NCSHA Washington Report | December 3, 2021

Published on December 3, 2021

Web Washington Report Graphics - December 3, 2021

The Treasury Department will soon announce the results of its first cut at right-sizing amounts of federal emergency rental assistance funds among the more than 450 state, county, local, and tribal governmental entities Congress charged with getting the aid to landlords and renters in need.

It’s increasingly clear Congress got the overall amount of funding just about right in its first ERA appropriation of $25 billion. This week Treasury projected “at least 80% of the program’s funding will be spent or obligated by year-end, nine months before the deadline for grantees to spend their initial allocations.”

The statutory formula was highly imprecise in authorizing amounts by jurisdiction, though. This was hardly a secret. USA Today published a long piece shortly after ERA became law that documented the extent to which the most populous states with the most renters got a lot less than they would likely need.

The flip side was that many smaller, less-populated states, with far fewer renters and much lower rents, got more than they needed, asked for, and were ever going to use under the rules and timetable in the law. This wasn’t a secret either; HFAs from smaller states raised it with their governors and members of Congress almost as soon as the ink was dry on President Trump’s signature on the legislation.

Still, the 18 states that received the statutory $200 million “small-state minimum” in ERA funds and others that got a little more than that have worked hard to meet their actual ERA demand. Most have funded much higher percentages of applications from their states’ renters than they have spent of their oversized allocations. Several have been highlighted for their successes by both renter advocates and the administration.

Yet for months, continuing to this week, some in the media and inside the Beltway have harshly criticized small states as “poor performers” mostly, it turns out, for not spending money they didn’t need and couldn’t use. Good people and agencies have been thrown under the bus unfairly. ERA’s bipartisan backing — the program emerged from a bipartisan consensus forged a year ago this week — has been unnecessarily undermined.

Thankfully, away from the misleading articles and partisan finger-pointing, the Treasury Department’s ERA team is working constructively with smaller states, counties, and cities to right-size their ERA allocations — and get more money to the places that have greater demand than they can currently meet. “Treasury anticipates that a substantial portion of the first round of reallocation will happen voluntarily — in a collaborative process among grantees and Treasury,” the department said Monday.

Anyone interested in the implementation issues states small and large have dealt with in operationalizing ERA should find this report NCSHA commissioned from Abt Associates of interest. We also asked Abt to assess the various models that had developed over the past year for estimating back rent and utilities. The pieces we hope will help inform better understanding of emergency housing assistance demand and the realities in meeting it.

Stockton Williams | Executive Director

State HFA Emergency Housing Assistance

In This Issue

Dapice Named Executive Director/CEO of New Hampshire Housing
The New Hampshire Housing Board of Directors has named Robert (Rob) Dapice as Executive Director/CEO, effective January 1, 2022. Dapice will succeed Dean Christon, who will retire on December 31 after 34 years of service. Dapice is the managing director of New Hampshire Housing’s Management and Development Division. Before joining the HFA in 2014, Dapice was a project manager for North Branch Construction and a captain in the U.S. Army, where he served in Iraq.

Strickland Inducted into Alabama Building Industry Hall of Fame
Alabama Housing Finance Authority Executive Director Robert Strickland is one of four inductees this year to the Alabama Building Industry Hall of Fame, the highest honor presented by the Home Builders Association of Alabama (HBAA). Strickland became the first employee of the Alabama Housing Finance Authority in 1987 after a 14-year career in commercial banking. During his tenure, Strickland has created and instituted programs that have served more than 123,000 families throughout Alabama. The induction ceremony took place during the HBAA’s Annual Convention on November 5.

Congress Passes Continuing Resolution Funding the Government Until February 18
Yesterday the House and Senate both passed a continuing resolution (CR) funding the federal government through February 18 and giving Congress more time to develop FY 2022 appropriations bills. The CR is largely the same as the CR signed into law on September 30 funding all agencies at their FY 2021 funding levels through December 3. It would provide an additional $7 billion to assist refugees from Afghanistan. President Biden is expected to sign the bill by midnight December 3 to keep government programs running without interruption.

IRS Issues Guidance on Implementation of Housing Credit 4 Percent Minimum Rate
On December 1, the Internal Revenue Service (IRS) issued Revenue Ruling 2021-20 and Revenue Procedure 2021-43 providing guidance to address ambiguities related to the application of the Housing Credit 4 percent minimum rate for bond-financed buildings. NCSHA sent a letter to IRS on February 26 urging them to issue guidance clarifying issues and questions about implementation of the 4 percent minimum rate. This week’s guidance addresses questions related to the applicability of the 4 percent minimum rate to buildings financed in part with draw-down bonds; buildings financed in part with tax-exempt bonds issued in 2020 and in part with proceeds of a different bond issue after December 31, 2020; and buildings receiving Housing Credit allocations after December 31, 2020. The guidance is intended to prevent windfalls of Credit authority in which a project is structured without the 4 percent minimum rate and is financially feasible as such. It is also meant to reduce any incentive for the borrower to seek an unnecessary de minimis amount of bond authority or additional Credit authority just to get the 4 percent minimum rate. For more details, please see NCSHA’s blog.

