John Day

The Low-Income Housing Tax Credit is an important tool in the affordable housing industry.

Introduction

The journey to develop mission-aligned affordable housing through the Low-Income Housing Tax Credit (LIHTC) program is both inspiring and daunting. For private non-profits, the first —and often most formidable — obstacle is the LIHTC application itself. It’s not just a form — it’s a massive, multifaceted process requiring months of preparation, hundreds of pages of documentation, and strategic coordination across dozens of stakeholders.

While it’s always an uphill climb, a clear understanding of its complexities – along with strategic partnerships and a thoughtful timeline – can help you tackle the application with confidence.

Understanding the Complexity

The LIHTC application routinely exceeds 400 pages. From market assessments, partnership documents, financial pro formas and architectural plans, each piece must be complete and in alignment. Long-term planning and preparation are key to an application that demonstrates both credibility and readiness.

Building Effective Partnerships for Collaboration

A successful LIHTC application doesn’t happen in a silo. Applicants engage design teams, contractors, attorneys, zoning administrators, co-developers and internal staff and board members. Relationships matter. When multiple partners are involved, open communication, defined roles, and clear expectations are critical. Misunderstandings and delays can put an entire application at risk.

A successful LIHTC application doesn’t happen in a silo.

Managing Stakeholders

In many LIHTC projects, over 40 stakeholders may be involved—zoning officials, city agencies, community representatives, investors, lenders, consultants, and more. Each one has the power to move your timeline forward—or stall it.

As highlighted by Terner Center, stakeholder coordination is a top friction point in affordable housing development. Successful applicants build time into their schedules for stakeholder engagement and maintain strong documentation trails to avoid misalignment across parties. This is especially critical when a project has local sensitivities—whether political, demographic, or regulatory.

Securing Financial Commitments

LIHTC projects often patch together a collection of small and large grants to complete a capital stack. After all, LIHTC typically funds only between 50 and 70 percent of total equity. Each potential funding source requires attention – from understanding use eligibility to tracking application and disbursement timelines.

As with any fundraising effort, you can’t build relationships too early. Transparent communication with funders matters, particularly as project plans evolve. The goal is to submit an application that shows a complete capital stack so long as LIHTC are awarded. Seeking many, diverse funding sources early in a project makes it more likely applicants can show this strong financial picture.

As with any fundraising effort, you can’t build relationships too early.

Creating a Realistic and Flexible Timeline

The pre-development timeline for a LIHTC-funded project is often underestimated. Market assessments can take up to eight weeks, whereas land use approvals may require weeks or months. Anticipating these delays and building flexibility into an application schedule is crucial. Pre-development funding is just as important. Without funds in place for design, market studies or early investigations, an application process can stall. Missing an annual application deadline can mean a delay until the following year.

Navigating Chaos With Expertise

Partnering with a consultant can be invaluable during the LIHTC application process. Guiding team assembly, financial engineering, development approvals, stakeholder management and overall project leadership, a consultant can support staff and provide expertise that avoids costly missteps. Even something as seemingly simple as selecting a property management company can be a real challenge. The company must have experience in managing low-income housing and the compliance reporting requirements. In addition, many states require special licensing to manage LIHTC-funded housing.

Conclusion

For nonprofits committed to delivering affordable housing, the LIHTC program offers an invaluable but complex tool offering great value and a path to get a development funded. While the application process may feel overwhelming at first, it becomes far more manageable when broken into key components: documentation, partnership alignment, stakeholder coordination, funding, and timing.

Nonprofits don’t need to have every answer on day one, but they do need a roadmap, a team, and the discipline to stay ahead of deadlines. The most competitive applicants don’t try to do it all alone. They build strong internal capacity, tap external expertise, and coordinate the details. From securing soft funding to managing stakeholder engagement, each step contributes to an application that reflects both mission and readiness.

Clearing the first hurdle takes work. But it also builds momentum, and confidence, for the journey ahead.

Key Takeaways:

  • The LIHTC application is a major undertaking, not a routine submission. Nonprofits should anticipate 400+ pages of material, all of which must be complete, accurate, and internally aligned across disciplines.
  • Strategic partnerships are essential. From architects and co-developers to attorneys and funders, your team must be well-coordinated, with clear roles, expectations, and communication protocols.
  • Stakeholder management is a full-time job. With dozens of parties involved—many with the power to delay your project—early engagement and proactive relationship-building are key to momentum.
  • Funding sources must be diversified and pursued early. LIHTC equity does not cover the entire project. A full, credible capital stack—supported by letters of intent or firm commitments—can significantly boost your application’s competitiveness.
  • Timelines must be realistic and flexible. Market studies, zoning approvals, and agency reviews can take weeks or months. Building in slack time and securing pre-development funding helps prevent costly delays.
  • Consultants can provide critical value. Especially for nonprofit sponsors with limited capacity, experienced advisors can help avoid common pitfalls, improve scoring outcomes, and guide project alignment with programmatic priorities.
  • Success lies in managing complexity. With the right plan, the right partners, and a steady hand, nonprofits can turn a daunting application process into the first step of a transformative housing development.

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