"There's no dedicated minimum-set-aside section in this QAP the way I'd expect, SC Housing publishes its own utility allowance schedules on top of the usual federal methods, and the DCR rule seems to run from 1.15 up to a ceiling that gets waived under certain conditions -- so what income/rent limits, utility allowances, and underwriting floors do I actually have to hit to pass financial feasibility review?"
No dedicated minimum-set-aside section -- but a scored table pushes targeting deeper than the federal floor
The 2026 QAP does not contain a standalone "minimum set-aside election" section spelling out the federal 20-50/40-60/average-income menu the way some states' plans do. The election surfaces in two places instead. First, the core QAP's targeting section restates the federal income-averaging test in its own words: developments "awarded [in] 2026 may utilize the average income minimum set-aside," but such projects "may not contain market-rate units, propose average designations exceeding 60% of area median income (AMI) for any bedroom type (pro-rata distribution), or change a unit designation without Authority approval" (2026 QAP, Section IV.M.3) -- the 60% ceiling here is the ordinary federal averaging test restated, not a state-specific tightening. Owners must also elect that each building in a multi-building development is part of the same multiple-building set-aside on the IRS Form(s) 8609.
Second, and more distinctively, Appendix C1's 9%-only "Affordability" scoring criterion names both federal elections explicitly and requires deeper targeting than the statutory floor to earn its 10 points: "the application must reflect one set-aside election (average income or 'original' minimum set-aside (i.e. 40% at 60% or 20% at 50%)) and meet the criteria below for the selected set-aside" (Appendix C1, Section III.C). The required depth then scales with a county's income tier -- counties are sorted into High, Moderate, and Low income levels, each with its own average-income ceiling and original-set-aside floor for scoring purposes.
| County income level | Average Income ceiling (for points) | "Original" set-aside floor (for points) |
|---|---|---|
| High | 54% | 30% |
| Moderate | 56% | 40% |
| Low | 58% | 50% |
Appendix C1, Section III.C. "High" counties: Beaufort, Berkeley, Charleston, Dorchester, Greenville, Lancaster, Lexington, Richland, York. "Moderate": Aiken, Anderson, Calhoun, Chester, Darlington, Edgefield, Fairfield, Florence, Georgetown, Horry, Kershaw, Oconee, Pickens, Spartanburg, Saluda, Sumter, Union. "Low": all other counties. For the Original election, at least 20% of units must be affordable to and occupied by households at the AMI shown; for Average Income, the percentage is the average AMI among unit designations.
Every one of these scoring thresholds sits deeper than the ordinary federal floor (60%/50% under the original test, 60% average under income averaging), meaning a 9% applicant chasing these 10 points is committing to more restrictive rents than federal law alone would require. This scoring table applies only to the 9% program; Appendix C2 (4%/TEB) does not reference it, and this research found no equivalent affordability-depth scoring mechanism for bond deals -- 4%/TEB applicants appear to compete solely on the resource-efficiency ranking described in Phase 4, with no points available for exceeding the statutory set-aside.
Income and rent limits: HUD's table by inference, not by name
The 2026 QAP and its appendices never use the term "MTSP" or "Multifamily Tax Subsidy Project" anywhere (confirmed by direct search) -- unlike some states' plans, SC Housing's documents do not name the specific HUD income-limit dataset they rely on. What the QAP does confirm is that SC Housing works off HUD's own annual release cycle rather than publishing an independent limit table: "SC Housing will allow 9% applications to use 2025 LIHTC rents in the Full Application, due to the 2026 LIHTC rent limits being released on May 1st" (2026 QAP Amendments, Mar. 9, 2026 entry). That stopgap rule -- permitting the prior year's rents when the current year's HUD release lags the application deadline -- is the clearest evidence in SC Housing's own materials that income and rent limits are sourced from HUD's annual publication, not calculated independently by the Authority; this research treats the "MTSP" label as a reasonable inference from that timing, not something SC Housing's own text confirms.
