NCSHA Washington Report | March 4, 2022
Everyone in housing has their sights on the need for more new construction to help slow out-of-control costs. Coming into focus for many is an equally immediate need — and arguably more actionable opportunity — to alleviate rent and price inflation being exacerbated by losses of existing affordable homes.
This is not (only) your grandmother’s affordable housing preservation challenge, though.
Yes, it includes the privately-owned, federally-subsidized units that historically have defined the issue. The latest view of the National Housing Preservation Database shows a loss of nearly 45,000 units between 2019 and 2020.
A wider-lens look that also encompasses unsubsidized, “naturally occurring affordable housing” (NOAH) reveals “in 2018–2019 alone, the supply of low-rent rentals fell in 45 states, with net losses totaling 731,000 units.” It’s part of a trend that has seen the loss of nearly four million low-cost apartments over the past decade.
Preservation isn’t just a rental housing issue anymore. The recent surge in investor purchases of single-family homes (by institutions, small investors, and individuals) is widely seen as crowding out would-be buyers and driving up prices in many markets. “Low-priced homes” represent “the lion’s share of investor purchases,” according to Redfin.
And a 2020 Fannie Mae report found the number of occupied manufactured homes fell by 140,000 over the previous six years, which the company called “concerning because there is a dearth of affordable housing in the U.S. today, and manufactured homes tend to be occupied by lower-income households.”
HFAs are part of all kinds of solutions that could stem some of these tides.
For affordable apartments, public-private apartment acquisition funds are an established, if still small-scale, model. HFAs are participants in funds in Colorado, Minnesota, and Oregon.
Manufactured housing park preservation financing is also available through a growing number of HFAs. The agencies in Wisconsin, Washington, Vermont, New York, Minnesota, and Colorado have partnered with ROC USA to preserve 39 resident-owned manufactured home communities.
State HFA-run Homeowner Assistance Fund programs launching around the country will help economically vulnerable owners avoid sales they don’t want to make. Funding from a variety of state HFA home repair and weatherization programs will do the same.
The agencies are also cracking down on strong-arm tactics by some real estate firms to deplete property reserves and remove rent restrictions in Housing Credit properties prematurely. Federal legislation would strengthen those efforts, just as federal funding would enable the others mentioned to get big enough to compete.
There’s a lot the federal government can do even without more money from Congress. CRA regs that incentivize bank investment in NOAH preservation; higher expectations of Fannie and Freddie to meet their “Duty-to-Serve” preservation mandate; State and Local Fiscal Recovery Fund rules from Treasury that optimize Housing Credit financing.
Everyone agrees building more new affordable homes is necessary to bring down prices and rents to sustainable levels (and meet future demand). That’s going to take time. Slowing losses of existing affordable units is just as necessary — and faster and cheaper too.
Stockton Williams | Executive Director
State HFA Emergency Housing Assistance
In This Issue
- 80 Groups Sign On to NCSHA Letter to Congressional Leaders in Support of Using Fiscal Recovery Funds with Housing Credit
- In SOTU, Biden Includes Affordable Housing in His “Building a Better America” Plan
- FHFA Reports Record-Setting Allocations for HTF, CMF
- House Committee Holds Hearing on Access to Affordable Housing
- Looking Ahead
80 Groups Sign On to NCSHA Letter to Congressional Leaders in Support of Using Fiscal Recovery Funds with Housing Credit
On February 28, NCSHA sent congressional leaders this letter urging them to amend the Coronavirus State and Local Fiscal Recovery Fund (SLFRF) program to facilitate its use with the Housing Credit. More than 80 organizations, representing state and local governments and affordable housing industry participants from across the nation, signed on to the letter with NCSHA. Enabling the use of SLFRF with the Housing Credit is key to helping developments in the pipeline facing unexpected financing gaps due to rising construction costs stemming from the pandemic. However, current Treasury guidance — based on the existing statute — makes it difficult, and in some cases impossible, to leverage SLFRF with the Housing Credit. For more information about the effort to enact a legislative fix to this problem, see NCSHA’s blog.
