"I have a signed purchase agreement -- is that worth 20 points or 15, and what happens to my title work if the seller turns out to hold this parcel in trust?"
What has to be in the application, and what it's worth
Application item 9 (Section VI.A) requires one of the following, in the applicant's name: a purchase agreement or option to purchase signed by both buyer and seller; a warranty deed or title insurance (with a copy of the purchase agreement); a long-term lease equal to or greater than the term of the Extended Use Period; or a contract for deed. Site Control is also a scored category under Readiness to Proceed (Section V.B.2, up to 30 points), and here the QAP's own two internal descriptions of the scoring disagree. The narrative text states: "a recorded warranty deed, a recorded long-term lease, or an approval of Transfer of Physical Assets (TPA) from the appropriate HUD, Rural Development, or SDHDA office for existing projects in the name of the applicant will receive 30 points" and "an enforceable, signed and accepted purchase agreement or option to buy will receive 20 points." Exhibit 7, the Self-Scoring Worksheet, lists the same category as "Recorded Deed -- 30" and "Signed and accepted purchase agreement -- 15." The 30-point figure for a recorded deed matches in both places; the purchase-agreement/option figure does not (20 in the narrative text, 15 in the worksheet). This research did not find anything elsewhere in the document resolving the discrepancy -- a self-scoring model built for a South Dakota deal should flag both figures and confirm the correct one with SDHDA before relying on it.
| Item | What's required |
|---|---|
| #9 -- Site control | Purchase agreement/option (both parties' signatures), warranty deed/title insurance, long-term lease at least as long as the Extended Use Period, or contract for deed |
| #12 -- Zoning status | Written evidence the site is properly zoned, that zoning is not required at the time of application, or that the site is in the zoning process, reflecting the current status of the project's plat |
| #13 -- Plat | A copy of the recorded plat, or documentation that the site is in the process of being platted |
| #29 -- Utilities (if claiming points under V.B.4) | Documentation from each utility provider that service is currently at or adjacent to the site and has capacity to serve the project |
Utilities scoring (Section V.B.4, up to 40 points -- 10 each for water, sewer, electricity, and heat) is explicit that "close proximity or that the utility can be extended does not qualify for points": the documentation has to show current adjacency and capacity, not feasibility of a future extension.
Title work escalates sharply after the award -- and diverges for tribal land
Winning a reservation does not end the site-control documentation obligation; it restarts it on a fixed post-award calendar. "Reservation Requirements Phase 1," due by January 31 of the year following the award notification, adds the reservation fee, a signed pro forma, the ownership entity's registration with the SD Secretary of State, and an FEIN copy. "Reservation Requirements Phase 2," due by June 1 of that same following year, is where the real title work lands: an attorney's opinion that the applicant is the owner of the property in compliance with the Code, and -- in the QAP's own words -- "Copy of the owners and lenders title commitment or a copy of the owner's recorded warranty deed. A BIA Title Status Report for projects on tribally leased land." That second sentence is the entire QAP's tribal-land-specific title provision: for a project on trust or otherwise tribally leased land, the standard title commitment or recorded warranty deed is explicitly replaced with a BIA Title Status Report, a document issued by the Bureau of Indian Affairs rather than a conventional title company, and one that this research did not find any SDHDA-published turnaround-time guidance for. A developer working a tribal-land site should build BIA lead time into the post-award schedule as its own line item, separate from ordinary title company timelines.
Reservation Requirements Phase 2 also requires documentation that every building has been individually surveyed and platted, final architect/engineer-stamped plans, an executed construction contract, and -- separately for new construction versus acquisition/rehabilitation -- either a USPAP appraisal evidencing land value, or a USPAP appraisal evidencing both as-is and as-completed value plus a full Physical or Capital Needs Assessment broken out by site work, building exterior, interior common space, utilities, and each individual unit. SDHDA must approve both the appraiser and the inspector.