Utility allowances: six methods, two of them SC Housing's own
The Threshold Participation Criteria list six acceptable utility allowance methods for a full application, more than the standard federal menu because two of the six are SC Housing's own schedules rather than a federal or third-party method: "(a) RD Schedule for those developments financed by and receiving rental assistance from RD; (b) the current allowance approved by HUD for those developments with 100% project based rental subsidies; (c) the S.C. State Housing Finance and Development Authority's statewide utility allowance calculation; (d) the Energy Star Statewide Utility Allowance for developments built to meet, at a minimum, the Version 3.0 Energy Star Certification ... EarthCraft, LEED, or another Energy Star Certified Program; (e) HUD Utility Schedule Model; or (f) Engineered Energy Consumption Model completed by a properly licensed engineer or other qualified professional" (2026 QAP, Section IV.A.6).
Method (d) -- the "Green Discount" -- is a distinct SC Housing program tied to a scoring election made up front, not something an applicant can claim after the fact: "Developers have the option of selecting 'Energy Star Version 3.0' in the optional points section of [the] Qualified Allocation Plan (QAP). Should the developer and architect select these points at initial application[,] use of the appropriate 'Green Discount' schedule will be permitted," with certification from a third-party rater required at Placed-in-Service (SC Housing, Development Utility Allowances webpage). The discount itself is substantial: "Energy Star Certification ... represents 18% in energy savings ... LEED Certification[ is] a 25% energy reduction" (same source).
Separately from the Green Discount, SC Housing publishes its own standard statewide utility allowance tables every year, broken out by region and building type: "Upstate Region," "Midlands Region," and "Low Country Region" schedules, each covering "Single Family House," "Lowrise Apartment (2-4) units," and "Larger Apartment (5+) units," with archives posted back to 2019 (SC Housing, Development Utility Allowances webpage). This is the "statewide utility allowance calculation" referenced as method (c) above.
Underwriting floors: DCR, expense coverage, vacancy, rent/expense trending, and syndication pricing
The debt coverage ratio rule runs on a range with a built-in waiver, not a single hard number: "The development's first year DCR must be within the range of 1.15 to 1.45. A proposed development may exceed the maximum for financial feasibility purposes. In the event the DCR is greater than 1.45, the Authority may increase debt or 'impute debt' ... to calculate the maximum annual tax credit amount allowed. The Authority will waive the 1.45 maximum if the initial projected annual Cash Flow/Unit does not exceed one thousand one hundred dollars ($1,100). The pro-forma must demonstrate maintaining not less than a 1.0 DCR throughout the first 20 years of operations" (2026 QAP, Section IV.P.7). For developments with no repayable debt, a parallel Expense Coverage Ratio applies instead: "a minimum of 1.10 and the initial projected annual cash flow per unit may not exceed $1,100" (Section IV.P.8).
The $3,500-$6,000 operating expense band and the 60% hard cost floor are both current, amended figures -- the QAP as originally drafted showed a $3,500-$5,000 band and a 65% hard cost floor before both were widened by amendment (compare the QAP's own internal tracked-changes text against the March 2026 consolidated restatement). An applicant working from an older copy of the QAP, or from a draft downloaded before the amendment cycle finished, would underwrite to the wrong numbers on both counts.
Reserves: two with real dollar formulas, and one with none at all
The Operating Reserve formula bundles three components: developments must fund "a six (6) month minimum or nine (9) month maximum of annual: Projected operating expenses ...; Replacement Reserves (the greater of Authority minimum per unit and a higher amount required by syndicator and/or lender ...); and Must-pay debt service" (2026 QAP, Section IV.P.2.a). This reserve must be funded at or before the final equity installment, must be maintained through the compliance period, and must "remain with the property at the time of the investor exit" regardless of what the Corporate Ownership Documents say, unless SC Housing has separately approved otherwise.
