"Our attorney says the Montana LURA runs 50 years, not the usual 30 — and that we already waived our Qualified Contract right just by recording it. Is that really how this works, and does anything actually get easier once we hit Year 15?"
MBOH's real math: 50 years, and it's a Threshold Requirement, not a score
The federal floor is the same everywhere: a 15-year Compliance Period under IRC Section 42(i)(1), followed by an Extended Use Period of at least 15 more years under Section 42(h)(6)(D) — 30 years minimum, nationwide. Montana's 2027 QAP states its own, materially longer number twice, in identical language, in two different sections: "All projects must have an additional 35 years of affordability beyond the initial 15-year Compliance Period (total Extended Use Period of 50 years)." The first instance sits in Section VI, Threshold Requirements — meaning it is a mandatory condition of every Pre-Application and Full-Application, not a scored election. The second instance repeats verbatim in Section X.D, LURA/Declaration of Restrictive Covenants, the section that actually governs what gets recorded against the property.
| Clock | Length | Source |
|---|---|---|
| Compliance Period | 15 years — the federal floor, IRC Section 42(i)(1) | Not independently defined in the QAP's own Appendix A glossary |
| Extended Use Period | An additional 35 years beyond the Compliance Period — mandatory for every award | 2027 QAP Section VI (Threshold Requirements); Section X.D (LURA/Declaration of Restrictive Covenants) |
| Total restriction | 50 years | Stated as a single parenthetical in both sections above |
One structural gap worth flagging directly: unlike Colorado's or New Mexico's QAPs, Montana's Appendix A Definitions section does not carry its own defined-term entries for "Compliance Period" or "Extended Use Period." Appendix A's own introductory sentence explains why: "Terms used in this QAP shall have the same meaning as in Section 42 and implementing regulations unless otherwise indicated." Both terms default to their federal IRC Section 42 meanings rather than a Montana-specific glossary definition — which is consistent with, not contrary to, the 50-year figure stated plainly in Sections VI and X.D.
This guide's own Phase 4 coverage of Montana already establishes that MBOH runs no point-scoring system at all — the Board applies an undefined "Selection Standard" rather than a scored formula. That matters here: there is no mechanism, the way New Mexico's up-to-8-point Longer Extended Use Period criterion works, for a Montana Applicant to elect an even longer term for competitive advantage. Fifty years is simply the floor every awarded Project must meet, with nothing further to buy or score.
The Qualified Contract right: waived at LURA recording — but a separate QCP policy still exists on paper
Section X.D of the 2027 QAP states the waiver directly: "By execution and recording of the LURA the Owner waives the right to request that MBOH locate a nonprofit qualified buyer as provided in Section 42 (Qualified Contract Process). The Extended Use Period specified in the LURA may not be terminated early through the Qualified Contract Process and the Owner must comply with the Restrictive Covenants for the entire Extended Use Period as provided in the LURA." On its face, that closes the Year-15 exit federal law nominally provides for any Project awarded under this framework.
Yet the same QAP, in Section XII ("Qualified Contract Process"), still points to a live mechanism: "MBOH has adopted certain requirements and procedures applicable to the qualified contract process. These requirements and procedures are set forth in a separate Montana Board of Housing publication entitled the Montana Board of Housing, Qualified Contract Process (the 'Qualified Contract Process' or 'QCP'). The QCP governs eligibility, submission, consideration, determination and other aspects of a request for a qualified contract as provided in Section 42." A separate "Montana Board of Housing Qualified Contract Policy," approved November 15, 2021, resolves the apparent tension in its own eligibility section: an Owner may submit a request "only if... the Project's LURA and applicable law permit the owner to request a Qualified Contract." Read together with Section X.D's waiver, the QCP appears to function for LURAs that predate the current mandatory-waiver requirement, not for a current-vintage award. No stated cutover year was found — unlike New Mexico, whose materials state its waiver has applied automatically "since 2003" — so confirming whether a specific older Montana deal retains a live Qualified Contract right requires reading that deal's own recorded LURA, not inferring it from award year.
| Step | Mechanic |
|---|---|
| Eligibility gate | LURA and applicable law must still permit a request; at least the 15th year of the Compliance Period must have commenced for all buildings; the Project must be in full Section 42 compliance (Section I) |
| Eligibility Determination Request | A $1,000 fee, plus required documentation (completed 8609s, a legal opinion on compliance-period end dates, the two most recent MBOH compliance close-out letters, and more); MBOH responds in writing within 90 days (Section II) |
| Qualified Contract Request | A separate $20,000 non-refundable administrative fee, plus a lengthy list of required financial, physical, and legal documentation — MBOH states it "will not consider any exceptions or waivers" on the list (Section II) |
| MBOH's process | MBOH orders a Qualified Contract price determination, a 100% physical inspection, and a full file audit before the one-year period begins (Section II) |
| The one-year period | Runs from MBOH's written notice; MBOH must only present a Qualified Contract within that year — there is no requirement a buyer actually closes (Section III) |
| If MBOH presents a contract in time | "The possibility of terminating the extended use period early through the Qualified Contract process is removed forever" — the LURA remains fully binding for its complete stated term (Section III) |
| If MBOH cannot present one in time | Section 42 restrictions terminate, except for tenant protections (Section III) |
One drafting detail worth flagging rather than treating as settled: the QCP document's own "Section IV – Applicability" reads, in full, "This policy applies to all Qualified Contract requests submitted to MBOH on or after [the effective date of the policy]." The bracketed placeholder was never filled in the published PDF — a genuine artifact in MBOH's own document, not a number to guess at.
