LIHTC Market Study and Feasibility Study for 9 Percent and 4 Percent Tax Credit Developments

Every state agency administers the credit under a qualified allocation plan, and nearly every QAP adopts the National Council of Housing Market Analysts' Model Content Standards, updated in September 2025, as the base for its market study requirement, then adds its own numeric thresholds. The thresholds are the whole game. A 72-unit family development can have deep demand, a strong site and a clean capital stack and still fail a QAP's rent advantage test in a market where the HUD income limits sit high relative to local rents, and the agency will not score it. MMCG's LIHTC work therefore begins with the agency's manual, not with the market, and the asset-class methodology on the multifamily feasibility study page is applied through that lens.

The three tests that bind most often are rent advantage, capture rate and stabilization. Georgia DCA's 2026 Market Study Manual states the rent advantage rule in one sentence: rent advantage must be at least 10 percent for 60 percent AMI or lower designations, and 70 or 80 percent AMI rents must be below achievable market rent. Its formula divides the gap by the proposed rent, not the market rent, and market rent must be adjusted for concessions and for owner-paid utilities before the comparison is made. The 2026-2027 QAP caps the overall capture rate at 30 percent in the metro pool and 35 percent in the rural pool, caps capture by bedroom type within each income segment at 60 percent, and limits three-bedroom units to 40 percent and four-bedroom units to 50 percent of the project. The stabilization standard is 93 percent occupancy, the study must state the months required to reach it, and a written explanation is required where vacancy and stabilization fall outside the agency's maximums of 7 percent and 24 months. Texas TDHCA fails a project outside a rural area that targets the general population where the gross capture rate or any income-band capture rate exceeds 10 percent, or 15 percent for tax-exempt bond developments in a metropolitan area above one million. North Carolina defines its absorption standard as the time to reach 93 percent occupancy. California requires proposed rents at least 10 percent below rents for the same unit types at comparable market-rate properties.

The states follow three procurement models, and a sponsor has to know which one applies before commissioning anything. In the first, the agency procures the study itself: the North Carolina Housing Finance Agency contracts directly with market analysts and covers the cost from the application fee, and Florida Housing Finance Corporation orders the market study for every request for applications at the onset of credit underwriting. In those states a sponsor's own study is a pre-application feasibility tool, and a good one determines whether the application is worth filing, but it is not the study the agency relies on.

In the second model, the applicant procures the study from an analyst on the agency's approved list. Georgia DCA requires the analyst to be on its approved list and the study to be dated no more than six months before the application. Texas requires a market analysis prepared and certified by an approved qualified market analyst, with the list refreshed annually on or about November 1; the April 2026 list carries 16 firms. Ohio OHFA requires an approved market study provider, with its list updated April 22, 2026, and a study updated or approved within 12 months. Virginia Housing accepts only its approved analysts for a credit reservation.

In the third model, the applicant procures the study from any independent analyst who meets the agency's guidelines. California TCAC requires an independent third party with no identity of interest with the development's partners, a study prepared or updated within 180 days of the filing deadline, and content to its own guidelines. Michigan MSHDA leaves the price and terms of the study to the applicant and the market study firm, and publishes guidelines, revised March 14, 2025, that are based on the NCHMA standards but depart from them in places.

Independence is enforced by certification. Georgia's form requires the analyst to affirm no interest in the project, no relationship with the ownership entity, and that compensation is not contingent on the project being funded. MMCG's fixed-fee, delivery-based terms satisfy that certification on every engagement.

The 2026 income limits make the rent advantage test harder in low-rent markets than it has been in years. HUD's multifamily tax subsidy project limits took effect May 1, 2026, and in many non-metropolitan and small-metro areas they rest on HUD's state floor rather than on local income, so the 60 percent rent limit lands closer to the market rent than the local economy would suggest. In Macon-Bibb County, Georgia, the 2026 four-person limit at 50 percent of area median income is $38,500 against a median family income of $74,400, which puts the 60 percent two-bedroom gross rent at $1,039 in a market whose median gross rent is $1,066 and whose newer market-rate communities are advertising two weeks free. Against the newest Class A comparables the 60 percent tier still clears 10 percent by a wide margin; against the older stock in the central and eastern parts of the county it does not, and the primary market area the analyst draws decides which comparables count.

