Program election (9% vs. 4% vs. hybrid) — South Carolina

Two programs, two rulebooks: a scored 9% round and an unscored 4%/TEB efficiency ranking

SC Housing's 2026 QAP sets baseline Threshold Participation Criteria in its own core text (Section IV), then hands the two federal credit programs to separate appendices. Appendix C1 governs the competitive 9% program; Appendix C2 governs 4% credits paired with tax-exempt bonds; a third, Appendix C3, governs the state housing tax credit that can layer onto either. Appendix C2 states plainly that the bond program inherits the core QAP by default and departs from it only where the appendix says so: "All developments must meet all threshold criteria in the QAP, except as modified by the following" (Appendix C2, Section II.B). The two programs' award-decision methods are not parallel versions of the same mechanism -- they are genuinely different systems, which matters because a development team cannot assume that a scoring strategy built for one program does anything for the other.

Application and award limits also run separately per program and are not fungible between them. A 9% Development Team member may be associated with at most four full (five preliminary) 9% applications and win at most two 9% awards (Appendix C1, Section I.A-B). A 4%/TEB Development Team may submit up to three full (four preliminary) TEB applications per funding cycle, win at most two TEB awards per funding cycle, and faces its own county caps: no more than two new-construction awards per "Urban" county (Aiken, Anderson, Beaufort, Berkeley, Charleston, Dorchester, Greenville, Horry, Lancaster, Lexington, Richland, Spartanburg, York) and no more than one per "Rural" county (all others), with the PHA set-aside capped at one award per county (Appendix C2, Section II.B.8). That Urban/Rural county list is SC Housing's own administrative classification for TEB award limits -- it is a different list from the USDA-designated rural-area map used elsewhere in the same QAP for scoring and state-credit set-asides (Appendix C1, Section III.A.3; Appendix C3, Section III), and the two should not be conflated.

This research found no combined or "hybrid" 9%/4% election anywhere in the 2026 QAP or its appendices -- no provision letting a single development draw both competitive 9% credits and bond-financed 4% credits on the same buildings, and no term "hybrid" used anywhere in the text (confirmed by direct search of the QAP and all appendices). A development team can run separate applications in both programs in the same year for different projects, since the two programs track application and award limits independently, but that is parallel pursuit of two programs, not a combined election within one deal.

How a 4%/TEB award is actually decided: a four-factor efficiency ranking, not a score

Where the 9% program ranks applications by QAP scoring points, the bond program ranks them by how little state resource each one consumes. Both Appendix C2 (bonds) and Appendix C3 (state credit) state the same statutory basis: "State law requires the ranking determination to be based on highest value and greatest public benefit. The ranking criteria below has been adopted by the Authority and the Joint Bond Review Committee in accordance with Act 202" -- a reference to 2022 Act No. 202, the same act that rewrote the state housing tax credit statute. SC Housing then ranks eligible TEB applications, lowest to highest, on four resource-efficiency measures computed from "state resources" (defined as bond ceiling plus any state tax credit): resources per heated residential square foot (excluding common areas), resources per bedroom, resources per dollar of total project cost, and resources per potential tenant (Appendix C2, Section II.C; Appendix C3, Section III).

Two adjustments apply before ranking: "A 30% adjustment to state resources will be made as a ranking consideration for projects located in USDA-designated rural areas. A 10% adjustment to state resources will be made for new construction units" (Appendix C2, Section II.C). Ties are broken, in order, by (1) allocating state credit to whichever project could be accommodated within the remaining STC limitation if the other could not, (2) favoring a project in a designated rural area over one that is not, and (3) the raw ratio of total state resources to the number of tenants served. Unlike Georgia's DCA, SC Housing's published materials do not include a numeric worked example of this ranking process for a real application pool -- this research located the formula and adjustments but no illustrative run-through, so the practical spread between a winning and a losing application in a real round could not be independently verified.

South Carolina's state Housing Tax Credit: a $20 million needs-based gap credit, not a match, since 2022

South Carolina's state housing tax credit was created by 2020 Act No. 137 (H.3998), the "Workforce and Senior Affordable Housing Act," codified at S.C. Code Ann. Section 12-6-3795, effective May 14, 2020. As originally enacted the credit was allowed "in an amount equal to the federal housing tax credit" with no statewide dollar ceiling -- functionally a 100% match. Uptake overwhelmed the state's own fiscal projections: a later legislative preamble recounts that "following the enactment of Act 137 of 2020 and through December 31, 2021, preliminary determinations of eligibility for the South Carolina Housing Tax Credit totaled approximately $100 million annually and approximately $1 billion for the ten-year term," against an original estimated impact of roughly "$2.1 million annually and $20.6 million for the ten-year term" (2023 Act No. 88, preamble, quoting the legislative history to Section 12-6-3795).

