NCSHA Washington Report | December 9, 2022
Covid-19 and rising trade tensions with China have ushered in a surprising, bipartisan embrace of a national “industrial policy,” the idea that government should support industries deemed critical for national security and competitiveness, which The Economist notes “has typically been seen as anathema by political and economic leaders in America in recent decades.”
Senator Rubio (R-FL), one of the most articulate industrial policy proponents in either party, offers a succinct explanation: “The market will always reach the most efficient economic outcome, but sometimes the most efficient outcome is at odds with the common good and the national interest.”
Industrial policy’s comeback began during the Trump Administration, with “reshoring policies to bring US firms with Chinese outposts back to the United States, and subsidies to boost domestic production of medical equipment and assorted high-tech products.” Think Operation Warp Speed for Covid vaccines.
The Biden – Harris Administration has increasingly framed its economic agenda in terms of “modern industrial strategy.” Three of the president’s biggest legislative accomplishments — bills pumping hundreds of billions of federal investment into infrastructure, technology, and energy — epitomize the approach.
The infrastructure and energy bills authorized substantial funding for home energy retrofits and expanded tax incentives for solar and wind installations in apartments, respectively. And a massive new EPA program could unlock investment in housing and community development while also reducing pollution, as NCSHA recommended to the agency this week.
Housing’s connections to an emerging industrial policy consensus are evident in other areas, too. In manufacturing, for example. The National Association of Home Builders and several electric power trade groups are asking Congress for $1 billion to “specifically address the supply chain crisis for electric distribution transformers,” which is impeding residential construction as well as undermining grid reliability.
Then there’s research and development, a linchpin of industrial policy. It’s been decades since the last sustained federal R&D commitment focused on housing affordability. Recent private-sector efforts like the Ivory Prize have illuminated innovations in residential construction, finance, and policy that suggest that should change.
The housing – industrial policy connection runs even deeper though.
In Arizona this week, President Biden touted the latest in a string of announcements by computer chip manufacturers expanding their investment in the United States as evidence that his strategy was already paying off. “American manufacturing is back, folks,” he said.
Yet in Arizona, and across the country, the housing finance agency leaders in states highlighting similar announcements — Ohio, Texas, North Carolina, and Georgia — will tell you that inadequate housing infrastructure is a serious challenge to the transformative potential of big new economic development commitments.
An industrial policy that sees American workers priced out of housing in proximity to new job opportunities, and forced to make costly, polluting commutes to access them as a result, isn’t in the common good or the national interest.
It’s one more reason Congress needs to put big new dollars into housing production by the end of the year.
Stockton Williams | Executive Director
State HFA Emergency Housing Assistance
In This Issue
- Tax Legislation Remains Lame Duck Agenda Possibility; Continued Housing Credit Advocacy Needed
- NCSHA Submits Comments to EPA on Greenhouse Gas Reduction Fund
- NCSHA Comments on HUD Small Mortgage Lending RFI
- Uncertainty Looms as Continuing Resolution Expiration Approaches
- NCSHA in the News
- Looking Ahead
Tax Legislation Remains Lame Duck Agenda Possibility; Continued Housing Credit Advocacy Needed
As the end of the calendar year draws nearer, congressional negotiations over end-of-year priorities are in full swing, including over whether and how to address expiring tax provisions and other possible tax changes. NCSHA and our partners continue to press for an expansion of the Housing Credit — both increasing 9 percent Housing Credit authority and lowering the 50 percent test for bond-financed properties — which is essential to increasing the supply of affordable rental housing.
This week, HFA executive directors from across the country, in DC for NCSHA’s Special Board of Directors Meeting and Executive Directors Forum, took to the Hill to advocate for these Housing Credit priorities. But you don’t need to be in Washington to have your voice heard. NCSHA urges all Housing Credit stakeholders to continue to reach out to their congressional delegations and urge them to communicate to leadership and tax committee leaders their support for advancing Housing Credit expansion this year. Make sure members of Congress understand there is strong bipartisan support for the Housing Credit and how dire the need is in their state or district. Take advantage of ACTION Campaign resources to make your ask. Even if you’ve reached out before, it’s time to do it again. We need to keep the pressure on to make it into a year-end package.
NCSHA Submits Comments to EPA on Greenhouse Gas Reduction Fund
On Monday, NCSHA submitted comments to the Environmental Protection Agency (EPA) in response to its Request for Information on The Greenhouse Gas Reduction Fund (GHGRF), urging EPA to prioritize the use of the GHGRF for affordable housing and allow state HFAs to apply directly for GHGRF assistance. Congress appropriated $27 billion to implement this new program, including $7 billion for competitive grants to states, municipalities, tribal governments, and other eligible recipients to enable low-income and disadvantaged communities to deploy or benefit from zero-emission technologies, including distributed technologies on residential rooftops; nearly $12 billion for competitive grants to eligible entities to provide financial and technical assistance to projects that reduce or avoid greenhouse gas emissions; and $8 billion for competitive grants to eligible entities to provide financial and technical assistance to projects that reduce or avoid greenhouse gas emissions in low-income and disadvantaged communities. These funds are available to EPA to award grants until September 30, 2024.
NCSHA Comments on HUD Small Mortgage Lending RFI
On December 5, NCSHA submitted comments to the Federal Housing Administration (FHA) in response to its Request for Information Regarding Small Mortgage Lending, which sought comments on barriers to the origination of small mortgages and ways to expand affordable homeownership opportunities in underserved markets with lower housing prices. NCSHA agreed with HUD’s conclusion that a primary barrier to small-balance mortgage loan lending is the cost to originate and service small mortgage loans in relation to the limited potential compensation afforded by them. In our response, we recommended FHA review whether its requirements for Direct Endorsement Underwriting could be lowered for underwriters serving rural markets or targeted metropolitan statistical areas where home prices are particularly low. We also suggested FHA consider revising its current lending restriction on properties with deed restrictions that survive foreclosure.
Uncertainty Looms as Continuing Resolution Expiration Approaches
Time is dwindling for Congress to resolve the question of how to continue to fund the federal government and avoid a shutdown ahead of the December 16 expiration of the current continuing resolution (CR). Discussions are ongoing among the White House, congressional leadership, and senior appropriators in both chambers, but no clear answer has emerged as to whether the parties can come to agreement in time. While there appears to be broad consensus on how much to spend on defense programs, the two parties remain about $26 billion apart when it comes to non-defense discretionary spending, largely due to disagreement over how to classify certain veterans’ benefits. Assuming that gap can be bridged and an agreement can be reached on a top-line number for domestic spending, there remain a number of outstanding policy questions that would need to be resolved before final spending legislation could be considered in the House and Senate, where it will require 60 votes to pass.
Democratic appropriators in the House and Senate plan to release their own omnibus spending legislation on Monday in an attempt to put pressure on Republicans to come along. As time goes on, though, the likelihood of either a full-year CR or a short-term CR into the new Congress increases. NCSHA remains engaged in advocacy related to HUD, USDA, VA, and Treasury programs of interest to housing finance agencies, as well as whether concerns about HUD’s project-based rental assistance administration solicitation can be resolved in a final omnibus bill.
NCSHA in the News
Fox Business, 12.5.22, Who qualifies as a first-time homebuyer?
Legislative and Regulatory Activities
- December 9 | Comments Due to NCSHA | Indexing Methodology for Title I Manufactured Home Loan Limits
- December 19 | Comments Due | Indexing Methodology for Title I Manufactured Home Loan Limits
- January 11 | Application Deadline | FY22 Choice Neighborhoods Planning and Implementation Grants
NCSHA 2023 Events
- January 8 – 13 | NCSHA’s HFA Institute 2023 | Washington, DC
- March 27 – 29 | Legislative Conference | Washington, DC
- June 13 – 16 | Housing Credit Connect & Marketplace | Seattle, WA
- October 14 – 17 | Annual Conference & Showplace | Boston, MA
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