NCSHA Washington Report | July 28, 2023
Over the past five years, the Ivory Prize has emerged as the most high-profile award for innovations in construction, financing, and public policy that point toward “ambitious, feasible, and scalable solutions to housing affordability.”
A new report from the organizers, Ivory Innovations, housed at the University of Utah’s David Eccles School of Business, distills the aims of 120 recognized efforts over the prize’s history that address three dominate themes of the American affordability crisis: inadequate access for millions of renters and would-be buyers, especially those of color; infeasible costs for building new homes affordably; and impenetrable layers of regulation that drive costs up and access down.
The report is an interesting, at times inspiring, reading.
The section on access is dominated by young firms using sophisticated data analytics technologies to improve renters’ and buyers’ awareness and options. At least one, Esusu, has achieved significant industry penetration, including a partnership with the Ohio HFA. Also cited is an avowedly old school and demonstrably scalable solution — state HFA down payment assistance — provided in a creative form recently by the California HFA.
The report’s overview of cost-saving innovators features a number of newer players attempting to refute the rueful adage that offsite construction is the future of affordable housing and always will be (h/t to Rob Dapice of New Hampshire HFA). One of the companies, indieDwell, is working with the Idaho Housing and Finance Association. The Ivory Prize has also illuminated industry and grassroots efforts to attract and train more workers in residential construction, an often-overlooked part of housing’s supply-side challenges.
The featured public policies include a heavy dose of reforms to reduce zoning barriers, including Oregon’s statewide law, and some that set the table for more development, especially accessory dwelling units.
A number of interventions in the spiral of evictions and homelessness are recognized, with the authors’ somewhat surprising observation that “most of the innovations we have seen are private sector organizations supporting public sector goals.” One might expect forthcoming honorees will include groundbreaking partnerships formed during Covid by state and local housing agencies, court systems, and local nonprofit organizations to create eviction diversion systems that avert the worst outcomes for renters.
As Ivory Innovations broadens its efforts to document and encourage new and better ways to solve housing affordability, future reports on prize winners could have even more impact if they would take stock of what past winners accomplished after they won.
The Ivory Prize is the brainchild of Clark Ivory, a longtime Utah home builder with a reputation for civic leadership and giving back, and his wife, Christine. Clark Ivory spoke to the Wall Street Journal a few weeks ago about how his company has had to remain nimble in navigating a post-Covid/high-interest rate environment where affordability is paramount. He and other builders who are succeeding today are delivering smaller homes at lower price points, offering buyer concessions for longer periods, and refocusing marketing attention on first-time buyers.
As innovations make their way to the mainstream, incremental measures can still move the needle.
Stockton Williams | Executive Director
State HFA Emergency Housing Assistance
In This Issue
- Housing Credit Legislation Surpasses Major Cosponsorship Milestone in Advance of August Recess
- NCSHA Writes FHFA with Concerns about Fannie Mae Duty-to-Serve Plan Revision
- NCSHA Submits Comments to CFPB on Proposed R-PACE Rule
- Senate Appropriations Committee Approves FY24 HUD Funding Bill
- Administration Announces Recent Actions to Increase Housing Supply, Protect Tenants, Eliminate Junk Fees
- Treasury Reports States, Localities Have Increased SLFRF Investments in Affordable Housing
- Eight Communities Receive Choice Neighborhoods Implementation Grants
- USDA Announces Two Pilot Programs for Homeownership Opportunities on Tribal Lands
- Banking Regulators Propose New Capital Standards, Increased Mortgage Risk Weights for Large Banks
- House Subcommittee Looks at Impact of ESG Policies on Housing Costs
- Brown, Wyden, Others Introduce Bill to Limit Institutional Investment in Single-Family Rental Housing
- Cleaver, Others Introduce Bill to Expand Tenant Mobility, Landlord Participation in Housing Choice Voucher Program
- Looking Ahead
Housing Credit Legislation Surpasses Major Cosponsorship Milestone in Advance of August Recess
Less than three months after its reintroduction, one-third of Congress has cosponsored the Affordable Housing Credit Improvement Act (AHCIA; S. 1557 / H.R. 3238), a remarkable achievement for Housing Credit advocates. The House bill this week reached 151 cosponsors (75 Republicans and 76 Democrats), including the leads — exceeding the goal set by lead sponsor Representative Darin LaHood (R-IL). The number of Republican House cosponsors this year has surpassed the number of Republicans who cosponsored the legislation in the previous Congress (75 compared to 71), and the percentage of House Ways and Means Committee members cosponsoring the bill is also higher than it was in the last Congress (79 compared to 77 percent). The AHCIA has more cosponsors than any other bipartisan tax bill in the House.