Whichever way a request resolves, the federal tenant protection is the same three years everywhere: no eviction without good cause, and no rent increase beyond what Section 42 would otherwise have allowed, running from the date the restrictions actually terminate (26 U.S.C. Section 42(h)(6)(E)(ii); QCP Section III).
Monitoring runs the full 50 years — no eased Year-16 tier found in either primary source
Several peer states in this guide (Colorado, Kansas, New Mexico) explicitly halve their inspection frequency and simplify recertification once Year 15 ends. Montana's own compliance sources describe no such change. The QAP's Appendix C states MBOH "has the right to perform an on-site inspection of any tax credit Project at least through the end of the extended use period" (Section J), and that certifications and reviews "will be made annually covering each year of the fifteen (15) year compliance period and the project's extended use period" (Section I(3)) — the same standard throughout, with no separate Year-16 tier introduced anywhere in the document.
| Requirement | Standard, stated as applying for the full 50-year term |
|---|---|
| Initial inspection | By the end of the second calendar year following the year the last building is placed in service — 100% of units and files (Appendix C, Section I(2)(iii)(A); Compliance Manual) |
| Ongoing inspection cadence | At least once every 3 years thereafter, with no stated change after Year 15 (Appendix C, Section I(2)(iii)(A)) |
| Sample size | Lesser of 20% of low-income units, or the minimum count in the federal Rev. Proc. sample-size table reproduced in Appendix C (Section I(2)(iii)(B)) |
| Mid-term full review | A separate 100% site visit in program year 12 or 13, on top of the standard 3-year cycle (2025 Compliance Manual, "Site Visit Occurrences") |
| Annual certification | 16 separate certified items every year, "annually throughout the Extended Use Period" — no simplified "basic" form after Year 15 (Appendix C, Sections H–I) |
The compliance fee is similarly flat. MBOH's currently linked Fee Schedule (file dated 09/01/2023) lists a Compliance Monitoring fee of $45.00 per non-market (LIHTC) unit annually, plus an additional $20.00 per unit for properties using the Average Income Test set-aside — with no stated reduction for the Extended Use Period. The 2027 QAP itself doesn't restate the dollar figures; both Appendix C, Section C and Section IV just direct an Applicant to "refer to the Fee Schedule on the website for current fees," so this figure should be reconfirmed directly with MBOH before relying on it for a specific deal, since the linked file predates the 2027 QAP itself.
What genuinely does change at Year 15 is the IRS reporting obligation — and Montana's own Compliance Manual says so explicitly, not by inference. Its "Compliance Period vs. Extended Use Period" section states: "The Compliance Period is the first 15 years following lease-up of the housing development. During this time MBOH must report noncompliance to the IRS by means of IRS Form 8823... The remainder of the time frame specified by the LURA is known as the Extended Use Period. During this period, instances of non-compliance are recorded but not reported to the IRS. Consequences of non-compliance during this period could result in a dissolution of the partnership with MBOH and MBOH refusal to do business with the members/partners of the ownership entity in the future." The QAP's own Appendix C, Section K(3)(i) reads consistently: the 45-day Form 8823 filing deadline runs only "during the project's compliance period."
Within the 15-year Compliance Period, the correction mechanics are the same regardless of when the finding occurs: MBOH gives written notice, the Owner has 30 days to correct (extendable up to six months for good cause), and MBOH files Form 8823 no earlier than the end of that correction period and no later than 45 days after it, whether or not the noncompliance was actually corrected (Appendix C, Section K).
No general Right of First Refusal — only a narrow homeownership-conversion option
Several other states' QAPs describe a standing Right of First Refusal mechanism letting a nonprofit, tenant group, or government entity buy a property at a statutory minimum price under IRC Section 42(i)(7). This research found no equivalent general provision anywhere in Montana's current QAP. The only Right of First Refusal language located sits inside Section VIII.C, "Eventual Homeownership" — a narrower, opt-in pathway letting some or all units convert to homeownership after the 15-year Compliance Period ends, subject to MBOH approval. For single-family detached units (excluding tribal properties), that pathway requires the land to be owned by or transferred to a community land trust or resident-owned cooperative, and a Right of First Refusal is listed as one of several possible transaction documents an Owner may need to submit before conversion — alongside a purchase/sale agreement, ground lease, deed, and restrictive covenants — not a standalone disposition right available to every rental deal.
