Rents, income limits, and the pro forma — Ohio

Rents run off HUD's MTSP limits, layered with a federal set-aside election

Ohio has no separate, state-published LIHTC income or rent limit schedule. OHFA's Multifamily Rental Underwriting Guidelines direct staff to compare a project's proposed rents against the 'achievable LIHTC rents, maximum LIHTC rents, and comparable market rents' identified in the required market study — with tenant-paid gross rent set at the lower of maximum allowable LIHTC rent or achievable LIHTC rent — and OHFA's own Bond Gap Financing materials independently reference HUD's Multifamily Tax Subsidy Project (MTSP) rent figures directly in underwriting calculations. There is no indication OHFA layers a separate Ohio-specific rent ceiling on top of the federal MTSP figures.

Every LIHTC application elects one of three federal minimum set-asides under 26 U.S.C. §42(g): the 20-50 test (at least 20% of units at or below 50% AMI), the 40-60 test (at least 40% of units at or below 60% AMI), or Income Averaging under §42(g)(1)(C) — at least 40% of units rent-restricted and occupied at imputed income limits that can range from 20% to 80% AMI in 10% increments, so long as the average of the imputed limits across those units doesn't exceed 60% AMI. OHFA governs the Income Averaging election through its own Average Income Policy (PC-L31, revised 02/01/2024), which requires the election be stated at both Proposal and Final Application, and requires the LIHTC equity commitment letter to explicitly state it's priced on the average-income test — an equity letter silent on the election is treated as a gap in the application, not a formality to fix later.

Utility allowances follow the federal rule directly: gross rent must be reduced by a utility allowance for any tenant-paid utility other than telephone, cable, or internet, per 26 U.S.C. §42(g)(2)(B)(ii) and 26 C.F.R. §1.42-10, using OHFA's Utility Allowance Request Procedure. HOME-funded units get an added option — the local PHA utility allowance in addition to HUD's Utility Schedule Model or an engineer's consumption model — that non-HOME units don't have.

The ELI threshold sits on top of the set-aside election, not inside it

The New Affordability pools' ELI requirement — 15% of units at or below 30% AMI if the site's census tract scores 45 or below on the Housing Needs Index, or 10% if it scores above 45 — is a pool threshold requirement tied to the federal selection preference for 'serving the lowest-income tenants' at 26 U.S.C. §42(m)(1)(B)(I). It is structurally separate from, and layered on top of, whichever §42(g) minimum set-aside a sponsor elects for the whole project. Electing the 20-50 test, the 40-60 test, or Income Averaging doesn't substitute for the ELI threshold — a New Affordability pool applicant has to satisfy both.

Read against OHFA's Average Income Policy, the interaction runs like this: a sponsor electing Income Averaging still has to designate the required 10% or 15% of units specifically in the ≤30% AMI imputed band to satisfy the ELI threshold — those units can't be averaged away by pairing them with higher-AMI units elsewhere in the mix to hit a blended number. What Income Averaging actually buys the sponsor is room on the rest of the unit mix: with the ELI units locked at ≤30% AMI, the remaining units can be imputed as high as 80% AMI (rather than being ceilinged at 60% AMI under the 40-60 test) so long as the whole project's average still lands at or under 60% AMI, which can materially improve blended rental income versus a straight 40-60 election covering the same ELI commitment.

Neither OHFA's QAP nor its Average Income Policy spells out a dedicated reconciliation provision naming this interaction explicitly — the reading above follows from applying the two published requirements together, not from a single administrative bulletin that addresses both at once. Confirm the treatment directly with OHFA (QAP@ohiohome.org) before locking a unit mix that leans on it, particularly on a deal where the ELI units and the deepest imputed-income units aren't the same units.

OHFA's real underwriting floor: vacancy, DSCR, reserves, and the developer fee

OHFA's Multifamily Rental Underwriting Guidelines (effective for applications submitted on or after January 1, 2026) set the assumptions that actually drive the pro forma. Vacancy defaults to 7% of effective gross income from the first stabilized year; a 5% assumption is permitted only if at least 70% of total units carry project-based rental subsidy and the market study supports a lower stabilized vacancy — and OHFA reserves the right to reset the file back to 7% if that documentation is thin. Income is projected to escalate 2% annually and operating expenses 3% annually for testing DSCR, income-to-expense ratio, and deferred developer fee repayment over the compliance period.

The minimum acceptable Debt Service Coverage Ratio is 1.20 in the first year of stabilized operations, with an annual DSCR above 1.00 required through the entire 15-year compliance period and a 15-year average hard DSCR that may not exceed 1.50 — extendable to a 2.0 average only if Year-1 expenses already exceed 75% of effective gross income, with a documented exception request. OHFA allows 4% LIHTC projects a narrower exception, permitting a 1.15 stabilized-year DSCR if the trend improves and sustains through the 15-year period. Developments with no hard debt instead maintain an income-to-expense ratio above 1.00 annually, averaging between 1.10 and 1.50 over 15 years.

Capitalized operating reserves must run 4 to 12 months of the first stabilized year's projected operating expenses, hard debt service, and replacement reserve contributions. Capitalized replacement reserves are not permitted for new construction at all, with two exceptions — adaptive reuse developments, and single-family lease-purchase properties (which must escrow $2,500/unit, matched over 15 years to a $5,000/unit minimum, for down-payment or closing-cost assistance). Ongoing annual replacement reserve contributions instead run by population and construction type: $315/unit for senior new construction, $420/unit for general occupancy new construction and for single-family homes, $365/unit for senior rehabilitation, and $445/unit for general occupancy rehabilitation.

Other income items — laundry, pet fees, parking — must be reasonable and comparable to peer properties; anything projected above $150/unit/year needs audited financials or third-party documentation to support it. Service coordination expenses are capped at $350/unit/year absent a documented exception for service-enriched, senior, or federally-mandated developments. Professional soft costs (which the AHFA defines to include the Developer Fee itself, application/consultant fees, legal, accounting, and construction management fees, among others) may not exceed 25% of total development cost, with soft cost contingency separately capped at 3% of professional soft costs.

The eligible basis boost is a real pro forma lever, priced per building, not per project

A building located in a Qualified Census Tract or Difficult Development Area is statutorily eligible for a 130% eligible-basis boost under 26 U.S.C. §42(d)(5)(B), determined by HUD's annual QCT/DDA designations. OHFA also administers a discretionary basis boost under §42(d)(5)(B)(v) for buildings that need the increase to be financially feasible -- but it isn't free: OHFA requires permanent deferral or recontribution of 1% of total developer fee for every 1% of state-designated boost claimed, structured as deferred developer fee, a GP/managing-member capital contribution, a sponsor loan, or some combination. On a scattered-site project the boost applies per building, not blanket across the project -- a companion building outside the QCT needs its own separate discretionary request and its own fee deferral, which the pro forma should model building-by-building rather than as a single project-wide assumption.