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HRA housing staff propose updates to Low Income Housing Tax Credit priorities for 2026–27 cycle
Summary
Housing staff outlined proposed changes to the 2026–27 Qualified Allocation Plan (QAP) and procedural manual for Low Income Housing Tax Credits (LIHTC), including point adjustments for homelessness, expanded transit buffers, removal of NOAH category and added consideration for childcare and multilingual services.
Housing department staff presented proposed changes to the city’s Low Income Housing Tax Credit (LIHTC) qualified allocation plan at the HRA meeting on May 7, 2025, ahead of a resolution expected next week and final joint board action June 11.
Joe Sthana, housing director in the Department of Planning and Economic Development, summarized the local funding landscape and explained the mechanics of the federal LIHTC program. "States receive housing tax credit allocation from the IRS and Minnesota has suballocators," he said, adding that the joint board must approve a QAP that sets priorities for the allocation cycle.
Key proposed changes for the 2026–27 QAP include: - Adjusting points for homeless units (reducing points to improve long-term financial viability: e.g., projects proposing fewer homeless units would score lower than under the prior rubric). - Maintaining preservation criteria while adding incentives for creation of new units and explicitly encouraging units in areas of opportunity. - Removing the Naturally Occurring Affordable Housing (NOAH) points category due to current market conditions. - Expanding the transit buffer for points from 0.25 miles to 0.5 miles to align with Metro Transit assumptions (staff said the initial reference to buffer direction was a typographical error and should be interpreted as expansion). - Adding childcare centers and multilingual services to the list of enhanced services and clarifying measurable actions under equity and cultural integration scoring.
Sthana estimated a 2026 LIHTC allocation of about $1,000,000 in credit, which—at current pricing roughly $0.80–$0.85 per credit—translates to approximately $8 million to $8.5 million in potential equity for projects using 9% credits. He emphasized that the dollar amount appears differently on project budgets as tax-credit equity or syndication proceeds.
Commissioners generally praised staff engagement during the drafting process. Commissioner Naker thanked staff for incorporating prior feedback. Commissioner Provodzinski and others supported the expanded transit buffer and the mixed-use incentives, noting the potential to reduce household transportation costs if affordable housing sites are near transit and services.
Next steps: staff will bring an HRA resolution for endorsement at the next HRA meeting, after which the joint board will meet June 11 for final approval and staff will release the 9% LIHTC RFP for this cycle.
Ending
The HRA received the presentation and will consider a formal endorsement the following week before the joint board’s June meeting.
