NCSHA Washington Report | April 17, 2026

While analysts disagree about whether federal Opportunity Zone tax breaks have induced investment in housing construction that would not otherwise have happened, nobody argues OZs have stimulated significant new development of homes for lower-income renters and home buyers. A question now is whether that may change under a revised version of OZs in a process that will start in earnest in states across the country this summer.

The One Big Beautiful Bill Act made the incentives permanent in the tax code, extended favorable capital gains treatment for OZ investments generally, and provided enhanced benefits for investments in designated rural zones. The law also narrowed the scope of census tracts that can qualify for OZ investment (which probably will result in fewer OZ-eligible tracts in many states).

Earlier this month, the Treasury Department and IRS published the rules for states to follow in designating tracts under OZs 2.0. Starting July 1, governors will have 90 days to send their lists to Treasury, which has 30 days to sign off on them. Eligible investments will flow into approved areas under the revised statutory features starting January 1 of next year. Already, “[e]arly moving states are rolling out maps, surveys, webinars and nomination portals to guide stakeholders through the OZ 2.0 selection process,” according to one assessment.

Metropolitan policy strategist Bruce Katz sees the “active involvement of state housing agencies in the designation of zones themselves” as key to ensuring they are best positioned to attract and support affordable housing development. Katz notes the agencies have tools that can be, and will need to be, combined with OZ-driven equity capital, such as Housing Credits, HOME funds, and state housing trust funds. HFAs and other agencies in some states pursued this strategy with the first iteration of OZs.

The new rural emphasis of OZs 2.0 — advantageous tax treatment of rural focused-investment funds and a reduced expenditure threshold for property improvement projects — is another call to HFA involvement. The agencies have extensive market experience and partner relationships in the rural parts of their states. A report from the Housing Assistance Council recommends linking OZ designations to certain geographic areas, which are often rural, where projects can qualify for augmented Housing Credits.

The new wave of mixed-income financing programs from state HFAs suggests another new lens through which some may relook at OZs. Novogradac’s survey of OZ investment fund managers last year indicated that $4.48 billion of $21.8 billion in total reported investment commitments were made to “workforce housing” or “mixed-income” properties, which are largely what the new wave of state revolving loan funds are intended to deliver.

Even under revised (and in our view improved) rules and with (we expect) renewed attention from HFAs, OZ incentives will not function like an affordable housing program. They may, however, enable states to focus more strategically, as Guidehouse’s Gregory Heller suggests, “across housing, infrastructure, healthcare, energy, and business development” in rural and other communities around their states that need more of all of it.

Stockton Williams | Executive Director

Washington Report will return May 1.

In This Issue

• House Appropriations Committee Schedules FY27 Funding Markups
• Economic Report of the President Highlights Housing Issues
• HUD Publishes NSPIRE Guidance and Inspection Standards for HOME, HTF
• USDA Issues Final Rule Establishing Environmental Review Rules for Its Programs
• USDA Aligns Its Multifamily Rental Assistance Programs with HUD’s, HOTMA Income and Asset Calculation Rules
• Fannie Mae Establishes Artificial Intelligence Guidelines
• Looking Ahead

House Appropriations Committee Schedules FY27 Funding Markups
On Monday, House Appropriations Committee Chair Tom Cole (R-OK) announced the committee’s markup schedule for the fiscal year 2027 appropriations season. The subcommittee markup of the Transportation, Housing and Urban Development, and Related Agencies funding bill is scheduled for May 21, with the full committee markup to take place on June 4. The U.S. Department of Agriculture’s appropriations bill, which funds Rural Housing Service programs, is scheduled for a subcommittee markup April 23 followed by full committee markup April 28. The House’s appropriations work begins before topline totals for discretionary funding have been set. Drafts of the House’s appropriations bills governing funding for the U.S Department of Housing and Urban Development (HUD) and USDA have not been released yet.

Economic Report of the President Highlights Housing Issues
The President’s Council of Economic Advisors (CEA) Monday released the 2026 Economic Report of the President. The report, which the CEA publishes annually, provides a broad overview of the state of the economy and highlights the administration’s economic policy priorities. This year’s report includes a chapter dedicated solely to housing affordability, with a focus on affordable homeownership. The chapter, titled “Protecting and Rebuilding the American Dream of Homeownership,” documents how both rental and homeownership costs have increased dramatically in the past two decades. The CEA argues several factors are driving these increases: the increased role of institutional investors in the home purchase market; demand for housing from illegal immigrants; and burdensome government regulations, zoning codes, and permitting processes that drive up the costs of building homes.

The report touts the Trump Administration’s efforts to address housing affordability, including its efforts to crack down on illegal immigration, directing Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities, reforming and rescinding federal housing regulations, and pushing for a ban on home purchases by institutional investors. The CEA makes no mention of the role federal housing programs and tax expenditures, such as the Housing Credit and Housing Bonds, play in funding affordable housing opportunities.

