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Legislative auditors: HPIP data inconsistent; affordable housing tax credits awarded but not yet claimed
Summary
Legislative auditors told the committee they could not produce a reliable statewide total of HPIP credits earned and used because Department of Revenue datasets were inconsistent; auditors also reported KHRC has awarded about $73 million in state affordable‑housing credits that investors have not yet claimed.
Legislative Post Audit staff summarized results of a limited‑scope review of two state tax credit programs: the High Performance Incentive Program (HPIP) and the Kansas Affordable Housing Tax Credit (KAHTC). The audit, limited in scope, found data‑quality problems for HPIP that prevent a reliable statewide tally of credits earned and used and quantified awarded KHRC credits that have not yet been claimed.
HPIP data limitations - Data inconsistencies: Josh Luthawi told the committee auditors compared three CADOR (Department of Revenue) datasets and found large inconsistencies for the same tax years. For example, for tax year 2019 one dataset showed businesses earned ~$900 million in HPIP credits; another showed ~$230 million; a third showed ~$160 million. Because of data inconsistencies and the limited hours available for a limited‑scope audit, auditors did not report definitive statewide earned/used totals for HPIP and recommended CADOR reconcile and correct its records. - Root causes described by CADOR: Department staff said the HPIP program is complex because many qualifying businesses are pass‑through entities that allocate credits to shareholders, including layered pass‑throughs; CADOR officials said manual adjustments and tracking are required and that errors and tax‑system limits contributed to inconsistencies. CADOR told auditors it is reviewing and correcting its data and will report back to the committee.
Kansas Affordable Housing Tax Credit (KAHTC): awards and potential liabilities - Awards, not yet claimed: Auditors reported KHRC had awarded about $73 million in KAHTC credits through August 2025. KAHTC works differently from annual single‑use credits because awards are typically claimed annually for 10 years; a $1 million award can translate to up to $10 million in claimed credits over a decade. Auditors illustrated a stacking effect: credits awarded across multiple years can cumulate so annual foregone revenue may grow over time as awards come into service and investors begin using credits. - Potential scale: Under statutory award limits enacted in 2025, auditors estimated about $100 million in awards could be made between 2023 and 2028; if claimed over the usual 10‑year profile this could represent about $1 billion in potential foregone state revenues. Auditors cautioned this is a forward‑looking estimate subject to assumptions about when projects complete, whether investors carry credits forward, and other behaviors.
Committee follow‑up: CADOR agreed to continue reconciling HPIP datasets and to provide corrected figures to the committee. KHRC and auditors noted that no KAHTC credits have been claimed yet because investor use follows project completion and tenant occupancy.
