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NCSHA Washington Report | March 10, 2023

Published on March 10, 2023

Web Washington Report Graphics - March 10, 2023

You could be forgiven for experiencing a bout of optimism about affordable housing’s relevance as a matter of national policy after this week in Washington.

President Biden’s budget proposal, released yesterday, is notable not only for the unprecedented $175 billion-plus it would invest in housing but for how a lot of the funding, if approved by Congress, would be delivered.

The president’s plan would channel much of the higher spending he’s seeking through the established national system of state HFAs, via expansions of the Low-Income Housing Tax Credit and HOME block grant, and through new programs to support affordable starter home construction and down payment assistance, in which HFAs would play key roles.

President Biden’s budget also proposes $3 billion for intergovernmental partnerships that have shown promise in reducing avoidable evictions and $10 billion to encourage jurisdictions to reduce regulatory costs and land use policies thwarting new affordable development. We can’t recall an administration more consistently committed to state- and local-led solutions to housing needs.

In the time-honored tradition when different parties control Congress and the White House, congressional Republicans blasted the Biden plan as soon as it came out. Yet just a few days before, one of Congress’ legislative power centers, the Senate Finance Committee, held a hearing that revealed growing bipartisan support for more from the federal government for affordable housing.

Committee Chairman Wyden (D-OR) and Ranking Member Crapo (R-ID) each spoke highly of the Housing Credit, recognized committee members from both parties working together to expand it, and noted bipartisan collaboration on other proposals, such as a new Neighborhood Homes Credit. None of the witnesses, reflecting picks from both sides and representing a wide range of viewpoints, disputed the need for more investment to build more affordable homes.

Steve Walker, executive director of the Washington State Housing Finance Commission, testified eloquently, as a longtime public servant, to the good the Housing Credit and Housing Bonds have done throughout his state, thanked Senator Cantwell (D-WA) for her remarkable leadership, and reminded the other committee members that they and hundreds of others in Congress had seen the same in their states.

Anyone who isn’t seeing it isn’t looking.

As if on cue, while the hearing was happening, the DC Housing Finance Agency announced it was investing credits, bonds, and local resources to fix up and preserve the long-term affordability of more than 200 apartments in 16 buildings across three neighborhoods. Residents, who took ownership a few years ago, selected the development team, led by National Housing Trust Communities and IBF Development, which committed most of the units to very low- and extremely low-income occupancy, including some for permanent supportive housing.

It was a good week.

Stockton-Williams-Washington-Report

Stockton Williams | Executive Director

State HFA Emergency Housing Assistance

In This Issue

Day Sworn in as Secretary of Maryland DHCD
Jacob Day was sworn in as Secretary of the Maryland Department of Housing and Community Development by Governor Wes Moore on March 3. Day previously served as the 28th mayor of Salisbury, MD, and city council president. An urban designer and architect by training, Day was the director of the Center for Towns for the Eastern Shore Land Conservancy. A major in the United States Army, Day is assigned to the Maryland Army National Guard as an information operations and special technical operations officer with the 110th Information Operations Battalion.

NCSHA Welcomes cfX to Leadership Circle
NCSHA welcomed cfX Incorporated as a member of our distinguished Leadership Circle this week. cfX is solely dedicated to helping America’s housing finance agencies develop and maintain outstanding affordable housing programs, analyze their portfolio risks, assist in the execution of financial transactions, and grow their financial strength. To learn how you can join NCSHA’s Leadership Circle, contact Phaedra Stoger.

President Biden Submits FY 2024 Budget Proposal to Congress
The Biden Administration released its budget proposal for fiscal year (FY) 2024 to Congress on March 9, highlighting what it describes as efforts “to lower housing costs, expand housing supply, improve access to affordable rental options and homeownership, and advance efforts to end homelessness.” NCSHA’s preliminary analysis of the proposal can be found here.

The budget contains a number of spending provisions, offset by a variety of revenue increases, and projects to reduce the deficit by nearly $3 trillion over the 10-year budgetary window. In particular, the budget proposes $73.3 billion in discretionary budget authority for the U.S. Department of Housing and Urban Development (HUD) in FY 2024, a $1.1 billion or 1.6 percent increase from the FY 2023 enacted level. Included in the budget are several of NCSHA’s Housing Credit priorities related to increasing production and ensuring preservation of existing Housing Credit developments, including increasing the cap allocation, lowering the bond financing threshold from 50 to 25 percent of project development costs, repealing the qualified contract provision, and replacing the nonprofit right of first refusal with a purchase option. Supplementary materials, including agency-specific congressional justifications and other appendices, have not yet been released. NCSHA will update its analysis as this information becomes available.

NCSHA Asks DOE to Prioritize Affordable Housing in Residential Rebate Programs
NCSHA submitted comments on March 3 in response to the U.S. Department of Energy’s Request for Information (RFI) on its forthcoming Home Efficiency and Electrification Rebate programs. The Inflation Reduction Act included $8.8 billion for the Home Energy Rebate programs, which are intended to help households save money on energy bills, improve energy efficiency, and reduce indoor and outdoor air pollution through the installation of modern clean energy equipment. NCSHA’s comments emphasized the important role HFAs play in financing the purchase, development, and rehabilitation of affordable housing and urged DOE to prioritize affordable housing and partnerships with HFAs to quickly deploy these resources. Funding for the rebates will be allocated to states through State Energy Offices (SEOs). NCSHA has been engaged with the National Association of State Energy Officials to help facilitate cooperation and coordination between SEOs and their HFA counterparts.

Separately, the ACTION Campaign, co-chaired by NCSHA and Enterprise Community Partners, sent a comment letter in response to the DOE’s RFI focused on how energy rebates should be implemented to maximize their use in Housing Credit developments.

Walker Urges Senate Finance Committee to Expand, Strengthen Housing Credit 
On March 7, the Senate Finance Committee held a hearing on tax policy’s role in increasing affordable housing supply for working families. Steve Walker, executive director of the Washington State Housing Finance Commission, testified on behalf of NCSHA. Walker described the imbalance between affordable housing supply and demand and the obstacles to production in the current economic environment. He argued the housing crisis will not get better unless Congress acts and called on the committee to approve NCSHA’s legislative priorities: the Affordable Housing Credit Improvement Act (AHCIA), closing the qualified contract loophole and protecting nonprofit Housing Credit sponsors (both components of Senator Wyden’s newly introduced DASH Act; see below), the Affordable Housing Bond Enhancement Act, and the Neighborhood Homes Investment Act. 

Other witnesses at the hearing were Denise Scott, president of the Local Initiatives Support Corporation; Sharon Wilson Géno, president of the National Multifamily Housing Council; Mark Calabria, senior advisor at the Cato Institute; and Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation. Scott and Géno also made the case for expanding and strengthening the Housing Credit by passing the AHCIA, stressing the urgency of the situation. Calabria raised concern about cost burdens faced by low-income households and urged Congress to consider ways to allow federal land to be used for affordable housing development, create a set-aside within the Housing Credit for rural areas, and allow states to use Housing Credit resources to fund tenant-based rental assistance. Watson called for greater data transparency and expressed concern about high Housing Credit development costs. 

Senators Introduce Neighborhood Homes Investment Act
Senators Ben Cardin (D-MD) and Todd Young (R-IN) on Monday introduced the Neighborhood Homes Investment Act (NHIA; S. 657). This legislation would establish a new federal tax credit to finance the rehabilitation and construction of affordable for-ownership housing. Modeled after the Housing Credit, the bill would allow developers to receive a tax credit to make up the difference between the cost of rehabilitating or constructing a home and its purchase price. States would allocate NHIA credits to developers, who could claim them after the home is sold to income-qualified home buyers. Finance Committee Chair Ron Wyden (D-OR), Cardin, Young, and Banking Committee Chair and Finance Committee member Sherrod Brown (D-OH) all spoke supportively of the bill during the Finance Committee hearing Tuesday. Passage of the Neighborhood Homes Investment Act is a top legislative priority for NCSHA. Companion legislation in the House of Representatives is expected to be introduced soon.

