Phase 5 of 11

State or territory

"IHFA underwrites to a 1.20 debt service coverage ratio and won't accept operating expenses below $5,500 a unit — but where do I actually get this year's Idaho rents and income limits, and can I elect income averaging if my deal is also tax-exempt-bond financed?"

Not yet coveredUnderwriting recurs at every evaluation stage — on receipt of the application, prior to granting the Tax Credit Reservation/Allocation, and again no earlier than 30 days before IRS Form 8609 is issued (Section 7.2). Utility allowance approvals, once obtained from IHFA, are valid for one year and must be renewed annually; a change in the allowance must be reflected in tenant rents no later than 90 days after its effective date (LIHTC Compliance Manual, "Utility Allowance").

Minimum set-aside: the standard federal menu, no Idaho-specific twist

Section 12 of the QAP explains, rather than restricts, the federal minimum set-aside options. "The Consolidated Appropriations Act of 2018 permanently establishes the average income test (AIT) as another minimum set-aside election for new tax credit developments in addition to the 20-50 or 40-60 standards already contained in IRC §42. AIT allows developments to serve households earning as much as 80 percent of AMI provided the average income/rent limit in the property equals 60 percent or less." The QAP restates the federal mechanics directly: owners electing AIT must designate at least 40% of units as affordable, income and rent targeting can only be set in 10-percentage-point increments from 20% to 80% of AMI, and the election is made on Form 8609 and is irrevocable — a development already placed in service cannot switch to AIT after the fact.

For a tax-exempt bond deal, the QAP flags a real interaction the federal statute itself creates: "The Consolidated Appropriations Act modifies IRC §42 to allow for AIT, but neglects to modify IRC Section 142, which governs multifamily housing bonds. Consequently, AIT is allowed in bond-financed developments only if the AIT minimum set-aside election and the tax-exempt bond minimum set-aside (20-50 or 40-60) are both independently satisfied." This research found no additional Idaho-specific restriction on AIT beyond that federal interaction — IHFA neither expands nor narrows the federal AIT framework in its own QAP text.

IHFA doesn't publish its own rent/income limit tables — it defers to Novogradac's calculator

Section 4.9.7 ("Affordability Threshold") states plainly: "The Association relies on Novogradac's Rent and Income Limit Calculator to determine tax credit rents and income limits in any given area in the state. A hotlink to this calculator is provided on the Association's website at www.idahohousing.com under Partners/Developers/Multifamily Financing/Low Income Housing Tax Credits (LIHTC)." Exhibit E repeats the same reliance almost verbatim. Unlike states that publish their own annual rent and income limit schedules directly, IHFA's QAP treats Novogradac's third-party calculator (which itself derives from HUD's published area median income figures) as the operative source — there is no separate IHFA-published limits table to check it against.

The Affordability Threshold itself requires that "the maximum tax credit rents, less an allowance for tenant-paid utilities, must be less than the market rents for comparable units in the area where the development is to be located." If a proposed unit fails that test, the Association may, at its sole discretion, reconfigure the unit's AMI targeting down to the next-lowest established AMI category as a condition of any award — rather than declining the application outright. Acquisition/rehabilitation developments with an existing Project Based Assistance contract in place are exempted from the Affordability Threshold entirely, provided the Sponsor documents that the existing subsidy will continue or be extended (Section 4.9.7).

Scoring rewards going deeper than the minimum set-aside

Selection Criteria preference points for deeper income targeting (Section 6.5)

Preference category	Threshold to qualify	Points
40-year extended affordability (25 years beyond the 15-year compliance period, with a Qualified Contract waiver)	Regulatory Agreement commitment	15
40% AMI (or less) units	≥2.5% of rent-restricted units (1-60 total units) or ≥5% (61+ units)	6
45% AMI units	≥5% of rent-restricted units (1-60 total units) or ≥10% (61+ units)	3
50% AMI units	≥10% of rent-restricted units (1-60 total units) or ≥20% (61+ units)	2
Qualified census tract contributing to a concerted community revitalization plan	City/urban-renewal-district documentation	1

2026 QAP, Section 6.5. Manager's units are excluded from all these calculations; 30%/35% AMI units may count toward the '40% or less' tier but not toward the 45% or 50% tiers.

