House and Senate Housing Leaders Reach Agreement on 21st Century ROAD to Housing Act; Passage Expected Soon

Yesterday, the Senate Banking Committee and the House Financial Services Committee announced that they had reached a bipartisan, bicameral deal on the 21st Century ROAD to Housing Act — the comprehensive housing policy reform legislation Congress has been working on over the last year. This sweeping legislation reforms and streamlines numerous U.S. Department of Housing and Urban Development (HUD) and U.S. Department of Agriculture (USDA) affordable housing programs and policies, authorizes new pilot programs and extends others, and directs federal agencies to undertake new research and establish best practices in an effort to expand the supply of affordable housing. In total, the bill has over 50 provisions. Bill text and a section-by-section summary are available.

The Senate took procedural steps yesterday evening to begin consideration of the bill, passage of which is expected later this week in that chamber. The House will likely take up the bill early next week after the Senate acts and then send it to the President for his signature.

Highlights of the bill follow.

Public Welfare Investment Cap

The legislation would raise the cap on public welfare investments — including Housing Credit investments — made by banks from 15 to 20 percent of capital and surplus. This provision is a high priority for NCSHA because it would allow banks currently up against the limit to invest more in Housing Credit developments.

Reauthorization and Reforms to the HOME Program

The final bill reflects long-sought improvements to the HOME Investment Partnerships program, including reforms NCSHA has worked on for years with HOME program champions in Congress and our affordable housing allies. This includes indefinite reauthorization of the program, elimination of barriers to using HOME for homeownership activities, providing relief from Section 3 requirements for properties under 50 units that receive HOME funds from states and small local participating jurisdictions (PJs), simplifying HOME property inspection requirements for state PJs, streamlining CHDO qualification requirements, allowing HUD to forgive repayment if a property is no longer financially viable due to economic reasons beyond a PJ’s or owner’s control, expanding HOME-eligible activities to include certain infrastructure activities, and more. The above-mentioned HOME reforms have been in previous versions of the legislation in both chambers and are detailed in a blog NCSHA published in March after the Senate acted on an earlier version of the bill.

The final bill includes two additional NCSHA-supported HOME provisions from the House-passed bill that had not been included in previous Senate drafts:

A requirement that the HUD Secretary conduct a review of the implementation of Build America, Buy America (BABA) requirements as they relate to the HOME program and update BABA guidance for HOME. HUD would have up to 180 days to conduct the review and up to 90 days following the review to publish new guidance. It also requires HUD to submit a report to the House Financial Services and Senate Banking committees describing the results of the review and the guidance update.

Exemption of certain HOME activities from environmental review requirements; specifically, housing that qualifies as new construction infill housing projects, acquisition of real property for affordable housing purposes, rehabilitation projects carried out pursuant to section 212(a)(1), and new construction projects of 15 units or fewer. Additionally, HOME PJs would not need to conduct duplicative environmental reviews due to the “addition, subtraction, or reallocation” of other federal funds within the project’s capital stack if the “scope, scale, and location” of the project remains substantially the same or if a similar review has already been conducted on the project for purposes of a different federal program.

Rural Housing Reforms

The bill includes reforms to the USDA Rural Housing Service (RHS) to preserve more rural affordable housing and authorize appropriations for technology improvements and increased staffing at RHS. Most significantly, the bill permanently authorizes what had been a pilot program allowing the USDA Secretary to decouple rental assistance from properties with expiring USDA multifamily mortgages, allowing for continued rental assistance for units located in properties where a USDA mortgage has been paid off. Additionally, it permanently authorizes the Multifamily Preservation and Revitalization program, which is currently a pilot program designed to rehabilitate housing properties financed with Section 514, 515, or 516 loans. Earlier versions of the legislation in the House did not include the rural housing decoupling provision, which is an NCSHA priority. We successfully worked with leaders in the Senate and supporters in the House to ensure its inclusion in the final bill.

Whole Home Repair Pilot Program

The bill authorizes HUD to establish a five-year pilot program to provide grants to nonprofits, state and local governments, and American Indian tribes to offer grants and forgivable loans to low- and moderate-income homeowners and qualifying small landlords to address repair needs and health hazards for single-family homes occupied by low-income households (earning 80 percent of area median income or below). State and local governments would be eligible to apply for funding only in areas where a qualified nonprofit is not participating in the program.

Manufactured and Modular Housing

The bill includes several provisions intended to increase the supply of manufactured housing options, including by updating federal definitions to allow units not built on permanent chassis, authorizing research into barriers to FHA lending for modular housing, and updates to mortgage lending standards for FHA lending for manufactured housing. Importantly, the final bill includes a seven-year authorization of what had been a pilot program at HUD, the Preservation and Reinvestment Initiative for Community Enhancement (PRICE) program. Several HFAs have participated in the program, which provides grants to communities to maintain, protect, and stabilize manufactured housing and manufactured housing communities. PRICE is an NCSHA priority that was added back into the bill by the Senate after having been left off the previous House-passed iteration of the bill.

RAD

The bill raises the cap on the Rental Assistance Demonstration (RAD) program by 100,000 units and codifies certain tenant protections. The House initially did not include a RAD expansion in its bill but agreed to include it in the final bill after pushback from the Senate.

Disaster Recovery

The final bill includes a three-year authorization of the Community Development Block Grant Disaster Recovery program (CDBG-DR) after the Senate pressed the House to include it despite resistance. It also establishes a new Office of Disaster Management and Resiliency within HUD to administer the program.

Prohibition on Institutional Investor Purchases of Single-Family Homes

The final legislation adopts previous House language restricting large institutional investors from competing with individual home buyers to purchase single-family homes. It does not require investors to sell “build-to-rent” or “build-to-renovate” properties within seven years, as had been required in earlier Senate-passed iterations of the bill. Institutional investors who violate the prohibition would be subject to civil penalties of up to $1 million per violation or three times the purchase price of the property, and such penalties would be funneled to the HOME program to support homeownership activities. The final language should not negatively impact single-family rental production with the Housing Credit or other affordable housing programs.

The legislation is arguably the most significant non-tax affordable housing legislation to advance through Congress since the early 1990s. NCSHA strongly supports the final package.