NCSHA Washington Report | July 8, 2022
While we were gone…
The House Appropriations Committee approved funding for HUD’s next fiscal year that’s 17 percent higher than this year’s level. The committee’s bill includes $1.7 billion for the HOME block grant, the most in more than a decade. Many other programs were increased, and the committee bill would make significant new investments in manufactured housing and energy improvements to public housing and HUD-assisted homes.
States ramped up their investment of fiscal recovery funds in affordable housing activities, bringing the total allocated across 29 states to nearly $9 billion – with almost $1 billion coming since we last reported in April. Among states making recent investments are Georgia, Iowa, Nebraska, New Jersey, and Utah. Fiscal recovery funds are the basis for one of the most significant state commitments to housing in history, and it’s happening in every part of the country. Upwards of $5 billion more is moving through local government efforts.
IRS officials speaking at NCSHA’s Housing Credit Connect conference in Chicago a couple weeks ago reaffirmed the intention communicated by the White House in May to release by September revised rules for financing more mixed-income affordable housing with the Housing Credit. Improvements sought by NCSHA and many others to the Service’s proposed regulations for “income averaging” would make it more feasible to serve extremely low-income renters with the program.
The Department of Transportation and HUD announced a new program to help communities coordinate funding from the big infrastructure bill with affordable housing investments. More broadly, the wheels are starting to turn in sending larger funding flows from the bill to states in areas of intersection we flagged when it passed: weatherization and broad-band expansion. We’ll have more in the weeks ahead on what’s at stake for affordable housing in forthcoming infrastructure programs.
The federal bank regulators — the OCC, the FDIC, and the Fed — continued their unified outreach to industry and advocates in support of their unified revision to the Community Reinvestment Act rules, the first since 1995. The overhaul, which the agencies are aiming to finish by the end of the year, has the potential to broaden and better define banks’ support for affordable housing and community development. We’ll be among many offering suggestions due by August 5 on how the new rules can fully achieve that potential.
The Housing Assistance Council turned 50, marking a half century of deep impact that includes construction and rehabilitation of more than 70,000 homes in many of the most persistently poor places in the country and a commitment, from president and CEO David Lipsetz, to “redouble our work toward a future in which all families in rural America have a safe, decent, and affordable place to call home.”
There’s a lot of good news in affordable housing if you know where to look.
Stockton Williams | Executive Director
State HFA Emergency Housing Assistance
In This Issue
- NCSHA Urges IRS and Treasury to Provide Targeted Extensions, Expansions to Housing Credit Deadline Relief
- House Committee-Passed FY 2023 Appropriations Bills Increase HUD, Rural Housing Service Program Funding
- Financial Services Committee Advances Down Payment Assistance Legislation
- Capital Magnet Fund Awards $336.4 Million to HFAs, Others
- Cortez Masto, Moore Introduce Bond Enhancement Act
- HUD Publishes Management and Occupancy Review Rule and Notice for Section 8 Programs
- Financial Services Committee Examines Homeownership Trends
- Financial Services Subcommittee Discusses Market Impact of Single-Family Rental Investors
- Senate Banking Committee Explores Flood Insurance Reauthorization
- JCHS Releases State of the Nation’s Housing 2022 Report
- NCSHA in the News
- Looking Ahead
NCSHA Urges IRS and Treasury to Provide Targeted Extensions, Expansions to Housing Credit Deadline Relief
On July 8, NCSHA sent a letter to the Internal Revenue Service and U.S. Department of the Treasury urging the agencies to extend and expand certain relief measures provided to the Housing Credit industry in response to the Covid-19 pandemic. Since the public health emergency began, IRS and Treasury have issued several notices providing deadline extensions for Housing Credit properties and waivers of certain program requirements, most recently in Notice 2022-05. While many of the measures previously provided are no longer needed, ongoing economic turmoil has resulted in rising development costs necessitating targeted continued relief. In addition to requesting further extensions to placed-in-service deadlines for some developments that received a Credit allocation in 2019 and all developments receiving an allocation in 2020, NCSHA urged Treasury and IRS to provide placed-in-service deadline extensions to developments with 2021 allocations. Projects receiving allocations in 2021 have not yet benefited from deadline relief under prior guidance. NCSHA also asked for further deadline relief for existing properties that have suffered a casualty loss or require repairs to address noncompliance and/or general maintenance. Lastly, NCSHA encouraged IRS and Treasury to extend flexibility to state Housing Credit allocating agencies to waive physical inspections of properties, in consultation with public health experts, in geographic areas where virus transmission makes such a waiver appropriate.
