NCSHA Washington Report | October 21, 2022
The nation’s state housing finance agencies and their business and community partners will convene in Houston starting this weekend for NCSHA’s first in-person annual conference in three years.
The state of the HFAs is strong. Never have they been more central to solving America’s housing affordability crisis — which never has been so severe. While the underlying causes are neither new nor mysterious, they are now manifesting themselves in multilayered ways that challenge affordable housing finance on every front.
In the mortgage market. The dynamics driving mortgage rates to 20-year highs don’t only make it harder for the lower-income and first-time buyers HFAs serve to qualify for an affordable mortgage: They also constrain HFAs’ ability to access the secondary market for loan liquidity and the additional down payment assistance more people than ever need. And they undercut the impact of loan loss mitigations and other solutions HFAs work with servicers and federal agencies to deliver, like the Homeowner Assistance Fund, elevating risks for economically vulnerable homeowners.
In the residential construction sector. Inflation, labor shortages, and the lingering effects of supply chain disruptions don’t just increase demands on HFAs’ already over-subscribed subsidies for desperately needed new homes and apartments: They also blow holes in the pro formas of pending projects, forcing HFAs to take extraordinary steps to prevent them from falling through the cracks. And they force builders and developers to focus even more on the upper-income buyers and renters who can reasonably afford to pay for what they can reasonably afford to produce.
In the real estate investment space. The appeal of the “affordable housing asset class” (a function of its shrinking supply relative to its escalating demand as much as its underlying fundamentals and historical performance) isn’t simply bidding up prices: It’s also attracting investment — in single-family homes as well as multifamily apartments — from players less committed to long-term affordability. And it’s increasing pressure on HFAs to use their regulatory tools and financial resources more aggressively and creatively in service of a widening understanding of “preservation.”
In the wind and rain and fire. More frequent and severe natural disasters aren’t only inflicting devastating harm on families and neighborhoods, disproportionately those of color and lower income: They are also making it difficult if not impossible for more would-be home buyers to get insurance and increasing the costs of apartment development, while complicating HFA analysis of where to target financing for new starter home and apartment development — and where to fund repairs. And since “the quantity of affordable housing shrinks after every type of disaster,” they also worsen the deficit.
State HFAs didn’t necessarily sign up to take on all these challenges, but to an agency, they are running toward them. Thanks to their remarkable staffs, at every level, and lots of terrific partners, they are rising to meet this most demanding moment in housing affordability. We’ll hear the latest in Houston.
Stockton Williams | Executive Director
Washington Report will return on November 4.
State HFA Emergency Housing Assistance
In This Issue
- 35 Senators, 53 Representatives Sign Reed–Moran, Langevin Letters Asking HUD to Withdraw, Rethink PBCA Procurement
- IRS Releases 2023 Housing Credit and Private Activity Bond Volume Cap Amounts
- NCSHA Urges Treasury to Clarify GSEs’ Tax Status for Purposes of Housing Credit Investments
- NCSHA Asks FHFA to Establish Strong GSE Multifamily Affordable Housing Goals
- NCSHA Joins Coalition Letter Expressing Concerns About Disclosure Legislation
- NCSHA Urges VA to Maintain Partial Claim Payment Option
- NCSHA in the News
- Looking Ahead
35 Senators, 53 Representatives Sign Reed–Moran, Langevin Letters Asking HUD to Withdraw, Rethink PBCA Procurement
Thanks to the leadership of Senators Jack Reed (D-RI) and Jerry Moran (R-KS) and Representative James Langevin (D-RI), 35 Senators (25 Democrats, 10 Republicans) and 53 Representatives (46 Democrats, seven Republicans) signed letters asking the Department of Housing and Urban Development to “withdraw HUD’s draft solicitation for Housing Assistance Payments (HAP) Contract Support Services and work with key partners to develop a proposal that recognizes the value of state-based program administration, improves efficiency, and achieves the best outcomes for property owners, tenants, and HUD.” This powerful bipartisan statement reflects outreach by HFAs and other stakeholders deeply concerned about HUD’s proposal.
IRS Releases 2023 Housing Credit and Private Activity Bond Volume Cap Amounts
On October 18, IRS published Revenue Procedure 2022-38, which outlines the inflation adjustments for numerous federal tax provisions, including the amount of Housing Credit and Private Activity Bond (PAB) authority each state will receive next year. In 2023, the state Housing Credit ceiling will be the greater of $2.75 per capita or $3,185,000, up from $2.60 per capita or $2,975,000 in 2022. The PAB cap for 2023 will be the greater of $120 per capita or $358,845,000, up from $110 per capita or $335,115,000 in 2022.