In SOTU, Biden Includes Affordable Housing in His “Building a Better America” Plan
In his first State of the Union address Tuesday, President Joe Biden outlined several policies he said were part of his agenda for fighting inflation and “building a better America.” The policies outlined as part of the package were largely considered to be part of Biden’s effort to restart work on the Build Back Better Act (BBB), a large package of federal investments currently stalled in the Senate. Among other investments, Biden said his plan included “more affordable housing.” BBB includes nearly $300 billion in funding for housing programs, as well as an expansion of the Housing Credit and establishment of the Neighborhood Homes Tax Credit, both NCSHA priorities. Biden also noted in the speech that American families are struggling with increased housing costs and briefly mentioned his administration’s efforts to provide housing for veterans.
FHFA Reports Record-Setting Allocations for HTF, CMF
This week, the Federal Housing Finance Agency announced the Housing Trust Fund (HTF) and Capital Magnet Fund (CMF) will receive $1.138 billion from Fannie Mae and Freddie Mac. HTF will receive $740 million, an increase of $29 million over last year, and CMF will receive $398 million, an increase of $15 million over last year. These are the largest amounts ever provided to these programs, which support the production and preservation of affordable housing. The Department of Housing and Urban Development, which administers HTF, will announce state-level allocations soon. The Department of the Treasury administers CMF and awards the funds competitively. See NCSHA’s recent blog for more details.
House Committee Holds Hearing on Access to Affordable Housing
On March 1, the House Select Committee on Economic Disparity and Fairness in Growth held a hearing titled Promoting Economic Prosperity and Fair Growth Through Access to Affordable and Stable Housing. During the hearing, Republicans focused on inflation and regulatory burdens on developers while Democrats discussed historically discriminatory federal policies related to housing loans and promoted using federal programs, including Section 8 and the Housing Credit, to fight the disparities. Ranking Member Bryan Steil (R-WI) focused on inflation in his opening remarks and maintained that addressing it would help families in need of down payment assistance.
Many of the witnesses agreed there was a role for private developers in the free market and the best outcome would be a blend of public-private partnerships to address these issues. Nikitra Bailey, senior vice president of public policy at the National Fair Housing Alliance, said addressing racial disparities could help the economy grow by an additional $1 trillion over the next five years.
Legislative and Regulatory Activities
- March 4 | Comments Due to NCSHA | FHFA Proposed Strategic Plan for 2022–26
- March 11 | Comments Due | FHFA Proposed Strategic Plan for 2022–26
NCSHA, State HFA, and Industry Events
- March 9 | Institute of Real Estate Management’s Advocacy Impact Day | Virtual
Jennifer Schwartz will speak at this event. - March 9 – 11 | National Affordable Housing Management Association’s Winter Conference | Washington, DC
Jennifer Schwartz will speak at this event. - March 14 – 16 | NCSHA’s 2022 Legislative Conference | Washington, DC
- March 16 | NH&RA Unmute the Mic: Managing Construction Costs in 2022 | Virtual
Jim Tassos will speak at this event. - March 24 – 25 | IPED Learn the Basics: Housing Tax Credits 101 | Boston, MA
Jennifer Schwartz will speak at this event. - March 29 – 30 | Nebraska Investment Finance Authority 2022 Housing Innovation Marketplace | La Vista, NE
Jim Tassos will speak at this event. - March 30 | National Housing Conference: Solutions for Affordable Housing Communications Convening | Washington, DC
Jennifer Schwartz will speak at this event. - March 31 | ABA Forum on Affordable Housing and Community Development Law: American Rescue Plan Act Programs | Webinar
Jennifer Schwartz will speak at this event. - May 11 – 12 | Outside the Box: 2022 PHFA Housing Forum | Harrisburg, PA
Jennifer Schwartz will speak at this event. - June 8 – 9 | CAHEC Partners Conference | Greensboro, NC
Stockton Williams will speak at this event.
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