy to conflate with one -- and important to keep straight, because only one is an actual transferable tax credit, and none of the three is a LIHTC match in the sense Georgia's or Missouri's state credits are.

The historic credit is transferable -- 30 Del. C. Section 1813(c) lets an owner "transfer, sell or assign any or all unused credits," which is what makes it usable by an LIHTC ownership structure that may not have Delaware tax liability of its own. But its $8,000,000 annual statewide cap is shared across every certified historic rehabilitation in Delaware, residential and commercial alike, not reserved for affordable housing -- a Delaware developer counting on it should confirm current-year cap availability with the State Historic Preservation Office directly rather than assume capacity.