NCSHA Urges Treasury to Clarify GSEs’ Tax Status for Purposes of Housing Credit Investments
On October 18, NCSHA sent a letter to Deputy Secretary Adewale Adeyemo urging the Treasury Department to provide written clarity that the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, are not Tax Exempt Controlled Entities (TECEs). TECEs that invest in Housing Credit properties are not entitled to certain tax benefits, including accelerated depreciation. Moreover, if a TECE invests in a multi-investor fund, the other investors in the fund are no longer eligible for those benefits. While Freddie Mac currently invests only in proprietary single investor funds, Fannie Mae has invested in a mixture of proprietary and multi-investor funds.
NCSHA understands that, prior to the GSEs’ re-entry into the Housing Credit equity market, Treasury provided verbal assurance to the Federal Housing Finance Agency that the GSEs are not considered TECEs, and this was conveyed to Fannie Mae and Freddie Mac. However, the lack of written assurance on the GSEs’ status is creating uncertainty for other investors who participate in multi-investor funds. Without written assurance, Fannie Mae may limit future Housing Credit investments to single investor proprietary funds, which would impact the types of deals they are able to invest in, with potentially negative repercussions for the rural areas that benefit from the multi-investor funds in which Fannie is involved as part of its Duty-to-Serve obligation.
NCSHA Asks FHFA to Establish Strong GSE Multifamily Affordable Housing Goals
The Federal Housing Finance Agency (FHFA) should continue to set affordable housing goals that push Fannie Mae and Freddie Mac to be leaders in the affordable rental market, NCSHA argued in its comments on FHFA’s proposed 2023 – 2024 multifamily goals for the firms. The letter supports FHFA’s proposal to adopt a new percentage-based goal-setting system in place of the current system in which FHFA requires a specific number of units financed by loans purchased by the firms be affordable. The proposed new system will help ensure that supporting affordable housing remains a key component of Fannie Mae’s and Freddie Mac’s multifamily business regardless of how many units they finance each year. NCSHA also asked FHFA to increase the proposed percentage thresholds, noting both firms would have exceeded the proposed goals in recent years, in some cases by a substantial margin.
NCSHA Joins Coalition Letter Expressing Concerns About Disclosure Legislation
NCSHA recently joined the Government Finance Officers Association, National Association of Counties, U.S. Conference of Mayors, the National League of Cities, and other municipal finance groups as signatories on a letter to congressional leaders expressing concerns about the Financial Data Transparency Act (FDTA; S. 4295) and its possible inclusion as an amendment to the FY23 National Defense Authorization Act. The letter describes the group’s concerns that the FDTA could have a negative impact on state, county, and municipal entities required to submit financial information to the Municipal Securities Rulemaking Board because of added compliance costs and substantial federal overreach into the content and structure of issuer disclosures and the accounting and reporting practices of government entities.
NCSHA Urges VA to Maintain Partial Claim Payment Option
This week, NCSHA sent a letter to the U.S. Department of Veterans Affairs (VA) urging Secretary Denis McDonough to temporarily extend the October 28 expiration date of the VA Partial Claim Payment for homeowners who have been pre-qualified by their state’s Homeowner Assistance Fund program.
NCSHA in the News
Route Fifty, 10.17.22, Cities and States Bristle Over Proposal to Change How They Report on Finances
Legislative and Regulatory Activities
- October 27 | Comments Due to NCSHA | HUD RFI on Green and Resilient Retrofit Program
- October 31 | Comments Due | FHFA Review of Federal Home Loan Bank System
- November 22 | Application Deadline | HUD Thriving Communities Technical Assistance
- November 28 | Comments Due to NCSHA | FHA RFI on Small Mortgage Lending
- December 5 | Comments Due | FHA RFI on Small Mortgage Lending
- January 11 | Application Deadline | FY22 Choice Neighborhoods Planning and Implementation Grants
NCSHA, State HFA, and Industry Events
- October 22 – 25 | NCSHA Annual Conference & Showplace | Houston, TX
- October 25 – 28 | National Affordable Housing Management Association Fall Conference | Washington, DC
Jennifer Schwartz will speak at this event. - November 9 – 10 | ProLink Technology Live 2022 | Virtual
Jennifer Schwartz will speak at this event. - November 14 – 16 | AHF Live | Chicago, IL
Stockton Williams will speak at this event. - November 15 | New Hampshire Housing’s Housing & Economy Conference | Manchester, NH
Jennifer Schwartz will speak at this event. - November 16 | 2022 Vermont Statewide Housing Conference | Burlington, VT
Jennifer Schwartz will speak at this event. - December 1 – 2 | Novogradac 2022 Tax Credit Housing Finance Conference | Las Vegas, NV
Jennifer Schwartz will speak at this event. - January 8 – 13 | NCSHA’s HFA Institute 2023 | Washington, DC
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