NCSHA Washington Report | October 29, 2021
The “Build Back Better” bill congressional Democrats plan to pass soon, which the White House says contains “the single largest and most comprehensive investment in affordable housing in history,” reflects Washington’s continuing confidence in states’ central role in affordable housing finance.
Billions in funding would flow through state HFAs from the bill’s expansions of HOME, the Housing Trust Fund, and a new down payment assistance program. HFAs have worked hard for months to ensure each measure was included in the bill.
A lot of people on and off Capitol Hill have, too, following the lead of House Financial Services Committee Chairwoman Maxine Waters (D-CA). The housing title of the BBB bill, should it pass, would place Waters among the most productive progressive lawmakers in congressional history.
But the BBB isn’t completely built yet, and Congress must shore up a serious structural flaw in the tax section that undermines Waters’ vision and the White House’s commitment “to address the supply shortage and reduce price pressures in the housing market.”
Neither the administration’s framework nor the 1,700-page House bill released yesterday contains any expansion of the Low Income Housing Tax Credit, which the Biden ‒ Harris Administration just a few weeks ago called “the federal government’s principal tool for incentivizing and subsidizing the construction and rehabilitation of affordable rental housing.”
In fact, the BBB in its current form allows the Credit to be cut by 12.5 percent in January, eliminating 55,000 new affordable units that otherwise would have been built, according to the accounting firm Novogradac. And the bill does nothing to stop mounting losses of Housing Credit properties from their expected rent-regulated affordability periods, even though legislation to do it already has been passed by the House Ways and Means Committee.
To be sure, the BBB as written would make meaningful progress on several important affordable housing challenges — including rehabilitating existing homes and apartments — but it will not drive significant additions to the affordable rental supply, for two reasons.
First is that only a small share of the $150 billion for housing in the bill would go to new rental development. (For the two main BBB-funded production programs, which account for 17 percent of the total, 20 percent of HOME and 65 percent of Housing Trust Fund units are newly built.)
Second is that the economics of affordable development almost always require Housing Credit equity to pencil out — especially properties that target extremely low-income renters and vulnerable households, which typically rely on the Credit for 50 – 75 percent of their funding.
Without more Housing Credits, the BBB-funded housing production programs will punch way below their weight.
At a time when the affordable apartment shortage defines the worst housing crisis the country has ever faced, when Democrats control Congress and the White House, and when the administration says President Biden is “committed to using every tool available in government to produce more affordable housing supply as quickly as possible,” how can the biggest affordable housing bill ever leave out the most effective affordable supply producer?
Stockton Williams | Executive Director
State HFA Emergency Housing Assistance
In This Issue
Revised Build Back Better Bill Released
Congressional leaders on Thursday afternoon released draft statutory language for the budget reconciliation legislation, formally called the Build Back Better Act (BBB). The bill is the product of months of negotiations among the Biden Administration, congressional leaders, and progressive and moderate Democratic Representatives and Senators. While subject to possible changes, the current bill includes $1.75 trillion in total government spending and tax expenditures, including $150 billion for affordable housing spending programs. Notably, the bill includes $9.925 billion for the HOME Investment Partnerships program, $14.925 billion for the Housing Trust Fund, and nearly $10 billion for a new First Generation Downpayment Fund through which states and nonprofits would provide first-generation home buyers with grants for down payment assistance and other home purchase expenses. NCSHA summarized the bill in more detail in our blog.
As currently drafted, the legislation does not include any of the investments NCSHA and our partners have long been pushing to expand and strengthen the Housing Credit or enact the Neighborhood Homes Credit. Still, congressional Housing Credit and Neighborhood Homes Credit champions believe there is a chance Congress could find a way to add these critical programs back into the BBB while the text is being finalized.
