NCSHA’s Updated Recommended Practices Include Several Suggestions from NH&RA

By Kaitlyn Snyder
November 28, 2023 4 min read

The National Council of State Housing Agencies (NCSHA) recently finalized updates to its Recommended Practices in Housing Credit Administration (RPs or Recommended Practices). The Recommended Practices are voluntary standards in Housing Credit allocation, underwriting and compliance monitoring that all states should consider adopting. Last updated in 2017, NCSHA formed a task force to consider the changes and provided two opportunities for public comments. National Housing & Rehabilitation Association is pleased to see that many of its suggestions from its August 2022 and 2023 comment letters were included in the final version.

Most of the comments centered around differentiating between the nine and four percent programs. Previous versions of the RPs included recommendations that the programs be the same, which NH&RA believes does not account for the structural differences between the two programs and how they are used. Within that framework, NH&RA also advocated for policies that would enable developers to maximize eligible basis, thereby driving more proceeds to a deal and allowing deals to become financially feasible.

NCSHA specially sought comments on the current volatility in development and operating costs and NH&RA recommended that any updates to the RPs be market-based and frequently updated. Many housing finance agencies (HFAs) irregularly and infrequently update the cost limits contained therein, potentially holding back development within their jurisdiction.

Those comments were all incorporated into the final version. RP 13, Ensuring Reasonable Development Costs was amended to include that, “agencies should review development cost standards on a regular basis, communicate proposed cost limit changes to stakeholders in a timely manner and with an opportunity for comment, and adjust standards as necessary to acknowledge cost increases that are not temporary in nature, as well as inflation.

“To respond to periodic and temporary volatility in development and operating costs, construction material shortages, increased financing costs and unanticipated development delays that contribute to cost increases, agencies should allow flexibility in the application of cost standards, including opportunities for waivers and/or exceptions to such standards when appropriate.”

NH&RA is pleased to see the following language added regarding Qualified Allocation Plans (QAPs), “Given the lengthy predevelopment timelines typical in Housing Credit development, agencies should, to the extent possible, provide advance notice of QAP changes to allow stakeholders sufficient time to design developments that meet new priorities.”

Perhaps the most exciting change is around the Issuance of IRS Form 8609, with new guidance setting a goal of 90 days after receiving complete required documentation.

Tenant Rights
The updated RPs include several provisions around tenant rights including:

Requiring owners to notify the agency of any transfer of ownership, qualified contract request or right of first refusal activity;
Requiring owners to notify tenants and the local government in which a property is located at least 12 months in advance of the expiration of a property’s long-term use restrictions and consider appropriate enforcement mechanisms for this requirement;
Tenant selection plan guidelines that include procedural protections for tenant screening and admissions, and that align with applicable federal guidance limiting the use of criminal records and prior eviction judgments;
Rental agreements with tenant protections, including fair lease and occupancy rules, meaningful language access for tenants with limited English proficiency, good cause eviction requirements or comparable eviction prevention policies and grievance procedures for resolving landlord/tenant disputes;
A limitation of one rent increase per certification period per household, a minimum of 60 days’ notice to tenants of any applicable rent increase;
A minimum of 90 days’ notice to tenants of any rent increase in excess of five percent of the existing;
Fair and transparent policies relating to any fees charged to tenants;
Notification to tenants of the three-year vacancy decontrol period upon termination of the extended use agreement due to qualified contract; and
A minimum of 12-months’ notice to tenants of an expiring extended use period.

Thanks to the NH&RA members who helped structure comments, as well as NCSHA for undertaking such a comprehensive review process. NH&RA believes the industry and its residents will be better served by the updated RPs by allowing for the development of more affordable housing and looks forward to working with individual HFAs to adopt these recommended practices.

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