"HHFDC scores a set-aside election on a 51/54/57 percent matrix I haven't seen labeled that way elsewhere, and Honolulu's income limits run tens of thousands higher than the Neighbor Islands' -- what DCR, vacancy, and reserve numbers does HHFDC actually underwrite to, and whose utility allowance schedule applies?"
One minimum set-aside election, scored on a 51/54/57 matrix that isn't the bare federal floor
The federal minimum set-aside test under IRC Section 42(g) still governs eligibility -- 20% of units at 50% AMI, 40% of units at 60% AMI, or the Average Income Test. HHFDC's QAP names only two of those paths for its own scoring purposes: "Average Income" and what it calls the "Original" minimum set-aside, defined in the QAP's own words as "40% at 60% or 20% at 50%." Criterion 15, "Percentage of Income Targeted Units" (0 to 10 points on the 9% LIHTC scale), scores the depth of whichever election is made on a single shared matrix: for Average Income, the number is the average AMI among the units' designations; for the Original test, the QAP requires "at least 30% of the units" be affordable to and occupied by households at the stated AMI -- a scoring bar, not the federal minimum-set-aside percentage itself, which remains 20% or 40%.
| Points | Average Income (avg. AMI) | 30% of units at, under "Original" election |
|---|---|---|
| 10 | 51% | 30% AMI |
| 6 | 54% | 40% AMI |
| 2 | 57% | 50% AMI |
2026 QAP, Criterion 15. The identical matrix, at a lower point ceiling (6/3/1 points), also governs Criterion 2 of the separate Hula Mae Multi-Family Bond Program scoring -- the same depth election is rewarded on both tracks, just weighted differently.
Do not read the 30/40/50% AMI column as the federal minimum-set-aside percentage -- it is the AMI depth threshold the QAP rewards under its own "Original" scoring label, applied to at least 30% of units regardless of which federal minimum-set-aside percentage (20% or 40%) was actually elected on the underlying Form 8609. The two numbers (the federal election's unit percentage, and HHFDC's own 30%-of-units scoring bar) serve different purposes and should not be conflated when modeling points.
Rents and income limits: HHFDC publishes its own tables, and Honolulu's numbers run far above the Neighbor Islands'
The QAP's Compliance Monitoring Plan states the rent-setting mechanics directly: units must be "rent-restricted to 30% of the imputed income limitations for each unit, based upon HUD area median incomes and size of units," computed by treating a unit with no separate bedroom as 1 individual and a unit with one or more bedrooms as 1.5 individuals per bedroom, and "HHFDC provides rent limits for projects receiving a LIHTC allocation." That is a meaningfully different practice from an agency that only points developers to HUD's own income-limit portal: HHFDC computes and separately publishes its own annual, county-by-county "Maximum Tenant Contribution (Including Utilities)" tables -- the actual gross rent ceilings, not just the income limits HUD sets. Gross rent, per the QAP, "must include any allowance for utilities" and excludes rental-assistance and supportive-service payments described in Section 42.
| County | 60% AMI, 4-person income limit | Max. tenant contribution incl. utilities, 2BR | Max. tenant contribution incl. utilities, 3BR |
|---|---|---|---|
| Honolulu | $92,400 | $2,079 | $2,403 |
| Hawaii | $72,600 | $1,633 | $1,887 |
| Kauai | $81,540 | $1,836 | $2,120 |
| Maui | $88,800 | $1,998 | $2,309 |
HHFDC, 2026 Multifamily Tax Subsidy Project Income Limits and Maximum Tenant Contribution tables, effective 5/1/2026. Honolulu's 60% AMI 4-person income limit runs $19,800 above Hawaii County's -- roughly 27% higher -- carrying through to a nearly $450/month gap in the maximum 3-bedroom gross rent between the two counties.
The QAP's own Criterion 2, "County Adjuster" (0 to 2 points), turns that gap into a scoring lever -- and in a direction that can surprise a developer used to thinking of a higher area income limit as a straightforward advantage. The criterion compares each county's 60%, 4-person MTSP income limit and gives the county with the LOWEST limit the full 2 points, the county with the HIGHEST limit 0 points, with the others interpolated proportionally. The QAP's own worked illustration (built on 2021 figures, shown in the QAP purely as a methodology example) has Hawaii County's then-lower limit earning the full 2.00 points while Honolulu's higher limit earned 0 -- the opposite of what a rent-revenue-maximizing read of the same income-limit gap would suggest. A site in a lower-income-limit county scores better here even though it also carries a lower rent ceiling.
HUD's own income-limit release-and-implementation mechanics still govern the transition each year: per the QAP, "Updated income limits must be implemented pursuant to IRS Revenue Ruling 94-57," meaning taxpayers may rely on a prior list of income limits until 45 days after HUD releases a new list, or until HUD's own effective date for the new list, whichever is later, with the IRS hold-harmless policy potentially applying on top.
