Buncombe staff recommend changes to N.C. tax-credit rules, authorize chair to submit comments

Buncombe County staff on Oct. 8 recommended a set of formal comments on the North Carolina Housing Finance Agency's 2026 Qualified Allocation Plan and the subcommittee authorized the chair to submit those comments on the county's behalf.

County staff told the subcommittee the suggested comments focus on six items: extending an agency-designated 30% "basis boost" to 4% low-income housing tax-credit projects as well as 9% projects; allowing counties to qualify for multiple bonus-point categories; clarifying how Community Development Block Grant-Disaster Recovery (CDBG-DR) funds should and should not be treated in tax-credit awards; offering scoring flexibility for site evaluations in storm-impacted areas; removing point deductions for projects that defer more than 25% of developer fees and keeping a consistent 50% deferral cap after award; and supporting NCHFA's stated intent to allocate at least one tax-credit award to Buncombe County in the regional competition.

Why it matters: the QAP sets scoring, eligibility and subsidy rules that shape which affordable rental projects are financially feasible. Staff said changes could help Buncombe County recover housing stock damaged by recent storms and increase the feasibility of projects serving very low-income households.

Details of the county's recommendations

- Basis boost: Under current federal and state practice, projects located in Qualified Census Tracts or designated Difficult Development Areas (DDAs) can receive a 30% basis boost that increases the number of tax credits a project can claim; county staff noted that NCHFA's implementation currently limits that boost to 9% competitive credits and recommended expanding eligibility to 4% tax-credit projects as well. Staff said doing so would help increase the supply of affordable units in storm-impacted areas.

- Bonus points: Staff noted NCHFA proposed offering bonus points to counties identified by the N.C. Department of Health and Human Services (DHHS) as priorities under the Olmstead settlement and separately to "mid counties" most impacted by recent storms. NCHFA's draft ties applicants to only one of those points. Staff recommended allowing projects to claim both bonus opportunities where both apply.

- CDBG-DR and LIHTC: The QAP draft indicates that applicants receiving CDBG-DR may be treated as part of their tax-credit award. County staff recommended caution. Their comment says CDBG-DR should be usable to combine with tax-credit financing to make projects feasible, but cautions against treating CDBG-DR as a fungible substitute inside the tax-credit award in ways that could move benefits away from the directly impacted communities.

- Site-score flexibility: Because the storm damaged neighborhood commercial services and infrastructure, staff asked NCHFA to allow flexibility in site-scoring criteria (for example, driving-distance measures to grocery stores, pharmacies and transit) or accept documentation of pre-storm resources so that projects in impacted communities are competitively scored.

- Developer fees: In prior guidance, NCHFA permitted applicants to defer up to 25% of developer fees during application with the underwriting allowing up to 50% after award. Staff recommended removing point penalties tied to deferrals above 25% and keeping a consistent 50% cap to reduce budget churn during applications and underwriting.

- Regional award assurance: Staff noted NCHFA's draft indicates Buncombe County would receive at least one award in the metro competition. The subcommittee's draft comments reiterate support for that assurance.

Public comment and action

Jeffrey Barton of Mountain Housing Opportunities told the subcommittee he appreciated staff's QAP comments and urged continued engagement with NCHFA. During the meeting the subcommittee voted to authorize the subcommittee chair to sign and submit the draft comment letter to the North Carolina Housing Finance Agency. The motion carried; the chair will send the final letter after staff incorporate any final edits.

What wasn't decided or specified

NCHFA has a public comment and revision process; county staff noted the agency may publish a second draft for further comments. The subcommittee requested staff continue coordination with local stakeholders and developers as NCHFA finalizes program guidance.