9%, 4%, or the rehab set-aside — North Carolina

Three tracks, one QAP: point scoring, a priority queue, and a qualitative rehab ranking

North Carolina's LIHTC program is administered entirely by the North Carolina Housing Finance Agency (NCHFA), acting as administrative agent for the North Carolina Federal Tax Reform Allocation Committee. But "the NC program" isn't one selection process — the 2026 QAP runs three structurally distinct tracks side by side, and which one a deal competes in is a strategic choice made before the preliminary application, not an outcome of the numbers.

The 9% competitive track (QAP Section IV, "Selection Criteria and Threshold Requirements") is the one most developers picture: Site Evaluation scored to a maximum of 68 points with a hard 50-point minimum threshold, Rent Affordability and Tenant Rent Levels scoring, Design Standards worth up to 30 points, negative-point penalties for excess development cost and market-rate units, and a five-level tiebreaker cascade if scores land identical. Win or lose is determined entirely by relative score against every other 9% applicant statewide.

The 4% credit — paired with tax-exempt bond volume — runs under QAP Section V, "Allocation of Bond Cap," and is explicitly not point-scored. The Committee allocates bond authority through an Order of Priority: (1) projects serving as a component of overall public housing revitalization, (2) rehabilitation of existing rent-restricted housing, (3) rehabilitation of projects consisting entirely of market-rate units, (4) adaptive re-use projects, and (5) other new construction. A project only receives bond authority if enough remains after every eligible application in a higher priority tier is funded first — and within a tier, the applicant requesting the least bond authority per low-income unit gets priority.

A third track exists inside the 9% program itself: the Rehabilitation Set-Aside (Section IV(H)). It skips the point system entirely — applications are evaluated against priority-ranked qualitative criteria (the most distressed housing with an existing tax credit allocation or federal project-based rental assistance ranks highest; deals primarily structured to subsidize an ownership transfer, or that displace large numbers of tenants, rank lowest), and it's capped at one award per county.

How "least bond authority per low-income unit" actually plays out, and the eligibility gate underneath it

The tie-break math is simple to state and consequential to model: total bond volume requested divided by the number of low-income units. A leaner ask beats a larger one within the same priority tier, which means over-improving a deal to chase 9%-style design points is the wrong instinct on the bond side — it can price a 4% deal out of its own tier.

Tier 5 ("other new construction") is where most typical market-rate-to-affordable new construction deals land, and it's the lowest priority tier — meaning it only gets funded after tiers 1 through 4 are satisfied for the cycle, and it's where per-unit bond-authority competition is sharpest.

Clearing the tie-break requires clearing a separate eligibility gate at Section V(B) that has nothing to do with priority order. Rehabilitation applications must have been placed in service on or before December 31, 2010; carry rehab expenses over $30,000 per unit; keep acquisition cost at or under 70% of total replacement cost; and not have gone through Mark-to-Market debt restructuring in the last five years. Regardless of project type, the Applicant identified in the preliminary application must include at least one Principal with a track record — a 9% Tax Credit project in North Carolina, or a tax-exempt bond project in any state, placed in service between January 1, 2017 and January 1, 2025 — who becomes a general partner or managing member and stays responsible for the project for two years after placed-in-service. A first-time sponsor without that track record cannot be the Applicant of record on a bond deal.

Winning the bond-cap race isn't the finish line, either: Section V(B) is explicit that "[e]ven with an allocation of bond authority, projects must meet the threshold requirements to be eligible for tax credits" — the Order of Priority determines who gets bond volume, not who gets credits.

The cost comparison developers assume is different, isn't

It's a reasonable assumption that a competitively-scored 9% application and a priority-queue 4%/bond application carry different fee structures. They don't. Section III(B) applies the identical fee schedule to both: a nonrefundable $6,200 preliminary application fee (covering the market study or physical needs assessment plus a $1,500 processing fee), a nonrefundable $1,500 full application processing fee, a 0.96% allocation fee on total eligible basis due at either carryover allocation or bond volume award, and a $1,320-per-unit monitoring fee before IRS Form 8609 issuance (plus $300 per unit more if the deal uses income averaging or NCHFA is the bond issuer).

The underwriting standards in Section VI(B) — vacancy, DCR, reserves, developer fee caps — are also written to apply to "all projects," not split by credit type. The real cost difference between 9% and 4% isn't in NCHFA's fee or underwriting schedule; it's in the credit itself. A 9% award delivers a materially larger annual credit against the same eligible basis than a 4% award, which is the actual trade a developer is making against the odds of winning a competitive score versus clearing a priority tier.

One fee consequence crosses both tracks and multiple deals at once: unpaid fees on any application freeze NCHFA's processing of every other application involving the same Principal, and the Agency can assess up to $2,000 per instance for failing to comply with a written requirement — whether or not that requirement appears in the Plan itself.