NCSHA Washington Report | June 17, 2022

The fact that the most significant federal incentive for affordable apartment construction is largely a state-designed and delivered program, reflecting core federal concerns, is not news to readers of this newsletter.

The most commonly cited benefit of Congress’ decision to devolve administration of the Low Income Housing Tax Credit to the states is the attribute it imbues in the program to be responsive to changing housing needs that vary substantially across state lines.

While state administration hasn’t always been perfect, its effectiveness overall is undeniable. It’s a big reason for the broad and deep bipartisan support the Housing Credit has earned in Congress, throughout a period when bipartisanship has been harder to come by.

One way state oversight has remained a consistent strength of the Credit — enabling it to adapt to significant economic volatility, social changes, statutory revisions, and regulatory updates since 1986 — has been state administrators’ collaborations to develop and adopt among themselves model approaches for sound administration.

These NCSHA-coordinated efforts have produced more than 40 consensus recommended practices in key areas of state responsibility, addressing:

• What kinds of affordable housing developments in which parts of a state most warrant Credits in a given year;
• How Credit awards should be rigorously underwritten to ensure developments receive no more than the necessary amounts;
• What the appropriate benefits and responsibilities are among developers, owners, and other participants in Housing Credit development; and
• How states should execute their responsibilities to ensure participants and properties fulfill the requirements of the law and the expectations of the state in rational, accountable ways.

NCSHA’s recommended practices in state Housing Credit administration have raised the bar for everyone involved in the program. They’ve spurred countless process improvements in the financing, development, and management of affordable housing. And they have pre-empted potentially counterproductive intrusions of regulatory overreach that would have the opposite effect.

Next week, at NCSHA’s Housing Credit Connect, NCSHA will launch a new round of recommended practices development to address seismic shifts in the affordable housing industry and American economy in the last several years.

Over the next 12 months, state Housing Credit agencies will assess how their administration of the Credit can and should evolve to address unprecedented construction cost increases, mounting needs to preserve affordability in existing properties, imperatives to advance racial inequities implicated in housing policies at all levels of government, and complexities in project siting, among other issues.

The project will be led by a task force of state HFA executive directors appointed by NCSHA’s Board of Directors and chaired by Maura Collins of Vermont and Christopher Nunn of Georgia. NCSHA’s Jim Tassos will staff it, as he has every other since 1992. Industry participants and interested parties will have opportunities to share their views with the task force, as they have in the past as well.

The Housing Credit has never been more necessary. Ensuring state administration remains a core strength has never been more important.

Stockton Williams | Executive Director

Washington Report will return on July 8.

State HFA Emergency Housing Assistance

In This Issue

• Subcommittee-Approved FY 2023 Appropriations Bill Increases Rural Housing Program Funding
• Senate Banking Committee Discusses National Flood Insurance Program
• Ginnie Mae Extends Delinquency Ratio Exemptions
• FHFA Releases Annual Report to Congress
• HUD, NAHB Hold Innovative Housing Showcase in DC
• NCSHA in the News
• Looking Ahead

Subcommittee-Approved FY 2023 Appropriations Bill Increases Rural Housing Program Funding
The House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Wednesday approved its Fiscal Year 2023 appropriations bill. The bill provides a total funding level of $27.2 billion, an 8.3 percent increase over FY 2022, and includes increased investment for the U.S. Department of Agriculture’s rural housing programs. The bill includes $150 million for Section 515 Multifamily Direct Loans, a $100 million increase over FY 2022, and $300 million for the Section 538 Multifamily Loan Program, a $50 million increase over FY 2022. However, these funding levels are lower than those included in the FY 2023 President’s Budget Request.

The bill also provides nearly $1.5 billion for Section 521 Rental Assistance, almost $500 million above FY 2022 but lower than the FY 2023 president’s budget, and $38 million for Section 542 Rural Housing Vouchers, $7 billion below FY 2022 but in line with the FY 2023 president’s budget. The bill does not include the administration-proposed provision to “decouple” rental assistance from the Section 515 and 514/516 programs, which would have allowed tenants to receive or continue to receive rental assistance after a property has paid off its USDA mortgage. The full committee will consider the bill on June 23.