Environmental and health due diligence SDHDA does -- and doesn't -- specify
No Phase I Environmental Site Assessment, flood-hazard standard, or wetlands check is named anywhere in the QAP -- confirmed by the same absence noted in Phase 1 of this guide (Section III.G, "Site Suitability," is two generic sentences). What the QAP does specify sits in Exhibit 4's minimum property standards: a passive radon system in every new-construction or substantially rehabilitated unit, tested near completion and "if 4pCi/L or higher the system must be made active and re-tested until results are below 4pCi/L"; lead detection and abatement, but only for rehabilitation projects; compliance with "State of SD DANR asbestos requirements" on rehabilitation; and formaldehyde-free or sealed particle-board products for shelving, cabinets, and countertops. None of this substitutes for a Phase I ESA -- lenders and equity investors will still require one as a matter of their own underwriting even though SDHDA's own QAP does not independently mandate it, and a developer relying on the QAP alone as a due-diligence checklist will miss that gap.
Layering in HOME or Housing Trust Fund dollars changes this picture without the QAP spelling out how: Section II.G states only that "Applications that also request HOME and HTFs must comply with federal regulations for those programs." HOME and HTF are HUD-sourced funds, which brings federal environmental review under 24 CFR Part 58 into the deal as a real, binding requirement -- but the QAP's own text does not describe that review's steps, timeline, or interaction with the rest of the application, leaving a HOME/HTF-layered applicant to source that process from HUD's own regulations rather than from SDHDA's plan.
The market study is its own parallel due-diligence project
Exhibit 2 requires "a complete comprehensive market study... completed within six months of submission by a market analyst who is a disinterested party approved by SDHDA," or by a South Dakota-licensed, currently MAI-certified appraiser meeting the same criteria. Its required contents run well beyond a typical rent survey: site photos and a primary/secondary market area map with a stated basis for the boundaries; a full inventory of existing multifamily developments in the market area broken out by subsidy type (Section 8, HOME, Rural Development), tax credit, and market rate, with vacancy rates and waiting lists; five-year projections of income-eligible households at 50%, 60%, and 80% AMI; population and employment trend data; documented meetings with the local Public Housing Authority and with local planners and community development officials; and an executive summary with the analyst's own opinion on market feasibility and the project's likely impact on existing developments. Because the study has a hard six-month shelf life measured against the fixed late-August deadline, ordering it too early in a due-diligence window that may otherwise run for months is a self-inflicted timing risk.
Where this goes wrong
- Relying on a single point value for a signed purchase agreement or option under Site Control -- the QAP's narrative text (Section V.B.2) says 20 points, its own Exhibit 7 Self-Scoring Worksheet says 15; the 30-point figure for a recorded deed is consistent in both places, but the lower tier is not. Confirm with SDHDA before scoring a deal against either number.
- Treating "close proximity" or an engineering letter confirming a utility "can be extended" as sufficient for Utilities points (Section V.B.4) -- the QAP explicitly disqualifies both; documentation must show the utility is currently at or immediately adjacent to the site with capacity to serve it.
- Assuming the standard title commitment/recorded warranty deed requirement at Reservation Requirements Phase 2 applies unchanged to tribally leased land -- the QAP substitutes a BIA Title Status Report for that specific circumstance, a federal document with its own, SDHDA-unspecified turnaround time.
- Treating SDHDA's QAP as a complete environmental due-diligence checklist -- it does not mention a Phase I Environmental Site Assessment, flood standard, or wetlands review anywhere; the only environmental/health items it specifies (radon, asbestos on rehab, lead on rehab) are property-construction standards, not a site-acquisition screen, and lenders/investors will independently require a Phase I regardless.
- Assuming HOME or Housing Trust Fund layering adds no new due-diligence steps -- the QAP incorporates federal environmental review (24 CFR Part 58) for those funds only by a single cross-reference sentence, without describing the process, so the actual steps and timeline have to be sourced from HUD's own regulations.
- Ordering the Exhibit 2 market study too early in the due-diligence window -- it must be completed within six months of the application submission date, and the deadline is fixed (last working day of August) regardless of when site control was secured.
- Assuming the post-award Reservation Requirements Phase 1 (January 31) and Phase 2 (June 1) deadlines are flexible or negotiable in the way some earlier application deadlines might feel -- both are dated relative to the notification-of-award year and drive the appraisal, survey/plat, and title-commitment/BIA Title Status Report deliverables directly.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies