"DCA's QAP doesn't even spell out the three minimum set-aside options the way I'd expect — so what are we actually electing, what utility allowance and rents can we underwrite to, and what DSCR, vacancy, and reserve numbers does DCA expect the pro forma to hit?"
No dedicated minimum set-aside section — but income averaging is scored twice
Unlike QAPs that walk through 20/50, 40/60, and Average Income as a named menu, Georgia's 2026-2027 QAP contains no standalone section defining the three federal minimum set-aside elections at all — that remains a matter of the underlying federal election on IRS Form 8609, Part II, Line 8b, governed by IRC §42(g). What the QAP does do is reward the Average Income election directly, in two separate, stackable-looking-but-actually-independent scoring categories.
| Category | Points | Mechanism |
|---|---|---|
| VIII. Deeper Targeting/Rent/Income Restrictions, subsection A | 2 points | Overall property AMI (calculated across imputed 20/30/40/50/60/70/80% unit designations) at or below 58%, achieved via either income averaging or a 40% at 60% minimum set-aside with units targeted lower. 4% Credits/Bonds Applications are eligible only under subsection B (PBRA), not this subsection. |
| XX. Mixed Income Developments, subsections A/B | 1 point (mutually exclusive) | 1 point for ≥10% unrestricted market-rate units without electing income averaging (A), OR 1 point for electing income averaging with no market-rate units (B) |
2026-2027 QAP as Amended, Scoring Criteria, Sections VIII and XX. Category VIII and Category XX are separate scoring categories with separate point pools — an Applicant using income averaging can potentially claim points in both, but cannot claim both subsections within XX.
Owners electing any set-aside must still execute restrictive covenants for the Compliance Period, and the QAP is explicit that "the overall AMI percentage will be calculated based on the total residential units" — common spaces and employee units are excluded from that calculation (Scoring Criteria, VIII).
Income and rent limits: Georgia borrows HUD's table outright
DCA publishes no Georgia-specific LIHTC income or rent limit schedule. Its own Rent and Income Limits page states plainly that current-year limits are HUD's own published figures: "The 2026 Multifamily Tax Subsidy Projects (MTSP) Income Limits have been posted to the HUD website," and directs Applicants to HUD's MTSP portal by county rather than to any DCA-generated document. The only DCA-authored rent documents on that page are archived "Program Maximum Rents" schedules from 2016-2018 — nothing current. This mirrors the pattern seen in other states that have moved away from publishing their own tables (e.g., Missouri), but this research found no DCA statement of why Georgia never built its own current table in the first place, or any Georgia-specific Gross Rent Floor or HERA hold-harmless guidance beyond what federal law already requires.
Utility allowances: a thin QAP requirement, but DCA does publish its own schedule
The QAP's own utility allowance requirement at Threshold is brief: "For any low-income units where the residents are responsible for any utility costs, the owner must provide UAs in accordance with the federal requirements," documented either through the current applicable UA (with all HUD Utility Model or comparable-model calculation documentation attached) or an Energy Consumption Model (with qualifications documentation for the professional providing it, "consistent with DCA Compliance Monitoring requirements for UA methodology change requests") (Threshold Criteria, Section I.7).
What the QAP text doesn't spell out, DCA fills in with its own published schedule: DCA issues annual "Allowances for Tenant-Furnished Utilities and Other Services" tables (the HUD Form 52667 format used by public housing authorities) split into two statewide localities — "Georgia North" and "Georgia South" — confirmed current for 2024, 2025, and 2026 (each dated and downloaded directly from dca.georgia.gov). This is a distinctive Georgia feature: rather than requiring every Applicant to source a local PHA schedule, DCA runs and publishes its own statewide default allowance twice over, geographically split. Whether this DCA schedule is mandatory, merely one of several accepted "comparable model" sources, or how often an owner must re-file it post-lease-up are questions this research could not answer with confidence — DCA's full LIHTC & HOME Compliance Manual (effective March 11, 2024, per DCA's own compliance-documents page) almost certainly governs that detail, but it is hosted only as an Adobe Acrobat cloud viewer link this research could not directly retrieve. Confirm the manual's actual utility-allowance-update mechanics directly with DCA before relying on any secondary summary of it, including this one.
The QAP does confirm that any post-initial-determination change to UA methodology requires a written request to DCA, that DCA will grant only one such request per calendar year, and that a fee applies (Scoring Criteria, Exhibit R — see the DCA website for the current fee amount).
