In determining a building's applicable fraction, when comparing unit and square footage percentages, what should be the deciding factor?

In the context of determining a building's applicable fraction for tax credit purposes, the deciding factor is indeed to use whichever percentage is smaller between unit and square footage percentages. This approach is grounded in the principles of ensuring that the allocation of the tax credits is equitable and does not disproportionately favor either the number of units or their size.

Using the smaller percentage reflects a conservative approach to calculating the tax credits, often aimed at maintaining compliance with program guidelines that seek to maximize affordability and accessibility. The applicable fraction ultimately determines the portion of expenses eligible for tax credits, and by selecting the smaller percentage, you reduce the risk of over-allocating benefits. This is particularly important in mixed-income or mixed-use developments where there may be a diversity of unit sizes and rent dynamics.

Both usage of a larger percentage or giving equal weight to both values could lead to inflated claims for credits, which would not only defeat the purpose of the tax credit programs but could also create compliance issues down the line. Therefore, the strategy of choosing the smaller percentage is not only methodologically sound but also aligns with the objectives of the affordable housing initiatives that these credits support.