Also this week, Senators Katie Britt (R-AL) and Bob Casey (D-PA) cosponsored the Senate version of the bill, bringing total cosponsorship in that chamber to 28 Senators. Britt is the 14th Senate Republican to cosponsor the bill, which had only 11 Republican cosponsors in the last Congress. With the addition of Casey, the percentage of Senate Finance Committee members on the bill is also higher already than it was in the 117th Congress (59 compared to 50 percent).
NCSHA thanks all Housing Credit advocates for your outreach and encourages you to continue to push your delegation members to cosponsor if they have not already. Advocacy materials, including the one-page bill summary, detailed bill summary, state and district fact sheets, and a brand-new In-District Advocacy Guide specifically designed for advocacy during the August recess, as well as other materials, are available in the ACTION Toolkit and on NCSHA’s AHCIA webpage.
NCSHA Writes FHFA with Concerns about Fannie Mae Duty-to-Serve Plan Revision
Last Friday NCSHA submitted comments to the Federal Housing Finance Agency (FHFA) expressing opposition to Fannie Mae’s proposed revision to its Duty-to-Serve Underserved Market Plan for 2022 – 24, which would substantially reduce Fannie Mae’s 2023 baseline for Housing Credit equity investments in qualified rural areas from 70 to between 20 and 40. Fannie Mae’s rationale for the proposed modification is that a question of tax law interpretation — whether Fannie Mae falls under the definition of a tax-exempt controlled entity (TECE) — has limited its ability to participate in multi-investor pools to make Housing Credit investments. In our comments, NCSHA acknowledges this is a legitimate concern but argues such a significant reduction in investments will greatly hinder efforts to support affordable housing in rural communities. The letter notes we are working to convince the Treasury Department to issue written guidance clarifying that Fannie Mae and Freddie Mac are not TECEs and asks FHFA also to request Treasury guidance. In the meantime, NCSHA requests that FHFA work with Fannie Mae and Freddie Mac to identify ways they can remain involved in the Housing Credit market until the TECE issue is resolved.
NCSHA Submits Comments to CFPB on Proposed R-PACE Rule
On Wednesday, NCSHA submitted comments to the Consumer Financial Protection Bureau (CFPB) regarding its Residential Property Assessed Clean Energy Financing (R-PACE) proposed rule. NCSHA voiced support for the proposed rule but urged CFPB to require R-PACE financings to be reported to the credit bureaus and to the homeowner’s mortgage servicer, establish homeowner disclosure requirements for R-PACE financings, and ensure R-PACE financings do not interfere with loss mitigation processes established by the Federal Housing Administration, Fannie Mae, and Freddie Mac.
Senate Appropriations Committee Approves FY24 HUD Funding Bill
By a vote of 29–0 on July 20, the Senate Appropriations Committee favorably reported Fiscal Year (FY) 2024 Transportation, Housing, and Urban Development (THUD) funding legislation that would maintain or slightly increase funding for a number of Department of Housing and Urban Development programs, including by providing level funding of $1.5 billion for the HOME Investment Partnerships program. This follows on the heels of a lengthy and somewhat contentious House Appropriations Committee markup of its THUD bill on July 19. That bill would reduce HOME by two-thirds from its FY23 enacted level, to $500 million for FY24. Read more about the bill and the status of FY24 appropriations here.
Administration Announces Recent Actions to Increase Housing Supply, Protect Tenants, Eliminate Junk Fees
On July 27, the Biden – Harris Administration released two fact sheets on steps it is taking to boost the supply of affordable housing and support renter protections. These announcements, which build on the administration’s May 2022 Housing Supply Action Plan and January 2023 Blueprint for a Renters Bill of Rights, respectively, focus on reducing barriers to building housing, such as restrictive land-use and zoning rules; expanding financing for affordable, energy efficient, and resilient housing; and promoting commercial-to-residential conversion, particularly for affordable and zero emissions housing. On July 19, the White House announced a series of steps intended to reduce rental housing “junk” fees, including rental application fees that exceed the cost of performing background and credit checks and convenience fees to pay rent online. More information on these actions can be found in NCSHA’s blog post.
Treasury Reports States, Localities Have Increased SLFRF Investments in Affordable Housing
The U.S. Treasury recently released a report on how states and local governments are using Coronavirus State and Local Fiscal Recovery Funds (SLFRF). According to the analysis, as of March 31, 861 state and local governments have devoted a total of $17 billion in SLFRF for 2,460 affordable housing-related programs and projects. The total invested in affordable housing and homelessness prevention activities is up seven percent since January and 29 percent since July of 2022 when Treasury adopted flexibilities advocated by NCSHA to facilitate the use of SLFRF with the Housing Credit and otherwise streamline program requirements for affordable housing uses. More detailed information about SLFRF investments in affordable housing can be found in this Treasury fact sheet.
Eight Communities Receive Choice Neighborhoods Implementation Grants
On July 27, HUD announced it has awarded $370 million to eight communities through the Choice Neighborhoods Implementation (CNI) grant program. CNI funding is available to create new mixed-use housing communities, revitalize distressed public and assisted housing developments, and provide residents with access to services focused on income, health, and education. The eight communities selected have leveraged an additional $3 billion in public and private commitments as part of the award process. Including this round of awards, HUD has provided CNI grants to 52 communities nationwide that have collectively invested more than $6.3 billion through this initiative. The communities selected for the most recent awards are Birmingham, AL; Tucson, AZ; Wilmington, DE; Miami-Dade County, FL; Atlanta, GA; Lake Charles, LA; and Philadelphia and Pittsburgh, PA. A summary of the winning submissions is available here.
USDA Announces Two Pilot Programs for Homeownership Opportunities on Tribal Lands
On July 26, the U.S. Department of Agriculture launched two pilot programs designed to increase affordable homeownership opportunities for people on tribal lands. The Tribal Property Valuation Pilot Program will allow approved lenders to obtain desktop appraisals for mortgage transactions on tribal land. USDA believes this will help decrease the costs and improve the quality of the appraisal reports. The other pilot announced — the Tribal Rehabilitation Pilot Program — will provide funding for renovations on existing homes located on tribal lands. Both programs will be made available through Single Family Housing Guaranteed Loan Program-approved lenders. USDA anticipates the pilots will continue until July 28, 2025. More information on these programs is available here.
Banking Regulators Propose New Capital Standards, Increased Mortgage Risk Weights for Large Banks
The three major federal bank regulators — the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Federal Reserve — on Thursday released a proposed rule that would increase capital requirements for banks with more than $100 billion in assets. The regulators have said the purpose of the proposed rule is to bolster the resiliency of the banking system following the recent failures of several regional banks. The proposed rule also would adjust the risk weightings applied to single-family mortgages to determine how much capital a bank needs to hold for each loan. Current regulations assign prudently underwritten mortgage loans a risk weight of 50 percent and all other primary-mortgage loans a weighting of 100 percent. The proposed rule would establish a tiered system in which the risk weighting for loans would increase for mortgages with higher loan-to-value ratios. Loans with an LTV ratio between 90 and 100 percent would be assigned a risk weighting of 70 percent. All mortgages insured by federal mortgage insurance programs, such as the Federal Housing Administration, will retain their 20 percent risk weighting, as will mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.