Wyden Introduces Comprehensive Housing DASH Act Legislation
Senate Finance Committee Chair Ron Wyden this week reintroduced the Decent, Affordable, Safe Housing for All (DASH) Act (S. 680), which would make wholesale changes to the affordable housing delivery system; significantly expand resources for existing housing programs, including the Housing Credit, Housing Trust Fund, and Housing Choice Voucher programs; and establish new programs, including a Middle-Income Housing Tax Credit, Renters’ Tax Credit, and refundable tax credit for first-time home buyers. It also incorporates the Neighborhood Homes Investment Act, which was introduced separately in the Senate this week by Finance Committee members Ben Cardin and Todd Young (see above).

The DASH bill includes numerous changes to the Housing Credit program also included in the Affordable Housing Credit Improvement Act (AHCIA), as well as some that are not in the AHCIA. It would lower the “50 percent test” for triggering 4 percent Housing Credits in projects financed by multifamily Housing Bonds to 25 percent for bond obligations issued in calendar years 2024 – 2028 and provide a 50 percent increase to the 9 percent program. Other AHCIA provisions in DASH include a 50 percent basis boost for extremely low-income (ELI) households (the DASH Act also includes a set-aside of Credit authority for projects serving ELI households not included in the AHCIA), a 30 percent basis boost in rural and Indian areas, a 30 percent state-determined basis boost for the 4 percent program, and the AHCIA provision that would address NIMBYism by prohibiting local approval and financial support requirements. Other Housing Credit changes in DASH, which NCSHA supports, include closing the qualified contract loophole, changing the nonprofit right of first refusal (ROFR) to a purchase option for future developments, and clarifying language in the tax code related to ROFR for existing developments. For more information about the DASH Act, see this short summary and section-by-section summary.

LaHood, Blackburn Take on Leadership Roles for Housing Credit Legislation
Representative Darin LaHood (R-IL) and Senator Marsha Blackburn (R-TN) are stepping into key leadership positions for the soon-to-be-reintroduced Affordable Housing Credit Improvement Act. This legislation, one of NCSHA’s top priorities, would build on the already very successful Housing Credit program by expanding its resources, streamlining program rules, and honing it to make it an even better tool for rental housing development serving hard-to-reach populations. 

LaHood will become the lead House Republican on the bill, replacing Representative Jackie Walorski (R-IN), who passed away last year, and joining Representative Suzan DelBene (D-WA), the bill’s lead House Democrat. Representatives Brad Wenstrup (R-OH) and Don Beyer (D-VA) also serve as leaders on the legislation. Blackburn is stepping into the number two Republican position on the Senate bill, replacing retired Senator Rob Portman (R-OH). She joins the bill’s lead sponsors, Senators Maria Cantwell (D-WA) and Todd Young (R-IN), as well as Finance Committee Chair Ron Wyden, the number two Senate Democrat on the bill. The legislation’s leaders in both chambers expect to introduce the AHCIA soon, once they have agreed to any modifications to the bill text as introduced in the last Congress. NCSHA and our ACTION Campaign partners will be advocating for the bill as soon as it is released.

