"Do we compete for 9% in January, take 4% and bonds whenever we're ready, or actually try to run both on the same site?"
Two credits, two governing documents, two section-numbering schemes
As of this research, Housing New Mexico administers the 9% competitive credit and the 4% tax-exempt-bond credit through two separate documents — the 2026 New Mexico 9% LIHTC QAP and the 2026 New Mexico 4% LIHTC QAP — both effective December 1, 2025. This confirms what EZFeasi's own Developer Guide data had already flagged: 4% credits are not a scoring track inside the 9% QAP, they're governed by an entirely separate Qualified Allocation Plan. The clearest proof they're independently maintained documents, not two chapters of one QAP, is that their internal section numbering doesn't stay in lockstep: the termination-of-Reservation clause sits at Section VII.F in the 9% QAP and Section VII.C in the 4% QAP, simply because the 4% document has fewer preceding subsections.
The two documents still share a structural skeleton. Both open with an Introduction and Eligible Projects section, both define Threshold Requirements across parallel Site Control, Zoning, Fees, Market Study, Applicant Eligibility, Financial Feasibility, and Pre-Application Requirements subsections (IV.A through IV.G in each), and both close with Underwriting Criteria and a Compliance Plan Summary. Where they diverge by name as well as substance is Section V: "Scoring Criteria" in the 9% QAP, and "Selection Criteria" in the 4% QAP — a naming difference that tracks a real structural one, covered next.
Competitive score vs. mandatory pass/fail
The 9% QAP holds to the 53-point minimum Phase 1 already covers, ranking every Application that clears it and awarding Reservations from the top down until the year's credits run out. The 4% QAP states its rule plainly: tax-exempt bond-financed Projects "will not be required to meet a minimum score to obtain a Letter of Determination," but they must instead "meet and agree to all" of a set of mandatory Selection Criteria as pass/fail conditions — Locational Efficiency, rehabilitation cost minimums, and meeting every requirement of one Targeted Population category. There is no partial credit and no ranking against other Applicants; a 4% Application either clears every mandatory criterion or it doesn't qualify for a Letter of Determination.
| 9% LIHTC | 4% LIHTC | |
|---|---|---|
| Standard | 0.5-mile walk to at least 3 qualifying facilities (General), or 1-mile walk to at least 6; Rural/Tribal sites get a 5-mile walk/drive to at least 2 facilities instead | Located within a 15-minute drive (per Google Maps) of a facility where fresh produce is available, or a full-scale supermarket that's part of an approved master plan |
| Structure | Scored — contributes points toward the 53-point minimum | Pass/fail — one of the mandatory Selection Criteria, unrelated to any point total |
The Targeted Population pass/fail criterion mirrors the 9% QAP's Housing Priorities in substance — the Households with Special Housing Needs category, for example, carries the same 20%-of-Units set-aside, 30%-AMI rent-restriction-or-subsidy requirement, and four-hours-per-week service coordination obligation in both documents — but in the 4% QAP, meeting it is a threshold condition to qualify at all, not a source of points. Rehabilitation Projects face their own pass/fail cost floor: average rehabilitation Construction Costs must reach at least $25,000 per Unit for a Moderate Rehabilitation or $45,000 per Unit for a Substantial Rehabilitation, with anything below that ineligible for 4% credits entirely. And every Developer applying for 4% credits must separately pass a QAP training quiz — a score of 80% or higher, completed within the six months before the Application is submitted — a requirement with no 9% equivalent.
The calendar is the real fork in the road
| Milestone | 9% LIHTC | 4% LIHTC |
|---|---|---|
| Intent to Submit | December 20, 2025 (fixed, mandatory) | 30 calendar days before the Applicant's own Initial Application submission |
| Initial Application | January 20, 2026, 12:00 p.m. Mountain Standard Time — once a year | Rolling, subject to readiness criteria — no annual window |
| Application processing | Preliminary Reservations/Rejections in late March; Board awards May 2026 | Approximately 30–60 days from a complete Application, depending on complexity |
| Award instrument | Reservation Contract, due early June 2026 | Draft 42(m) Letter, expiring 3 months from issuance; State Board of Finance presentation within 3 months of that letter |
| Financial closing | Governed by the Reservation/Carryover process Phase 1 and Phase 2 describe | The earlier of 7 months from State Board of Finance volume-cap approval or the date the volume cap itself expires |
The practical effect: a 9% election is a once-a-year bet with a hard January deadline and a roughly five-month wait to an award decision. A 4% election can be filed essentially whenever the deal is ready, with an award decision inside 30 to 60 days of a complete Application — but it then runs its own tight clock to closing, since the bond volume cap allocation itself expires on a schedule set by the State Board of Finance under NMAC 2.61.4. Program election in New Mexico is as much a question of when the deal actually needs to close as it is a question of competitive odds.
