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NCSHA Washington Report | January 20, 2023

Published on January 20, 2023

Web Washington Report Graphics - January 20, 2023

There’s still cause for cautious optimism that some of the most significant and enduring economic disruptions of the pandemic — the rise of remote work and the partial emptying of downtowns — could also create opportunities to alleviate the pernicious pre-existing affordable housing supply shortage.

On the one hand, a recent paper from the Federal Reserve Bank of San Francisco argues remote work actually made housing more expensive and “may account for more than half of overall price appreciation and similar increases in rents” between November 2019 and November 2021. The authors speculate that the “fundamental evolution in work-related housing demand may be important for future house prices.”

Analysts at the Economic Innovation Group are more positive though, finding that “even though remote work has increased rents in the short-run, they are likely to decline going forward and in the long-run may end up lower than pre-pandemic.” Not only will rents fall as supply catches up to demand overall, the authors suggest, remote work’s push of demand “to housing markets where supply is more responsive will result in a larger decrease in rents than would otherwise have occurred.”

With as much as 35 percent of workers able to work entirely from home (with wide variations by industry and location), many central business districts are facing potentially dire consequences from high vacancy rates in their office buildings and retail stores. A hoped-for silver lining remains the prospect of converting some to housing.

You can find plenty of examples of interesting projects and municipal efforts to encourage them. A report by RentCafe, analyzing data from Yardi Matrix, found a 25 percent increase in apartment conversions in 2021 – 2022, resulting in 28,000 new units, with 77,000 more in the development pipeline as of last summer.

It’s true that most are happening in a couple handfuls of cities and only a fraction tend to be affordable to low-income renters. Economic conditions that could induce some commercial owners to sell their properties for less, theoretically enabling more affordable conversions to housing, may at the same time make it more difficult to attract financing for them.

Last month, the influential Real Estate Roundtable wrote President Biden to urge the federal government to rethink its emphasis on remote work due to negative impacts “on cities, local tax bases and small businesses” and recommended “legislation to facilitate the increased conversion of underutilized office and other commercial real estate to much-needed housing.” Without a federal or local redevelopment incentive, office-to-affordable conversions will remain rare in most places.

The federal government’s own real estate represents an opportunity. The Obama Administration identified roughly 14,000 excess federal properties and “thousands of others that are underutilized.” The McKinney-Vento Homeless Assistance Act gives homeless service providers an effective “right of first refusal” to acquire them. Yet the approval rate for applications is “abysmally low,” according to the National Homelessness Law Center, due to overly bureaucratic procedures.

Encouragingly, forthcoming reforms are hinted at in both the White House’s new homelessness strategy and its existing housing supply agenda.

Stockton-Williams-Washington-Report

Stockton Williams | Executive Director

State HFA Emergency Housing Assistance

In This Issue

Hovey Named MSHDA Executive Director
The Michigan State Housing Development Authority has announced Amy Hovey will assume the role of executive director on January 23. Hovey brings to her new role experience in finance, government relations, commercial real estate, construction, housing, and neighborhood revitalization. She began her career as a banker and went on to hold the position of senior vice president and CEO of the Center for Community Progress in Washington, DC. She served as a special projects coordinator for the Charles Stewart Mott Foundation and most recently worked with the state Department of Labor and Economic Opportunity as a contractor on housing matters. Hovey will be the first woman to serve as executive director of MSHDA (in a non-acting capacity) in its 56-year history. 

Florida Housing Announces Resignation of Executive Director Trey Price
The Florida Housing Finance Corporation has announced the resignation of Executive Director Trey Price, effective February 1. Trey joined Florida Housing as executive director in March 2017. He was active on the NCSHA Board of Directors in 2019 – 2021. NCSHA thanks Trey and wishes him the best in his new endeavors.

HUD Publishes Affirmatively Furthering Fair Housing Proposed Rule
This week, HUD published the Affirmatively Furthering Fair Housing (AFFH) proposed rule, which is intended to build and improve upon HUD’s 2015 AFFH final rule adopted under the Obama Administration and later repealed by the Trump Administration. The obligation that HUD and its grantees affirmatively further fair housing is statutorily required by the 1968 Fair Housing Act. The new AFFH proposed rule sets forth a process by which participants in HUD programs would develop Equity Plans that include a fair housing analysis, goals, strategies for meeting those goals, and a community engagement process. See NCSHA’s blog for a detailed analysis. More information is available in HUD’s fact sheet and quick reference guide. NCSHA joined other leading civil rights and housing policy organizations on a statement applauding HUD for releasing the proposed rule. Comments will be due 60 days from the rule’s publication in the Federal Register. Please send input you would like NCSHA to consider for its comments to Jennifer Schwartz by February 28.

NCSHA Co-Signs Build America, Buy America Letter to HUD
NCSHA and other housing advocacy groups recently sent HUD Secretary Marcia Fudge a letter expressing concerns regarding HUD’s potential implementation of the Build America, Buy America Act. This new law, enacted as part of the Infrastructure Investment and Jobs Act on November 15, 2021, establishes domestic content procurement preferences for certain infrastructure projects funded with federal financial assistance. The letter notes that HUD may be planning to apply these domestic content procurement preferences to the HOME Investment Partnerships and Housing Trust Fund programs and says such new requirements would substantially increase the cost and administrative burden of developing affordable housing. The letter urges HUD to rely on guidance from the Office of Management and Budget to exempt these critical programs from the new requirements. NCSHA will continue to engage with HUD and other interested stakeholders as this process unfolds.

FHFA, Fannie Mae, Freddie Mac Announce Further Single-Family Pricing Changes
On Thursday, the Federal Housing Finance Agency (FHFA) announced further changes to Fannie Mae’s and Freddie Mac’s single-family pricing framework, introducing redesigned and recalibrated upfront fee matrices for purchase, rate-term refinance, and cash-out refinance loans. The pricing changes broadly impact purchase and rate-term refinance loans and build on upfront fee changes announced by FHFA in January and October of 2022, which have been integrated into the new grids. The new fee matrices consist of three base grids by loan purpose for purchase, rate-term refinance, and cash-out refinance loans — recalibrated to new credit score and loan-to-value ratio categories — along with associated loan attributes for each. The updated fees will take effect for deliveries and acquisitions beginning May 1 to minimize the potential for market or pipeline disruption. FHFA’s announcement included Fannie Mae’s Lender Announcement and Freddie Mac’s Guide Bulletin Announcement.

House Committees Welcome New Republican Members; Democrats to Lose Seats
As detailed in NCSHA’s January 12 blog post, House Republicans have announced which members will join three committees critical to affordable housing. The Appropriations and Ways and Means committees each will see 10 new Republican members; 11 new members will join the Financial Services Committee. The new committee members reflect the fact that the number of Republican seats on every committee will grow and the number of Democrat seats will contract due to the change in the overall makeup of the House with Republicans taking the majority. Additionally, some former members on each of the committees left Congress at the end of last year, opening up their seats for new committee members. Representatives Kay Granger (R-TX) and Patrick McHenry (R-NC) will chair the Appropriations and Financial Services committees, respectively; each served as the ranking member on their respective committee in the previous Congress. Representative Jason Smith (R-MO) will serve as chair of the Ways and Means Committee, having won a contested race to replace former Representative Kevin Brady (R-TX) leading the powerful tax-writing committee.

While the Senate remains in Democratic control, we expect the committee ratios to change some to reflect the Democratic majority, as opposed to the even split in the previous Congress. There also will be new members joining key housing committees — Appropriations, Banking, and Finance — to replace Senators who retired from Congress. However, Senate leaders have not yet announced who will join these and other committees.

HUD to Provide $568 Million for Lead-Based Paint, Other Housing-Related Hazards
Last Friday, HUD announced two Notices of Funding Opportunities (NOFOs) totaling $568 million to address lead-based paint and other housing hazards for low-income families. The first NOFO will provide $403 million in grants to state and local governments, under HUD’s Lead Hazard Reduction Grant Program, to improve the health and safety of privately owned older (pre-1978) homes of low-income families. The second NOFO makes $165 million available for public housing agencies (PHAs) to improve the health and safety of their public housing properties. The funding is designed to mitigate threats to public housing residents by addressing lead-based paint, carbon monoxide, mold, radon, fire, and asbestos. State and local governments have until March 14 to apply for the first NOFO. PHAs have until April 13 to apply for the second NOFO.

FHA Updates Single-Family Handbook
On Wednesday, the Federal Housing Administration released the latest version of the Single-Family Housing Policy Handbook 4000.1, which incorporates previously published mortgagee letters and includes a variety of enhancements, revisions, and technical edits. Of particular note to state HFAs, the new handbook provides an FHA-HAMP-related exception for mortgages backed by mortgage revenue bonds. The updated handbook also provides guidance relating to borrowers who earn self-employment or commission income when the income has been earned for less than two years.

Ginnie Mae Extends Covid-Related Flexibilities
On Wednesday, Ginnie Mae released two All Participants Memoranda (APM) that extend previously announced Covid-19-related temporary flexibilities. The first, APM 23-01, extends the temporary flexibilities extended in APMs 20-14, 21-08, and 22-06 to allow alternative audit procedures for Ginnie Mae issuers with a fiscal year ending on or before June 30, 2023. The second, APM 23-02, extends the delinquency reporting exemptions for six months from January 31 to July 31, 2023 (i.e., the June 2023 investor reporting). With this latter flexibility, Ginnie Mae will continue to exclude any delinquencies occurring on or after April 2020 for the purposes of enforcing the provisions in Chapter 18, Part 3, Sections C and D, for issuers that were compliant with Ginnie Mae’s delinquency rate thresholds as of their April 2020 investor account report.

DOE Releases Home Energy Rebate RFI
The Department of Energy (DOE) issued a Request for Information (RFI) seeking input from states, local governments, and others on implementation of new home energy-efficiency rebate programs created by the Inflation Reduction Act (IRA): the Home Efficiency and Home Electrification rebate programs. As it has for other IRA energy-efficiency programs, NCSHA will submit comments on this RFI, arguing the new rebate programs should prioritize affordable housing and HFAs should be able to help determine how these funds will be distributed to ensure maximum impact for states’ affordable housing stock. NCSHA previously filed similar comments on HUD’s Green Retrofit and Resilience Program and the Environmental Protection Agency’s Greenhouse Gas Reduction Fund. The comment deadline is March 3. To inform NCSHA’s submission, please send your comments to Robert Henson by February 17.

HUD, Other Agencies Issue Joint Proposed Rule on Religious Liberty Protections 
On January 12, HUD joined other federal departments to publish a joint proposed rule implementing Executive Order (EO) 14015, which revoked EO 13831 issued under the Trump Administration, related to rules governing the participation of faith-based organizations in various federal assistance programs, including housing programs. The proposed rule would modify numerous regulations put in place under the previous administration in accordance with EO 13831. Comments on the proposed rule are due by March 14.

Examples of the types of changes the proposed rule would make include requiring government resources to be available to providers without regard to the religious or non-religious nature of the provider and without program incentives that deliberately skew for or against religious or secular providers; prohibiting organizations that receive federal financial assistance from, in providing services with that assistance, discriminating against beneficiaries based on religion, religious belief, or refusal to hold a religious belief or participate in religious practice; and requiring organizations providing services with such assistance to provide written notice to beneficiaries of religious protections.

Enterprise and Wells Fargo Announce Affordability Grant Program
Enterprise and the Wells Fargo Foundation have jointly launched a $20 million grant competition — The Housing Affordability Breakthrough Challenge — designed to promote innovative strategies to increase access to affordable housing. Housing finance agencies, nonprofits, mission-oriented for-profits, government-affiliated organizations, and tribal housing authorities will be eligible to compete for grants of $1 million, $2 million, and $3 million to scale ideas and programs that will shift the current affordable housing paradigm. The first round of applications will run from January 31 through March 3. Enterprise and the Wells Fargo Foundation will be holding an informational webinar on February 2. Registration for the webinar is available here.

NCSHA in the News
Affordable Housing Finance, 1.19.23, HUD Announces New Affirmatively Furthering Fair Housing Rule
Earth911.com, 1.17.23, Where To Find Affordable Financing for Energy-Efficiency Upgrades
Route Fifty, 1.10.23, Housing Programs Nationwide See Big Infusion of Earmark Cash

Looking Ahead…

Legislative and Regulatory Activities

NCSHA, State HFA, and Industry Events

  • January 31 – February 1 | Affordable Housing Tax Credit Coalition 2023 Annual Meeting | Scottsdale, AZ
    Jennifer Schwartz will speak at this event.
  • February 8 | NeighborWorks America Symposium, Advancing Equity for People of Color: Local Solutions for Housing Stability | Washington, DC
    Garth Rieman will speak at this event.
  • February 9 | Habitat for Humanity Habitat on the Hill Conference | Washington, DC
    Garth Rieman will speak at this event.
  • February 22 – 23 | Yardi Executive Briefing | Austin, TX
    Stockton Williams and Jennifer Schwartz will speak at this event.
  • March 1 | Discounts End on Early Registration & Hotel Rates for NCSHA’s 2023 Legislative Conference
  • March 6 – 9 | NH&RA Annual Meeting | Bonita Springs, FL
    Stockton Williams will speak at this event.
  • March 8 – 10 | NAHMA Biannual Top Issues in Affordable Housing Conference | Washington, DC
    Stockton Williams and Jennifer Schwartz will speak at this event.
  • March 27 – 29 | NCSHA’s 2023 Legislative Conference | Washington, DC
  • April 12 | E&A Team Annual Accessibility Summit | Virtual
    Jim Tassos will speak at this event.
  • April 17 – 19 | Nebraska Investment Finance Authority 2023 Annual Conference | Lincoln, NE
    Jennifer Schwartz will speak at this event.

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