NCSHA Washington Report | August 23, 2024
Coming out of their conventions, the Trump and Harris campaigns have put forward summaries of their economic proposals but scant detail on how all the elements of their domestic agendas would fit together and how the country would afford them. It’s clear enough that each candidate has a bunch of big-ticket goals.
It’s been 20 years since Dick Cheney said, “Ronald Reagan proved deficits don’t matter,” and it seems true that the nation’s enormous expansion of debt since then — with the deficit reaching $1.9 trillion and nearly doubling as a share of GDP — hasn’t punished either political party.
So, whether a serious effort to put the country on a more sustainable fiscal path gains any traction remains to be seen. Rest assured, though, that the politics of tax and spending policy will dominate discussions of any domestic priorities of a Trump or Harris administration as soon as they take office next year.
That’s partly because of the unprecedented confluence of “consequential fiscal deadlines [that] are rapidly approaching, including the reinstatement of the debt limit, the expiration of tax cuts, key decisions on discretionary spending caps and subsidies for healthcare, and looming depletion dates for Social Security and Medicare,” writes the Peter G. Peterson Foundation (a must-follow for anyone interested in these issues).
The “tax cuts” are the major provisions of the 2017 Tax Cuts and Jobs Act, full renewal of which would reduce federal revenue by $4 trillion over 10 years. Of course, rate reductions for individuals and corporations are just two of countless tax policy ideas that will be in the mix.
In the housing affordability area alone are bipartisan bills to increase Housing Bonds and Housing Credits, proposals to create credits for home buyers and renters, and ideas to spur middle-income apartment construction and affordable home building — including both the Neighborhood Homes Investment Act and a new incentive for starter-home construction Vice President Harris proposed last week. There’s also bipartisan support for extending New Markets and Historic tax credits and the Opportunity Zones incentives, all of which support housing development, too.
Congressional tax writers and their staff, deep into the preseason ahead of 2025’s “Super Bowl of taxes,” are being inundated with similar lists by every other industry and interest you can think of. Even top-tier issues, which housing finally qualifies as, will be at risk of getting crowded out.
On the other side of the federal fiscal ledger, spending, the “domestic discretionary” category — where HUD, USDA, Treasury, and other federal housing and community development programs are funded — will be under tremendous pressure regardless of who wins the White House and which party controls Congress in 2025.
Consider that during the historically expansionary period from 2010 – 2024, during which White House and congressional control was variously shared by the two parties and held completely by each for periods of time, “non-defense appropriations other than for veterans’ medical care fell by 14 percent when adjusted for inflation and population growth, and six percent when adjusting just for inflation,” according to the Center on Budget and Policy Priorities.
In both the tax and spending debates to come next year, housing affordability advocates may be in for the fight of our lives.
Stockton Williams | Executive Director
Washington Report will return September 6.
In This Issue
- NCSHA Welcomes New Members
- NCSHA Asks FHFA to Encourage FHLBs to Sync AHP Applications with Federal, State Housing Programs
- NCSHA Participates in PBCA Listening Session Series
- EPA Obligates $27 Billion in Greenhouse Gas Reduction Funds
- FHFA Proposes GSE Affordable Housing Goals for 2025 – 2027
- Harris, Trump Campaigns Feature Affordable Housing Proposals
- Chicago FHLB Announces Collateral Pilot Program for Housing Credit Loans
- NCSHA in the News
- Looking Ahead
NCSHA Welcomes New Members
NCSHA has welcomed these organizations as Affiliate members since June: AppFolio; Federal Home Loan Bank of Atlanta; Happy Medium; Karen A. Graham Consulting, LLC; Land Home Financial Services, Inc.; North Peak Solutions; Preferred Compliance Solutions; The Public Finance Law Group PLLC; Shreveport Housing Authority; Skinner Fawcett LLP; and Vera Institute of Justice. If you work with a partner interested in becoming a member, please contact Phaedra Stoger.
NCSHA Asks FHFA to Encourage FHLBs to Sync AHP Applications with Federal, State Housing Programs
NCSHA on Monday submitted comments in response to a Federal Housing Finance Agency (FHFA) request for input (RFI) on potential changes to the application process for the Federal Home Loan Banks’ (FHLBs) Affordable Housing Programs (AHPs). FHFA issued the RFI as part of its comprehensive efforts to review and reform the FHLB system to ensure it continues to meet the needs of the housing market, including affordable housing. In the letter, NCSHA suggested each FHLB consult with HFAs and other bank members when setting the timeline and other policies for its AHP application process to maximize the potential for AHP funds to be used in conjunction with financing from the Housing Credit and other federal and state housing programs, reflecting feedback NCSHA has received from HFAs about the AHP award process.
NCSHA Participates in PBCA Listening Session Series
NCSHA participated in one of a series of small-group listening sessions the U.S. Department of Housing and Urban Development (HUD) held this week and will hold next week on the Performance-Based Contract Administration (PBCA) program and HUD’s legislative proposal to modify it. The sessions are held in person and virtually, limited to eight participants with a variety of perspectives, and moderated by HUD officials and have featured a set of common questions about the PBCA program. Attendees include representatives of HFA and local public housing agency PBCAs, owners and managers, tenant groups, national trade associations and interest groups, and other stakeholders. HUD is recording the sessions but has not yet announced how or when the recordings will be available to the public.
EPA Obligates $27 Billion in Greenhouse Gas Reduction Funds
The Environmental Protection Agency (EPA) announced last Friday it had obligated $27 billion in Greenhouse Gas Reduction Fund grants to recipients under three main programs. The largest of the three programs, the National Clean Investment Fund provides $14 billion to three entities tasked with developing financing mechanisms for investments in energy-efficiency upgrades, including in affordable housing. The Solar for All program, which provides $7 billion, is intended to create or expand solar programs for single- and multifamily affordable housing as well as community solar in low-income communities. The Clean Communities Investment Accelerator will provide $6 billion for capital and technical assistance for community lenders to develop capacity to finance a number of types of energy-efficiency projects in low-income communities. More information about the programs and grantees is available in the EPA press release.
FHFA Proposes GSE Affordable Housing Goals for 2025 – 2027
Yesterday, FHFA released a proposed rule that would establish affordable housing goals for Fannie Mae and Freddie Mac for 2025 through 2027. The goals require both firms to purchase from certain underserved markets a percentage of the total number of single-family and multifamily mortgages they finance. For single-family loans, FHFA proposes to set the low-income home purchase goal, for loans made to borrowers earning at or below 80 percent of area median income (AMI), at 25 percent of all single-family loan purchases, down from 28 percent in 2022 – 2024 but above previous levels. FHFA also would slightly lower the very low-income home purchase goal (households earning at or below 50 percent of AMI) from seven to six percent. The agency says the reduced goals reflect the impact of higher mortgage rates and increasing housing prices on homeownership affordability for low- and very low-income consumers. On the multifamily end, at least 61 percent of the rental units financed by loans each firm purchases must be affordable to low-income renters, the same as in 2023, and at least 14 percent must be affordable to very low-income renters, up from 12 percent last year.
FHFA will accept comments on the proposal until 60 days after it is published in the Federal Register, which should be soon. Please email any feedback to Greg Zagorski by October 11.
Harris, Trump Campaigns Feature Affordable Housing Proposals
Last Friday, Vice President Kamala Harris proposed a tax credit for builders to construct more new homes for first-time home buyers; $25,000 in down payment assistance for first-time home buyers and more for first-generation home buyers; a new $40 billion innovation fund to spur housing construction; expansion of the Low-Income Housing Tax Credit; streamlining of permitting processes and reviews; and eligibility of certain federal lands to be repurposed for affordable housing development. Several of these proposals echo or expand similar proposals made by the Biden-Harris Administration. Harris said these proposals would help build three million new housing units in the next four years.
Earlier last week, Donald Trump highlighted housing elements of his campaign platform: reducing mortgage rates by slashing inflation, opening limited portions of federal lands to allow for new home construction, promoting homeownership through tax incentives and support for first-time buyers, and cutting unnecessary regulations that raise housing costs.
Chicago FHLB Announces Collateral Pilot Program for Housing Credit Loans
The Federal Home Loan Bank of Chicago on Tuesday announced it is launching a $300 million Low-Income Housing Tax Credit Collateral Pilot Program. The program will allow FHLB Chicago members, including housing associate members, to reduce by up to 17 percent the haircut for collateral they pledge for loans used to finance Housing Credit projects. The pilot is designed to incentivize further lending for Housing Credit properties, particularly those that meet specialized needs or have smaller loan amounts that are difficult to sell in the secondary market. While all FHLB Chicago members will be eligible to participate in the pilot, $200 million of the $300 million in funding will be reserved for members with assets under $1.46 billion. The pilot will run for three years, ending in August 2027. In its comprehensive report on the FHLBs last year, FHFA urged each of the FHLBs to launch more pilot programs to address underserved needs in their jurisdictions.
NCSHA in the News
The Bond Buyer, 8.19.24, Kamala Harris’ focus on housing may advance muni priorities
Affordable Housing Finance, 8.14.24, Officials Announce Improvements to HFA Risk-Sharing Program
Legislative and Regulatory Activities
- August 28, 2:00 pm ET | FHA Stakeholder Briefing: Updates to the 203(k) Rehabilitation Mortgage Insurance Program | Register
- September 4 | Feedback Due to NCSHA | Draft HUD Mortgagee Letter on Modernization of Engagement with Borrowers in Default
- September 10 – 11 | FHFA Advisory Committee Meeting on Affordable, Equitable, and Sustainable Housing | Washington, DC, and Virtual
- September 13 | Feedback Due | Draft HUD Mortgagee Letter on Modernization of Engagement with Borrowers in Default
- September 20 | Comments Due | HUD Drafting Table Edits to HUD Guidance on Qualified Contract Loophole in the Low-Income Housing Tax Credit Program
NCSHA, State HFA, and Industry Events
- August 27 | Early-Bird Registration and Hotel Discounts End | NCSHA’s 2024 Annual Conference & Showplace | Phoenix
- September 4 – 5 | 2024 HousingIowa Conference | Des Moines, IA
Jennifer Schwartz will participate in this event. - September 19 | Ballard Spahr’s 2024 Housing Authority Summit | Washington, DC
Jennifer Schwartz will participate in this event. - September 24 – 26 | Oklahoma Housing Conference 2024 | Midwest City, OK
Stockton Williams will speak at this event. - September 26 – 27 | Novogradac 2024 Housing Tax Credit and Bonds Conference | New Orleans
Jennifer Schwartz will participate in this event. - September 28 – October 1 | NCSHA’s 2024 Annual Conference & Showplace | Phoenix