NCSHA Sends Comments to FHFA on Equitable Finance Plans, Affordable Housing Goals
NCSHA on Monday submitted comments on two key Federal Housing Finance Agency (FHFA) proposals regarding Fannie Mae’s and Freddie Mac’s (the Enterprises) affordable housing activities: a directive that the Enterprises develop Equitable Housing Finance Plans and proposed affordable housing goals for 2022–24. In our comments on the Equitable Housing Finance Plans directive, NCSHA praised FHFA for taking concrete action to spur the Enterprises to do more to address racial and ethnic inequities in the housing finance system. The letter outlined several potential partnership opportunities the Enterprises could undertake with HFAs immediately to start making progress toward this goal: expanding the advantages of their HFA products, investing in Mortgage Revenue Bonds and other HFA securities, and piloting programs to support small-dollar mortgage lending and loans for new construction of affordable single-family homes.
The letter on the proposed Enterprise housing goals supports FHFA’s recommendation to increase the single-family and multifamily housing goals, as well as FHFA’s proposal to create a new single-family subgoal requiring that at least 10 percent of loans purchased by the Enterprises be loans located in minority census tracts.
Treasury Issues Additional ERA Reallocation Guidance, Forms
On October 26, Treasury Deputy Secretary Wally Adeyemo sent Emergency Rental Assistance (ERA) program grantees a letter providing further information about how Treasury will recapture and reallocate excess unobligated funds from the initial ERA allocations, as authorized under the Consolidated Appropriations Act of 2021 (ERA 1), to grantees who have obligated at least 65 percent of their ERA 1 grants. Treasury first will prioritize requests from grantees serving jurisdictions in the same state as the grantee from whom funding is recaptured. Next, Treasury will prioritize providing reallocated funds to those grantees who are close to expending all of their ERA 1 and ERA 2 (the ERA funding authorized under the American Rescue Plan Act) grants. Lastly, any funds not distributed under the first two priorities will be available for reallocation nationwide to grantees who met the 65 percent obligation threshold and request additional funds from Treasury in accordance with their need.
Treasury also published the Obligated Funds Certification, Program Improvement Plan, and Request for Reallocated Funds forms. For more information on reallocation, see our blog.
NCSHA in the News
Miami Herald, 10.28.21, Slashing affordable-housing money from the reconciliation bill is a huge mistake
MReport, 10.25.21, Group Pushes for Further Duty to Serve Improvements
MPA, 10.25.21, Calls for FHFA to improve “duty to serve” proposals
Housing Wire, 10.22.21, Housing groups to FHFA: Hit pause on Duty to Serve plan
RisMedia, 10.22.21, New Affordable Housing Coalition Writes to FHFA, Urging Fannie and Freddie to Improve Duty to Service Proposals
Legislative and Regulatory Activities
- October 29 | Comments Due | OCC Proposed Rule on the Community Reinvestment Act
- November 6 | Comments Due | HUD’s Climate Action Plan
- November 16 | Application Deadline | FR-6500-N-25, Notice of Funding Opportunity FY 2021 Continuum of Care Competition
NCSHA, State HFA, and Industry Events
- November 1 | 2021 HFA/CDFI Virtual Summit Hosted by Fannie Mae
Stockton Williams will speak at this event. - November 1 – 5 | Council of Development Finance Agencies 2021 Virtual Summit
Greg Zagorski will speak at this event. - November 4 | 8th National Housing Mobility Conference | Virtual
- November 9 | Manufactured Housing Institute NCC Fall Leadership Forum | Chicago
Jennifer Schwartz will speak at this event. - November 9 | ProLink Technology Live 2021 | Virtual
Jennifer Schwartz will speak at this event. - November 10 – 12 | Virginia Governor’s Housing Conference | Norfolk
- November 17 – 18 | NCSHA’s Housing Credit 101 | Virtual
- November 18 – 19 | NAHB 2021 Mortgage Roundtable Meeting
Stockton Williams will speak at this event. - November 20 – 21 | National Association of Home Builders Mortgage Roundtable | New York City
Stockton Williams will participate in this event. - December 1 – 2 | 2021 Virtual Ohio Housing Conference
Stockton Williams will speak at this event.
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