The National Council of State Housing Agencies has recently published its Board-approved final Recommended Practices in Housing Credit Administration report, a document which has been periodically updated since its creation in 1992. The current report was written over an 18-month period by a dedicated task-force of 19 state HFA executive directors representing almost 60% of all housing credit authority annually.

NH&RA consulted with many of its members and councils and submitted a comment letter in August. The report is significant in that states will generally respond to the best practices through policy changes in their QAPs.

Significant recommendations in this new report include the following:

  • Qualified Contracts
    • Require all LIHTC recipients (9% and 4%) to waive the right to request a qualified contract
    • Deter current owners from requesting a qualified contract by way of the current QAP, such as assessing negative points on future applications
  • Cost Containment
    • Development Costs
      • QAPs should limit development costs on either a per unit, per bedroom, or square footage basis.
    • Sustainable Development
      • States should weigh the benefits and savings of green building practices and requirements against the costs – comparing upfront development costs with potential long-term savings. The costs should be justifiable in light of the benefits.
    • Developer Fees
      • QAPs should limit developer fees, and these fees should not exceed the lesser of an appropriate per unit or per project dollar cap or 15% of total development costs.
      • Limits on the 9% program should be applied equally to the bond program as well
    • Consultant and Professional Fees
      • HFAs should identify which professional fees are reimbursable through the credit, which are excluded costs payable by the syndicator (SEC registration, sales commission), and require any other consultant fees be permitted only within the developer fee.
      • Agencies should review professional fees—including, at minimum, fees for architectural, engineering, environmental, accounting, legal, market analysis, construction management, and asset management services at project application and compare them with professional fees charged in Housing Credit developments awarded Credit in prior funding cycles and with current Housing Credit applications to assess reasonableness
    • Preservation
      • While preservation is important generally, states should approach the issue at the project-specific level, determining financial viability, physical condition, location, population served, etc. in determining the most important preservation needs.
      • Consider cost effectiveness of bundling scattered-site properties for preservation transactions
      • Develop specific policies on the use of 9% and 4% credits for preservation as well as policies on housing credit resyndication
    • Reducing Local Barriers to Development
      • concerted community revitalization plans do not require approval from local government
      • local financial contributions should not be a requirement, and should be weighed equally with contributions from other sources
    • Market Studies
      • HFAs should consider providing a list of approved market analysts or contract with analysts directly to ensure independence of the analyst
      • HFAs should review or hire a third-party to review the market studies
      • One recently added minimum requirement for a market study includes a site visit