House Committee-Passed FY 2023 Appropriations Bills Increase HUD, Rural Housing Service Program Funding
Last week, the House Appropriations Committee passed the Transportation, Housing and Urban Development, and Related Agencies Fiscal Year 2023 appropriations bill. In total, the bill would provide $62.7 billion for Department of Housing and Urban Development programs and activities, $9 billion, or 17 percent, more than the FY 2022 enacted level and $1.1 billion above President Biden’s FY 2023 budget request. The bill includes $14.9 billion for project-based rental assistance, an increase of $1 billion above the FY 2022 enacted level, and $1.7 billion for the HOME Investment Partnerships program, an increase of $200 million over the FY 2022 enacted level.
On June 23, the committee also passed the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies FY 2023 appropriations bill. The bill provides a total funding level of $27.2 billion, an 8.3 percent increase over FY 2022. The bill would increase spending on the U.S. Department of Agriculture’s rural housing programs but not by as much as Biden’s FY 2023 budget requested. The Section 502 single-family direct loan program would receive $1.5 billion, $50 million above the FY 2022 enacted level. The bill includes level funding for the Section 502 single-family guaranteed loan program at $30 billion. It would increase the Section 515 multifamily direct loan program $100 million to $150 million. The Section 521 rental assistance program would receive $1.5 billion, $44 million more than in FY 2022.
For more information on the THUD appropriations bill, see NCSHA’s blog, and for details on HUD and USDA key programs, see NCSHA’s budget chart.
Financial Services Committee Advances Down Payment Assistance Legislation
The House Financial Services Committee voted June 23 to favorably report legislation, the Downpayment Toward Equity Act (H.R. 4495), that would establish a grant program to provide down payment and other home purchase assistance to underserved home buyers. The bill would authorize $100 billion over 10 years in total appropriations for the new program, which HUD would administer federally. HUD would distribute 75 percent of the funding appropriated each year to state HFAs (or another state agency HUD designates). Recipients may use the funds to help first-generation home buyers — defined as those whose parents have not previously owned a home or whose parents experienced a foreclosure and who have not themselves owned a home in the past three years (those who have lived in foster care also would qualify) — purchase a home through down payment assistance, closing cost assistance, and interest rate buy-downs. NCSHA supported the legislation, introduced by Committee Chair Maxine Waters (D-CA), and worked with committee staff to strengthen it.
For more information on the bill, read NCSHA’s blog and detailed summary.
Capital Magnet Fund Awards $336.4 Million to HFAs, Others
On June 22, Treasury’s Community Development Financial Institutions Fund (CDFI Fund) announced the FY 2021 Capital Magnet Fund awards. Twenty-seven nonprofit housing organizations — including five HFAs — and 32 CDFIs will receive a total of $336.4 million for the development and preservation of affordable housing targeted to low-, very low-, and extremely low-income families. The CDFI Fund predicts these Capital Magnet Fund awards will generate nearly $12.4 billion in public and private investment for affordable housing and economic development in communities most in need across the country. The five HFAs selected — Colorado Housing and Finance Authority, MassHousing, Rhode Island Housing, Vermont Housing Finance Agency, and Wisconsin Housing and Economic Development Authority — will receive a total of $44.5 million in grants.
See NCSHA’s blog for more details.
Cortez Masto, Moore Introduce Bond Enhancement Act
Senator Catherine Cortez Masto (D-NV) and Representative Gwen Moore (D-WI) on June 22 introduced the Affordable Housing Bond Enhancement Act (S. 4445/H.R. 8184). This legislation, which NCSHA has worked on closely with the senator’s and congresswoman’s offices, would expand the HFAs’ ability to provide affordable homeownership by strengthening the Mortgage Revenue Bond (MRB) and Mortgage Credit Certificate (MCC) programs. Many of NCSHA’s long-standing priorities for improving housing bonds are included, such as increasing the MRB home improvement loan limit, allowing MRBs to be used for refinancing loans, providing HFAs additional flexibility in how they use housing bond authority, and simplifying how a borrower’s MCC benefit is calculated.
NCSHA summarized the bill in more detail in our blog and published a summary and section-by-section analysis.
HUD Publishes Management and Occupancy Review Rule and Notice for Section 8 Programs
On June 27, HUD published the Management and Occupancy Review (MOR) Rule and Notice that will become effective September 26. The rule and notice apply to seven project-based Section 8 Housing Assistance Payments programs: new construction, substantial rehabilitation, new construction or substantial rehabilitation financed by state housing agencies, new construction financed under Section 515, the loan management set-aside program, disposition of HUD-owned projects, and the Section 202/8 program. The rule establishes a frequency for the completion of MORs based on a project’s previous MOR score and the project’s rating under HUD’s risk-based assessment management model. The intent is to reduce the frequency of MORs for projects that consistently perform well and to provide consistency across programs.