Senate Banking Committee Discusses National Flood Insurance Program
The Senate Banking Committee Thursday morning held a hearing to examine options for reauthorizing the National Flood Insurance Program (NFIP). NFIP’s authorization expires on September 30. Congress has not passed a long-term reauthorization of the program since 2012. In his opening remarks, Committee Chair Sherrod Brown (D-OH) said reauthorizing NFIP is critical to protecting communities and homeowners from flood damages, an issue he said would only get worse due to climate change. Brown said he was particularly interested in hearing suggestions on how the committee could advance NFIP legislation that provides access to insurance for homeowners and businesses, addresses concerns about the affordability of flood insurance, ensures more people are aware of the flood risk of their homes and business and purchase coverage, and helps communities lower their flood risk.

Ranking Member Pat Toomey (R-PA) agreed with Brown about the need to reauthorize NFIP, arguing the current law requires NFIP to operate in an unsustainable manner. He said his four priorities for reauthorization are to encourage more participation from private insurers and reinsurers, allow NFIP to continue implementing its updated risk rating system, better target subsidies for low-income policyholders, and better communicate with property holders and homeowners about their flood risk. Brown announced the committee will hold an additional hearing as soon as next week with officials from the Federal Emergency Management Agency who administer NFIP.

Ginnie Mae Extends Delinquency Ratio Exemptions
On Thursday, Ginnie Mae issued APM 22-05 announcing it will continue to exclude through January 31, 2023, any delinquencies occurring on or after April 2020 for the purposes of enforcing the acceptable delinquency threshold provisions in its MBS Guide. NCSHA most recently advocated for an additional extension in this April 28 letter.

FHFA Releases Annual Report to Congress
The Federal Housing Finance Agency (FHFA) Wednesday released its 2021 Report to Congress. The report, which is required by statute, outlines the actions FHFA took last year to carry out its authority to supervise the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and the Federal Home Loan Banks. Included in the report is a summary of FHFA’s examinations of the GSEs, which found they continue to effectively manage their financial risk and build up capital. FHFA pledges in the report to continue focusing on helping the GSEs build their capital reserves to allow them to leave conservatorship. At the same time, the report calls on Congress to advance housing finance reform legislation to determine the GSEs’ structure and purpose post-conservatorship. The report also asks Congress for the authority to examine the GSEs’ third-party service providers to identify and remedy potential risks to the firms. FHFA has requested such authority in previous reports.

HUD, NAHB Hold Innovative Housing Showcase in DC
Last weekend, the Department of Housing and Urban Development (HUD) and the National Association of Home Builders (NAHB) presented the 2022 Innovative Housing Showcase on the National Mall for the first time since 2019. The event showcased alternative construction methods, including modular construction and 3D printing, new and more sustainable materials, and space-efficient designs. HUD and NAHB kicked off the showcase with a June 9 webinar exploring how innovation in housing design and construction technology can help address housing supply shortages, combat rising costs, and expand access to affordable housing and homeownership. A full list of exhibitors along with descriptions of their presentations can be found on the showcase website.

NCSHA in the News
Law360, 6.16.22, Housing Groups Pursue 2 Tracks Toward Fed Tax Credit Update

Looking Ahead…

Legislative and Regulatory Activities

• June 22 | House Financial Services Subcommittee on Consumer Protection and Financial Institutions Hearing | Better, Together: Examining the Unified Proposed Rule to Modernize the Community Reinvestment Act
• June 23 | House THUD Appropriations Subcommittee | Mark-Up of FY 2023 HUD Funding Legislation
• June 28 | House Financial Services Subcommittee on Oversight and Investigations Hearing | Where Have All the Houses Gone? Private Equity, Single-Family Rentals, and America’s Neighborhoods
• June 29 | House Financial Services Committee Hearing | Boom and Bust: Inequality, Homeownership, and the Long-Term Impacts of the Hot Housing Market
• 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

• June 21 – 24 | NCSHA’s Housing Credit Connect | Chicago
• July 14 | National Council of State Legislatures’ Hill Housing Briefing | Virtual
  Jennifer Schwartz will speak at this event.
• June 22 | Harvard University Joint Center for Housing Studies Releases Annual State of the Nation’s Housing Report | Virtual
• July 11 – 13, 1:00 – 3:00 p.m. ET | Federal Housing Finance Agency Duty to Serve Listening Sessions | Virtual
• 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 17 – 19 | Arizona Housing Forum | Scottsdale, AZ
  Jennifer Schwartz will speak at this event.

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