Low Income Housing Tax Credits & Cost Containment in Maryland, 2016

To encourage cost effective construction, Maryland DHCD has established limits on the dollar amount of construction costs per square foot in the 2016 Qualified Allocation Plan.

Maryland Department of Housing and Community Development (DHCD) 2016 Multifamily Rental Financing Program Guide communicated construction and rehabilitation cost incentives in Section 4.5.3 and allocates a point incentive of negative 8 points maximum.

To encourage cost effective construction, DHCD has established limits on the dollar amount of construction costs per square foot. While some unique aspects of a given project may reasonably require greater investment (e.g. redevelopment of an historic building on a brownfield site), DHCD also wants to encourage selection of projects that achieve various public goals—including taking on challenging sites, building high quality projects, and serving populations with unique needs—while still doing so for competitive costs. To this end, DHCD will deduct points for projects that exceed the cost limits further described below.

DHCD will consider requests from sponsors of projects involving adaptive re-use of previously nonresidential buildings; substantial historic rehabilitation; or redevelopment/reconstruction of housing determined to be beyond repair to be evaluated against new construction cost limits rather than the rehabilitation limits below.

For the purposes of determining the per square foot cost, DHCD includes all on-site and off-site development and the total construction contract less any construction contingencies. This total is then divided by the gross square footage of all buildings being built or renovated. Buildings with parking structures or internal parking will be evaluated on a case-by-case basis. Applications should include area and square foot cost for parking related construction separate from occupiable building on DHCD Form 212.

DHCD will review the cost limits before each competitive round and revise them as appropriate based on market conditions and information provided by published cost indices, such as McGraw Hill’s Engineering News Record. Changes will be announced at the pre-round information session and posted to DHCD’s website at least thirty (30) calendar days before the application deadline.

Unless a waiver has been requested and granted in accordance with Chapter 5 of this Guide, up to eight (8) points will be deducted from any large project, and up to six (6) points deducted from small projects, with construction costs per square foot in excess of the following limits:

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National Housing Trust

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