"WCDA doesn't publish its own current LIHTC rent and income limit table, and its Income Averaging rules run to almost twenty separate sub-conditions -- so where do the actual numbers come from, what utility-allowance method does WCDA actually require, and what debt-coverage, vacancy, and reserve figures does the pro forma have to clear?"
Income Averaging in Wyoming: the federal test plus roughly nineteen WCDA-specific conditions
WCDA does not simply accept the federal Income Averaging (IA) test as-is. Developers electing IA must satisfy a long, itemized list of additional requirements "in addition to any IRS requirements under 42(g)(1)(C)." The practical effect is that IA in Wyoming carries real cost and real diligence burden beyond the federal election itself.
| Condition | What it requires |
|---|---|
| Project size / history | Fewer than 25 units will not be approved for IA absent compelling, case-by-case circumstances reviewed before the Letter of Intent; re-syndications of a previously credited or LURA-encumbered property are ineligible |
| Extra fees | A $2,500 application fee increase (to cover additional underwriting) plus an additional $10 per unit per year in ongoing LIHTC monitoring fees |
| Income tiers | Income and rent levels must be delineated in 10% AMI increments, and units at different income tiers must be equitably distributed across bedroom sizes and unit types |
| Market study | Must show proposed tenant-paid rent for every affordable unit type at every income tier at least 10% below the weighted average rent for comparable market-rate units, and must independently demonstrate sufficient demand at every proposed unit/income combination |
| Lender/investor sign-off | Written statements from all construction and permanent lenders, syndicators, and the equity investor approving the IA election |
| Multi-building election | All buildings in the project must be treated as one multiple-building project on IRS Form 8609, line 8b |
| Compliance history | WCDA reserves the right to deny IA outright based on the property manager's prior compliance record, and may require additional third-party compliance monitoring at the Developer's expense for the first three years after placement in service |
| Ongoing reporting | A special annual report documenting IA outcomes, in a WCDA-provided format, on top of ordinary IRS and WCDA compliance reporting |
2027 AHAP, Section V.I, Projects with LIHTC Funding, item 1 (sub-items a through u). The full list also covers disclosure of any outstanding 8823 findings or failing Management and Occupancy Reviews anywhere in the applicant's or manager's portfolio, unit-floating rules that keep the count within each income designation fixed per the LURA, and Fair Housing compliance.
Where the actual rent and income numbers come from: Novogradac's calculator, not a WCDA table
Unlike agencies that publish their own current LIHTC rent and income limit schedule, WCDA's own Affordable Rental Housing Compliance Manual sends owners elsewhere: "WCDA has posted the link to the Novogradac Rent and Income Calculator on WCDA's website, and owner/agents are required to go to that site for LIHTC rent limits," with a footnoted "Quick Tip" that the calculator is reached from the front page of www.novoco.com. WCDA does separately publish its own current-year income and rent limit tables for its HOME and NHTF programs directly on its website (state-specific PDFs updated annually) -- so a project layering LIHTC with HOME or NHTF funds is working from two different limit sources depending on which subsidy is being tested.
The Compliance Manual also spells out the gross-rent math WCDA expects: an assumed 1.5 persons per bedroom (1 person for a studio/efficiency), with the corresponding household-size income limit multiplied by 30% and divided by twelve to reach maximum gross monthly rent; for an odd bedroom count (producing a half-person figure, e.g., 4.5 persons for a 3-bedroom unit), the income limits for the two adjacent household sizes are averaged before applying the same 30%/12 calculation. All resulting monthly rents are rounded down to the nearest dollar.
Utility allowances: WCDA doesn't run its own schedule either -- and it bans two shortcuts the IRS allows
WCDA's Compliance Manual states plainly: "WCDA does not calculate or provide UAs for projects that it monitors, although it does inform when state PHA UAs are published." Utility allowances instead follow the standard Treasury Regulation 1.42-10 hierarchy: an RD-approved allowance controls if the building (or any tenant in it) receives Rural Development assistance; a HUD-determined allowance controls if the building's rents and utility allowances are otherwise HUD-regulated (e.g., PBRA Section 8, HOME); and for every other building, the owner chooses among a PHA estimate, a written local utility-company estimate, the HUD Utility Schedule Model (HUSM), or an independently certified Energy Consumption Model (ECM). The 2027 AHAP layers its own sequencing on top for LIHTC applications specifically: "The HUD Utility Schedule Model MUST be used during the application process. Once the project is built and has an energy consumption history it may utilize the Energy Consumption Model...by a properly licensed engineer," with the same method required for every unit in the project.
| Practice | Federal (IRS) position | Wyoming position |
|---|---|---|
| Submetering (tenant pays owner, owner pays utility company) | Not disallowed by the IRS as a utility-allowance method | "the Wyoming Affordable Housing Plan does not allow submetering of utilities" |
| Ratio Utility Billing Systems (RUBS) | Also not permitted by the IRS for utility-allowance purposes | Also disallowed by WCDA -- both agree here |
WCDA Affordable Rental Housing Compliance Manual (Aug. 2025), Chapter 3, Utility Allowances section. Submetering is the one place Wyoming is explicitly more restrictive than the bare federal rule.
