I taught at a school in the past that had not seen a first division in 21 years. Last year the band earned its first "sweepstakes" in that long period with a one in marching, concert, and SR. However, we entered as Sub NV for C/SR. We were also down a level in SR. The school was 6A. No region secretary in their right mind would require a band to go from level 3 SR to 6 SR just because a one was earned. Granted, we entered Sub NV, but since we are making our way out of a mess of learning loss an incremental increase of the level was granted.
In your case, the NV band would have represented the program as the top band and did not earn the first division required to move back into varsity. I think it would be wise for the region secretary to allow the program the latitude to grow back up slowly. And I imagine this will be the case.