NCSHA Washington Report | December 6, 2024
Three of President-Elect Trump’s recent high-profile appointments suggest the Opportunity Zone tax incentive will be a top priority for the incoming administration in next year’s huge tax bill.
Kevin Hassett, whom Trump named last week to head the White House National Economic Council, is one of the intellectual architects of OZs and was a vocal proponent of them as the chair of the White House Council of Economic Advisors in Trump’s first term.
Scott Turner, the president-elect’s nominee to be HUD Secretary, ran the White House Opportunity and Revitalization Council in the prior Trump Administration, leading an interagency effort that “identified over 300 Federal programs where targeting, preference, or additional support could be granted to Opportunity Zones.”
Brooke Rollins, Trump’s pick for USDA Secretary, who directed the White House Domestic Policy Council the last time around, played a key role implementing and promoting OZs as well.
The 2017 tax cut bill created the OZ incentive, which is designed to attract private investment in the economic development of distressed areas through several forms of capital gains tax relief. As the most significant new federal community development program in nearly 20 years — since the Community Renewal Tax Relief Act of 2000 ― OZs quickly generated breathless hype and blistering criticism, even before any real results were in.
A report published last year by the Biden – Harris Administration’s Treasury Department, which tracked $82 billion in capital raised for OZ investment, said: “It is too soon to reach conclusions regarding the effectiveness of the OZ tax incentive.”
In 2018 – 2019 NCSHA worked with the Trump Administration to optimize OZ investment for affordable housing, submitting extensive recommendations on implementation, developing case studies on OZ-supported housing developments, and supporting the efforts of HFAs to integrate OZs into their financing programs, as a number did. Overall, OZs through 2020 had stimulated development of more than 22,000 homes that “are in developments that include affordable housing,” according to an analysis by Novogradac.
The leading voices for OZs in Congress, which include members of both parties, agree the incentives should be better targeted to needy areas and more transparent to the public. One of the most influential, Senator Scott (R-SC), who is expected to chair the Senate Banking Committee, has said he wants to “broaden and extend” the OZs in the upcoming tax bill.
While there could be opportunity in the process to tinker with the OZ mechanics to be more affordable housing-friendly, OZs are better seen as the economic development complement to the effective housing-focused incentives that already exist in the code, and which the tax bill should also broaden and extend.
Senator Crapo (R-ID), who will be a lead author of the bill as the expected chair of the Finance Committee, seemed to make that point at a hearing last summer, saying: “Opportunity zones, the new markets tax credit, the historic tax credit, tax-exempt bonds and the low-income housing tax credit all spur local economic development. And we can see tangible results in communities around the country.”
Stockton Williams | Executive Director
In This Issue
- Boggess Retiring from West Virginia HDF
- Ho Profiled in Tax Credit Advisor
- NCSHA Award-Winning HFA Programs Featured in Affordable Housing Finance
- Disaster Bill Unlikely to Include Affordable Housing Tax Provisions
- Trump to Nominate Turner as HUD Secretary
- FHFA, FHA Announce Maximum Loan Limit Increases
- FHFA Publishes Fannie Mae, Freddie Mac Duty to Serve, Equitable Housing Finance Plans
- FHA Proposes Loss Mitigation Changes
- NCSHA in the News
- Looking Ahead
Boggess Retiring from West Virginia HDF
The West Virginia Housing Development Fund has announced the retirement of Executive Director Erica Boggess, effective January 2, after nearly four decades with the agency. Boggess joined WVHDF as an assistant controller in 1986 and was appointed executive director in 2017. Active in NCSHA, she served on several elections committees and a strategic planning task force. Deputy Director of Production Nathan Testman will be named interim executive director upon Boggess’ retirement.
Ho Profiled in Tax Credit Advisor
NCSHA Board Chair and Minnesota Housing Commissioner Jennifer Ho is profiled in Tax Credit Advisor this week. Featured in the magazine’s column “Breaking Ground,” Ho responds to questions about her priorities for the coming year as the newly elected chair of NCSHA, innovation in state HFA programs, her proudest accomplishments to date at Minnesota Housing, her perspective on the current state of U.S. affordable housing and what she sees working well, and advice for anyone thinking about a career in affordable housing. You can read that profile here.
NCSHA Award-Winning HFA Programs Featured in Affordable Housing Finance
The November/December issue of Affordable Housing Finance features a story on innovative work by the Hawai‘i Housing Finance and Development Corporation (HHFDC), MaineHousing, and the Indiana Housing and Community Development Authority (IHCDA), programs for which the three HFAs were recognized in NCSHA’s 2024 Awards for Program Excellence. HHFDC won the Special Achievement Award for its Fire Relief Housing Program created to help shelter families displaced by the August 2023 wildfire that devastated Lahaina. MaineHousing was recognized for its Rural Affordable Rental Housing program which is creating developments of five to 18 units in smaller communities for families making no more than 80 percent of area median income. Since 2018, IHCDA has reserved a portion of its Housing Credits for rental developments that commit to serving individuals with intellectual or developmental disabilities in an integrated setting; the agency won in the Special Needs Housing category. Read more about these and all the 2024 award-winning HFA programs here.