No state LIHTC credit — verified against a real 2025 legislative attempt, not assumed
A full-text search of the 2027 QAP for any reference to a state-level housing tax credit, state credit match, or state-specific recapture rule returned nothing — Montana's QAP describes only the federal 9% and 4% Housing Credit programs. That silence was checked against Montana's actual recent legislative history rather than simply assumed: the 2025 Montana Legislature considered House Bill 21, which would have created a "Montana Workforce Housing Tax Credit" stacked on top of federal LIHTC awards, capped at $1.5 million in credits per year for properties placed in service on or after January 1, 2026. The bill passed its House Taxation Committee vote in January 2025 with bipartisan support, but was tabled in the House Appropriations Committee and, per the Montana Free Press's 2025 Capitol Tracker, formally "Died in Process" on May 20, 2025.
Because no Montana state credit exists, there is no state-specific recapture rule to layer on top of the federal Section 42 recapture regime for this phase — a real finding, not a gap in this research.
Where this goes wrong
- Assuming Montana's tail matches this guide's default 55-year phase framing, or assuming it drops to the bare federal 30-year floor the way Kansas does. The QAP's own Section VI (Threshold Requirements) and Section X.D (LURA/Declaration of Restrictive Covenants) both state the real number: "an additional 35 years of affordability beyond the initial 15-year Compliance Period (total Extended Use Period of 50 years)" — a mandatory Threshold Requirement for every award, not a scored election.
- Assuming a longer commitment is a scoring option the way New Mexico's up-to-8-point Longer Extended Use Period criterion works. Montana has no point-scoring system at all — MBOH runs a discretionary "Selection Standard" process instead — and the 50-year total is the flat mandatory floor for every award, with nothing extra to elect or score.
- Assuming a current Montana award carries a live Qualified Contract right because MBOH still publishes a Qualified Contract Policy. Section X.D of the QAP states the Owner waives the right to request a Qualified Contract "by execution and recording of the LURA" — the still-published QCP document (approved November 15, 2021) governs eligibility for properties whose LURA and applicable law actually still permit a request, not for a current-vintage award.
- Not knowing when Montana's mandatory waiver took effect and assuming it's safe to infer from award year alone. Unlike New Mexico, which states its waiver has applied "since 2003," MBOH's own materials don't give a cutoff year — confirming whether an older Montana LIHTC deal is QC-eligible requires reading that deal's actual recorded LURA.
- Treating the QCP's own "Section IV — Applicability" clause as a settled effective date. The published policy PDF itself leaves the date as an unfilled placeholder — "[the effective date of the policy]" — a drafting artifact in MBOH's own document, not a real date to rely on.
- Assuming inspection cadence or certification depth eases once Year 15 ends, the way it does in Colorado, Kansas, or New Mexico. Neither the QAP's Appendix C nor the 2025 Compliance Manual describes any post-Year-15 step-down — MBOH's stated inspection standard is "at least once every 3 years" and full annual certification "throughout the Extended Use Period," with no separate, lighter Year-16-and-beyond tier found in either document.
- Assuming the compliance monitoring fee drops after Year 15. MBOH's currently published Fee Schedule (dated 09/01/2023 in its own filename) lists a flat $45.00 per non-market unit annually, plus an additional $20.00/unit for Average Income Test properties, with no stated reduction for the Extended Use Period.
- Assuming a noncompliance finding discovered after Year 15 still gets filed on Form 8823. The 2025 Compliance Manual states this outright: "During this period [the Extended Use Period], instances of non-compliance are recorded but not reported to the IRS" — the consequence instead runs through MBOH's own refusal to do future business with the ownership entity's members and partners.
- Assuming Montana's QAP includes a general nonprofit or tenant Right of First Refusal purchase-option mechanism the way many states describe under IRC Section 42(i)(7). The only Right of First Refusal language found in the current QAP appears inside the narrow "Eventual Homeownership" conversion pathway (Section VIII.C) for units electing to convert to homeownership after Year 15 — it is not a general disposition mechanism available to every rental deal.
- Assuming Montana runs a state LIHTC credit with its own recapture rule to track. Montana has no enacted state low-income housing tax credit; a 2025 bill that would have created one (a "Montana Workforce Housing Tax Credit," HB 21, capped at $1.5 million a year) died in the House Appropriations Committee in May 2025 and was never enacted.
- Treating "Compliance Period" and "Extended Use Period" as independently defined terms in the QAP's own glossary. Appendix A doesn't carry separate defined-term entries for either phrase; the QAP's own definitions section states that terms default to their meaning "in Section 42 and implementing regulations unless otherwise indicated."
- Confusing the Fee Schedule's filename date with a guarantee it's current. The linked Fee Schedule PDF is dated 09/01/2023 in its own filename and predates the 2027 QAP itself — reconfirm the actual current amount directly with MBOH before relying on the numbers in this phase.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies