NCSHA Washington Report | December 20, 2024

In the weeks since the election, this space has highlighted opportunities for federal housing policy under the incoming administration of President-elect Trump and a Republican-controlled 119th Congress:

• A “Super Bowl” of taxes that could expand existing incentives for affordable home buying and apartment construction;
• A drive to deregulate that could create cost savings for builders, buyers, operators, and owners of all kinds of housing; and
• A commitment to freeing up federally-owned land in appropriate areas for new residential development.

The risks for federal housing policy — there are always risks — fall largely into the known but unknowable, at least for the time being.

Will a promised mass deportation further deplete a U.S. construction workforce that counts 25 percent of its members as immigrants, perhaps half of them undocumented, and already faces “fundamental shortages” of workers, or will more targeted sweeps spare them and other essential contributors to the U.S. economy?

Will an aggressive tariff regime directed at Canada, China, and Mexico make homes and home building more expensive, as the prior Trump Administration’s tariffs on Canadian softwood lumber did, or will any negative effects be offset by greater contractor and supplier readiness and deeper benefits of lower taxes and less regulation?

Will a major piece of unfinished business from that administration, releasing Fannie Mae and Freddie Mac from federal conservatorship, which the key official in charge then said recently would have happened but for Covid, be a priority for the new Trump team (say, after the “Super Bowl”), or will the considerable inherent unknown unknowns in GSE privatization preserve the status quo?

One known known is the prospect of deep reductions in “domestic discretionary” programs, including rental assistance, construction subsidies, community development assistance, and financial guarantees through HUD, USDA, and the Treasury Department, among many other areas of federal social spending.

While Congress largely rejected the first Trump Administration’s mostly halfhearted proposed cuts, this time may be different. Candidate Trump promised to “squeeze the bloated federal bureaucracy for massive savings” and this week the president-elect suggested that eliminating $2 trillion from the federal budget will have “no impact on people.”

The figure comes from Elon Musk and Vivek Ramaswamy’s “government efficiency” project, which will have new committees in the House and Senate and hundreds of millions of social media followers tuned in to its activities. Musk and Ramaswamy’s influence on the country’s fiscal policy is already being felt, about which more below.

Sure, some of their stated agenda is hype, but the fact remains that the incoming administration and Congress appear to be more committed to shrinking the federal government than any executive and legislative branch in decades. Even relatively small cuts to programs limping along at levels already inadequate to need can cause compounding damage for years to come.

Advocates for federal social safety net policies that meet rational standards of “government efficiency” will need to demand a fair hearing and be able to demonstrate they deliver as intended. And show how cost-cutting that falls disproportionately on the 14 percent share of the federal budget where relatively small investments in affordable housing and other public goods are funded will in fact have a huge “impact on people.”

Stockton Williams | Executive Director

Washington Report will return in January.

In This Issue

• NCSHA Board Sets 2025 Legislative and Regulatory Priorities
• NCSHA Welcomes New Members
• Heckles Nominated for Delaware State Housing Authority Director
• Congress Stumbles As It Seeks to Avert Government Shutdown
• House Republicans Select New Ways and Means Committee Members
• FHFA Finalizes 2025 – 2027 Housing Goals for Freddie Mac, Fannie Mae
• USDA Will Give Priority for 538 Guaranteed Loans to Housing Credit Properties That Waive Qualified Contract Right
• HUD Final Rule Establishes Eviction Notice Requirements
• HUD Establishes New Environmental Reporting Requirements
• HUD Announces First PRICE Grant Awards for Manufactured Housing
• NCSHA in the News
• Looking Ahead

NCSHA Board Sets 2025 Legislative and Regulatory Priorities
Last week, NCSHA’s Board of Directors approved the legislative and regulatory priorities that will drive NCSHA’s policy and advocacy work in 2025. Similar to last year, NCSHA’s priorities are to advance legislation and regulation that reduce the costs to buy, build, own, and operate affordable homes and apartments; expand the supply and preservation of affordable for-sale and rental homes for low- and moderate-income households; and strengthen the capacity of state HFAs to serve economically vulnerable households and people and communities disproportionately harmed by disasters, discrimination, and disinvestment. NCSHA’s 2025 priorities also include addressing rising insurance costs, promoting affordable housing in Opportunity Zones, and maximizing the effectiveness of Covid-related emergency housing funds.

NCSHA Welcomes New Members
NCSHA welcomed Old National Bank and Slate Capital Partners as Affiliate members in December. If you work with a partner interested in becoming a member, please contact Phaedra Stoger.

Heckles Nominated for Delaware State Housing Authority Director
Delaware Governor-elect Matt Meyer has announced he is nominating Matthew Heckles to serve as director of the Delaware State Housing Authority (DSHA). Heckles is currently the Mid-Atlantic Regional Administrator for the U.S. Department of Housing and Urban Development, where he oversees the delivery of federal housing programs across six states, including Delaware. Previously, he led the Community Development Administration in Maryland and was a senior leader at DSHA.

Congress Stumbles As It Seeks to Avert Government Shutdown
With the December 20 expiration of the current continuing resolution (CR) imminent, a bipartisan deal to extend funding for the federal government as well as provide significant resources for disaster relief collapsed late Wednesday under pressure from some House Republicans, President-elect Trump, Vice President-elect Vance, and Elon Musk. The deal, which would have extended the current CR through March 14 and provided $100 billion for disaster relief, also included a number of other measures that swelled the package and drew criticism from observers inside and outside Congress. Instead of that legislation, Trump has urged House Republicans to pass a clean CR coupled with lifting the debt ceiling, currently scheduled to go back into effect on January 1, although so-called extraordinary measures by the Treasury Department are expected to stave off a potential federal default until later in the spring or early summer. It remains unclear, however, whether there are sufficient votes in either chamber to pass such a measure. If a government shutdown occurs, HUD will follow its most recent shutdown contingency plan, which describes agency activities that could continue for a period of time and those activities which would cease almost immediately.

House Republicans Select New Ways and Means Committee Members
The House Republican Steering Committee has named four new Republican members to the Ways and Means Committee, which has jurisdiction over tax issues including the Low-Income Housing Tax Credit and tax-exempt Housing Bonds. Representatives Aaron Bean (R-FL), Max Miller (R-OH), Nathaniel Moran (R-TX), and Rudy Yakym (R-IN) will be joining the committee in the 119th Congress. Miller and Yakym are cosponsors of the Affordable Housing Credit Improvement Act. Five members of the committee in the 118th Congress are not returning to the House next year: Representatives Earl Blumenauer (D-OR), Drew Ferguson (R-GA), Dan Kildee (D-MI), and Brad Wenstrup (R-OH) retire at the end of the calendar year, and Representative Michelle Steel (R-CA) lost her reelection race. Democrats have not announced new committee members as of this writing.

FHFA Finalizes 2025 – 2027 Housing Goals for Freddie Mac, Fannie Mae
The Federal Housing Finance Agency (FHFA) issued Thursday a final rule that establishes new three-year affordable housing goals for Freddie Mac and Fannie Mae (the Enterprises). The goals require both firms to purchase from certain underserved markets a percentage of the total number of multifamily and single-family mortgages they finance. The multifamily goals are 61 percent of all units financed for low-income units, 14 percent for very low-income units, and two percent of all units in small (5 – 50 units) multifamily properties that are affordable to low-income families.

For the single-family goals, the Enterprises are required to meet either the benchmark level described below or the actual market level of loans in specific categories. The actual market level is determined retrospectively for the year based on Home Mortgage Disclosure Act (HMDA) data. The single-family benchmark levels are 25 percent of all loan purchases for low-income home purchases, six percent for very low-income home purchases, 12 percent for minority census tract purchases, four percent for low-income census tract purchases, and 26 percent of all refinance loans for low-income refinances. The rule also establishes new “measurement buffers” for the single-family goals that give the Enterprises a little leeway because an action plan to demonstrate how an Enterprise will improve its performance will be required only if the Enterprise fails to meet a goal and the gap between the Enterprise’s performance and the market level is greater than the buffer defined in the final rule.

NCSHA commended FHFA for maintaining the goals at elevated levels in our comments on the proposed rule.

USDA Will Give Priority for 538 Guaranteed Loans to Housing Credit Properties That Waive Qualified Contract Right
Today, the U.S. Department of Agriculture’s (USDA) Rural Housing Service published guidance updating the competitive process for lender application submissions to its Section 538 Guaranteed Rural Rental Housing Program. One of the program updates implemented in the guidance is a new priority scoring criteria for applications for properties financed with the Housing Credit in which the owner has waived the qualified contract option. This priority will help prevent the early termination of properties from the Housing Credit program’s affordability restrictions via qualified contracts, ensuring the preservation of those properties in rural areas. NCSHA urged USDA to take this step in an September 2023 letter to Secretary Vilsack. The guidance also adds a new priority scoring criteria related to maturing mortgages in Section 514/515 multifamily properties and Section 538 joint transactions.

HUD Final Rule Establishes Eviction Notice Requirements
The U.S. Department of Housing and Urban Development (HUD) recently published a final rule requiring public housing agencies and owners of properties that receive HUD Project-Based Rental Assistance to provide written notice to tenants facing eviction for nonpayment of rent 30 days prior to filing a formal judicial eviction procedure. This final rule, which supersedes a previous interim final rule and proposed rule on the topic, consolidates various notice requirements and provides tenants of HUD-subsidized housing with additional opportunities to avoid eviction. The rule becomes effective on January 13, 2025.

HUD Establishes New Environmental Reporting Requirements
On Tuesday, HUD published new environmental reporting requirements for a number of different multifamily programs, including Section 8(bb) transfers (voluntary transfer of remaining budget authority upon termination of a PBRA Housing Assistance Payments contract) and Rental Assistance Demonstration (RAD) transactions (including RAD-to-PBRA transfers). Notice H–2024–10 contains a number of requirements that may impact these transactions, including restrictions on choice-limiting actions, timing considerations, and coordination between Part 50 and Part 58 reviews, particularly when a transaction includes HOME funding.

HUD Announces First PRICE Grant Awards for Manufactured Housing
On Thursday, HUD announced $225 million in grant awards for 17 awardees ― including Oregon Housing and Community Services — through the first federal grant program specifically designed to support manufactured housing: the Preservation and Reinvestment Initiative for Community Enhancement (PRICE) program. The inaugural PRICE awards will be used to support critical investments within manufactured homes and manufactured housing communities, including repairs and rehabilitation of existing units, infrastructure and accessibility improvements, mitigation strategies to increase resiliency, and the transition of existing manufactured housing communities to resident-managed communities. The 17 recipients will use the awards to make improvements in 26 states including rural, suburban, urban, tribal, and disaster-impacted areas. Read more about the recipients’ plans for the grant funding here.

NCSHA in the News
Tax Credit Advisor, 12.1.24, NCSHA Recognizes Stand-Out Affordable Housing Programs and Initiatives

Looking Ahead

Legislative and Regulatory Activities

• 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 8 | Comments Due to NCSHA | HUD Notice on 2025 Operating Cost Adjustment Factors
• January 10 | Comments Due | HUD Notice on 2025 Operating Cost Adjustment Factors
• 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

• January 12 – 17 | NCSHA’s HFA Institute 2025 | Washington, DC
• January 29 – 30 | Affordable Housing Tax Credit Coalition 2025 Annual Meeting | Newport Beach, CA
  Jennifer Schwartz will speak at this event.