"Do we compete for 9% or take 4% with bonds — and which set-aside do we file under?"
What you are actually choosing
IHCDA — the Indiana Housing and Community Development Authority — is both Indiana's state housing credit agency and its multifamily private activity bond issuer for LIHTC deals. There's no CDLAC/CTCAC-style split into two agencies with two applications: one Qualified Allocation Plan, one point schedule, and one threshold section cover the 9% competitive round, the competitive 4%-with-bonds round, and the rolling noncompetitive 4%-with-bonds track.
| 9% competitive | 4% + bonds + AWHTC (competitive) | 4% + bonds, no AWHTC (noncompetitive) | |
|---|---|---|---|
| Rationing mechanism | Fixed annual point-ranked round | Fixed annual point-ranked round | First-come, first-served while bond volume lasts |
| Per-project / per-application cap | $1,300,000 max annual credit, non-waivable | No stated credit cap if eligible basis supports it; $45,000,000 max bond request | Same $45,000,000 bond request cap |
| Minimum score to pass threshold | 85 of 165 points | IHCDA sets case-by-case, never below 50 of 165 | IHCDA sets case-by-case, never below 50 of 165 |
| 9% set-aside categories available | 7 | None apply | None apply |
| 2027 application deadline | July 27, 2026 | July 27, 2026 (same date) | Rolling; 2nd 2027 window Nov 3 – Dec 31, 2026 |
The two competitive tracks share the same deadline. A developer deciding between 9% and competitive 4%-with-AWHTC in the 2027 cycle had to pick by July 27, 2026 either way — there's no sequencing where you try 9% first and drop into competitive 4% later that year if you lose.
The federal reset behind the 4% math — and the state QAP that hasn't caught up
| Path | Threshold | Condition |
|---|---|---|
| 50% path | ≥50% of aggregate basis (building + land) | No additional condition |
| 25% path | ≥25% of aggregate basis | At least one bond issue dated after 12/31/2025 must itself finance ≥5% of aggregate basis |
Verified directly against the enacted text: both prongs apply only to buildings placed in service in taxable years beginning after December 31, 2025 — the placed-in-service condition is not limited to the 25% path.
Indiana's own QAP doesn't mention any of this. A search of the full 103-page 2026-2027 QAP for "aggregate basis" or either threshold returns nothing. Unlike a state that wrote a bond-allocation-cap rule specifically in response to the new 25% path, IHCDA hasn't built any implementing provision around it — plausibly because Indiana's bond side isn't scarce in the way a heavily oversubscribed state's is: a $45,000,000 per-application cap plus a rolling noncompetitive window means a developer testing the 25% path here is working from the bare federal statute, with no state guidance filling the gap.
The 9% side changed too, confirmed from the same enacted text: Section 42(h)(3)(I) now sets a permanent 1.12 multiplier on the state housing credit ceiling for calendar years after 2025 (it had been a temporary 1.125 multiplier limited to 2018-2021). The federal per-capita formula behind Indiana's actual 9% ceiling is the same one every state uses — the greater of $3.416 times state population or a $3,953,600 floor for calendar year 2026 (Rev. Proc. 2025-32 § 4.08) — and the private-activity-bond volume-cap formula behind the bond side is the greater of $135 times state population or a $397,625,000 floor (§ 4.19). IHCDA's QAP doesn't publish Indiana's resulting dollar ceilings, so these formulas are the way to derive them, not a number to look up directly.
One point schedule, but it doesn't score 9% and 4% the same way
| Category | Max points |
|---|---|
| 1. Affordability | 23 |
| 2. Development Characteristics | 52 |
| 3. Market Characteristics | 42 |
| 4. Financing | 14 |
| 5. Other Scoring | 30 |
| 6. Bond Experience (4%/bond applications only) | 4 |
| Total possible | 165 |
9% applicants must score 85 or more to pass threshold. 4% applicants — competitive or noncompetitive — must clear a minimum IHCDA sets case-by-case, but never below 50.
The categories aren't available to both program types equally. Competitive 4%/bond/AWHTC applications aren't scored on Rent Restrictions or Income Restrictions (Part 6.1(A)-(B)) — the 16- and 3-point swings a 9% deal fights over don't exist on that side of the schedule. 4%/bond applications generally aren't scored on Unit Production in Areas Underserved by the 9% Program (Part 6.3(B)), a category built specifically to steer 9% credits toward places that haven't seen a 9% award. Noncompetitive 4%/bond applications also skip the Tax Credit/Bond Volume Per Unit ranking (Part 6.4(D)). And only 4%/bond applications — competitive or not — get an extra category the 9% side doesn't have at all: Bond Experience, up to 4 points for a developer whose prior Indiana 4%-and-bond deal was placed in service within the last 5 years, 2 points if it was 5-10 years ago (Part 6.6(A)).
If two applications tie and there isn't enough credit for both, Indiana breaks the tie on locality first, not on the score: priority goes to the community that hasn't had an LIHTC award (4% or 9%) in the past three years, then to the lowest credit-per-unit request (9%) or lowest bond-per-unit request (4%), then to the lowest average rent restriction, then to whichever application competes under the most set-asides.
Bucket election only exists on the 9% side
The QAP states this directly: "These set-aside categories do not apply to 4% LIHTC and tax-exempt bond applications." All seven set-asides — and the bucket-selection decision this phase is named for — are a 9%-only question. A 4% deal, competitive or noncompetitive, is scored on the general schedule with no nonprofit, Rural, or Preservation carve-out to retreat into.
| Set-aside | Share of annual 9% LIHTC |
|---|---|
| Qualified Nonprofit | 12.25% |
| Community Integration | 12.25% |
| Large City (pop. 70,000+) | 17.00% |
| Small City (pop. 10,000-69,999) | 17.00% |
| Rural | 17.00% |
| Preservation of federally assisted housing | 12.25% |
| Supportive Housing | 12.25% |
An application can compete in more than one set-aside, but only one Development Location set-aside (Large City, Small City, or Rural) — and it's bound by every set-aside it competes in, not just the one that ends up funding it. IHCDA can also exceed these percentages, or ignore the split entirely, if the applicant pool doesn't fill a category.