2022 Act No. 202 (H.5075), Section 1.A, effective May 16, 2022, rewrote the credit's mechanics by adding Section 12-6-3795(B)(5). The credit is now a needs-based gap filler, not a match: it "must supplement but not supplant the federal housing tax credit and must be limited to an amount necessary only to achieve financial feasibility of the project" (Section 12-6-3795(B)(5)(a)). SC Housing's own Appendix C3 states the same rule in application-process terms: "Application must request the maximum amount of federal LIHTC before requesting STC. STCs are only meant to be the last resource in the application and only meant to cover any gap remaining after all other sources have been maximized" (Appendix C3, Section I.A.5). The per-project ceiling technically remains "not to exceed the federal housing tax credit" (Section 12-6-3795(B)(1)), but that ceiling is now subordinate to the needs-based limitation and to a hard statewide annual cap that did not exist before 2022.

SC Housing's own amendment log reports two different 2026 STC figures without reconciling them: "2026 State LIHTCs available - $26,702,193" (2026 QAP Amendments, Feb. 23, 2026 entry) and, three weeks later, "2026 State LIHTCs - $17,801,462" alongside "2026 Federal LIHTCs - $18,750,000 (estimate)," a "Federal Syndication Rate - minimum .80," and a "State Syndication Rate - minimum .45" (2026 QAP Amendments, Mar. 9, 2026 entry). Neither entry states whether these are total statewide figures, remaining balances after an award round, or the 9%-only sub-share; this research could not resolve the discrepancy from SC Housing's own published materials and did not guess at which figure governs which pool.

To actually receive STC, an applicant must also provide SC Housing a report on "how the STC will benefit the tenants (including, but not limited to, reduced rent), why the STC is essential to the financial feasibility to the project, and provide evidence of local support" (Appendix C3, Section I.A.4), and the statute requires a public hearing with "no less than ten business days" advance notice and a further "no less than ten days" comment period before an eligibility statement issues (S.C. Code Section 12-6-3795(C)(3); Appendix C3, Section I.A.6). Only one STC application per project per developer is permitted, and an application "will be ineligible if there is an insufficient amount of STC remaining" in the relevant sub-cap (Appendix C3, Section I.B.3-4).

The federal bond test under OBBBA, and SC Housing's own (unexplained) tightening of the bond-ceiling request

The federal aggregate-basis test for bond-financed 4% deals is set by IRC Section 42(h)(4)(B). The One Big Beautiful Bill Act (Pub. L. 119-21, Section 70422(b)(1), 139 Stat. 72, 235, enacted July 4, 2025) rewrote that subparagraph to add a second, lower path alongside the historical one. As enacted, a building now qualifies if either "50 percent or more of the aggregate basis of such building and the land on which the building is located is financed by" tax-exempt bonds subject to volume cap (the pre-existing rule), or the new alternative: "25 percent or more of the aggregate basis" is bond-financed, provided "1 or more of such obligations ... are part of an issue the issue date of which is after December 31, 2025, and ... provide the financing for not less than 5 percent of the aggregate basis of such building and the land." The amendment applies "to buildings placed in service in taxable years beginning after December 31, 2025" (Pub. L. 119-21, Section 70422(b)(2)).

SC Housing's QAP and all of its 2026 appendices never mention OBBBA, "One Big Beautiful Bill," or Public Law 119-21 anywhere (confirmed by direct text search of every downloaded 2026 document). What the QAP does contain is its own administrative rule about how much bond ceiling a Development Team must ask SC Housing to reserve for its deal -- a distinct question from the federal aggregate-basis test itself, since a bond-ceiling request and an actual bond-financed-basis percentage are not automatically the same number. As originally published, Appendix C2 required requesting the larger of two amounts: "The Development Team must request ceiling allocation that will be the maximum of thirty percent (30%) of the aggregate basis or permanent supportable debt" (Appendix C2, Section II.B.8.d, base text) -- a floor, ensuring the request was at least 30% of basis or the deal's actual supportable debt, whichever was larger.

The Jan. 9, 2026 QAP amendment rewrote that same provision, dropping the debt-linked alternative and flipping the comparison: "The Development Team must request ceiling allocation that will be the minimum of thirty percent (30%) of the aggregate basis" (2026 QAP Amendments, Jan. 9, 2026, "Clarification" to Appendix C2, Section II, Criteria, B.8, item d). Read literally, the amended rule now caps the request at no more than 30% of aggregate basis rather than requiring at least that much. That cap sits comfortably above OBBBA's new 25% federal floor and well below the old 50% floor -- the kind of number a housing agency would set if it wanted deals to request only as much bond ceiling as the new, lower federal test actually requires, freeing the state's finite bond volume cap (SC Housing "plans to allocate approximately $300,000,000.00 ... along with any returned 2024 and 2025 allocated bond ceiling, in carry-forward for bond issuances" for 2026 -- 2026 QAP Amendments, Jan. 9, 2026) to support more deals per year. That reading is this research's own inference from the timing and the numbers, not a stated SC Housing rationale -- the amendment's "Clarification" label carries no explanation, and nothing in SC Housing's materials ties the change to OBBBA. Treat the connection as plausible, not confirmed.