Utility allowances: a federal-standard Threshold test, sourced county by county, not from a single HHFDC-authored schedule
The QAP's utility allowance requirement is a Threshold item stated in general federal terms, not a Hawaii-specific formula: rent charged on each unit must reflect utility allowances, and the applicable schedule, report, or model used to calculate the allowance must be on file. HHFDC's 2026 Funding Round Application Exhibits ask, at Exhibit 22, for applicants to "include the current utility allowance schedule for the County where the project is located" -- language that points to a county-sourced schedule, not a single statewide HHFDC-authored table.
This research did not find an HHFDC-authored, statewide utility allowance schedule comparable to the dual-region tables some mainland agencies publish directly. The QAP and funding-round exhibits both point the applicant to the utility allowance already in effect for the relevant county rather than to an HHFDC-branded document -- confirm the current, applicable county schedule and its source (HUD Utility Schedule Model, local utility company estimate, or Energy Consumption Model) directly with HHFDC or the county's own public housing authority before underwriting, rather than assuming a single statewide number applies everywhere.
Underwriting: a 1.15x floor, 5% vacancy, and gaps this research could not fill with a fixed HHFDC number
The QAP's Debt Service Ratio requirement is explicit and applies for the life of the initial compliance period: projects with hard debt service, with or without an RHRF Project Award Loan, "must evidence a Debt Service Ratio of no less than 1.15x on all hard debt service requirements for the duration of the initial 15-year LIHTC compliance period." Projects without hard debt service but applying for an RHRF loan must instead evidence 1.15x on the RHRF loan itself, underwritten at the Long-Term Applicable Federal Rate in effect the month the Consolidated Application is released, fully amortized over 35 years; projects with neither hard debt service nor an RHRF loan application need only demonstrate positive Net Operating Income throughout the affordability period.
A second, lower Debt Coverage Ratio figure appears elsewhere and should not be confused with the QAP's binding 1.15x standard: HHFDC's separate Rental Housing Revolving Fund (RHRF) Program Overview defines "Debt Coverage Ratio" as the ratio of Net Operating Income to total annual debt service and states, in that document's own definitions section, that "for Projects requesting Program funds, this ratio shall not be less than 1.00 to 1.00." That 1.00x figure is a floor specific to how HHFDC sizes the RHRF gap loan itself, not a substitute for the QAP's own 1.15x overall project standard -- underwrite the whole deal to 1.15x, and treat the RHRF definition's 1.00x as a separate, narrower loan-sizing reference.
HHFDC's own RHRF Program Overview separately defines a discretionary "Debt Service Reserve" -- "Program contract language may require a Program recipient to deposit all or a portion of the Project's cash flow into a debt service reserve account to reduce the loan principal during or at the end of the loan term" -- but that is a contract-by-contract, RHRF-specific mechanism rather than a QAP-wide, fixed-dollar reserve formula applicable to every award.
Where this goes wrong
- Looking for the QAP to name "20/50" and "40/60" as separate elections the way many mainland QAPs do -- HHFDC names only "Average Income" and its own "Original" label, scoring both on the same 10-point matrix.
- Conflating the 30/40/50% AMI depth thresholds in HHFDC's own "Original" scoring matrix with the federal minimum-set-aside election percentage (20% or 40% of units) -- they are different numbers serving different purposes.
- Assuming a higher area income limit (Honolulu) is a straightforward scoring advantage -- the QAP's County Adjuster criterion (Criterion 2) rewards the opposite, giving full points to the county with the lowest 60% AMI, 4-person limit.
- Treating HUD's published income limits alone as the applicable rent ceiling -- HHFDC computes and separately publishes its own county-by-county Maximum Tenant Contribution (gross rent, including utilities) tables; underwrite to that published rent table, not a self-computed 30%-of-income figure.
- Assuming HHFDC publishes a single statewide utility allowance schedule -- the funding-round exhibits ask for the schedule current for the county where the project sits, and this research found no HHFDC-authored statewide UA table to fall back on.
- Confusing the RHRF Program Overview's own 1.00x Debt Coverage Ratio definition (specific to sizing the RHRF gap loan) with the QAP's binding, higher 1.15x Debt Service Ratio that governs the whole project's hard debt service for the 15-year compliance period.
- Assuming a fixed-dollar or fixed-month initial operating deficit reserve requirement exists in the QAP the way it does in several mainland states' QAPs -- this research located only the $300/unit/year replacement reserve; no operating reserve formula was found in the QAP text.
- Assuming deferred developer fee is capped at a stated percentage or repayment window by default -- no such cap was found anywhere in the QAP text; confirm directly with HHFDC underwriting staff before modeling a deferral limit that may not exist in Hawaii.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies