Print this page

Housing Tax Credits

The Low Income Housing Tax Credit Program was designed as an incentive for construction and rehabilitation of housing for low-income households.

Created by the Internal Revenue Code of 1986, the Housing Tax Credit Program offers a reduction in tax liability to owners, subject to restrictions.  The annual housing tax credit amount is intended to provide the owner or investor a return which provides a "present value" of either 30% or 70% of the qualified costs of the low-income units in the development.  Depending on the project type, the qualified project costs (depreciable costs) will be eligible for either 30% present value (correlating to 4%) or 70% present value (correlating to 9%).  The maximum allowable credit amount is determined by multiplying the annual percentage rate (approximately 4% to 9%) by the qualified costs attributed to the designated low-income units in the project.

Developers of housing tax credit projects typically raise equity capital for their projects by syndicating the tax credits to investors who are willing to invest in the project. The investors' return is the annual tax credit and other economic benefits generated by the project.  The U.S. Department of Treasury annually allocates in excess of $2.5 million to South Dakota.  SDHDA, as the credit-issuing agency, is responsible for the administration of the tax credits.

2018 Housing Tax Credit Applicants

Applications are due annually on the last working day of August at 5:00 p.m. Central Time. Completed applications must be delivered (via U.S. Postal Service, private mailing service, or hand delivery) to SDHDA by 5:00 p.m. Central Time on the applicable due date. Applications via facsimile or e-mail will NOT be accepted.  
pdf HTC Income Averaging Policy
(22 KB)

$3.863 million available
$772,600 per project
$965,750 per developer
$386,300 non-profit set aside

On August 1, 2018, the SDHDA Board of Commissioners approved Resolution 18-08-N, authorizing the use of the Income Averaging set aside for certain HTC Projects that are in the development process.  Based on the approved resolution, the following policy for Income Averaging will apply to all future HTC applications.  This policy supersedes any Income Averaging information in the 2018-2019 HTC QAP.

  • Up to 20 percent of the affordable units in the project may be rented to tenants whose incomes are 80 percent or less of the area median income (AMI).
  • The rents for all units above 60 percent AMI may not exceed the 60 percent AMI rent unless documented and approved by SDHDA. 
  • Owner will only be allowed to increase rents above 60 percent AMI with prior approval from SDHDA.  
  • A rent comp study must be provided to document the marketability of the 70 or 80 percent AMI rents. And the rents charged must meet the SDHDA standard of 85 percent of the 70 or 80 percent HTC rent limit for Sioux Falls and Rapid City or 80 percent of the 70 or 80 percent HTC rent limit for all other communities. 
  • The project must maintain the minimum set aside of 40 percent of the units being rented to tenants whose average income is at or below 60 percent AMI.  
  • Designated income levels can only be set at 10 percent increments from 20 percent AMI to 80 percent AMI.
  • All units for the various AMI levels must be proportionately disbursed among the different unit sizes and buildings.   
  • Once the unit designations have been made, the owner will not be allowed to make additional changes. The unit designations will be disclosed in the Declaration of Land Use Restrictive Covenants.

pdf HTC Qualified Allocation Plan (595 KB)

pdf HOME-HTC Application* (2.33 MB) *Applicants are no longer allowed to submit utility allowance calculations from their local Public Housing Authority. Applicants may document utility calculations from service providers, use the HUD Utility Schedule Model, or they may utilize the SDHDA Utility Allowance Worksheet to request the utility calculation from SDHDA. Please allow ten working days for the calculation of utilities from SDHDA.  Request for utility allowance calculations must be received by August 10, 2018.  For more information regarding the worksheet or utility calculation, please contact Lorraine Polak at lorraine@sdhda.org or by calling 605-773-3181

pdf Utility Allowance Worksheet (371 KB)

spreadsheet HOME-HTC Pro Forma (64 KB)

pdf Non-profit Questionnaire (144 KB)

pdf Housing Opportunity Fund Supplemental Application (153 KB)

pdf HOME Program Allocation Plan (1.08 MB)

HTC-Carryover and Final Cost Certification Forms

pdf 2017 HTC Reservation List (19 KB)

pdf HTC Cumulative Reservation List (250 KB)

*You will need Adobe Acrobat to fill out the Application form. In order to save the Application form, you will need to have Adobe Acrobat Professional 7.0

Call or e-mail Scott Rounds, Housing Development Officer, with your Housing Tax Credit questions.
Phone: (605) 773-4532


Subscribe to Our Blog (Click Here)