Senate Housing Subcommittee Discusses USICH’s Strategic Plan to End Homelessness
The Senate Banking Subcommittee on Housing, Transportation, and Community Development held a hearing on Wednesday to examine the Biden – Harris Administration’s Strategic Plan to End Homelessness. The plan, announced in December, outlines how the United States Interagency Council on Homelessness (USICH) intends to utilize federal resources in partnership with state, local, and nonprofit leaders to reduce homelessness by 25 percent by 2025. Jeff Olivet, executive director of USICH, and Richard Cho, HUD senior advisor for housing and services, testified about how the plan would work and also touted the administration’s recent efforts to prevent and reduce homelessness, including the HOME-ARP program. Subcommittee Chair Tina Smith (D-MN) praised the plan for setting a lofty goal and expressed optimism that Congress could advance bipartisan legislation to help government agencies more effectively assist populations experiencing homelessness. New Ranking Member Cynthia Lummis (R-WY) echoed Smith’s desire to work together on legislation. Lummis also expressed concerns that the “housing first” approach suggested in the USICH plan may not adequately assist those who need additional services, such as addiction treatment, and that HUD and USICH were not adequately considering the needs of rural and tribal communities developing homelessness assistance policies.

FHA Issues 40-Year Loan Modification Final Rule, Mortgagee Letter
On Thursday, the Federal Housing Administration (FHA) published a final rule in the Federal Register to allow FHA mortgagees to increase the maximum term of a loan modification from 360 to 480 months after a default episode. The regulatory provisions in the final rule become effective May 8. FHA also published Mortgagee Letter 2023-06 to establish a standalone 40-year loan modification. Per the mortgagee letter, FHA mortgagees may implement the standalone 40-year loan modification immediately.

USDA Provides Resources for Section 515 Multifamily Loans
On March 3, the U.S. Department of Agriculture (USDA) announced the availability of $70 million for Section 515 Rural Rental Housing subsequent loans in FY 2023. USDA issues subsequent loans to complete, improve, repair, or make modifications to multifamily housing initially financed through USDA. The subsequent loan program is available only for projects that currently have a Section 515 loan or loan commitment. USDA will consider applications received by April 30 and prioritize projects that improve tenant health and safety and/or preserve projects with expiring affordability protections. USDA may consider applications received after April 30 if funding remains available. USDA is holding a stakeholder information session on March 23 at 2:00 pm ET for those interested in the program. Register here for that webinar.

Fudge Urges Housing Providers, State and Local Leaders to Limit, Better Disclose Renter Fees 
This week, HUD Secretary Marcia L. Fudge published an open letter calling on rental housing providers and state and local governments to implement policies that promote fairness and transparency about fees charged to renters — so they better understand the actual costs associated with their housing — and to limit unnecessary “junk fees.” The letter notes application fees are often used to pay for tenant screening reports, which may include inaccurate information that applicants are not given the opportunity to refute. Other fees that may take renters by surprise include move-in fees, late fees, high-risk fees or security bonds, and convenience fees for online payments. The letter encourages providers to eliminate or limit application fees such that they cover only actual and legitimate costs for services; allow a single application fee to cover multiple applications on the same platform across multiple properties owned by the housing provider or managed by a single company across providers; eliminate duplicative, excessive, and undisclosed fees; and clearly identify bottom-line amounts tenants must pay for move-in and monthly rent.

Looking Ahead…

Legislative and Regulatory Activities

NCSHA, State HFA, and Industry Events

  • March 15 | National Housing Conference’s Solutions for Housing Communications | Washington, DC
    Stockton Williams will speak at this event.
  • March 27 – 29 | NCSHA’s 2023 Legislative Conference | Washington, DC
  • March 30 | National Community Reinvestment Coalition Just Economy Conference 2023 | Washington, DC
    Garth Rieman will speak at this event.
  • April 12 | E&A Team’s Annual Accessibility Summit | Virtual
    Jim Tassos will speak at this event.
  • April 17 – 19 | Nebraska Investment Finance Authority’s 2023 Annual Conference | Lincoln, NE
    Jennifer Schwartz will speak at this event.
  • April 25 – 27 | Affordable Housing Investors Council’s 2023 Spring Meeting | Baltimore, MD
    Stockton Williams will speak at this event.
  • April 27 – 28 | Novogradac 2023 Affordable Housing Conference | San Francisco, CA
    Jennifer Schwartz will speak at this event.
  • May 9 | Ballard Spahr National Housing Summit | Washington, DC
    Jennifer Schwartz will speak at this event.

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