NCSHA Washington Report | August 19, 2022
Neither the Bipartisan Infrastructure Law (BIL) nor the Inflation Reduction Act (IRA) ended up investing much in the inflation-reducing affordable housing infrastructure the nation needs, a missed opportunity of historic proportions. The bills, twin pillars of President Biden’s domestic agenda, should significantly cut home energy costs for low-income renters, homeowners, and apartment operators, leading to hundreds of thousands of longer lasting and more affordable homes, though.
The magnitude of the affordability payoff will depend on answers to the following.
Will weatherization assistance arrive quickly enough during an energy cost surge? The BIL provided $3.5 billion for the Weatherization Assistance Program — a 10-fold increase over the typical annual funding amount — which the White House estimates will help more than 700,000 households. Many will need more help than usual, more quickly than ever, as all sources of home energy fuel are experiencing some of the sharpest price increases in years. Over the past 12 months, natural gas prices are up 38 percent, electricity is up 14 percent, and heating oil is up almost 100 percent.
The last time federal weatherization got a similarly huge one-time infusion of funding, in 2009, the system struggled initially to deploy it, although the increased funding eventually did a lot of good. BIL weatherization money must move quickly.
Can expanded tax credits make solar and wind power more mainstream in affordable homes? The IRA made several changes to the energy Investment Tax Credit, which attracts equity investment in renewable energy property. One will make ITCs and Housing Credits much more effective in combination, making solar and small wind more viable in affordable multifamily developments. The bill also provides a 20 percent bonus for ITC investments used in conjunction with “affordable housing programs” the Treasury Department identifies and a 10 percent bonus for them in statutorily-defined low-income communities.
And the IRA expands an existing tax credit for energy improvements to single- and multifamily homes and provides that it, like the ITC, can be combined with Housing Credit financing without reducing credit equity, creating another potential resource to fill development cost gaps caused by inflation.
How will HUD seize a new opportunity to finance energy improvements? The IRA includes $837.5 million to HUD for direct loans and grants to “fund projects that improve energy or water efficiency, enhance indoor air quality or sustainability, implement the use of zero-emission electricity generation, low-emission building materials or processes, energy storage, or building electrification strategies, or address climate resilience, of an eligible property.”
HUD ran a similar, smaller program during the Great Recession, which a subsequent evaluation determined delivered electricity and natural gas savings of 16 and 19 percent, respectively, and water savings of 28 percent. This time around, the department needs to engage with stakeholders who can advise it on the least bureaucratic ways to leverage the IRA funding with other sources to create a sustainable financing facility for the long term.
These questions aren’t easy but are answerable. State HFAs look forward to suggesting answers.
Stockton Williams | Executive Director
State HFA Emergency Housing Assistance
In This Issue
- Biden Signs Health, Climate, and Tax Reconciliation Bill
- FHFA Publishes New Multifamily Affordable Housing Goals for Fannie Mae and Freddie Mac
- Fannie Mae and Freddie Mac Require Loan Servicers to Collect Fair Lending Data
- NCSHA in the News
- Looking Ahead
Biden Signs Health, Climate, and Tax Reconciliation Bill
President Biden on Tuesday signed into law the Inflation Reduction Act, the much-streamlined reconciliation legislation with health, climate, and tax provisions, including several climate-related provisions that could have a significant impact on the use of renewable energy technologies and energy efficiency in affordable housing. According to the National Housing Trust, the bill includes a total of $25 billion that is directly targeted to or can be leveraged for affordable housing. Of this amount, the bill provides $1 billion to the Department of Housing and Urban Development (HUD), including $837.5 million for HUD direct loans and grants to improve the energy and water efficiency and climate resilience of HUD-financed affordable housing properties. The bill also includes provisions to enable the Investment Tax Credit (ITC) to work more effectively with the Housing Credit and provide bonus credit amounts for ITC facilities used in conjunction with covered affordable housing programs and in low-income communities.
FHFA Publishes New Multifamily Affordable Housing Goals for Fannie Mae and Freddie Mac
The Federal Housing Finance Agency (FHFA) Tuesday proposed multifamily affordable housing goals for Fannie Mae and Freddie Mac for 2023 and 2024. Under a new goal-setting methodology, FHFA proposes at least 61 percent of the rental units financed by loans each firm purchases be affordable to low-income renters (those earning 80 percent of area median income or less), 12 percent be affordable to very low-income renters (those earning 50 percent of AMI or less), and 2 percent be affordable low-income units in small multifamily properties (between 5 to 50 units). The current affordable multifamily goals require a specific number of units financed by loans purchased by the firms be affordable. FHFA says it is proposing the new methodology so the goals will be more responsive to market conditions and not have a substantial operational impact on Fannie Mae and Freddie Mac.
FHFA will accept public input on the proposed rule until October 17. NCSHA is examining the proposal to determine what impact it could have on support for HFA programs and affordable housing, and we will submit comments on behalf of all HFAs. If you have input for us to consider, email Greg Zagorski by October 7.
Fannie Mae and Freddie Mac Require Loan Servicers to Collect Fair Lending Data
FHFA announced last week that Fannie Mae and Freddie Mac will begin to require their mortgage servicing partners to collect and retain certain fair mortgage lending data on borrower age, race, ethnicity, gender, and preferred language. Servicers are required to ensure all such data is included for each mortgage loan when transferring servicing rights. The new requirements will take effect for all loans originated on or after March 1, 2023; servicers can choose to implement them sooner. Fannie Mae and Freddie Mac released bulletins for their servicers informing them of the new policy.
NCSHA in the News
Queen Creek Sun Times, 8.18.22, Housing collaboration annual Arizona Housing Forum in Scottsdale Aug. 17–19
Legislative and Regulatory Activities
- August 19 | Comments Due to NCSHA | HUD’s Draft Solicitation on Housing Assistance Payments (HAP) Contract Support Services
- August 29 | Comments Due | HUD’s Draft Solicitation on Housing Assistance Payments (HAP) Contract Support Services
- October 7 | Comments Due to NCSHA | FHFA Proposed Affordable Multifamily Housing Goals for Fannie Mae and Freddie Mac
- October 17 | Comments Due | FHFA Proposed Affordable Multifamily Housing Goals for Fannie Mae and Freddie Mac
- October 22 │ Applications Due │ HUD Continuum of Care (CoC) Program Supplemental Funding Opportunity to Address Unsheltered and Rural Homelessness
NCSHA, State HFA, and Industry Events
- September 14 – 16 | 2022 New Mexico Housing Summit | Albuquerque, NM
Stockton Williams and Jennifer Schwartz will speak at this event. - September 27 – 29 | Oklahoma Housing Conference | Oklahoma City, OK
Stockton Williams will speak at this event. - October 18 | Ohio Housing Council Fall Symposium | Columbus, OH
Jennifer Schwartz will speak at this event. - October 19 – 21 | Affordable Housing Investors Council 2022 Affordable Housing Summit | Minneapolis, MN
James Tassos will speak at this event. - October 22 – 25 | NCSHA Annual Conference & Showplace | Houston
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