Two programs, two rulebooks: 9%, 4%/bond, or both — Washington

Two governing documents, not one

WA's structural split is real, but it isn't "9% is scored, 4% isn't." The 9% program runs on the 9% Competitive Housing Tax Credit Policies (Chapters 5-6, WAC 262-01-130). The 4%/bond program runs on a completely separate Bond/Tax Credit Program Policies document, and that document has its own Section 4 "Bond Cap and Tax Credit Allocation Criteria" with a real point minimum: 25 points for a project outside King County, 30 points inside King County, at least 4 (or 5, in King County) of which must come from Section 4.5 "Projects that are By and For the Community." The two point menus don't overlap — a project can't carry Chapter 6 points into a bond application or vice versa — and the ranking mechanics differ even more than the scoring does.

9%: three geographic pools, ranked to exhaustion

The Commission divides the state into three Geographic Credit Pools — Seattle/King County, Metro, and Non-Metro — sized by negotiated shares of the Annual Authority, not by population alone. A scattered-site project with any King County site is evaluated entirely within the Seattle/King County pool; a project spanning Metro and Non-Metro sites is evaluated in the Metro pool.

Within a pool, staff recommend Credit reservations in a fixed priority order (§5.2.8): Fully Funded status first, then Geographic Credit Pool standing, then the Credit Extension Policy, then the Geographic Dispersion Policy, then Allocation Criteria points, and only then tiebreakers — Qualified Census Tract status first, then least Credit requested, then least Credit per low-income unit (§5.2.7). An application that clears its pool's point minimum isn't ranked purely on points; "Fully Funded" status (all non-Credit permanent financing committed at application, §5.2.1) outranks everything else. Projects that miss the cut go to a waiting list, and if the last funded project in a round only receives a partial carryover allocation, the Commission can issue a Forward Credit Commitment against up to 20% of the following year's anticipated Annual Authority (§5.2.10) — a real but uncertain bridge, since that authority isn't guaranteed to materialize.

4%/bond: readiness and tiers, not a scoring ladder

In King County, bond financing runs on a three-tier readiness system layered on top of the Section 4 point minimum, not a straight point-rank. A project must first show at least 10% public support in Seattle (5% in King County outside Seattle) before it's tier-eligible at all. Tier 1 projects are fully funded and permit-ready with lender/investor commitments in progress, and are expected to close within six months of being placed there — miss that window and the allocation reverts to Tier 2. Tier 2 projects are fully funded and expect permits within the calendar year; Tier 3 projects have local funding commitments and expect permits the following year. The Commission reassigns tiers each January and July based on Bond Cap availability and readiness (Bond/Tax Credit Program Policies §1.1.1.1).

Outside King County, Balance of State applicants must file a Notification of Intent 60 days ahead of the application deadline, then compete only when Bond Cap demand exceeds supply. Staff rank Balance of State projects on three factors together — point score, Bond Cap requested per unit, and cost per unit — not points alone, so a well-scored project can still lose to a cheaper one requesting less bond cap per unit. The Commission also caps how much of the resource any one sponsor can absorb: no more than 25% of a single round's volume cap to one project sponsor (absent a Director exception), and no more than 25% of a calendar year's aggregate Bond Cap, current plus carryforward, to that sponsor (§2.2). When demand still exceeds supply, the Commission can push the portion of a bond issue beyond the minimum 25% Test onto non-4%-eligible "alternative bonds," targeting new-issue allocations at roughly 30% of aggregate basis (5 points above the 25% Test floor), with an allowance up to 40% if permanent-debt sizing supports it (§2.3).

The 25% test just changed the math for everyone

WA's own §3.17 "25 Percent Test" now reflects a real, permanent federal change: the One Big Beautiful Bill Act (P.L. 119-21, signed July 4, 2025) cut the tax-exempt bond financing threshold for 4% credit eligibility from 50% to 25% of a building's aggregate basis (depreciable basis plus land), effective for bonds issued after December 31, 2025 and property placed in service after that date — with a guardrail that the new post-2025 bond issue must itself finance at least 5% of aggregate basis, so a small 2026 issue wrapped around mostly pre-2026 debt doesn't qualify on its own. WSHFC's policy text states the mechanics plainly: 25% or more of Aggregate Basis financed with tax-exempt bonds makes the entire building LIHTC-eligible; below that, only the bond-financed portion qualifies, and multi-site deals are tested site by site.

Practically, this roughly doubles the LIHTC-eligible basis a fixed dollar of Bond Cap can support, which is exactly why WSHFC's own Balance of State ranking now weighs Bond Cap requested per unit as heavily as points — the agency is actively managing a resource that stretches further per dollar than it did before 2026, and the per-sponsor caps in §2.2 exist to keep any one sponsor from absorbing that expanded capacity alone.