Underwriting floors: DSCR, expense ratios, vacancy, and a real equity-pricing test
DCA's own DCR standard is more granular than a single number, and it is tested annually with no cross-year credit: "DCA will require that developments with debt meet, for fifteen years, a minimum DCR of 1.20 for new construction and 1.25 for rehabilitation (deferred Developer Fee does not count as debt) ... each year will stand alone. Amounts set aside in a reserve funded in one year may not be withdrawn in a subsequent year to satisfy the debt service coverage ratio that year. Amounts received in one year that exceed the debt service coverage target for that year will not be credited to another year" (Threshold Criteria, Exhibits to Threshold Criteria, A.6). A parallel, separate ratio applies on top of DCR: "All developments with debt must have a minimum Effective Gross Income to Total Annual Expenses (including reserve for replacement) ratio of 1.10 for new construction and 1.15 for rehabilitation." DCA may reduce a credit allocation if DCR and cash flow both run unusually high, and may waive or lower the DCR floor for USDA 515 deals that demonstrate feasibility or match another government program's requirements.
| Assumption | DCA standard | Source |
|---|---|---|
| Revenue trend | 2% per year | Threshold Criteria, A.16 |
| Expense trend | 3% per year | Threshold Criteria, A.16 |
| Vacancy/collection loss | Higher of 7% or a percentage DCA determines appropriate | Threshold Criteria, A.16 |
| Ancillary income cap | Maximum 2% of gross potential rents in the cash flow analysis; income from commercial space, fees, charitable or owner contributions is not eligible revenue | Threshold Criteria, A.2 |
| 9% equity pricing floor | Underwritten at no less than 90% of the median equity price among Applications submitted that round, determined per geographic pool | Threshold Criteria, A.4 |
| Minimum annual operating expenses | $6,500/unit (Atlanta Metro Pool); $6,000/unit (Other Metro Pool); $4,250/unit (Rural Pool) | Exhibits to Threshold Criteria, A.1 |
The 90%-of-median equity pricing floor is a real, active constraint: an Applicant that submits a below-median equity price gets its credit allocation reduced to match, and must then "submit an amended equity commitment letter or a revised pro forma showing how any funding gaps will be covered prior to the issuance of a carryover allocation" (Threshold Criteria, A.4).
Reserves, PBRA rent-layering, and market units
Where a unit carries Project-Based Rental Assistance with fewer than ten years remaining as of Application Submission, DCA requires underwriting within the maximum tax credit rent and/or HOME rent, whichever applies — and any unit carrying both a High HOME rent and PBRA must be underwritten at the maximum HOME rent specifically (Threshold Criteria, I.8). Market-rate (unrestricted) units must be fully covered by unrestricted financing sources in both the development budget and the operating pro forma, and the ratio of market units to total units cannot exceed the ratio of unrestricted permanent financing to Total Development Cost — deferred Developer Fee counts as an unrestricted source for this test (Threshold Criteria, I.10).
Where this goes wrong
- Looking for a dedicated 20/50 vs. 40/60 vs. Average Income section in Georgia's QAP the way you would in many other states' — it isn't there; the election runs off IRS Form 8609/IRC §42(g) directly, though DCA does score an income-averaging election in two separate scoring categories.
- Assuming a 4% Credits/Bonds Application can claim points under Deeper Targeting Through Rent Restriction (subsection A) — the QAP restricts 4%/Bonds Applications to subsection B (PBRA) only.
- Assuming Mixed Income Developments subsections A and B stack for 2 points — they are mutually exclusive; the category caps out at 1 point either way.
- Assuming DCA publishes a current Georgia-specific rent or income limit table — it does not; DCA's own compliance page points Applicants directly to HUD's MTSP portal, and the only DCA-authored rent documents on file are archived 2016-2018 schedules.
- Treating DCA's own published North/South utility allowance schedule as the only acceptable source — the QAP separately allows an Energy Consumption Model with professional qualification documentation, and the full menu of acceptable sources (and how the DCA schedule interacts with them) sits in the Compliance Manual, which this research could not fully verify.
- Underwriting to a flat 5% or 7% vacancy assumption — DCA underwrites at the higher of 7% or whatever percentage it independently determines appropriate for the deal, not a fixed rate.
- Missing that DCA's 15-year debt coverage test is non-cumulative — a reserve funded in a strong year cannot cover a shortfall in a later year, and above-target cash flow in one year does not carry forward to another.
- Applying a single DSC and expense-coverage standard across new construction and rehabilitation deals — DCA runs different floors for each (1.20/1.10 for new construction vs. 1.25/1.15 for rehabilitation).
- Missing the 90%-of-round-median equity pricing floor on 9% deals — pricing below it triggers a mandatory reduced allocation and a revised equity commitment or funding-gap plan before carryover.
- Confusing the one-time Rent-Up Reserve (3 months of opex, pre-lease-up) with the ongoing annual Replacement Reserve or the Operating Deficit Reserve — all three are separate, differently sized, differently timed requirements.
- Treating anything in this phase's utility-allowance or rent-limit discussion as a substitute for DCA's actual LIHTC & HOME Compliance Manual (effective March 11, 2024) — that manual's full methodology could not be directly retrieved in this research (it is hosted as an Adobe cloud viewer link, not a fetchable document) and should be confirmed directly with DCA before underwriting.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies