M id A tlantic Real Estate Journal — 2026 Forecast — January 2026 — 7A
www.marej.com
2026 F orecast
By Austin Pittman, Lawson Checking the boxes; LIHTC applications from a developer perspective ly receive scoring incentives. Key building design deci- application competitiveness but adds complexity.
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ow-Income Housing Tax Credit (LIHTC) applications are a se-
QAP. Elections are the differen- tiator between competitive and non-competitive applications. While elections are voluntary, many elections are required to meaningfully compete. Elections fall into two catego- ries; operational and physical. Operational elections gov- ern how the property will be leased, managed, and operated. They’re the frame- work for income targeting structure, tenant popula- tion, leasing preferences, and rental subsidy require - ments, and require long-term operations and compliance
oversight. The minimum set-aside election establishes project income targeting framework and influences unit mix, achievable rents, underwriting assumptions, and compliance obligations. Many QAPs award points for leasing preferences tied to specific populations or policy objectives, impacting tenant selection plans and marketing strategies. Developers may elect to include rental sub- sidies, such as project-based vouchers to support deeper af- fordability or strengthen proj- ect feasibility. This improves
Physical elections relate to site selection and building design. Site selection is both point-driven and market- driven, and affects location, design, cost, constructability, and operating performance. Proceed with caution; each election can be binding for the life of the compliance and extended use periods. QAPs often prioritize de - velopment in specific market types and targeted redevelop- ment or revitalization areas. Sites in QCTs or DDAs typical-
sions are required at the time of the reservation applica- tion, including accessibility, green building enhancement, and building materials. En- hanced accessibility is often incentivized and affects unit layouts, construction costs, and maintenance. Sustain- ability standards and energy- efficiency are rewarded under QAP scoring and influence upfront costs and long-term operating expenses. Elections related to material quality, continued on page 10A
ries of delib- erate elec- tions. Elec- tions may appear to be simple scor- ing decisions, but each car- ries long- term impli-
Austin Pittman
cations and shape a property’s financial success or failure. To understand why certain elections matter, it’s essential to start with the Qualified Al - location Plan (QAP). The Internal Revenue Code establishes boundaries for the LIHTC program and grants states discretion to define priorities. The QAP is the primary policy instrument through which states translate federal requirements into a competitive framework, es- tablishing selection criteria and scoring priorities that govern which developments receive LIHTC allocations. QAPs may give preference to experienced project spon- sors committed to serving the lowest-income households and ensuring long-term afford- ability. Emphasis is placed on developments in Quali- fied Census Tracts (QCTs) or Difficult Development Areas (DDAs), projects incorporat- ing leasing preferences and accessible design features, and proposals advancing energy efficiency and sustainability goals. Equally important are financial feasibility, cost ef- ficiency, and readiness incen - tives. States expect applicants to show efficient use of resourc - es while demonstrating project feasibility through achievable budgets and evidence of munic- ipal approvals and entitlement progress. These thresholds shape underwriting assump- tions, partnership structures, and operating strategies. Understanding the QAP is not just about winning credits; these are binding, decades-long commitments. Elections impact construction, lease-up, asset management, and compliance monitoring, and decisions must align with operational realities and long- term impacts. After establishing baseline eligibility, the LIHTC appli- cation becomes an exercise in making informed election deci- sions in response to the state’s
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