Utility allowances must be updated at least once every calendar year, with documentation submitted to WCDA annually. Any new UA requires 90 days' advance notice to both residents and WCDA before it takes effect; for PHA-based estimates specifically, owners must check for PHA updates at least every 60 days and implement any change within 90 days of the PHA's own effective date. After a project's initial UAs are set, no re-analysis is required until the earlier of 90% occupancy sustained for 90 days, or the end of the second year of the credit period.
Underwriting floors: a DCR band tested across the whole pro forma, a size-tiered vacancy schedule, and a flat replacement reserve
WCDA's debt-coverage standard is a band, not a single number, and its own text is explicit that hitting it once is not enough: "the debt coverage ratio, using rent at the committed amount, must be between 1.20x [1.15x for Rural Housing Service (RHS)] and 1.50x for foreclosable debt plus HOME and/or NHTF loans...The debt coverage ratio requirements must be met and proven throughout the term of the proforma to ensure the financial success of the project." Projects of twelve units or fewer may, at WCDA's sole discretion, be underwritten to 1.30x instead, "in order to ensure long term financial viability." Reading "throughout the term of the proforma" literally, this is a full-term test rather than a single closing-year snapshot or a year-by-year rolling test -- confirm WCDA's actual re-underwriting practice directly if a deal is underwritten close to either edge of the band.
| Project type | Vacancy assumption |
|---|---|
| Acquisition/rehabilitation (ordinary) | The property's own actual average vacancy rate for the trailing 3 years |
| New construction, or acq/rehab where the property was significantly dilapidated -- 1 to 24 units | 10% |
| Same, 25 to 35 units | 8% |
| Same, 36 units or more | 7% |
2027 AHAP, Section V.H, Program Requirements, items 20-21. The step-down schedule is keyed to project size, not a flat statewide rate.
| Project size | Maximum operating expense per unit per month |
|---|---|
| ≤ 24 units | $525.00 |
| 25-35 units | $473.00 |
| 36-47 units | $441.00 |
| > 48 units | $420.00 |
Figures assume the owner pays water, sewer, and trash while tenants pay electric and gas; WCDA adjusts the figure if a different party pays a given utility. A group home under one roof counts as one unit for this table regardless of its actual bedroom count (e.g., a 3-bedroom group home is one 3-bedroom unit, not three 1-bedroom units).
Where this goes wrong
- Assuming WCDA publishes its own current LIHTC rent/income limit table -- it does not; its Compliance Manual sends owners to the Novogradac Rent and Income Calculator at novoco.com, while WCDA separately publishes its own HOME and NHTF limit tables directly.
- Treating Income Averaging as a simple federal election -- WCDA layers roughly nineteen additional conditions on top, including a 25-unit floor, a re-syndication bar, extra fees, a market study showing proposed rents at least 10% below comparable market rents, and WCDA's own discretion to deny the election based on the property manager's compliance history.
- Assuming submetering is acceptable because the IRS permits it -- the Wyoming AHAP itself disallows submetering outright, a stricter-than-federal rule specific to this state.
- Using one flat vacancy assumption across every deal -- new construction (and significantly dilapidated acquisition/rehabilitation) runs a unit-count-keyed step schedule (10%/8%/7%), while ordinary acquisition/rehabilitation uses the property's own trailing 3-year actual average instead.
- Assuming the debt-coverage test is satisfied by hitting the number once at closing -- WCDA's own language requires the band to be "met and proven throughout the term of the proforma."
- Applying the same 1.20x DCR floor to a Rural Housing Service (RHS/USDA)-financed deal as to any other -- RHS deals get a 1.15x floor instead.
- Assuming the $250/$300 per-unit Replacement Reserve escalates annually by some standard percentage -- no WCDA-stated escalator for that figure was found in the AHAP text; confirm directly with WCDA before modeling one.
- Using the $250/unit senior new-construction Replacement Reserve rate for a senior rehabilitation deal -- any rehabilitation project (senior or family) uses the higher $300/unit figure; only new-construction senior projects get $250.
- Missing that Initial Project Reserves funded above 6 months of expenses are excluded outright from eligible basis and the gap calculation, not merely discouraged.
- Treating the Operating Expense Limitation as a flat per-unit number -- it steps down as project size increases (≤24, 25-35, 36-47, 48+ units) and assumes a specific owner/tenant utility-payment split that must be adjusted if the real split differs.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies