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NCSHA Washington Report | January 19, 2024

Published on January 19, 2024

Web Washington Report Graphics - Janurary 19, 2024

We recently highlighted three federal regulations expected this year that have high stakes for housing affordability. The Supreme Court also could act on several cases with far-reaching impacts in our industry.

The justices last fall heard oral arguments in Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited. The Biden – Harris Administration is asking the court to reverse a Fifth Circuit decision that found the CFPB’s funding mechanism — Federal Reserve funds rather than congressional appropriations — to be unconstitutional.

Since its establishment in 2010, the bureau has implemented and enforced a number of laws impacting housing access and mortgage finance. None are universally loved, but they have largely benefitted consumers and the massive costs of complying with them have been absorbed into countless institutional systems and processes. Housing trade groups warn a high court ruling that upholds the Fifth Circuit’s could have “potentially catastrophic consequences” for the mortgage market unless it explicitly “does not call into question other crucial regulations issued by the CFPB over the past years.”

Last week, the court added to its docket City of Grants Pass v. Johnson. At issue is whether the small Oregon city can enforce its ban on public camping against homeless people. The court in 2019 declined to take up a challenge by the City of Boise to a Ninth Circuit decision that found the city’s policy of imposing criminal penalties on people for sleeping outside who have no available shelter options violates the Eighth Amendment’s ban on cruel and unusual punishment.

“Leaders from dozens of cities and states — both liberal and conservative — have been hoping the U.S. Supreme Court would overturn the Martin and Grants Pass decisions,” according to Vox’s Rachel Cohen. Advocates argue criminalizing homelessness in the absence of viable alternatives is counterproductive as well as cruel. The National Law Center on Homelessness calls Grants Pass “the most significant case about homelessness in 40+ years.”

The court also last week heard oral arguments in Sheetz v. County of El Dorado, California. The case involves a homeowner who argued the $24,000 “traffic mitigation fee” he had to pay to build a manufactured home on a lot he owned violated the takings clause of the Fifth Amendment. In essence, the court is asked to determine whether fees authorized in law, as in Sheetz, must meet the same legal standard of proportionality as those assessed on an individual basis.

Home builders hope a ruling for the plaintiff will help them in excessive local regulations that choke affordable building. Local government groups argue such an outcome would undermine communities’ ability to fund necessary development-supporting infrastructure.

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After ascending some of the highest peaks in mortgage finance — in business, public service, and association management — Dave Stevens spent the better part of the last seven years as confidential advisor, public advocate, and at times contrarian pundit, with a wide-ranging portfolio of clients, causes, and creative ideas that reflected the remarkable breadth of his network and depths of his intelligence. He was a thought leader in the fullest sense of that overused term.

Among Dave’s many areas of deep interest and influence was affordable homeownership, especially for the millions whose opportunity to achieve the American dream demands more focused attention in our country’s public policies. He was a steadfast friend to state housing finance agencies. Dave passed away this week. We will miss him.

Stockton-Williams-Washington-Report

Stockton Williams | Executive Director

State HFA Emergency Housing Assistance

In This Issue

Ways and Means Committee Approves Bill with Housing Credit Expansion
For weeks, Senate Finance Committee Chair Ron Wyden (D-OR) and House Ways and Means Committee Chair Jason Smith (R-MO) have been working together to craft tax legislation on which both could agree. Those negotiations resulted in a legislative proposal released at the start of this week that already has moved at lightning speed — particularly when compared to the typical pace in Congress. The $78 billion package, announced on January 16, was formally introduced as the Tax Relief for American Families and Workers Act of 2024 (H.R. 7024) by Chairman Smith on January 17. Earlier today, the Ways and Means Committee marked up the legislation, passing it out of committee with an overwhelming bipartisan vote of 40 – 3. The bill, which deals with a variety of tax issues, including an expansion of the Child Tax Credit, business tax breaks, disaster tax relief, and Taiwan tax issues, includes major NCSHA Housing Credit priorities that Novogradac estimates would increase affordable housing production by 202,573 units. Specifically, the legislation would:

  • Restore the 12.5 percent cut in Housing Credit authority the program suffered after a previous increase expired in 2022. The cap increase would apply to credit authority in 2023 – 2025. 
  • Lower the tax-exempt bond financing requirement from 50 to 30 percent for projects financed with bonds that have an issue date before 2026. 

For detailed information about the Housing Credit provisions and the uncertain path to enactment, see NCSHA’s blog. 

During the Ways and Means Committee markup today, committee members from both parties spoke up in support of the Housing Credit provisions. Representative Darin LaHood (R-IL), Affordable Housing Credit Improvement Act (AHCIA) lead Republican sponsor, spoke about how the bill makes progress in addressing the housing crisis head on by expanding the Housing Credit. He submitted for the record a letter NCSHA and some of our advocacy partners organized in advance of the hearing, signed by 88 leading national and statewide housing and community development organizations. (An additional organization signed on after the letter was sent, bringing the total to 89 groups.)

Other AHCIA lead sponsors, Representatives Suzan DelBene (D-WA), Brad Wenstrup (R-OH), Don Beyer (D-VA), Claudia Tenney (R-NY), and Jimmy Panetta (D-CA), and cosponsors, Representatives Drew Ferguson (R-GA), Danny Davis (D-IL) Judy Chu (D-CA), Gwen Moore (D-WI), Dan Kildee (D-MI), Bill Pascrell (D-NJ), and Brad Schneider (D-IL), as well as Ranking Member Richard Neal (D-MA), all lauded the Housing Credit provisions in the bill, though several noted they would have liked to see other Housing Credit changes included, such as modifications to allow unhoused individuals and veterans to be exempt from the student rule and to make it easier to build housing serving extremely low-income households and in Native American areas.

The AHCIA includes provisions that would address all the concerns raised related to housing. While NCSHA would have strongly supported additional AHCIA provisions in the tax bill, we are grateful for those that are included and will continue to fight in future bills to advance other important policy changes that would strengthen the Housing Credit. 

President Signs Short-Term Spending Legislation; Government Shutdown Averted
With funding for the U.S. Department of Housing and Urban Development (HUD) set to expire at midnight tonight, the House and Senate both passed on Thursday and President Biden signed today legislation to extend funding for federal agencies by a little over a month to allow additional time to consider full-year appropriations legislation for fiscal year 2024. The newest continuing resolution (CR), which passed in the Senate by a vote of 77 – 18 and then in the House by a vote of 314 – 108, provides funding for certain federal agencies, including HUD, through March 1, and other federal agencies through March 8.

This latest CR comes as Congress continues to struggle to find consensus necessary to enact all 12 regular appropriations bills before April 30, when mandatory across-the-board one-percent cuts would be imposed on all federal spending as required by the deal struck in June to suspend the federal borrowing limit through January 2025. To date, the House has passed seven of the 12 required spending bills, while the Senate has passed three, and the two chambers remain far apart on the appropriate overall level of spending, despite those levels being set by the debt ceiling deal. House Speaker Mike Johnson (R-LA) recently announced an agreement with Senate Majority Leader Chuck Schumer (D-NY) to adhere to those previously agreed-upon levels, but it remains to be seen whether negotiators between the two chambers ultimately can resolve their differences to assemble and pass final FY24 spending legislation before the new deadlines.

NCSHA Comments on Proposed New Capital Standards for Large Banks
NCSHA on Tuesday submitted comments in response to a notice of proposed rulemaking (NPR) issued July 27, 2023, by federal banking regulatory agencies — the Federal Reserve, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency — modifying the bank capital standards for large banks with more than $100 billion in assets. In its comments, NCSHA opposed provisions in the NPR that would increase bank capital standards for high loan-to-value home purchase mortgages and tighten capital rules for mortgage servicing rights, arguing these proposals would reduce mortgage lending to low- and moderate-income households and negatively impact liquidity in the housing finance market. In addition, NCSHA asked the regulators to reduce the amount of capital large banks are required to hold for Housing Bond investments and affordable housing properties financed by the Housing Credit. NCSHA also signed onto letters from the National Housing Conference and the National Association of Affordable Housing Lenders and Affordable Housing Tax Credit Coalition that raised similar concerns.

Dewey Elected to FHLB of Atlanta Board
The Board of Directors for the Federal Home Loan Bank of Atlanta (FHLB of Atlanta) last week elected Susan Dewey to serve as an independent public interest director on the board, effective January 15 through the end of 2024. Dewey retired last month after 24 years as executive director of Virginia Housing. A longtime member of NCSHA’s Board of Directors, Dewey served as NCSHA president from 2008 – 2010. She also has been a member of FHLB of Atlanta’s Affordable Housing Advisory Council, the Fannie Mae Housing Impact Advisory Committee, the board for Housing Forward Virginia, and the National Association of Realtors’ Housing Opportunity Advisory Board. The National Housing Conference honored Dewey with its prestigious Housing Visionary Award last year in recognition of her affordable housing leadership.

HUD Announces $40 Million Available for Housing Counseling Agencies
Last week, HUD announced $40.25 million will be available through the 2023 Office of Housing Counseling Comprehensive Notice of Funding Opportunity. The funds will be used to support more than 150 HUD-approved housing counseling agencies that provide educational services for home buyers, homeowners, and renters. Historically Black Colleges and Universities, other minority-serving institutions, and partnering agencies will be awarded $3 million of the available funding to help bridge the racial homeownership gap and support underserved communities. HUD is accepting applications through February 8, and more information is available here.

House Financial Services Committee Holds HUD Oversight Hearing
The House Financial Services Committee last week held an oversight hearing of the U.S. Department of Housing and Urban Development. In her written and spoken testimony, HUD Secretary Marcia L. Fudge highlighted the department’s efforts in recent years to support affordable housing and improve agency operations and thanked Congress for appropriating the funding for these efforts. Fudge fielded questions on a variety of housing policy issues from committee members in both parties, including several pertaining to HFA programs and priorities. In response to a question from Representative Jim Himes (D-CT), Fudge expressed her support for the Housing Credit and a willingness to discuss with the Treasury Department possible regulatory changes to make the program more effective. Fudge told Representative Ritchie Torres (D-NY) she would support a long-term extension of the Federal Financing Bank Risk-Sharing Program. Representative David Scott (D-GA) asked Fudge if HUD’s latest procurement proposal for Section 8 rental assistance contract administration adhered to language passed by Congress requiring HUD to take state HFA views into account, and Fudge replied that it does.

Joint Economic Committee Hearing Probes Affordable Housing Issues
The Joint Economic Committee of the U.S. Congress held a hearing this week on policy approaches to increase the affordable housing supply. In his opening statement, Committee Chair Senator Martin Heinrich (D-NM) argued more federal investment is needed to address the growing housing crisis and increase the supply of affordable housing. He expressed his strong support for the Housing Credit and the need to enact the Affordable Housing Credit Improvement Act (AHCIA) to increase housing supply. Witness Jenn Lopez, founder and president of Project Moxie, provided especially strong rationale for expanding the Housing Credit to increase supply. Numerous committee members — including Senator Maggie Hassan (D-NH) and Representatives Don Beyer (D-VA), Drew Ferguson (R-GA), and Katie Porter (D-CA) — also expressed support for the Housing Credit and AHCIA during the hearing. In addition to federal resources for financing affordable housing, the hearing addressed state and local planning and zoning requirements, innovative construction methods, and energy incentives that could help to increase affordable housing supply.

HUD Publishes Notice Changing Methodology, Limiting Annual Increases to Income Limits
On January 10, HUD published a notice announcing a change to the criteria for determining the maximum possible increase in income limits for housing financed with Housing Credits, private activity bonds, and various HUD programs. The previous limit, set in 2010, was five percent or twice the percentage change in national median family income. Beginning in FY24, HUD will adjust this limit by imposing an absolute cap of 10 percent on annual income limit increases. HUD is accepting comments on the new methodology until February 8 and has requested input on six particular questions included in the notice. NCSHA would appreciate HFA input as we prepare a response. Please email any feedback to Jim Tassos by February 1 to inform NCSHA’s comments.

HUD Announces Changes to GRRP Requirements
On January 8, HUD announced changes to its Green and Resilient Retrofit Program (GRRP), which provides grants and loans for energy-efficiency and resilience upgrades for certain HUD-supported multifamily housing properties. In particular, the updated program requirements simplify and streamline payment terms and disbursement processes for awardees, update the terms for surplus cash loans, clarify the applicability of Davis-Bacon wage rates and the use of project labor agreements, and provide several other technical changes, including related to Section 8 project based rental assistance properties. You can learn more in the updated FAQs and redline version of the revised notice.

Novogradac Accepting Applications for Tax Credit Awards
Novogradac is now accepting applications for its upcoming Journal of Tax Credit Awards. These awards recognize those who have made great strides in affordable housing development, community development, or historic preservation. A new category is being introduced this year: the Robert E. Ibanez Award for outstanding achievement in community development. Other categories include the Developments of Distinction for affordable housing, QLICIs of the Year for use of new markets tax credit financing, and Historic Rehabilitation. Nominations are due by March 1.

NCSHA in the News
The Bond Buyer, 1.17.24, Muni-friendly housing provisions poised to become law
Route Fifty, 1.16.24, Child tax credit revived under proposal in Congress

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