NCSHA and Industry Stakeholders Urge IRS and Treasury to Finalize Housing Credit Average Income Test Rule
On December 2, NCSHA and 31 other affordable housing stakeholder organizations sent a letter to IRS and the Treasury Department urging them to expedite issuance of a final rule on the Housing Credit Average Income Test (AIT). IRS’ October 2020 proposed rule substantially chilled interest in the AIT set-aside, and more than 80 Housing Credit stakeholder organizations expressed concerns about the rule via formal written comments and in oral testimony at an IRS public hearing earlier this year. The letter includes a set of consensus recommendations for IRS and Treasury to consider as they work to finalize the AIT rule. These recommendations include modifying the approach for meeting the AIT minimum set-aside, allowing changes to unit designations, providing greater flexibility when AIT noncompliance results from a casualty loss, expanding the mitigating action allowed to correct noncompliance, and extending further relief to existing developments that elected the AIT set-aside prior to publication of the proposed rule. For more detail, please see NCSHA’s blog.

Treasury Clears Third State to Run HAF Program
On Monday, the Treasury Department notified the state of Maryland that its Homeowner Assistance Fund (HAF) Plan had been approved, making Maryland the third state to receive plan approval. The Maryland Homeowner Assistance Fund will support mortgage relief, weatherization, housing counseling, and legal services and expects to open in late 2021. The other two states to receive HAF Plan approval from Treasury are New York and Ohio.

FHFA and FHA Increase Loan Limits
On Tuesday, the Federal Housing Finance Agency (FHFA) and the Federal Housing Administration (FHA) both announced increased loan limits for 2022. FHFA’s new conforming loan limit (CLL) in most of the United States will be $647,200, an increase of $98,950 from $548,250 in 2021. For high-cost areas, the new ceiling CLL for one-unit properties will be $970,800, which is 150 percent of $647,200. FHA’s Mortgagee Letter 2021-28 announced the maximum mortgage limits for FHA-insured Title II forward mortgages. FHA’s low-cost and high-cost loan limits will increase from $356,362 and $822,375 in calendar year (CL) 2021 to $420,680 and $970,800 in CY 2022, respectively, for a one-unit property. (Alaska, Hawaii, Guam, and the U.S. Virgin Islands are subject to higher loan amounts.)

Yellen Touts ERA Progress at Senate and House Hearings
On Tuesday, Treasury Secretary Janet Yellen and Federal Reserve Board Chair Jerome Powell testified before the Senate Banking Committee in a hearing on CARES Act oversight to highlight their post-pandemic economic recovery policies. In her opening testimony, Yellen touted the success of the Emergency Rental Assistance program (ERA), which she said has helped two million working families. Senator Jack Reed (D-RI) applauded Yellen for significantly expanding the ERA program and implementing self-attestation and bulk utility payment policies. He asked Yellen to develop additional Treasury ERA guidance that could streamline assistance to persons experiencing homelessness. He also encouraged Yellen to accelerate Treasury’s review and approval of state Homeowner Assistance Fund plans. In response to a question from Senator Jon Tester (D-MT), Yellen expressed her support for the $150 billion in affordable housing program spending in the Build Back Better Act, which she contended would help address the nation’s affordable housing shortage. Committee Ranking Member Pat Toomey (R-PA) strongly urged Powell to reconsider purchasing mortgage-backed securities, as he believes they would put housing affordability farther out of reach for those who need it most. Yellen and Powell also testified during a hearing before the House Financial Services Committee the next day, with Yellen once again citing the ERA program’s progress.

HUD Awards $20 Million in Eviction Protection Program Grants
On November 23, HUD announced it was awarding $20 million in grants through the Eviction Protection Grant Program. These inaugural grants will be provided to 10 organizations operating in nine states that provide legal services to low-income tenants at risk or subject to eviction. Due to the competitive nature of the grant application process — more than 100 organizations applied for funding — HUD awarded the grants based on an organization’s ability to provide or expand legal services in areas with high rates of eviction or prospective evictions, especially in rural areas and communities with limited English proficiency. This newly-created program is part of HUD’s efforts to support families recovering from the pandemic’s public health and economic impacts. Read more about the Eviction Protection Grant Program.

HUD Posts Lead Safe Housing Rule Toolkit
HUD’s Office of Lead Hazard Control and Healthy Homes on Tuesday released a Lead Safe Housing Rule Toolkit to help practitioners understand and comply with federal lead rules and support healthy homes. The Lead Safe Housing Rule (24 CFR Part 35) applies to almost all ownership transactions, rentals, and sales of pre-1978 housing. The rule is divided into subparts based on the activity being funded with different requirements for project-based assistance, tenant-based assistance, renovation, and acquisition. The toolkit provides tools and information for each subpart and includes sample forms, checklists, and information on proper record-keeping.

NCSHA in the News
The U.S. Sun, 11.24.21, Is there a mortgage stimulus program and how much can you get?

Looking Ahead…

NCSHA, State HFA, and Industry Events

December 8 | Women’s Affordable Housing Network Policy Panel | Virtual
Jennifer Schwartz will speak at this event.
December 14 | Tetra Tech Webinar: “Unlocking Treasury’s Emergency Rental Assistance Program”
Jennifer Schwartz will speak at this event.
January 10 – 14 & 24 – 28 | NCSHA’s HFA Institute 2022 | Virtual

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