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Dear Colleagues,
---Delaware’s affordable housing landscape continues to gain momentum, supported by expanding activity through the Low Income Housing Tax Credit (LIHTC) program and by sustained population growth driven by the state’s favorable tax climate. With more individuals and families relocating to Delaware for its lower tax burden, no sales tax, low property taxes, and proximity to major East Coast job markets, demand for high quality, affordable housing continues to rise across all counties.
In recent years, Delaware has seen:
• A steady increase in LIHTC financed communities, with new projects advancing in New Castle, Kent, and Sussex Counties.
• Strong reinvestment in existing affordable housing through preservation focused LIHTC strategies that modernize buildings and extend long term affordability.
• Effective collaboration among DSHA, developers, lenders, and syndicators, resulting in well structured projects and strong long term performance.
• Continued emphasis on high efficiency building systems and envelope design, improving operational predictability for owners and residents.
A Growing Market Driven by Tax Advantages
---Delaware continues to attract new residents from surrounding states with significantly higher tax burdens. No sales tax, low property taxes, no state tax on Social Security benefits, and a comparatively low income tax environment make Delaware increasingly appealing for working households and retirees alike. This in-migration is placing additional pressure on the state’s housing supply, underscoring the importance of LIHTC development and accurate Utility Allowance methodologies.
Newark, Delaware ECM Utility Allowance Study
---Recently, our team completed a detailed Utility Allowance study for a Newark property using the Energy Consumption Model (ECM). This approach evaluated actual building systems, equipment efficiencies, historical weather data, and realistic consumption behavior to produce an allowance that reflects the true operating characteristics of the property. The study resulted in lower utility allowances across all unit types compared to PHA values, improving allowable rents and strengthening annual revenue:
Allowance Comparison Highlights
• 1 Bedroom: decreased from $162 to $132 (-$30, -18.52%)
• 2 Bedroom: decreased from $219 to $155 (-$64, -29.22%)
• 3 Bedroom: decreased from $273 to $193 (-$80, -29.30%)
---While the ECM allowances result in lower utility deductions, the true financial benefit is reflected in the increase in total allowable rents, which significantly improves the property’s income profile. See below.
Total Net Revenue Comparison
Using PHA Allowances:
Total Annual Revenue: $4,510,392
Using ECM Allowances:
Total Annual Revenue: $4,667,112
Total Annual Revenue Increase using ECM over PHA:
+$156,720
---This increase directly aligns with the updated utility assumptions and accurately captures the property’s operating efficiency. For owners, lenders, and investors, ECM results support stronger underwriting, improved cash flow, and enhanced long term financial stability.
---As Delaware’s LIHTC market continues to expand alongside rising statewide demand, accurate Utility Allowance methodologies such as ECM are becoming increasingly important tools for maximizing property performance.
If you would like more information on LIHTC opportunities in Delaware, or if you need assistance with Utility Allowance studies, ECM modeling, or affordable housing development support, please reach out.
Sincerely,
Walter Mendoza
Managing Partner
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