The regulators will accept comments until November. NCSHA is reviewing the proposed rule to determine what impact it could have on HFAs and their affordable lending programs. If you have questions or input for NCSHA to consider, email Greg Zagorski by November 15.
House Subcommittee Looks at Impact of ESG Policies on Housing Costs
The House Housing and Insurance Subcommittee on July 14 held a hearing to examine the impact of environmental, social, and governance (ESG) standards and mandates on the costs of housing and insurance. Subcommittee Vice Chair Monica De La Cruz (R-TX), who presided over much of the hearing, argued in her opening statement that ESG mandates are tools activists use to strong-arm corporations into adopting their preferred policies, but their real-world impact is to increase costs and reduce consumer options. Ranking Member Emanuel Cleaver (D-MO) countered that ESG mandates often address critical community needs, such as environmental resiliency, that benefit businesses and consumers. He said insurance and housing costs have risen recently because of environmental changes caused by climate change, not ESG policies.
Most of the hearing focused on the insurance industry, but Alicia Huey, chairman of the National Association of Home Builders, and Bill Boor, the president and CEO of Cavco Industries, who spoke on behalf of the Manufactured Housing Institute, both argued that poorly conceived mandates can significantly increase the costs of housing development and production. The hearing was part of a series the House Financial Services Committee held this month on ESG standards. Earlier this week, the committee advanced several bills designed to curb the influence ESG standards would have on corporations and investment funds.
Brown, Wyden, Others Introduce Bill to Limit Institutional Investment in Single-Family Rental Housing
Senate Banking Committee Chair Sherrod Brown (D-OH) and Finance Committee Chair Ron Wyden (D-OR) recently introduced the Stop Predatory Investing Act, which would restrict federal tax credits available to large institutional investors in single-family homes. Specifically, the legislation would prohibit an investor who acquires 50 or more new single-family rental homes after the date of enactment from deducting interest or depreciation on those properties. Brown and Wyden argue institutional investors are making housing less affordable for working families by purchasing single-family homes in bulk and charging higher rents. The bill, they contend, would reduce large investors’ competitive advantage in the market by cutting their access to key tax incentives. Large investors would continue to be able to claim the deduction for properties financed through Housing Credits that are still in their affordability period, homes sold to a home buyer or qualified nonprofit, and build-to-rent single-family homes. Also cosponsoring the bill are Senators Tina Smith (D-MN), Jeff Merkley (D-OR), Jack Reed (D-RI), John Fetterman (D-PA), Elizabeth Warren (D-MA), and Tammy Baldwin (D-WI). A summary of the bill is available here.
Cleaver, Others Introduce Bill to Expand Tenant Mobility, Landlord Participation in Housing Choice Voucher Program
On July 13, House Housing Subcommittee Ranking Member Emanuel Cleaver (D-MO) and Representative Lori Chavez-DeRemer (R-OR) reintroduced the Choice in Affordable Housing Act (H.R. 4606). The bill would authorize $100 million each fiscal year for a period of five years to recruit, train, and incentivize participation by landlords in HUD’s Housing Choice Voucher program. The incentives include one-time payments, security deposit protections, and bonuses for organizations with dedicated landlord liaisons. The legislation would also amend the way HUD determines rents under the program by using Small-Area Fair Market Rents in more metropolitan areas. Companion legislation (S. 32) was introduced in the Senate by Senators Chris Coons (D-DE) and Kevin Cramer (R-ND) in January.
Legislative and Regulatory Activities
- July 31 | Comments Due | FHFA RFI on Multifamily Property Tenant Protections
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