NCSHA Washington Report | November 15, 2024

Every presidential administration since Ronald Reagan’s has variously decried the role of regulations in impeding housing construction and increasing housing costs for lower-income Americans.

Throughout numerous White House announcements, special commission reports, federal agency assessments, and cabinet secretary speeches over the years, most of the focus has been on state and local policies, like exclusionary zoning, which have in fact been shown, over and over again, to make it much more expensive to build a home or apartment property, especially if it serves somebody of limited economic means.

The federal government’s apparent inability, for the last century, to spur more rational local land use decisions has meant “previous federal efforts to address regulatory barriers have resulted in more talk than action, in failed modest spending measures, and in dead-end legislative proposals,” wrote housing scholar Michael Stegman in a 2019 report.

The first Trump Administration, to its credit, was more explicit than most about the negative housing affordability consequences of excessive federal rules, in addition to state and local ones. A presidential executive order in 2019 directed nine different agencies to “identify and assess the actions each agency can take under existing authorities to minimize Federal regulatory barriers that unnecessarily raise the costs of housing development.”

While Covid “limited” substantive collaborative action by those agencies, according to a HUD review published in 2021, most took steps on their own to reduce red tape, including several among nearly 50 recommendations NCSHA made at the time. HUD’s report described a number of other moves agencies were considering at the end of the administration. It’s probably essential reading for anyone interested in what the incoming Trump team may look at doing early on.

There will be other areas of housing deregulatory attention as well, we expect. The viability of the president-elect’s campaign pledge to “open limited portions of Federal Lands to allow for new home construction” will likely hinge on how much environmental regulations can be relaxed, among other factors. (Development of privately-held land is also constrained by federal environmental “permitting roadblocks” according to the National Association of Home Builders.)

For our part, we will continue to push recommendations for more flexible and less bureaucratic HUD, USDA, and Treasury-administered programs. We will also continue to urge the federal government to exempt affordable housing development programs from the “domestic sourcing” requirements in the 2021 infrastructure law, which can drive up construction costs significantly.

And we will press for continuation of the Federal Financing Bank’s support for HFA risk-sharing loans with the Federal Housing Administration, which permit small, deeply targeted affordable apartment transactions that would not happen otherwise to bypass nearly 1,000 pages of federal rules and lengthy review periods.

More than 40 years ago, President Reagan’s housing advisory commission (on which Michigan SHDA Executive Director and NCSHA President Richard Helmbrecht served) said: “The time has come for restraint in government regulation of housing.” So by now it’s long past time.

Stockton Williams | Executive Director

In This Issue

• Republicans Win White House, Senate, House of Representatives
• Tax Writers Plan Post-Election, 2025 Action
• Congress Focuses on Disaster Relief, Dec. 20 Funding Deadline
• HHS Publishes Final Rule Revising Title V Homeless Assistance Program
• NCSHA, CPE Survey Shows Value of Risk-Sharing/FFB Program
• USDA Proposes Rule to Preserve Affordability of Section 538 Multifamily Properties
• FHFA Simplifies AHP Application Process
• Ginnie Mae Acting President Resigns
• Affordable Housing Crisis Task Force Releases Housing Policy Recommendations
• CBO Report Analyzes Impact of GSE Single-Family Goals
• Terner Center Publishes Report on State Programs to Encourage Housing Development
• NCSHA in the News
• Looking Ahead

Republicans Win White House, Senate, House of Representatives
The latest election results show that, in addition to Donald Trump being elected President, Republicans will gain four seats for a majority in the Senate and will have a small majority in the House of Representatives at the start of the next session of Congress, though the exact size of their majority depends on several still-uncalled elections. The degree to which House Republicans will be able to advance their priorities with what is likely to be a slim majority will be determined over time, but it will at least likely give them the ability to elect a Republican Speaker, committee chairs, and other key leadership positions that set the agenda and write legislation. Perhaps most impactful for affordable housing, the election gives Republicans stronger footing to enact budget and tax legislation through the reconciliation process, which enables the Senate to pass legislation with a simple majority instead of having to overcome a filibuster with at least 60 votes.

In addition, this week, the Senate and House began electing leaders for the next session of Congress, and we learned more about likely committee chairs and ranking members. For more information, read NCSHA’s preliminary election analysis in our blog and our November 14 update.

Tax Writers Plan Post-Election, 2025 Action
Congress returned to Washington this week with a packed agenda for the lame-duck session. NCSHA is paying close attention to potential disaster relief legislation in case it presents an opportunity to advance our affordable housing tax priorities or disaster Housing Credit authority and Mortgage Revenue Bond flexibilities for states that have suffered recent major disasters.