The Replacement Reserve has its own floor and ceiling: "$300 per unit annually," with "additional reserves ... allowed up to $450 per unit annually, only if required by a syndicator and/or lender" (Section IV.P.2.b). Funding must come from operating cash flow over the first 20 years -- "Lump sum (i.e. pre-funded) replacement reserves itemized in total development costs (TDC) are not allowed," and any pre-funded amount "will be removed from TDC during financial feasibility underwriting regardless if deemed eligible or ineligible basis costs."
By contrast, there is no set dollar formula anywhere in the QAP for a rent-up reserve, an operating deficit reserve, or any other special-purpose reserve. SC Housing groups all of these together as "Other Reserves" -- "interest, transitional, Section 8, working capital, MIP, rent up, etc." -- and simply disallows them from TDC at Placed-in-Service "unless: The total amount of the Other Reserve is identified within the full application submission TDC and includes a descriptive calculation on how such Other Reserve was determined; and The Authority provides pre-approval of the Other Reserve in writing after full application underwriting is completed" (Section IV.P.2.c). Any approved Other Reserve must also carry a sweep provision: remaining funds at the end of the compliance period or sale, whichever comes first, "must be used to reduce outstanding debt on the development." An applicant looking for SC Housing's own prescribed rent-up reserve number, the way some states publish one, will not find one -- it is negotiated case by case.
Where this goes wrong
- Looking for a dedicated "minimum set-aside" section in the QAP the way some states organize it -- South Carolina's federal election surfaces mainly inside the 9%-only Appendix C1 Affordability scoring criterion, and separately (in restated form) in the core QAP's targeting section.
- Reading the QAP's 60%-AMI cap on income-averaging designations (Section IV.M.3) as a state-specific tightening beyond federal law -- it restates the ordinary federal income-averaging test (the average across designated units cannot exceed 60% AMI), not an additional SC-specific restriction.
- Assuming the Appendix C1 Affordability scoring thresholds (54%/56%/58% average-income ceilings; 30%/40%/50% original-set-aside floors, by county income tier) are minimum program requirements -- they are optional, 9%-only scoring thresholds worth 10 points, deeper than the statutory floor, not a mandatory election.
- Citing "MTSP" as SC Housing's income-limit source -- the term does not appear anywhere in the QAP or its appendices; this research inferred HUD-sourced limits from the QAP's own May 1 release-date reference, not from an explicit SC Housing statement naming MTSP.
- Assuming SC Housing's utility allowance options are limited to the standard federal menu -- two of the six listed methods are SC Housing's own: a statewide utility allowance calculation and an Energy-Star/LEED-linked "Green Discount" schedule, on top of separately published regional (Upstate/Midlands/Low Country) tables.
- Trying to claim the Green Discount utility schedule after the fact -- it requires electing Energy Star Version 3.0 points "in the optional points section" at initial application, not simply building to that standard and claiming the discount later.
- Underwriting to a $3,500-$5,000 operating expense range or a 65% minimum hard cost ratio -- both were widened by mid-cycle amendment (to $3,500-$6,000 and 60%, respectively); a draft or cached copy of the QAP predating the amendment will show the old numbers.
- Treating the 1.45 DCR figure as a hard application-killing ceiling -- the QAP explicitly allows exceeding it (with SC Housing imputing additional debt to size the credit down) and waives the ceiling entirely when initial annual cash flow per unit is $1,100 or less.
- Assuming a rent-up reserve, operating deficit reserve, or other special-purpose reserve has a set dollar formula the way the Operating and Replacement Reserves do -- SC Housing groups these as discretionary "Other Reserves" requiring case-by-case pre-approval, with no published formula.
- Pre-funding the Replacement Reserve out of Total Development Costs -- the QAP explicitly disallows lump-sum, pre-funded replacement reserves in TDC and will strip them out during underwriting regardless of basis eligibility.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies