Rents, income limits, and the operating pro forma — District of Columbia

Minimum set-aside: the federal menu, plus a DC-only overlay on Income Averaging

The QAP restates the three federal minimum-set-aside options directly: "20% of the units in the Project or more must be rent-restricted and occupied by tenants with incomes at 50% or less of AMI; 40% of the units ... at 60% or less of the AMI; or 40% of the units ... at 80% or less of AMI, as long as the average of income designations among qualified units does not exceed 60% of AMI (known as the 'Average Income' minimum set-aside, or 'Income Averaging')." A Project owner electing Average Income must comply with the federal Average Income Test at 26 CFR Section 1.42-19, and the election is irrevocable once made on IRS Form(s) 8609 -- standard federal mechanics.

On top of that federal baseline, DHCD layers its own additional conditions on any Average Income election, stated as requirements rather than suggestions: "100% of the units are LIHTC-eligible, except for preservation Projects with current tenants with documented income above 80% of AMI[;] At least 10% of the units must be rent restricted at 30% AMI or below[;] Applicants must provide reasonable parity between unit size and buildings ... at each income band[; and a]ll buildings in the Project shall be included as one multiple building Project, as referenced on line 8b of IRS Form 8609, except on a case-by-case basis." None of those four conditions is required by the bare federal Average Income Test itself (26 CFR Section 1.42-19 sets the 40%-of-units/60%-average mechanics but does not itself mandate a 30%-AMI floor or a single-Project election across buildings) -- they are DC-specific overlays a deal must separately satisfy.

The most consequential DC-specific rule sits at the very end of that list, and is easy to miss because it reads like a footnote: "4% Tax Credit Projects that elect the Average Income minimum set-aside must meet either the 20/50 or 40/60 minimum applicable to tax-exempt bond financing." In other words, electing Income Averaging does not, by itself, satisfy DHCD's minimum-set-aside requirement for a bond-financed 4% deal -- that deal must independently also clear the ordinary 20% at 50%-or-less, or 40% at 60%-or-less test. A 9% deal has no such double requirement; this stacking rule is specific to the 4%/bond path.

AMI is regional, not municipal -- Washington-Arlington-Alexandria, not DC alone

The QAP defines "Area Median Gross Income (AMI)" as "the most current tenant income requirements published by HUD pursuant to the qualified low-income housing Project requirements of IRC Section 42(g)" -- DHCD does not calculate or publish its own income figures; it points straight to HUD's Multifamily Tax Subsidy Projects (MTSP) tables. HUD, in turn, does not calculate DC's income limits from DC's own population. It publishes them for the Washington-Arlington-Alexandria, DC-VA-MD HUD Metro FMR Area, a custom OMB-based geography that reaches well beyond the District's own boundaries -- into Calvert, Charles, Frederick, Montgomery, and Prince George's Counties in Maryland, and Arlington, Clarke, Fairfax, Fauquier, Loudoun, Prince William, Spotsylvania, and Stafford Counties (plus the City of Alexandria) in Virginia, among others. Several of those Virginia and Maryland suburbs (Loudoun, Fairfax, and Montgomery Counties among them) are routinely among the highest-median-income counties in the entire United States. Because HUD's stated rationale for region-wide AMI calculation is that "families searching for housing are likely to look beyond the city itself," DC's federally published AMI is pulled upward by those wealthier suburban counties -- a structural fact that affects every DC LIHTC deal's allowable rents, regardless of DC's own, lower, city-only median household income.

The QAP doesn't publish DCR, vacancy, or reserve numbers -- the annual Consolidated RFP does

The QAP's Underwriting Guidelines section lists the categories DHCD underwrites -- "Reserve requirements[,] Limitations on costs[,] Development/consultant fees[,] General contractor fees[,] Income/expense/vacancy rates[,] Debt service requirements" -- but supplies no numbers for any of them, deferring instead to "the forthcoming Underwriting Guide" and "other published guidance." The real, current figures live in DHCD's annual Consolidated RFP for Affordable Housing Financing and Development Sites, which is a separate, republished-each-year document from the QAP itself. The FY2026 Consolidated RFP (issued February 20, 2026) sets out a full underwriting-criteria table for non-tax-exempt-bond rental projects.

The operating-expense ceiling has a real consequence for resident-services budgeting. The QAP tells applicants that services can be funded from operating income "to the extent that DHCD's overall Operating Expense Guideline is not exceeded," but otherwise "prefers to see the incorporation of sources of funding outside proposed Project capital and operating financing (e.g., organizational fundraising, a portion of developer fee reserved for this purpose ...)." With the ceiling published at $12,900/unit/year, any resident-services line that would push a project's modeled per-unit operating expenses above that figure has to be funded from developer fee, fundraising, or a dedicated grant or contract rather than from rental income.

HPTF gap financing layers its own, slightly different numbers on top

Most competitive 9% deals in DC pair the federal credit with Housing Production Trust Fund (HPTF) gap financing, and HPTF runs its own term sheet with its own underwriting figures -- not identical to the Consolidated RFP's general rental standards. The current HPTF New Construction Term Sheet (version 1.1, dated 3/13/2026) sets Debt Service Coverage at "1.15x on all financing" and a separate Income-to-Expense ratio at "1.05x on all financing." It requires an annual replacement reserve deposit and imposes a cash-flow sweep: "Fifty percent of net cash flow, after payment of the Deferred Developer Fee, must be deposited in the Operating Reserve." All reserve accounts must be held by the project's permanent senior lender or a DHCD-approved institution, and withdrawals require DHCD's consent under the Regulatory Agreement.

HPTF also imposes a sponsor-equity requirement tied directly to how far a project's average AMI runs above 60%: "Sponsor equity shall be required for all projects where the average residential AMI is greater than 60% AMI. For every 1% of AMI above 60% AMI (rounded up), the project sponsor shall be required to provide equity equivalent to 0.25% of Total Development Costs (TDC)."

Utility allowances: the standard federal menu, DC-specific mechanics thin

The QAP's own Threshold requirement is brief: for any low-income unit where residents pay utility costs, "the owner must provide UAs in accordance with the federal requirements," documented either through the applicable UA (with HUD Utility Model or comparable-model calculation documentation) or an Energy Consumption Model with qualification documentation for the professional providing it. DHCD's Portfolio and Asset Management Division (PAMD) publishes a separate Utility Allowance Policy that offers owners a choice among four calculation options: the applicable Public Housing Authority utility allowance, a local utility company estimate, the HUD Utility Schedule Model, and an Energy Consumption Model -- the standard menu available under the federal utility-allowance regulations generally.

This research could not confirm, from DHCD's publicly available materials, whether DHCD expresses a priority ordering among those four options, how often an owner must recalculate or re-file an allowance once selected, or whether DHCD's own PAMD-published option differs in any DC-specific way from the federal default. The QAP does specify one procedural rule directly: any post-initial-determination change to utility-allowance methodology requires a written request to DHCD, DHCD will grant only one such request per calendar year, and a fee applies. Confirm the current Utility Allowance Policy directly with DHCD/PAMD before assuming a specific option's mechanics or update cadence.