The economics tilt the decision too
The 9% QAP caps any single Project's Reservation at $1,700,000 in annual federal credit — a hard ceiling that applies regardless of score or need. A project whose 9% credit requirement would exceed that figure cannot be fully funded by 9% alone no matter how it scores; that arithmetic, not just competitive odds, pushes larger deals toward 4% and bonds. The 4% program has no equivalent fixed dollar cap on a single Project; instead, the private activity bond volume cap allocated to it is limited to the greater of 30% of the Project's aggregate basis used in the 25% test, or the amount of its permanent first-lien mortgage loan — a different kind of ceiling that scales with deal size rather than capping it outright. In exchange, no Applicant, General Partner, Affiliate, or anyone eligible to receive a Developer fee may have more than one 4% Project in the Application phase, or more than two in construction, between January and August of a given year.
The two programs also lock the Developer fee at different moments: the maximum Developer fee is fixed at Initial Application for a 9% Project, but not until IRS Form 8609 issuance — effectively, construction completion — for a 4% Project. That difference changes how each program absorbs cost creep between award and completion. Separately, a 9% Project using a Housing New Mexico-issued Section 811 Project Rental Assistance award, and targeting Permanent Supportive Housing for the Underserved Populations set-aside, is eligible for a 5% boost to the capped Developer fee — provided the entire boost is placed into a capitalized 15-year supportive-services reserve. This research found no equivalent boost offered under the 4% QAP.
The 4% program carries one more cost line the 9% program doesn't: costs of issuance on the bond itself are capped at 5% of the bond issue for Projects with total financing sources of $2,000,000 or more, and 7% for Projects below that threshold — a real, calculable expense that sits alongside, not instead of, the 8.5% LIHTC processing fee both programs otherwise share.
New Mexico's QAP spells out the hybrid mechanics
Both the 9% and 4% QAPs contain identical language, at Section I.D.3, expressly authorizing a combined 9%/4% development. The two credit types can't be blended into one financing: the 9% and 4% portions of the development have to be structured as two separate Projects, each fully self-supporting on its own financing and operations, with no cross-collateralization between them, and each requiring its own complete, separate Application.
| Structure | Mechanics |
|---|---|
| Adjacent parcels | Building on adjacent parcels, or splitting one parcel into two — the 4% Application may be filed concurrently with the 9% Application, or at any time 4% Applications are being accepted, since 4% runs on a rolling basis anyway |
| Within a building (condominium plat) | Allocating 9% and 4% credits within the same building through a condominium plat requires both Applications to be submitted concurrently, by the 9% Application Deadline; the 9% Reservation is then contingent on the State Board of Finance actually allocating private activity bond volume cap. If that allocation doesn't happen by December 2026, Housing New Mexico instead issues a binding commitment for the 9% credit in a future year, contingent on that future volume-cap allocation |
EZFeasi has no New Mexico-specific modeling, scenario comparison, or program-election worksheet today for any of the three paths above. This phase, for a New Mexico deal, is currently a place to record which credit type — or which hybrid structure — the deal is pursuing, and to track each program's calendar and fee schedule by hand against the two QAPs above.
Where this goes wrong
- Assuming 4% is "the easy path" because there's no point minimum. The mandatory Selection Criteria are pass/fail with real cost floors and a graded 80% training quiz — not a rubber stamp, and failing any one of them disqualifies the Application entirely.
- Reading "Locational Efficiency" the same way across both QAPs. The 9% QAP tests walk/drive distance to a list of qualifying facilities; the 4% QAP instead tests a 15-minute drive to fresh produce or an approved-master-plan supermarket — the same criterion name, two different standards.
- Missing the 9% program's $1,700,000 per-project Reservation cap when sizing a large deal. A project whose 9% credit need exceeds that ceiling cannot be fully funded by 9% alone regardless of how well it scores.
- Filing the 9% and 4% Applications for a "within a building" hybrid on different timelines. Section I.D.3 requires both Applications to be submitted concurrently, by the 9% Application Deadline — not the 4% program's usual rolling schedule.
- Treating the 80% QAP training quiz as a formality that can wait. It must be completed within six months before submittal, and because 4% Applications can be filed on short notice, an out-of-date quiz score can block a filing a developer thought was ready.
- Assuming the two programs lock the Developer fee at the same point. The 9% QAP locks it at Initial Application; the 4% QAP doesn't lock it until Form 8609 issuance — changing how each program absorbs cost overruns between award and completion.
- Forgetting the 4% program's concurrency limit: no Applicant, General Partner, Affiliate, or Developer-fee recipient may have more than one 4% Project in the Application phase, or more than two in construction, between January and August of a given year.
- Under-budgeting a 4% deal's deadline-extension fee ($2,500/week) against the 9% figure ($500/week) when stress-testing a schedule slip — a fivefold difference covered in more detail in Phase 2's due-diligence fee comparison.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies