NCSHA Washington Report | February 9, 2024

Nobody disagrees that the Low Income Housing Tax Credit is “the most important resource for creating affordable housing in the United States today.”

The Housing Credit isn’t perfect — no program is — and it will never meet the preferences of every interested party. Still, stakeholders should always be open to fact-based, good-faith suggestions, from any constituency, for how the Credit can better achieve its purpose, which is more urgent today than ever.

We cannot, however, let stand unchallenged egregious errors or blatant mischaracterizations purporting to be balanced assessments. A spate of recent commentary has, unfortunately, been rife with both. Some examples:

In Shelterforce, Miriam Axel-Lute refers to a “critique from fair housers about the lack of Housing Credit construction in higher-income areas” with a link to an 11-year-old study. Yet just last year, the Poverty & Race Research Action Council, whose work is cited often in Shelterforce, produced a report that found:

[A]n increasing number of states have eliminated potentially discriminatory provisions in their QAPs, added incentives for development in high opportunity communities, strengthened affirmative marketing and tenant selection practices, and defined requirements for concerted community revitalization plans accompanying developments in low-income neighborhoods.

Alan Mallach, also writing for Shelterforce, claims:

Most of the [Housing Credit] projects are in high-poverty neighborhoods…Rather than improving the neighborhood as a whole, they are as likely to contribute to neighborhood decline and the loss of still-salvageable older housing units.

Mallach, a distinguished analyst, does a disservice to an important topic by failing to note that a considerable amount of other research comes to different conclusions, such as studies concluding there is “little evidence that the LIHTC is increasing the concentration of poverty” (New York University and University of Massachusetts). And those showing Credit-financed development: “helps revitalize low-income neighborhoods” with benefits to surrounding owners and renters (Stanford University); leads to “significant reductions in violent crime” (Cornell University); has been especially beneficial for majority Black, high-poverty neighborhoods (University of Michigan); and has boosted the economic prospects for low-income children (Georgetown University/Joint Committee on Taxation).

A post by Tobias Peter of the American Enterprise Institute cites a 2010 study that suggests Housing Credit construction “crowds out unsubsidized development of rental housing” and asserts “if the private sector would build the same number of units as LIHTC, then LIHTC does not add to supply, it merely wastes taxpayer money.”

But multiple current studies have shown the U.S. faces a shortage of millions of affordable apartments. The Housing Credit at its current capitalization finances approximately 76,000 new units a year in addition to the properties that rely on the Credit for rehabilitation, filling a fraction of the hole. There’s more than enough “room” in the market for private-sector builders to fill in more.

Forbes-sponsored commentator Roger Valdez suggests that a 2018 study by the Government Accountability Office found “LIHTC projects reach $1 million per unit” because “some allocating agencies require detailed cost certifications from contractors, but many do not.” The GAO report includes that quote but not that figure. In fact, the GAO found Housing Credit median per-unit development costs were $204,000, which was comparable to market-rate construction at that time.

Howard Gleckman of the Urban-Brookings Tax Policy Center alleges a significant fiscal inefficiency, as “developers sold credits to banks at an average of 73 cents on the dollar.” His source is a 2009 study of pricing for projects in one state between 1995 – 2005. Yet widely available national data from as recently as this month indicates average credit prices have been between 85 – 90 cents for the past several years, a highly efficient rate in light of the 10-year time period over which credits pay out.

These commentators have useful things to say elsewhere in some of their work. Their recent posts on the Housing Credit suggest they would benefit from a fact checker.

Stockton Williams | Executive Director

In This Issue

• NCSHA Coordinates National Sign-On Letter Supporting Tax Bill’s Housing Credit Provisions
• Eight States, DC to Participate in Housing with Services Accelerator Program to Combat Homelessness
• ABA, Others Challenge CRA Rule in Court
• HUD Publishes Revised HOTMA Implementation Notice
• NCSHA in the News
• Looking Ahead

NCSHA Coordinates National Sign-On Letter Supporting Tax Bill’s Housing Credit Provisions
In advance of the Senate’s anticipated two-week Presidents’ Day district work period, NCSHA and some of our Housing Credit advocacy partners organized a February 7 sign-on letter to Senate Majority Leader Chuck Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY) from national and statewide affordable housing leaders. The letter urged Schumer and McConnell to bring to the Senate floor the bipartisan tax bill that passed the House of Representatives last week and urged their support for the two provisions that would expand Housing Credit production of affordable rental housing. The letter was signed by 120 groups, including statewide coalitions from nearly every state in which such coalitions exist. The letter was similar to one NCSHA coordinated in advance of the January 19 markup in the House Ways and Means Committee, but with more time, we were able to bring on a far broader set of organizations.
The letter was highlighted in the February 8 edition of Politico’s Morning Tax, a subscription newsletter widely read on Capitol Hill and among Washington tax experts. The same newsletter commented on the growing number of Republican Senators who have made positive public comments about the tax legislation in recent days.

NCSHA will continue to advocate for passage of the legislation during the recess, urging enactment when the Senate returns to Washington.

Eight States, DC to Participate in Housing with Services Accelerator Program to Combat Homelessness
Earlier today, the Biden – Harris Administration announced the winning states in the Housing and Services Partnership Accelerator, a competitive technical assistance opportunity. The U.S. Departments of Housing and Urban Development (HUD) and Health and Human Services (HHS) selected eight states — Arizona, California, Hawaii, Maryland, Massachusetts, Minnesota, North Carolina, and Washington — and the District of Columbia to participate in the accelerator, which will provide them with technical assistance, peer-to-peer exchange opportunities, and coaching in implementing recent HHS guidance on housing-related supports and services that can be covered by Medicaid and the Children’s Health Insurance Program to help people with complex health needs experiencing or at risk of homelessness. States applying for the accelerator were required to identify collaborative teams composed of their health and housing agencies and aging and disability sectors to work on their projects.

States not selected to participate in the accelerator may still apply by February 13 to take part in a related technical assistance opportunity: National Academy for State Health Policy’s Health and Housing Institute.

ABA, Others Challenge CRA Rule in Court
Several organizations representing the financial services industry filed a lawsuit Monday in the Northern District of Texas attempting to stop federal banking regulators from implementing a recently published rule overhauling their Community Reinvestment Act (CRA) regulations. Parties to the suit include the American Bankers Association, Independent Community Bankers of America, U.S. Chamber of Commerce, and several Texas-based associations. The suit alleges the three banking regulators who promulgated the CRA rule — the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation — arbitrarily exceeded their authority and published a final rule that is needlessly complex and burdensome and ultimately will hinder the CRA’s mission to promote bank investments in the communities they serve. The claimants asked the court to issue a preliminary injunction preventing the new CRA rule from taking effect and to set aside the rule permanently for violating the Administrative Procedures Act. NCSHA previously summarized the CRA rule in our blog.

HUD Publishes Revised HOTMA Implementation Notice
On Tuesday, HUD published a revised HOTMA Implementation Notice (Notice H 2023-10) that now includes information to address the asset limitation found in Section 104 of the Housing Opportunity Through Modernization Act of 2016. Among other changes, the revised notice makes clear that owners have discretion regarding whether to enforce the asset limitation for existing tenants. In light of the revised notice, HUD’s Office of Multifamily Housing published a revised list of discretionary policies for owners implementing HOTMA.

NCSHA in the News
Notes from Novogradac, 2.5.24, 2024 Harvard JCHS Rental Housing Report Shows All-Time High in Cost Burdens Among Renters in 2022
TCN News, 2.2.24, How to apply for Low Income Tax Credit Apartments

Looking Ahead

Legislative and Regulatory Activities

• February 12 | Application Deadline | Section 811 Project Rental Assistance for Persons with Disabilities NOFO
• February 15 | Application Deadline | FY24 CDFI Program and NACA Program Application Round

NCSHA, State HFA, and Industry Events

• February 22 – 23 | National Housing and Rehabilitation Association Annual Meeting and Symposium | Palm Beach, FL
  Stockton Williams will speak at this event.
• March 4 – 6 | NCSHA’s 2024 Legislative Conference | Washington, DC
• March 6 – 8 | National Affordable Housing Management Association’s Winter Conference on Top Issues in Affordable Rental Housing | Washington, DC
  Jennifer Schwartz will speak at this event.