Financial Services Committee Examines Homeownership Trends
The House Financial Services Committee held a June 29 hearing to consider the long-term impact the strong homeownership housing market, which arose during the pandemic, will have on homeownership opportunities for working families and efforts to increase minority homeownership. In her opening statement, Committee Chair Maxine Waters (D-CA) observed the pandemic housing boom made homeownership unaffordable for many low- and moderate-income families and widened the homeownership gap between white and minority households. She noted higher housing prices have been one of the biggest contributors to inflation and urged Congress to pass legislation her committee advanced to increase support for affordable housing, including the Downpayment Toward Equity Act (H.R. 4495) and the housing provisions included in the Build Back Better Act. Ranking Member Patrick McHenry (R-NC) and other committee Republicans countered that higher housing prices were a result of Democratic policies that increased inflation. They argued the policies Waters has suggested would make homeownership more expensive by increasing demand without addressing the shortage of affordable for-sale homes.
Financial Services Subcommittee Discusses Market Impact of Single-Family Rental Investors
The House Financial Services Subcommittee on Oversight and Investigations held a hearing June 28 to discuss the impact private equity firms are having on the for-sale housing market. In his opening remarks, Subcommittee Chair Al Green (D-TX) said recent home purchases by private equity firms have contributed to the nation’s shortage of affordable housing and further exacerbated the racial wealth gap by reducing the supply of homes available for purchase by working families. Financial Services Committee Chair Maxine Waters (D-CA) echoed Green’s concerns, arguing that would-be home buyers are unable to compete with cash offers made by institutional investors. Citing a survey the committee recently conducted, Waters expressed concerns about large rent increases implemented by some single-family rental investors and asked witnesses whether policies such as rent caps could help renters. Subcommittee Ranking Member Tom Emmer (R-MN) countered that rent control and similar policies would disincentivize rental housing production and argued the best thing Congress could do to lower housing costs is to lower inflation.
Senate Banking Committee Explores Flood Insurance Reauthorization
On June 23, the Senate Banking Committee held a hearing to explore a long-term reauthorization of the National Flood Insurance Program (NFIP). The NFIP’s current statutory authority is set to expire on September 30. NFIP’s most recent long-term reauthorization expired in 2017, and the program has been reauthorized for short periods more than 20 times since then. Committee Chair Sherrod Brown (D-OH), Ranking Member Patrick Toomey (R-PA), and witness David Maurstad, acting associate administrator for resilience at the Federal Emergency Management Agency (FEMA), all expressed a desire to enact a long-term NFIP authorization. Maurstad said FEMA also would like Congress to make NFIP insurance more affordable for low- and moderate-income Americans, improve real-time communications and education for residents regarding changing flood plains, reduce risk to the entire portfolio by addressing properties that have received two or more paid flood claims, and address the NFIP’s current $20.5 billion debt to the U.S. Treasury.
JCHS Releases State of the Nation’s Housing 2022 Report
On June 22, Harvard University’s Joint Center for Housing Studies released its annual report assessing the housing market and challenges faced by renters and homeowners across the nation. The report found that, after record-breaking increases in home prices and rents in 2021, the housing market is likely to cool due to higher interest rates and as increased apartment construction brings some relief to renters. However, the report says the combination of higher interest rates, insufficient housing supply, and price surges for gas, food, and other necessities is expected to put greater pressure on lower-income households and households of color, especially as pandemic-related emergency funding winds down.
Read NCSHA’s blog for more information.
NCSHA in the News
Novogradac, 7.1.22, Low-Income Housing Tax Credits News Briefs – July 2022
FingerLakes1.com, 6.27.22, Stimulus payments through the homeowner assistance fund
Legislative and Regulatory Activities
- July 11 | Comments Due to NCSHA | Joint Agency Proposed Community Reinvestment Act Regulations
- July 15 | Comments Due to NCSHA | SEC’s Proposed Rule on Enhanced Disclosures by Certain Investment Advisers and Investment Companies about Environmental, Social, and Governance Investment Practices
- TBD (early August) | Comments Due | SEC’s Proposed Rule on Enhanced Disclosures by Certain Investment Advisers and Investment Companies about Environmental, Social, and Governance Investment Practices
- August 5 | Comments Due | Joint Agency Proposed Community Reinvestment Act Regulations
NCSHA, State HFA, and Industry Events
- July 11 – 13, 1:00 – 3:00 p.m. ET | Federal Housing Finance Agency Duty to Serve Listening Sessions | Virtual
Jennifer Schwartz will speak at this event. - July 14 | National Council of State Legislatures’ Hill Housing Briefing | Virtual
Jennifer Schwartz will speak at this event. - July 20 | Consortium for Housing Asset Management Policy Webinar | Virtual
Jennifer Schwartz will speak at this event. - July 27 – 29 | IPED Tax Credit Property Disposition Conference | Philadelphia, PA
Jennifer Schwartz will speak at this event. - August 3 | National Conference of State Legislatures’ Legislative Summit | Denver, CO
Garth Rieman will speak at this event. - August 15 – 17 | US Bank HFA Symposium | St. Louis, MO
Rosemarie Sabatino will speak at this event. - August 17 – 19 | Arizona Housing Forum | Scottsdale, AZ
Jennifer Schwartz will speak at this event.
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