HUD Publishes NSPIRE Guidance and Inspection Standards for HOME, HTF
HUD published a notice Tuesday providing guidance on the implementation of National Standards for the Physical Inspection of Real Estate (NSPIRE) in the HOME Investment Partnerships (HOME) and Housing Trust Fund (HTF) programs. The notice also provides guidance for participating jurisdictions on how to develop written property standards and inspect assisted projects in compliance with the NSPIRE final rule and the HOME final rule. The NSPIRE final rule is effective for HOME and HTF projects with funds committed on or after October 1, 2023, however, the notice further extends the compliance date for HOME and HTF by 365 days from the notice’s publication to April 14, 2027.

USDA Issues Final Rule Establishing Environmental Review Rules for Its Programs
USDA published a final rule on April 3 designed to modernize the implementation of National Environmental Policy Act (NEPA) regulations for the department. The final rule adopts the changes proposed in an interim final rule published on July 3, 2025, which consolidated NEPA regulations for seven agencies within USDA, including Rural Development, into a single framework for all of USDA. The consolidation of NEPA requirements resulted in a reduction of overall regulations by 66 percent and enabled USDA to reduce environmental review timelines by up to 80 percent, according to USDA. The final rule went into effect upon its publication.

USDA Aligns Its Multifamily Rental Assistance Programs with HUD’s, HOTMA Income and Asset Calculation Rules
USDA on Monday issued a final rule designed to align the way income and net family assets are calculated under its multifamily rental assistance programs with HUD’s multifamily programs. The Section 515 Rural Rental Housing and Section 514/516 Farm Labor Housing Direct Loan and Grant programs will follow HUD’s Housing Opportunity Through Modernization Act of 2016 (HOTMA) regulations for HUD’s multifamily programs. The final rule is in effect as of April 13.

Fannie Mae Establishes Artificial Intelligence Guidelines
On April 8, Fannie Mae issued Lender Letter 2026-04, which provides guidelines for single-family sellers and services regarding artificial intelligence and/or machine learning (AI/ML). The new guidelines state that, to the extent a seller/servicer uses AI/ML in connection with the origination of loans sold to or guaranteed by Fannie Mae or is servicing loans on behalf of Fannie Mae, the seller/servicer must ensure compliance with applicable laws and the Lender Contract.

Additionally, the seller/servicer must have policies and procedures regarding the development, implementation, use, and maintenance of any AI/ML system it utilizes and must measure and manage AI/ML risk. These policies must incorporate the characteristics of trustworthy and ethical AI/ML, comply with the requirements in the Fannie Mae Information Security and Business Resiliency Supplement, and manage risks and appropriate governance of subcontractor and vendor use of AI/ML that is no less protective of these requirements. The new guidelines become effective 120 days from the date of publication.

Looking Ahead

Legislative and Regulatory Activities

• April 17 | Comments Due to NCSHA | HUD Interim Final Rule: Revocation of the 30-Day Notification Requirement Prior to Termination of Lease for Nonpayment of Rent
• April 17 | Comments Due to NCSHA | HUD Proposed Rule: Allowing PHAs and Owners to Set Work Requirements and Term Limits
• April 21 | Comments Due | HUD Proposed Rule: Verification of Eligible Status for HUD-Subsidized Housing Assistance
• April 27 | Comments Due | HUD Interim Final Rule: Revocation of the 30-Day Notification Requirement Prior to Termination of Lease for Nonpayment of Rent
• May 1 | Comments Due | HUD Proposed Rule: Allowing PHAs and Owners to Set Work Requirements and Term Limits
• May 4 | Comments Due to NCSHA | HUD Notice for Comment: HOME Maximum Per-Unit Subsidy Limit Methodology and Amount
• May 11 | Comments Due | HUD Notice for Comment: HOME Maximum Per-Unit Subsidy Limit Methodology and Amount
• June 5 | Comments Due to NCSHA | Bank Regulators’ Proposed Rules: Bank Capital Requirements
• June 18 | Comments Due | Bank Regulators’ Proposed Rules: Bank Capital Requirements

State and Industry Events

• April 21 – 23 | Affordable Housing Investors Council Spring Meeting | Scottsdale, AZ
  Jim Tassos will speak at this event.
• April 29 – May 1 | 2026 Mississippi Annual Housing Conference | Biloxi, MS
• May 3 – 6 | 2026 Women’s Affordable Housing Network Summit | San Diego, CA
  Jennifer Schwartz will speak at this event.
• May 4 – 6 | Mountain Plains Housing Summit 2026 | Boise, ID
  Garth Rieman will speak at this event.
• May 6 – 7 | 2026 PHFA Housing Forum | Harrisburg, PA
  Garth Rieman will speak at this event.
• May 7 – 8 | Novogradac 2026 Affordable Housing Conference | San Diego, CA
  Jennifer Schwartz will speak at this event.
• May 18 – 20 | Montana Housing Partnership Conference | Anaconda, MT
  Jennifer Schwartz will speak at this event.