Revised Build Back Better Bill Maintains Strong Investments in Affordable Housing But Leaves Out Housing Tax Priorities

Congressional leaders on Thursday afternoon released the initial draft legislative text of the budget reconciliation legislation, formally called the Build Back Better Act (BBB). The bill is the product of months of negotiations among the Biden Administration, congressional leaders, and progressive and moderate Democratic Representatives and Senators. While subject to possible changes, the current bill includes $1.75 trillion in total government spending and tax expenditures, including $150 billion for affordable housing spending programs.

It has not yet been determined when Congress will vote on the Build Back Better Bill. House Speaker Nancy Pelosi (D-CA) has said the text currently is still under consideration.

Affordable Housing Spending Programs

While the total amount of funding for housing in the BBB agreement is significantly lower than the amount included in the version of the bill passed by the House Financial Services Committee last month, it still includes historic levels of funding for key housing programs.

The BBB bill provides $9.925 billion for HOME and $14.925 billion for the Housing Trust Fund, with the funds to remain available through fiscal year (FY) 2026. Significant funding for each program was among NCSHA’s priorities for BBB, which we outlined in letters to congressional leadership and the leaders of the relevant committees.

The bill exempts the HOME funds provided in the legislation from several statutory program requirements, including that all HOME funds be committed within 24 months, that participating jurisdictions (PJs) match a portion of HOME funding received with their own funds, and that PJs allocate at least 15 percent of their HOME funding toward projects involving Community Housing Development Organizations.

BBB also establishes a new federal program through which states and nonprofits would provide first-generation home buyers with grants for down payment assistance and other expenses associated with purchasing a home. The initiative, the First Generation Downpayment Fund, would receive $10 billion through FY 2026, with $6.9 billion going to states and $2.3 billion awarded competitively to Community Development Financial Institutions (CDFIs) and other entities. A federal resource for down payment assistance was also an NCSHA priority for BBB.

The funds could be used to help first-generation home buyers, defined as “those who attest that neither they nor their parents have previously owned a home.” Eligible expenses include down payment assistance, closing cost assistance, and interest rate reductions. Funds also could be used to finance pre-purchase modifications needed to make a home accessible for the buyers or members of their household. Home buyers could receive assistance for up to 10 percent of the home’s purchase price or $20,000, whichever is greater, but HUD is allowed to increase the maximum assistance amount for home buyers who are considered economically disadvantaged.

Other provisions in the bill include:

• $53 billion to support capital repairs for public housing;
• $22.1 billion for Housing Choice vouchers, with $7.1 billion targeted to individuals and families experiencing or at risk of homelessness and survivors of domestic violence and human trafficking;
• $880 million for Project-Based Rental Assistance;
• $1.685 billion for the Community Development Block Grant program, with $700 million set aside to address housing and infrastructure needs in colonias;
• $200 million for a new Housing Investment Fund to provide grants to CDFIs and other nonprofit developers;
• $450 million for Section 202 Supportive Housing for the Elderly;
• $450 million for housing for persons with disabilities;
• $3.425 billion for lead paint removal;
• $4.15 billion to subsidize 20-year mortgages for Federal Housing Administration and U.S. Department of Agriculture Rural Development home buyers;
• $90 million for single-family housing repair grants in rural areas; and
• Forgiveness of the National Flood Insurance Program’s accumulated debt.

Affordable Housing Tax Programs

As currently drafted, the legislation does not include any of the investments NCSHA and our partners have long been pushing to expand and strengthen the Housing Credit or enact the Neighborhood Homes Credit. With numerous provisions intended to raise revenue and pay for tax incentives such as the Housing Credit and Neighborhood Homes Credit taken off the table in the negotiations, the tax-writing committees had considerably less revenue available to them than was initially expected.

Still, congressional Housing Credit and Neighborhood Homes Credit champions believe there is a chance Congress could find a way to add these critical programs back into the BBB while the text is being finalized.

NCSHA strongly urges all affordable housing stakeholders to reach out again to their members of Congress and urge them to appeal personally to their leadership and the White House to include these programs in the final legislation.