Form C is a pre-application notice IHCDA uses to assign a market analyst — it isn't scored or ranked, and not every Form C becomes a full application. But as a leading indicator of how the 2027 9% round is shaping up, Rural alone drew more filings than Community Integration and Supportive Housing combined, and every filer picked exactly one Development Location bucket, as the QAP requires.
Calendar, cost of entry, and what binds you after you file
| Track | Window | Reservation timing |
|---|---|---|
| 9% Annual Competitive Round | Deadline July 27, 2026 | ~Nov 19, 2026 |
| 4% + Bond + AWHTC Competitive Round | Deadline July 27, 2026 (same date) | ~Nov 19, 2026 |
| 4% + Bond Noncompetitive, Window 1 | Opened by Mar 2, 2026 – closed July 31, 2026 | 90-120 days from submission |
| 4% + Bond Noncompetitive, Window 2 | Opens Nov 3, 2026 – closes Dec 31, 2026 | 90-120 days from submission |
| 501(c)(3) bonds (Schedule D2) | Rolling, no deadline | — |
Both 2027 competitive deadlines have already passed as of this writing. The only 2027 filing window still open is the noncompetitive bond track's second window, which doesn't open until November 3, 2026 — everything else waits for whatever QAP IHCDA adopts next.
| Fee | Amount |
|---|---|
| Application fee | $3,500, non-refundable |
| Additional jurisdiction (if applicable) | $500 each |
| Supplemental funding source (AWHTC, HOME, HTF, PBV, 811 PRA) | $1,000 each |
| Conditional Commitment Reservation Fee | Greater of 6.5% of annual LIHTC or $15,000, due within 30 days of Conditional Commitment |
| Modification fee | $1,000 (+$1,500 if legal documents must be amended) |
The real cost of overreaching shows up after the award, not before. Failing to maintain the initial application's score through the final application triggers a $5,000-per-point fine and, at IHCDA's discretion, a one-year suspension from every IHCDA capital funding source — not just LIHTC — for the applicant, owner, developer, and other Development Team members (Part 7.6). A reduction in tax credit units produced is a flat $10,000 per unit. And every applicant, 9% or 4%, must irrevocably waive the right to an early Qualified Contract release at application — one of the few threshold items IHCDA states it will not waive under any circumstance (Part 5.1(U), Part 5.7).
Set the two pipelines side by side and the 2027 cycle reads as a 9% story: roughly five times as many developments chasing the annual 9% round as the competitive 4%/AWHTC round. That tracks the prior cycle too — IHCDA's own posted list of 2026-round applications shows 42 competitive 9% filings against 12 competitive 4%/AWHTC filings and 24 noncompetitive 4%/bond filings, up from 37, 18, and 36 respectively in the 2025 round.
Where this goes wrong
- Treating the $1,300,000 9% per-project credit cap as something underwriting can push past. It's one of the few threshold items IHCDA states it will not waive under any circumstance (Part 5.3(A), Part 5.7) — a QCT/DDA or discretionary basis boost raises eligible basis, not this cap.
- Looking for a nonprofit, Rural, or Preservation set-aside to fall back into on a 4% deal. Section 4 states plainly that its seven set-asides "do not apply to 4% LIHTC and tax-exempt bond applications" — bucket election is a 9%-only decision in Indiana.
- Filing 9% and competitive 4%/AWHTC as a staged fallback plan. Both competitive rounds share the same annual deadline (July 27, 2026 for the 2027 cycle) — there's no way to try one and drop into the other the same year if it doesn't work out.
- Assuming the noncompetitive 4%/bond track closes fast because it isn't scored competitively. Reservation still runs 90-120 days from submission, longer if a competitive round is running at the same time.
- Padding the initial application's score to clear threshold and planning to true it up later. Failing to hold that score through final application costs $5,000 per point lost and can trigger a one-year suspension from every IHCDA capital funding source, not just LIHTC (Part 7.6).
- Leaving a Qualified Contract escape hatch in the deal documents. Every applicant — 9% or 4% — must irrevocably waive the QC release right at application, and that waiver requirement is itself non-waivable (Part 5.1(U), Part 5.7).
- Exceeding 25% of units, or clustering them, under the Community Integration set-aside. The set-aside caps eligible units at 25% of the total, requires them to float throughout the property, and disqualifies buildings or areas set aside solely for people with disabilities (Part 4.2).
- Testing the new federal 25% bond-financing path without checking the placed-in-service condition. Confirmed directly from the enacted text of P.L. 119-21 § 70422(b): both the 50% and 25% prongs apply only to buildings placed in service in taxable years beginning after December 31, 2025 — and Indiana's QAP doesn't implement or even reference the new 25% path, so there's no state guidance filling the gap.
- Treating Form C counts as a scored or final application list. Form C is a pre-application notice IHCDA uses to assign a market analyst, filed well before the formal application — it's a leading indicator of demand, not a ranking.
- Assuming a Community Integration set-aside unit's disability status can be verified however the property normally screens tenants. Indiana Code 12-7-2-61's definition, Fair Housing Act verification limits, and the no-clustering rule all apply, and property management is barred from probing further once qualifying proof is on file (Part 4.2).
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies