On May 6, NCSHA sent a letter to the Internal Revenue Service (IRS) detailing the profound negative impact recent amendments to the Low Income Housing Tax Credit (Housing Credit) compliance monitoring regulations will have on the program and urging IRS to work with NCSHA and its members to find a better alternative.
The letter explains how the new compliance monitoring sample size requirements IRS adopted in the final rule will greatly increase the number of units states must monitor, including both physical inspections and low-income certification reviews, thus creating significant increases in state agencies’ costs for additional staff and other related expenditures. Cost increases are likely to necessitate increased compliance monitoring fees and could force states to divert resources from other affordable housing priorities to fund Housing Credit compliance monitoring activities. The new sample requirements will have the most significant impact on states with numerous small projects, many of which are in rural areas.
The new Housing Credit sample size requirements are based on the sample sizes used by the Real Estate Assessment Center (REAC) protocol. NCSHA’s letter explains why the REAC sample requirements should not be applied to the Housing Credit.
NCSHA also raises concerns about the change to the amount of advance notice that states give owners before site inspections, which the new rule reduced to 15 days from 30 days, and the new requirement that states use a random selection process, rather than a risk-based process, for determining which units they will inspect.
For more information, contact Jennifer Schwartz.