Disaster Bill Unlikely to Include Affordable Housing Tax Provisions
While the 118th Congress is still seeking to advance disaster recovery spending legislation in its final days, the chance such a bill would include affordable housing tax priorities, such as NCSHA-supported disaster Housing Credit authority to help rebuild rental housing or modifications to allow state HFAs to optimize use of the Mortgage Revenue Bond program to help homeowners displaced by recent natural disasters, dimmed this week. Inclusion of tax provisions in the disaster spending bill hinged on whether the Senate would add a non-housing-related disaster tax bill, H.R. 5863, which the House passed earlier in the year, to the disaster recovery spending bill, providing an opportunity for housing tax provisions to advance along with it. However, the Senate instead passed H.R. 5863 as a standalone bill on December 4, sending it to President Biden for his signature. This means, even if Congress is able to reach agreement on disaster spending, that bill is not likely to be a vehicle for advancing the affordable housing tax provisions for which NCSHA has been advocating.
Trump to Nominate Turner as HUD Secretary
President-Elect Donald Trump has announced his intention to nominate Scott Turner to be Secretary of the Department of Housing and Urban Development (HUD), pending confirmation by the Senate. If confirmed, Turner would serve as the 19th Secretary of HUD. During the first Trump Administration, Turner served as executive director of the White House Opportunity and Revitalization Council, chaired by then-HUD Secretary Ben Carson and established by executive order to promote federal investment in Opportunity Zones. Previously, Turner served two terms in the Texas House of Representatives, as well as in a variety of executive leadership positions in the public and private sectors. An All-American in track and field while a student at the University of Illinois, Turner played in the National Football League from 1995 to 2004.
FHFA, FHA Announce Maximum Loan Limit Increases
The Federal Housing Finance Agency (FHFA) last Tuesday announced the conforming loan limits for mortgages eligible for purchase by Fannie Mae and Freddie Mac in 2025. In most of the United States, the 2025 limit for one-unit properties will be $806,500, an increase of more than five percent from 2024. For high-cost areas, the new ceiling loan limit for one-unit properties will be $1,209,750, which is 150 percent of $806,500. FHFA also published a comprehensive list of 2025 conforming loan limits for all counties.
Later that day, the Federal Housing Administration (FHA) released in a mortgagee letter new maximum mortgage limits for home purchase loans insured by its Title II program. The FHA loan limit for most counties is set at 65 percent of the GSE conforming loan limit, with the floor for low-cost counties set at $524,255. The new limits are effective for loans assigned case numbers on or after January 1, 2025. FHA’s maximum mortgage limits webpage provides additional information and a search tool for specific area limits.
FHFA Publishes Fannie Mae, Freddie Mac Duty to Serve, Equitable Housing Finance Plans
FHFA last week published the 2025 – 2027 Duty to Serve and Equitable Housing Finance plans for the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. The Duty to Serve plans outline how each firm intends to carry out its statutory obligations to support manufactured housing, affordable housing preservation, and rural housing. Both GSEs commit in their plans to continue making equity investments in Housing Credits that fund affordable housing development in rural areas and to purchase loans funding Housing Credit projects. Both firms slightly increased their Housing Credit investment targets from the levels included in their proposed Duty to Serve plans, as NCSHA suggested in our comments on those plans.
The Equitable Housing Finance plans lay out the activities each GSE will undertake to support equitable access to affordable and sustainable housing. In their plans, both firms pledge to continue supporting first-time and first-generation home buyers; expand the use of rental payment history and cashflow analysis in their underwriting systems; promote awareness of various down payment assistance programs, particularly HFA programs; enable renters to strengthen their credit through reporting of on-time rent payments to the credit bureaus; and expand their free financial education and housing counseling offerings. You can read both GSEs’ Duty to Serve and Equitable Housing Finance plans here.
FHA Proposes Loss Mitigation Changes
Last week, FHA posted for feedback proposed changes to the servicing and loss mitigation sections of its Single-Family Handbook and related reporting requirements. The changes include updates to FHA’s repayment plan and forbearance policies, modifications to FHA’s home retention options, guardrails to ensure home retention options are reserved for borrowers who can sustain their monthly mortgage payments, and amendments to FHA’s home disposition options. Comments via FHA’s Drafting Table are due December 23. To inform NCSHA’s comments, please send any feedback to Rosemarie Sabatino by December 13.
NCSHA in the News
Affordable Housing Finance, 12.3.24, NCSHA Recognizes State HFA Programs
Tax Credit Advisor, 12.1.24, Jennifer Leimaile Ho, Minnesota Housing Commissioner and Incoming Chair of National Council of State Housing Agencies
Inside Mortgage Finance, 11.27.24, Trump Taps Scott Turner for Secretary of Housing
Legislative and Regulatory Activities
- December 9, 2:00 – 3:30 pm ET | HUD Energy Code Webinar Series: An Introduction to ASHRAE 90.1-2019
- December 13 | Comments Due to NCSHA | FHA Single-Family Loss Mitigation Changes
- December 20 | Comments Due to NCSHA | USDA Proposed Rule to Preserve Affordability of Section 538 Multifamily Properties
- December 23 | Comments Due | FHA Single-Family Loss Mitigation Changes
- January 6 | Comments Due | USDA Proposed Rule to Preserve Affordability of Section 538 Multifamily Properties
- January 22 | Comments Due to NCSHA | FHFA Proposed Rule on FHLB Governance
- February 3 | Comments Due | FHFA Proposed Rule on FHLB Governance
NCSHA, State HFA, and Industry Events
- December 6 | Early-Bird Registration Deadline | NCSHA’s HFA Institute 2025
- December 17, 1:00 pm ET | NCSHA Webinar: Affordable Housing Program Insights from NCSHA’s 2023 State HFA Factbook
- January 12 – 17 | NCSHA’s HFA Institute 2025 | Washington, DC