That is the finding in MMCG's model study on a 72-unit family development in Macon: the all-60-percent program is not feasible as proposed in a market area of older stock, and it becomes feasible when 44 units move to the 50 percent tier, where the advantage runs above 30 percent, and the remaining 28 units are placed at 70 and 80 percent of area median income and priced just below market, which is all the QAP requires of them. The weighted average stays below 60 percent. The lesson travels: in any market where the state floor sets the limits, the 50 percent tier and the upper tiers together pass where a flat 60 percent program fails, and the study's job is to find the mix before the application does.

Utility allowances are part of the arithmetic. The agency's test is run on net rents, so the study applies the public housing authority's or the agency's own allowance schedule for the building type and the tenant-paid utilities, and a schedule that is high relative to the gross rent limit can erase the advantage on its own. MMCG models the allowance by bedroom size and building type from the current schedule, states the resulting maximum net rents by tier, and runs the comparison on the same utility basis as the comparables.

The agency's capture rate is a fraction whose denominator is the income-qualified renter households in the primary market area: those with incomes between the minimum needed to afford the proposed rent at the agency's affordability ratio, 35 percent of income for families in Georgia and 40 percent for seniors, and the maximum allowed at the unit's income tier. The study sizes that band from the American Community Survey's renter household income distribution, projects it to the placed-in-service date, and divides the proposed units into it by tier and by bedroom. In a county where the renter median household income is near $31,000, as in Macon, the 50 to 80 percent band is real but narrow, and a study that does not pull the household income table will overstate it.

The numerator includes the subject and every competing affordable unit in the pipeline, and the agency expects the analyst to inventory the existing LIHTC, USDA and HUD-assisted stock with its occupancy and waiting lists, and to apply any rule that limits new awards near underperforming projects. Georgia's QAP, for example, disqualifies a market area in which more than two DCA-funded projects have physical occupancy below 90 percent; that 90 percent figure is a screen on the competing stock, not the subject's stabilization standard, which is 93 percent. The study states both and does not confuse them.

Each MMCG LIHTC engagement delivers:

For a 4 percent bond transaction or a Section 515 preservation, the study is scoped to the capital needs assessment, the rental assistance and the permanent loan sizing rather than to new demand; that work is described on the USDA multifamily feasibility study page.

The thresholds change by state and by year, and the study is written to the adopted QAP for the round, not to a national rule of thumb. Georgia's 2026-2027 QAP, final December 8, 2025 and amended August 12, 2026, sets the 9 percent application deadline at May 15, 2026, allows a request based on 130 percent of eligible basis for projects in stable communities and for rural projects without DCA-administered federal funds, and breaks ties among family applications in favor of those with 20 percent or more three- and four-bedroom units and those requesting the least credit per low-income unit. Texas publishes its approved analyst list on or about November 1 and runs a uniform application cycle under 10 TAC Chapter 11. North Carolina's 2026 QAP sets threshold criteria for new construction on the project's capture rate, its absorption rate and the vacancy rate at comparable properties. Ohio's 9 percent round requires a study by an approved provider updated within 12 months. California's committee regulations, adopted December 11, 2024, set the 10 percent rent differential and the 180-day currency rule. Florida orders the study itself at credit underwriting, so a Florida sponsor's own study is a go or no-go tool before the request for applications is answered. MMCG confirms the adopted plan, the round dates and the analyst rule for the state before scoping, and tells the sponsor in the proposal which model applies.

MMCG's LIHTC model studies apply the methodology end to end on real markets, with the agency's thresholds, the full sources and uses, coverage by year and the stated determination:

The six-study program across every multifamily financing path is listed on the multifamily feasibility study page.

MMCG engagements start at $4,900 with fixed-fee scoping; the quote is issued before work begins and does not depend on the conclusion, which is what the agencies' independence certifications require. Standard delivery is 9 to 16 business days, with rush delivery available from 5 business days. Payment terms are 50 percent at engagement and 50 percent on delivery of the final report; no part of the fee is contingent on the application being funded. Every study carries MMCG's written acceptance guarantee: revisions required by the agency or the lender are made at no additional cost. Studies are prepared under the direction of Michal Mohelsky, J.D., FMVA, Practicing Affiliate of the Appraisal Institute.