Republican tax writers are also poised to get started with their 2025 tax agenda to extend the 2017 Tax Cuts and Jobs Act provisions set to expire at the end of next year. With unified Republican control of Congress, we expect tax writers to move quickly to release and advance legislation using the budget “reconciliation” process, which circumvents the filibuster in the Senate, allowing a bill to pass with a simple majority in that chamber. Republicans in both chambers have been preparing this year so that they would be ready on day one. As we’ve previously reported, last Spring, House Ways and Means Chairman Jason Smith (R-MO) established 10 Republican tax teams, each charged with preparing policy proposals in a specific area for inclusion in the eventual legislation. The Community Development Tax Team, chaired by Representative Mike Kelly (R-PA), is focusing largely on affordable housing issues. Meanwhile, in the Senate, Republicans on the Finance Committee also have been meeting to flesh out their priorities. NCSHA will focus its advocacy both on protecting affordable housing tax programs — the Housing Credit and Housing Bonds — and seeking to expand resources for those programs in next year’s tax bill. For more information about our priorities, see the October 15 letter NCSHA sent to the House Ways and Means Community Development Tax Team.

Congress Focuses on Disaster Relief, Dec. 20 Funding Deadline
After returning to session this week, Congress must now turn its attention to the need to secure supplemental funding for disaster relief and extend Fiscal Year 2025 (FY25) appropriations beyond the December 20 expiration of the current continuing resolution (CR) before closing out its 118th session and leaving town again for the holidays. But negotiating and passing a comprehensive disaster package will likely consume much of the time and political capital that would otherwise have gone toward finalizing regular appropriations for FY25, potentially requiring Congress to enact yet another CR through sometime in the new year, likely February or March, to avoid a government shutdown at the end of this year. Stay tuned as that December 20 deadline approaches.

HHS Publishes Final Rule Revising Title V Homeless Assistance Program
The U.S. Department of Health and Human Services (HHS) published this week a new final rule amending the Title V program, which makes suitable surplus federal real properties available to states, local government agencies, and nonprofits for use to assist the homeless. The final rule incorporates statutory changes and current practices, updates outdated references and terminology, and makes the program more efficient. The Title V program is administered by the U.S. Department of Housing and Urban Development (HUD), the General Services Administration, and HHS. NCSHA has encouraged the Biden-Harris Administration to improve this program to make it more useful. The final rule will be effective December 13, 2024.

NCSHA, CPE Survey Shows Value of Risk-Sharing/FFB Program
A survey jointly conducted by NCSHA and the Center for Public Enterprise (CPE) on the Federal Housing Administration-HFA Multifamily Risk-Sharing Program and the Federal Financing Bank (FFB) funding initiative for risk-sharing loans shows the program has real value for many states as a tool to increase multifamily production. A recent CPE blog summarizes the survey’s data on how using the risk-sharing program and FFB financing lowers the cost of capital, permits longer loan terms and amortization periods, and simplifies the process compared to other products. The survey also lists ways states have used risk-sharing loans and includes recommendations for further program improvements.

USDA Proposes Rule to Preserve Affordability of Section 538 Multifamily Properties
On November 5, the U.S. Department of Agriculture (USDA) published a proposed rule to amend the Section 538 Guaranteed Rural Rental Housing Program to ensure Section 538-financed properties remain affordable throughout the original term of the loan. Properties financed with a Section 538 loan must be used for occupancy by low- and moderate-income households and rents must remain affordable for the original term of the loan. Current regulations do not require a deed restriction to be recorded, which means in the event a Section 538 loan is prepaid, the property’s affordability protections may be lost. USDA proposes to require a separate recorded deed restriction, which contains restrictive-use language requiring the property to be available for occupancy by low- and moderate-income households for the original term of the loan. Comments on the proposed rule are due January 6 to USDA. Please email any feedback to Glenn Gallo by December 20 to inform NCSHA’s comments.

FHFA Simplifies AHP Application Process
On October 31, the Federal Housing Finance Agency (FHFA) published an advisory bulletin simplifying the process via which project sponsors can receive funding from the Federal Home Loan Banks’ (FHLBs) Affordable Housing Programs (AHPs). The changes contained in the bulletin reflect feedback FHFA received from stakeholders as part of its ongoing comprehensive review of the FHLBs, including a request for information seeking input on potential changes to the AHP application process (see NCSHA’s comments). FHFA seeks to streamline the AHP application and review process by allowing each FHLB to develop project cost guidelines that align with those used by HFAs and/or other funders so projects are not subject to multiple standards. The bulletin also seeks to reduce uncertainty for project sponsors about the amount of the AHP award they will receive and provides further clarity to the FHLBs on determining the need for an AHP subsidy when a rental project includes capitalized reserves and supportive services.

