NCSHA Washington Report | June 3, 2022

HUD Secretary Fudge and her regional office leaders were out in force this week highlighting how the agency’s programs are helping create more affordable homes alongside state and local initiatives. Fudge calls her Our Way Home campaign “a HUD-led effort to address the housing supply challenges in our local communities.”

Other federal agencies should step up on the issue.

Secretary Raimondo’s Commerce Department, along with U.S. Trade Representative Tai, can do more to address out-of-control lumber costs, which the National Association of Home Builders reported last month “have added more than $18,500 to the price of an average new single-family home and nearly $8,000 to the price of a multifamily home.” Even with an encouraging recent drop in prices, lumber is still more expensive than before the pandemic and costs for other key materials are still rising.

Secretary Walsh’s Department of Labor can ensure his agency’s pending revision of the Davis-Bacon Act regulations doesn’t make affordable development more complicated and expensive at the worst possible time, as NCSHA warned last month. In fact, a thoughtful update of prevailing wage rules “could encourage new construction and would be a catalyst for the preservation of public, workforce, and affordable housing,” according to a coalition of builder, landlord, and mortgage finance groups.

Secretary Yellen’s Treasury Department can optimize federal fiscal recovery funds for the primary housing purpose states and local leaders want to use them: new affordable construction. Treasury’s overly narrow interpretation of how the funds can combine with Housing Credits is preventing pending transactions from closing, as financing and other costs continue to increase. For a growing number of transactions on the brink, time literally is money these days.

Secretary Granholm’s Energy Department can pause DOE’s new energy standards for manufactured housing until it hears more from HUD on the cost implications for low-income consumers. The Manufactured Housing Institute’s Leslie Gooch makes the case that DOE’s rules “should not become effective until HUD adopts them as part of the HUD Code … and until the DOE standards and the HUD Code are reconciled, since manufacturers should not have to sort through two standards.”

Secretary Buttigieg’s Transportation Department can prioritize its stated commitment to use its successful financing program for large-scale projects to “increase financial support” for those “that include residential development.” DOT can also help states and localities invest funds from the big infrastructure bill in ways that encourage more affordable home building and apartment construction, because as Secretary Buttigieg said in Texas the other day, “Affordable housing and affordable transportation go hand in hand.”

This rundown is neither an exhaustive list of actions nor federal agencies that could take them. With President Biden this week calling inflation “my top economic priority,” and economists expecting housing costs to put upward pressure on it through the end of this year, more Cabinet Secretaries can and should follow Secretary Fudge’s lead by moving to reduce housing costs.

Stockton Williams | Executive Director

State HFA Emergency Housing Assistance

In This Issue

• NCSHA Welcomes New Members
• NCSHA Submits Priority Guidance Plan Recommendations to IRS, Treasury
• NCSHA and NAHB to Host Congressional Briefing on LIFELINE Act
• House, Senate Members Urge IRS, Treasury to Expedite Average Income Test Rule
• Senate Confirms Thompson as FHFA Director
• Housing Credit Bills Gain Cosponsorship
• Senate Banking Subcommittee Discusses Rural Housing Service Programs
• USDA Accepting Applications for Rural Multifamily Housing Repair
• HUD Launches Affordable Housing Supply Initiative
• HUD to Hold Innovative Housing Showcase
• SEC Proposes ESG Disclosure Guidelines
• NCSHA in the News
• Looking Ahead

NCSHA Welcomes New Members
These organizations joined NCSHA as affiliate members in May and June: Applied Assurance Corp; Buckeye Community Hope Foundation; Carrollton Bank; Conifer Realty, LLC; Greystone; J&A Inc.; Marble Cliff Capital, LLC; Markel; PaymentVision; The Money Source (TMS); and Trinity Development Alliance, Inc. If you work with a partner interested in joining NCSHA, please contact Phaedra Stoger.

NCSHA Submits Priority Guidance Plan Recommendations to IRS, Treasury
This week, NCSHA sent a letter to the Internal Revenue Service and Treasury Department with its recommendations for guidance projects the agencies should include in their 2022–23 Priority Guidance Plan. The annual Priority Guidance Plan lists the guidance projects IRS and Treasury will work on each year, from July 1 to June 30. NCSHA’s letter urges IRS and Treasury to issue final Housing Credit Average Income Test and compliance monitoring regulations; expand Housing Credit Covid-19 relief; modify existing guidance related to restoration after a casualty loss and tax treatment of relocation expenses; and develop new Housing Credit guidance related to the treatment of existing tenants in acquisition/rehabilitation properties undergoing syndication, implementation of the Violence Against Women Act, nonprofits’ right of first refusal, planned foreclosures, and Housing Credit disaster relief.

NCSHA also asked IRS and Treasury to provide for more flexible use of carryforward private activity bond (PAB) authority for affordable housing purposes, issue final guidance on PAB record retention requirements, amend existing regulations to change how mortgage fees are considered when calculating an MRB mortgage’s effective interest rate, and amend the Yield and Valuation of Purpose Investment regulations to address covered investments.

NCSHA and NAHB to Host Congressional Briefing on LIFELINE Act
NCSHA is partnering with the National Association of Home Builders to host a virtual briefing for congressional staff Monday, June 6, on the LIFELINE Act (S. 4181/H.R. 7078), which would allow states and local governments to loan Coronavirus State and Local Fiscal Recovery Funds to Housing Credit developments. Senators Patrick Leahy (D-VT) and Susan Collins (R-ME) and Representatives Alma Adams (D-NC) and David Rouzer (R-NC) introduced this legislation in response to the challenges Housing Credit developers are facing with escalating construction costs causing financing gaps that threaten the feasibility of many projects. The briefing will feature state HFA leaders and Housing Credit developers presenting to congressional staff on why it is so critical that Congress pass the LIFELINE Act. For information about registration or to help us get the word out to congressional staff, contact Deborah Yi. 

House, Senate Members Urge IRS, Treasury to Expedite Average Income Test Rule
On May 26, Senators Michael Bennet (D-CO), Todd Young (R-IN), Rob Portman (R-OH), Ron Wyden (D-OR), and Mike Crapo (R-ID) and Representatives Suzan DelBene (D-WA), Jackie Walorski (R-IN), Donald Beyer (D-VA), and Richard Neal (D-MA) sent a letter to Treasury Secretary Janet Yellen and IRS Commissioner Charles Rettig urging them to expedite release of the final rule implementing the Housing Credit Average Income Test (AIT). The members of Congress stressed the final rule must be workable and responsive to feedback IRS and Treasury have received from the Housing Credit industry and specifically referenced a sign-on letter from industry groups that NCSHA spearheaded last December setting out a consensus position on AIT implementation. 

Senate Confirms Thompson as FHFA Director
The Senate last week voted to confirm Sandra Thompson as director of the Federal Housing Finance Agency (FHFA). FHFA oversees the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac and the Federal Home Loan Banks. The FHFA director plays a critical role in determining what affordable housing activities and products the GSEs pursue. The nomination was approved by a largely party-line vote of 49–46, with all Democrats present voting in support and all Republicans present, with the exception of Mike Rounds (SD), voting in opposition. Thompson has served as acting director of FHFA since June, when Mark Calabria stepped down. She joined FHFA in 2013 as deputy director of housing mission and goals, following 23 years at the Federal Deposit Insurance Corporation. Since taking the helm at FHFA, Thompson has pushed the GSEs to do more to support affordable housing and equitable housing finance. NCSHA supported Thompson’s nomination.

Housing Credit Bills Gain Cosponsorship
Both the Affordable Housing Credit Improvement Act (AHCIA; S. 1136/H.R. 2573) and the LIHTC Financing Enabling Long-Term Investment in Neighborhood Excellence Act (LIFELINE Act; S. 4181/H.R. 7078) gained cosponsorship in May. Senator John Ossoff (D-GA) and Representative Steven Horsford (D-NV) cosponsored the AHCIA, bringing total support to 35 Senators — 10 Republicans and 25 Democrats — and 159 House members — 100 Democrats and 59 Republicans. Representatives Melanie Ann Stansbury (D-PA), Al Lawson (D-FL), Ann Kuster (D-NH), Tom Cole (R-OK), and Deborah Ross (D-NC) cosponsored the House version of the LIFELINE Act, bringing support to 13 Representatives — 10 Democrats and three Republicans. Cosponsorship of the Senate LIFELINE Act, introduced earlier this month, stands at 11 original cosponsors — eight Democrats, two Independents, and one Republican. Please continue to reach out to your delegation members — in particular Republican members of Congress in both chambers — to urge them to cosponsor both the AHCIA and LIFELINE Act. 

