What are QAPs and Why are they so Important to Phius?

Isaac Elnecave, a member of the Phius certification team, breaks down Phius’ involvement in the Qualified Action Plans of various states, specifically Illinois and Michigan.

Over the last few weeks, Illinois and Michigan have proposed (and in the case of Michigan, finalized), the latest version of their Qualified Allocation Plans (QAP).  What is a QAP?

A good working description of the QAP can be found at the Illinois Housing Development Agency website: 

The Qualified Allocation Plan (QAP) sets forth the criteria for evaluating all projects that apply for a tax credit allocation. The QAP sets forth the rules under which the IHDA offers affordable housing development funding in the form of federal Low Income Housing Tax Credits (LIHTC). The QAP describes the selection criteria and application requirements for receiving these federal tax credits and tax-exempt bonds. 

Illinois Housing Development Agency Website

The LIHTC, a federal program administered by states, incentivizes the construction of low income housing.  States determine who receives the tax credit through the evaluation of the QAP. 

The QAP is a points-based system. A developer submits a proposed project to the housing agency. The proposed project then receives points based on whether they achieve criteria set out in the QAP. Points can be awarded under a variety of categories such as (please note that each state has its own characteristics): 

• Building characteristics, 
• community characteristics, 
• development team, 
• financing and 
• sustainability. 

For example, under building characteristics, a project can receive points for having an increased number of accessible units and engaging in cost containment. Under community characteristics, a project can receive points for being located near public transit. Under sustainability (the category of most interest to Phius readers), a project can receive points for meeting either energy efficiency or green building standards. 

The QAP presents a great opportunity to incentivize the construction of low-income buildings to the Phius standard. In Pennsylvania, when the Pennsylvania Housing Finance Authority awarded significant points to projects built to the Phius standard, the number of projects built to the Phius standard grew substantially.

Illinois 

In the new Illinois QAP, a project that meets the basic Phius designation — Phius CORE — would receive 10 points. If the project meets the Phius ZERO certification, it would receive an additional 3 points, for a total of 13. Thirteen points represents a significant percentage of the maximum 100 points. 

Moreover, the agency structured the point values so that a developer could meet both a green designation such as Enterprise Green Communities and Phius. This provides an additional pathway as receiving a Phius certification is one way of meeting the EGC energy designation.  

The Illinois QAP can be found here.

Michigan 

In Michigan, projects need to meet a minimum threshold requirement (such as EGC), and can receive an additional four points by achieving a Phius certification. So, much like in Illinois, Phius can work in tandem with green standards such as Enterprise Green Communities.  For example, a project that incorporates a Phius certification as part of the EGC requirements would meet the threshold requirement and receive an additional four points toward the overall score — an approach that leverages the strengths of both standards.  

The Green Standard requirements of the Michigan QAP can be found here.

Ultimately, Phius hopes to get its standard as part of the QAP in every state. Currently, there are about a dozen states, primarily in the Northeast, that incorporate Phius into their QAPs. The work in Michigan and Illinois charts a path to broadening the geographic scope of this important incentive program to help promote the construction of Phius certified low-income housing across the entire country.