Ginnie Mae Acting President Resigns
Ginnie Mae announced earlier today Acting President Sam Valverde will step down and leave Ginnie Mae November 30. Valverde has served as acting president of Ginnie Mae since May, following Alanna McCargo’s departure. Previously, he served as Ginnie Mae principal executive vice president and chief operating officer. During his tenure, NCSHA worked closely with Valverde to identify how Ginnie Mae and the HFAs could better partner to finance affordable housing lending. Upon Valverde’s departure, Senior Vice President and Chief Risk Officer Gregory Keith will assume the responsibilities of the Ginnie Mae president.

Affordable Housing Crisis Task Force Releases Housing Policy Recommendations
The National Housing Crisis Task Force last Monday released a report outlining 40 policy recommendations for the federal government to address the affordable housing shortage. The task force, which was formed in July, includes a bipartisan group of policymakers and housing practitioners. NCSHA Board Chair and Minnesota Housing Commissioner Jennifer Ho and New York State Homes and Community Renewal Commissioner/CEO RuthAnne Visnauskas are members. The task force intends also to publish a report on the affordable housing crisis and a “State and Local Housing Playbook” by July 2025.

The report is designed to serve as a blueprint for the new administration and Congress to tackle the affordable housing crisis. The task force focused specifically on successful initiatives and policies undertaken at the state and local levels that could be applied nationwide with federal support, with special emphasis on suggestions for increasing housing supply. Notable suggestions include expanding the allocation authority for 9 percent Housing Credits, eliminating the cap on private activity bonds, reducing the bond financing threshold for 4 percent Housing Credit deals to 25 percent, expanding state oversight capacity of Housing Credit development costs, permanent authorization of the HUD-Federal Financing Bank Risk-Share program, and providing Section 8 Housing Choice Vouchers to all eligible households.

CBO Report Analyzes Impact of GSE Single-Family Goals
The Congressional Budget Office (CBO) Wednesday released a report analyzing how the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac meet their single-family affordable housing goals and the impact these efforts have on home buyers and affordable homeownership. CBO projects that, in FY25, the GSEs will purchase nearly 750,000 mortgage loans that are goal-eligible, or about 35 percent of their total purchases. The report estimates that, by charging lower fees for goal-eligible loans (and waving upfront fees for some loans), the GSEs effectively provide a subsidy of nearly $2,300 on these loans. The report further concludes the GSEs will seek to recoup the cost of the discounted fee by charging higher fees on non-goal-eligible loans than they would otherwise, resulting in an additional cost of $160 for other home buyers (or nearly $8,000 for those purchasing second homes and investment properties). CBO concludes the affordable housing goals will cause the GSEs to purchase around 37,000 more goal-eligible mortgages in FY25 than they would without the requirement and purchase 29,000 fewer non-goal-eligible mortgages.

Terner Center Publishes Report on State Programs to Encourage Housing Development
The Terner Center for Housing Innovation at the University of California at Berkeley on Thursday published a report profiling six pro-housing programs in California, Massachusetts, Montana, New Hampshire, New York, and Utah. The report highlights states’ varying approaches to building political will, determining participation and compliance, establishing incentives and penalties, and strengthening data collection to inform and refine current and future housing efforts. It also details opportunities for improvement and offers lessons to other states interested in facilitating housing growth in ways that fit their specific legal, economic, and political contexts.

NCSHA in the News
Bangor Daily News, 11.14.24, What last week’s election means for Maine’s housing crisis
Notes from Novogradac, 11.7.24, Affordable Housing Advocates Can Use LIHTC Mapping Tool to Bolster Support
OC Today Dispatch, 10.31.24, State housing department introduces UPLIFT program
MBA NewsLink, 10.24.24, Q&A: Rob Chrane of Down Payment Resource

Looking Ahead

Legislative and Regulatory Activities

• November 18 | Comments Due | HUD Multifamily Asset Management and Project Servicing Handbook
• December 20 | Comments Due to NCSHA | USDA Proposed Rule to Preserve Affordability of Section 538 Multifamily Properties
• January 6 | Comments Due | USDA Proposed Rule to Preserve Affordability of Section 538 Multifamily Properties
• January 22 | Comments Due to NCSHA | FHFA Proposed Rule on FHLB Governance
• February 3 | Comments Due | FHFA Proposed Rule on FHLB Governance

NCSHA, State HFA, and Industry Events

• November 21 – 22 | NAHB Mortgage Roundtable | New York, NY
  Stockton Williams will participate in this event.
• December 2 | Women’s Affordable Housing Network Quarterly Policy Update | Virtual
  Jennifer Schwartz will speak at this event.
• December 4 | National Housing Conference’s Solutions for Affordable Housing Conference | Washington, DC, and Virtual
  Stockton Williams will speak at this event.
• December 6 | Early-Bird Registration Deadline | NCSHA’s HFA Institute 2025
• January 12 – 17 | NCSHA’s HFA Institute 2025 | Washington, DC