1. Timing Is Everything
Both the LIHTC and RAD programs have detailed, independent processes with unique requirements. Certain milestones must align for a successful closing. For example, the 42M Letter from the LIHTC program requires the submission of the Financing Plan under RAD, while the RAD RCC must be secured before the LIHTC closing. A carefully mapped project schedule is essential when combining the two programs.
2. Experience May Be Required
While experience is always helpful, in some states it’s mandatory. Definitions of “experience” vary, ranging from multifamily ownership to prior LIHTC development history. Organizations may partner with an experienced developer or pursue certifications that demonstrate capacity to stay competitive.
3. Decide on a Development Partner Early
A strong development partner can be the difference between feasibility and delay. For PHAs with little or no LIHTC experience, a developer can help meet state QAP requirements, bring credibility with debt and equity partners, and provide expertise throughout pre-development and operations. Engaging them early maximizes efficiency.
4. Understand the Underwriting Requirements
LIHTC and RAD impose strict underwriting standards, which don’t always align. Key considerations like cash flow, developer fees, and hard cost limits must meet the criteria of both programs. Development partners can help ensure that Pro Formas are fully compliant, improving the likelihood of approval and funding.
5. Keep Up to Date with the QAP
The Qualified Allocation Plan (QAP) varies state by state and is updated annually. Because it defines evaluation and scoring criteria, early familiarity with your state’s QAP can help shape project design and maximize competitiveness. A strong application is critical to securing an allocation in today’s environment.
Ready to Explore Your Options?
Are you curious about using LIHTC with RAD or if RAD could be the right fit for your housing authority’s goals? The HPS Consulting Team at D3G can help. Our repositioning experts will evaluate feasibility, guide you through key requirements, and ensure your application is as competitive as possible. Reach out today to start the conversation.