Section 6.5.1 requires that any application claiming points for the 40% or 45% AMI preference categories independently demonstrate economic feasibility: "Sponsors must carefully assess the impact of the lower rents on their development to be certain they have not jeopardized feasibility in an attempt to achieve a high point score." An application that fails that feasibility check will be declined regardless of how many preference points it otherwise earns.

Underwriting the pro forma: DCR, vacancy, trending, and reserve/opex minimums IHFA actually publishes

Generally at least 1.20 — "there may be some instances where it is acceptable to have a higher or lower coverage," particularly for large bond-financed developments with strong cash flow versus smaller developments with thinner marginsDebt service coverage (hard debt)

Generally not to exceed 80.00%; value estimated by dividing NOI at refinance by a capitalization rate from a current appraisal, or a 6.50% CAP rate if no appraisal is availableLoan-to-value at refinance

2% annual income trend / 3% annual expense trend, unless there is an operating subsidy (in which case both are trended at the same rate)Income/expense trending

7% typical underwriting assumption; the Association will not use less than 5% under any circumstancesVacancy rate

2026 minimum operating expense and replacement reserve benchmarks

Benchmark	Family	Senior/Elderly
Minimum annual operating expense per unit (excludes replacement reserves)	$5,500	$5,000
Minimum annual replacement reserve per unit — new construction	$400	$350
Minimum annual replacement reserve per unit — rehabilitation	$400	$400

2026 Combined Annual LIHTC Application Information. These are trended year-over-year from a stated 2018 base ($4,000/$3,700 operating expense; $300/$250 replacement reserve) off Novogradac's proprietary Multifamily Operating Expense Report, rounded to the nearest $50. The Association will not accept replacement reserve figures below these published minimums; tax-exempt bond developments may instead follow lender/investor-set operating expense standards and 'may be held to a lower standard.'

Utility allowances: which method applies, and what changes when HOME funds are layered in

The QAP itself does not set a distinct Idaho utility allowance methodology — it requires documentation of the calculation (Exhibit B) but defers to the standard federal framework under 26 C.F.R. §1.42-10, which IHFA's own LIHTC Compliance Manual walks through in detail. Certain sources are mandatory where they apply: USDA Rural Housing Service-financed or -assisted units use the RHS utility allowance; project-based Section 8 units use the utility allowance established for the subsidized units; and tenant-based Section 8/Housing Choice Voucher units use the allowance established for that voucher.

Utility allowance methods available in Idaho, by funding layer

Property type	Available methods
100% tax credit property (no HOME)	Local Public Housing Authority (PHA) utility schedule, Actual Consumption/Utility Company Model, Engineering (Energy) Consumption Model, or the HUD Utility Schedule Model (HUSM)
LIHTC layered with HOME funds	PHA schedule is not permitted — HOME's own final rule requires HUSM, the Actual Consumption/Utility Company Model, or the Engineering Consumption Model instead

IHFA, Low-Income Housing Tax Credit Compliance Manual, "Utility Allowance" and "Public Housing Authority (PHA) Utility Allowance" sections. A property with both LIHTC and HOME may only use one utility allowance method for the whole property.

Owners/Agents must remit a non-refundable $250 utility consumption analysis fee to IHFA for a 100% tax credit property's utility allowance submission, and an IHFA-approved allowance is effective for one year before it must be renewed. IHFA is explicit that its review is not a guarantee: "Approval of the utility allowance does not constitute a guarantee that the utility allowance is correct" — if an allowance is later found understated, IHFA must report the resulting non-compliance to the IRS on Form 8823. IHFA also does not itself collect or maintain utility rate data; obtaining current utility allowance information from the relevant PHA, utility company, or engineer is the owner's responsibility.