Senate Banking Subcommittee Discusses Rural Housing Service Programs
On May 25, the Senate Banking Subcommittee on Housing, Transportation, and Community Development listened to testimony from USDA Under Secretary for Rural Development Xochitl Torres Small during a hearing Examining the U.S. Department of Agriculture’s Rural Housing Service. Torres Small’s opening remarks highlighted the historic underinvestment in rural communities’ housing supply, which she said tends to be overlooked even when the country’s affordable housing shortage is discussed more broadly. In response to a question from Subcommittee Chair Tina Smith (D-MN) about USDA’s Section 515 Rural Rental Housing program, Torres Small testified that, without congressional action, more than three quarters of Section 515 rental homes will lose their affordability protections by 2050. Torres Small stressed provisions included in the administration’s proposed FY 2023 budget would help preserve Section 515 homes, but just preserving USDA’s existing stock of affordable housing units is not enough to alleviate the affordability problems affecting rural communities across the country.

USDA Accepting Applications for Rural Multifamily Housing Repair
On May 26, USDA announced $16 million in grant funding is available through the FY 2022 Housing Preservation Program. USDA is seeking applications from state and local government entities, nonprofit organizations, and federally recognized tribes to repair or rehabilitate rural housing units owned or occupied by low- and very low-income rural citizens. The pre-application process will be open through 4:30 pm ET on July 11. More information on the program and funding application process is available here.

HUD Launches Affordable Housing Supply Initiative
On Wednesday, HUD Secretary Marcia Fudge announced a new initiative, Our Way Home, a national effort to connect communities to tools and resources to produce and preserve more affordable housing. HUD officials participated in roundtables and events throughout the country to recognize the launch and engage with local leaders, including several HFA executive directors and senior staff. Our Way Home builds on the Biden Administration’s Housing Supply Action Plan and their efforts to address communities’ housing supply needs. NCSHA commends the administration for the plan and looks forward to participating in future convenings and listening sessions to develop and discuss recommendations on how HUD can improve its programs.

HUD to Hold Innovative Housing Showcase
After a three-year hiatus, the Innovative Housing Showcase will return to the National Mall in Washington, DC, June 10 – 12. This three-day event, presented by HUD and the National Association of Home Builders, will feature new building technologies and housing solutions that are making housing more innovative, resilient, and affordable for American families. The showcase, open to the public and free of charge, also will include exhibitor demonstrations, entrepreneurs, and housing industry leaders. HUD and NAHB are holding a related webinar on June 9 from 1:00 – 2:30 pm ET to discuss how to address housing supply shortages through innovative building technologies. You can register for the webinar here.

SEC Proposes ESG Disclosure Guidelines
On May 25, the Securities and Exchange Commission (SEC) released proposed amendments to rules and disclosure forms that promote consistent, comparable, and reliable information for investors on investment advisers’ and companies’ use of environmental, social, and governance (ESG) factors. The proposed changes, which would apply to certain registered investment advisers, advisers exempt from registration, registered investment companies, and business development companies, would, among other things, require funds claiming to achieve a specific ESG impact to describe the specific impact they seek to achieve and summarize their progress on achieving that impact. Comments on the proposed amendments will be due 60 days after publication in the Federal Register, which has not yet occurred. If you have feedback for NCSHA to consider in its comments, please email Rosemarie Sabatino by July 15.

NCSHA in the News
Newsweek, 6.1.22, Stimulus Check Update: These States Will Send Out Payments in June

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 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 6 | NCSHA- and NAHB-Sponsored Briefing for Congressional Staff on LIFELINE Act | Virtual
• June 8 – 9 | CAHEC Partners Conference | Greensboro, NC
  Stockton Williams will speak at this event.
• June 9, 1:00 pm ET | HUD and NAHB Webinar: Addressing Housing Supply Shortages Through Innovative Building Technology | Virtual
• June 10 – 12 | 2022 Innovative Housing Showcase | Washington, DC
• June 15 | Affordable Housing Tax Credit Coalition and Housing Advisory Group Affordable Housing Symposium | Washington, DC
  Jennifer Schwartz will speak at this event.
• June 16 | National Association of Home Builders’ Affordable Housing Group Steering Committee Meeting | Washington, DC
  Jennifer Schwartz will speak at this event.
• June 21 – 24 | NCSHA’s Housing Credit Connect | Chicago
• July 27 – 29 | IPED Tax Credit Property Disposition Conference | Philadelphia, PA
  Jennifer Schwartz will speak at this event.
• August 17 – 19 | Arizona Housing Forum | Scottsdale, AZ
  Jennifer Schwartz will speak at this event.

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