Where this goes wrong

Looking for Idaho's own published income/rent limit tables — IHFA does not publish one; it hot-links to Novogradac's Rent and Income Limit Calculator and expects Sponsors to use that tool directly for both rents and income limits.
Assuming a PHA utility-allowance schedule works for every deal — properties layering LIHTC with HOME funds cannot use the PHA schedule at all and must pick HUSM, the Actual Consumption/Utility Company Model, or the Engineering Consumption Model instead.
Treating the 1.20 debt service coverage figure as a rigid floor in every case — the QAP itself notes a large bond-financed development with strong cash flow may be underwritten below 1.20, while a small development with thin cash flow may be held to a higher figure.
Using generic national operating-expense or reserve rules of thumb instead of IHFA's own current-year benchmarks — the Association will not accept replacement reserve figures below its published minimums, which are trended annually from a stated 2018 base off Novogradac's proprietary Multifamily Operating Expense Report.
Assuming Average Income Test elections are unavailable or restricted on a tax-exempt bond deal — AIT is allowed, but only if the AIT election and the separate tax-exempt-bond minimum set-aside (20-50 or 40-60) are both independently satisfied, since Congress never amended Section 142 to reference AIT.
Chasing deep-AMI preference points (40%, 45%, or 50% AMI tiers) without re-testing feasibility — Section 6.5.1 requires the pro forma to independently demonstrate the lower rents don't break the deal, and the Association will decline an application that fails that check regardless of its point score.
Assuming a failed Affordability Threshold test kills the application outright — the Association may instead require reconfiguring the affected units to the next-lowest AMI category as a condition of award rather than declining automatically.
Treating IHFA's utility-allowance approval as a guarantee of correctness — IHFA states directly that approval 'does not constitute a guarantee,' and an understated allowance discovered later is reported to the IRS as noncompliance on Form 8823 regardless of the earlier approval.

At a glance

Minimum set-aside options: 20-50, 40-60, or the Average Income Test (AIT) per Section 12; no Idaho-specific restriction found beyond the federal framework
AIT general requirements: Minimum 40% of units designated affordable; income/rent targeting only in 10% increments (20%-80% AMI); election made on Form 8609 and irrevocable
Rent/income limit source: Novogradac's Rent and Income Limit Calculator, hot-linked from idahohousing.com — IHFA does not independently publish its own limit tables
Debt service coverage: Generally at least 1.20 for all hard debt; may flex up or down based on unit count and cash flow
Refinance assumptions: LTV generally ≤80%; 6.50% capitalization rate used if no current appraisal is available
Income/expense trending: 2% income / 3% expenses annually (matched at the same rate if the development carries an operating subsidy)
Vacancy rate: 7% typical underwriting assumption; Association will not use less than 5%
2026 minimum operating expense benchmarks: $5,500/unit (family), $5,000/unit (senior/elderly), excluding replacement reserves
2026 minimum replacement reserve benchmarks: $400/unit new construction (family), $350/unit new construction (senior); $400/unit rehabilitation (both types)
Utility allowance for 100% credit properties: PHA schedule, Actual Consumption/Utility Company Model, Engineering Consumption Model, or HUD Utility Schedule Model (HUSM); LIHTC+HOME properties may not use the PHA schedule
Utility consumption analysis fee: $250 non-refundable, paid to IHFA, for 100% tax credit property utility allowance review; approval valid for one year

Governing authority

Minimum set-aside and Average Income Test mechanics2026 QAP, Section 12
Affordability Threshold and rent/income limit source2026 QAP, Section 4.9.7; Exhibit E ("Income and Rent Limits," "Income and Rent Targeting")
Preference points for deeper income targeting and required feasibility check2026 QAP, Sections 6.5, 6.5.1
Debt service coverage, debt financing, trending, vacancy rate assumptions2026 QAP, Exhibit E ("Debt Service Coverage," "Debt Financing," "Trending," "Vacancy Rate")
Operating expense and replacement reserve benchmarks2026 Combined Annual LIHTC Application Information, "Operating Expenses and Replacement Reserves"
Utility allowance methodology, fees, and IHFA's compliance obligationsIdaho Housing and Finance Association, Low-Income Housing Tax Credit Compliance Manual, "Utility Allowance," "Public Housing Authority (PHA) Utility Allowance," "Actual Consumption Utility Allowance," "HUD Utility Schedule Model," "Engineering Consumption Model"

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Rents, income limits, and the operating pro forma — Idaho