NCSHA Washington Report | September 22, 2023

With more strikes underway today than at any time in the past 20 years and union approval ratings higher than their long-term polling average, the “uneasy relationship” between organized labor and affordable housing may be entering a new period.

The phrase is Baruch College professor Hilary Botein’s, from her 2007 paper documenting labor’s role as an “influential architect of national housing programs” between the end of World War II and the 1980s, its waning impact for the remainder of the 20^th century, and signs of renewed involvement in the 21^st.

The dominant issue throughout of course has been wages, reflected in federal law by the 1931 Davis-Bacon Act’s requirement that government contractors pay locally prevailing wages to laborers and mechanics employed on federally-funded construction projects. Davis-Bacon rates apply to HUD-and USDA-backed projects, although not to Housing Credit developments if they don’t have federal subsidies.

Organized labor advocates cite voluminous evidence that the rates generally don’t lead to higher government contracting costs and in fact increase federal revenues while improving worker skills and workplace safety. Industry sources point elsewhere to voluminous evidence of the opposite.

There’s less disagreement that prevailing wage requirements tend to make it more expensive to build affordable housing, with several studies showing dramatic impacts at the state level (in California and New York, for example).

Even a leading labor-aligned think tank, the Economic Policy Institute, concedes: “Labor-intensiveness, skill, and material-saving technologies involved in affordable housing construction might be sufficiently different from those used in other public building and road construction that the operation of prevailing wage regulations works differently in this sector.”

Next month, the Department of Labor will publish the first comprehensive update of the Davis-Bacon regulations in 40 years. NCSHA provided the department with detailed recommendations to reduce the complexity, time, and costs associated with the new rules so HFAs and their partners can continue to deliver high-quality affordable housing as efficiently as possible, while also supporting the essential workforce that delivers that housing.

Labor/housing connections aren’t limited to construction wages on development projects, though. As Botein points out, “service workers, industrial unions, the construction trades, and public employee unions approach the housing issue with differing interests and strengths.”

You see this around the country. Nascent organizing efforts by service workers in the South are highlighting housing costs as a basis for their demands. Striking hotel workers in Los Angeles are calling for more affordable construction and pushing a 2024 ballot measure that would make vacant rooms available to the unhoused. Teachers’ unions are pressing for housing funding in Chicago and elsewhere; in rural West Virginia, one actually funded construction of a project.

Members of organized labor don’t only build a lot of the country’s affordable housing. Many call it home.

Stockton Williams | Executive Director

State HFA Emergency Housing Assistance

In This Issue

• Local Government Leaders Across the Nation Urge Congress to Expand and Strengthen the Housing Credit
• HUD Announces 2024 DDAs, QCTs
• Congress Struggles to Advance Funding Legislation for Fiscal Year 2024
• HUD Delays Compliance Date for NSPIRE Protocols for Community Planning and Development Programs
• Senate Banking Committee Republicans Object to FHFA, GSE Racial Equity Plans
• Ginnie Mae Announces Social Bond Designation for Single-Family MBS
• Consortium Formed to Access EPA Funds for Affordable Housing
• Looking Ahead

Local Government Leaders Across the Nation Urge Congress to Expand and Strengthen the Housing Credit
Mayors, county executives, and other elected executive leaders from local municipalities in nearly every state in the nation this week sent congressional leaders a letter urging Congress to pass the Affordable Housing Credit Improvement Act (AHCIA; S.1557 / H.R. 3238). In total, 184 local elected leaders signed the letter, which specifically calls for lowering the “50 percent test” bond financing threshold for 4 percent Housing Credit developments, expanding 9 percent Housing Credit authority, and providing basis boosts so the program can better reach hard-to-serve communities—all of which are included in the AHCIA. The ACTION Campaign, which NCSHA co-chairs with Enterprise Community Partners, in partnership with the National Association of Counties, National League of Cities, and Mayors and CEOs for U.S. Housing Investment sponsored the letter. NCSHA appreciates the work HFAs and their partners did to encourage local elected leaders to sign on, indicative of the vast support for the Housing Credit and desperate need for affordable housing at the local level. See the ACTION press release for more information.

HUD Publishes 2023 Housing Credit QCTs and DDAs
This week, HUD published its annual list of areas that qualify as Qualified Census Tracts (QCTs) or Difficult Development Areas (DDAs) for purposes of the Low-Income Housing Tax Credit (Housing Credit). Properties in these areas are eligible for up to a 30 percent basis boost. HUD designates DDAs and QCTs each year. DDAs are areas with high development costs relative to area median gross income (AMGI). QCTs are census tracts with a poverty rate of at least 25 percent or in which 50 percent of the households have incomes below 60 percent of AMGI. These designations will take effect on Housing Credit allocations made after December 31, 2023 or for tax-exempt bond-financed buildings placed in service after December 31, 2023.

Congress Struggles to Advance Funding Legislation for Fiscal Year 2024
Since returning from its annual August recess, Congress has made limited progress advancing legislation to fund the federal government for fiscal year 2024, increasing the likelihood of a government shutdown when the current fiscal year ends on September 30. In the Senate, while a procedural motion related to the FY 2024 funding legislation for HUD and other agencies passed by a vote of 91-7, momentum has stalled as negotiations continue on a package of potential amendments to the bill. Meanwhile, in the House, internal tensions within the majority Republican caucus resulted in the failure of a procedural motion to advance funding legislation for the Department of Defense by a vote of 212-214, narrowing the path forward for funding other federal agencies. A continuing resolution to keep government programs going in the new fiscal year on a temporary basis is likely at some point, but its details and duration are uncertain, and it very well may not come in time to avoid a government shutdown.

Against this backdrop, on Wednesday the House Budget Committee advanced a nonbinding concurrent budget resolution for fiscal years 2024-2033 envisioning dramatic cuts in federal spending over ten years, in part by repealing energy incentives included in the Inflation Reduction Act.

HUD Delays Compliance Date for NSPIRE Protocols for Community Planning and Development Programs
On Monday, September 18 HUD announced it would delay until October 1, 2024 the compliance date for its National Standards for the Physical Inspection of Real Estate (NSPIRE) final rule for Community Planning and Development (CPD) programs. Programs covered by the delay include the HOME Investment Partnerships (HOME), Housing Trust Fund (HTF), Housing Opportunities for Persons with AIDS (HOPWA), Emergency Solution Grants (ESG), and Continuum of Care (CoC) programs. You can read more about the announcement here.

Senate Banking Committee Republicans Object to FHFA, GSE Racial Equity Plans
All Senate Banking Committee Republicans Tuesday sent Federal Housing Finance Agency (FHFA) Director Sandra Thompson a letter raising objections to FHFA’s April proposed rule requiring the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac to publish equitable housing finance plans. The plans, which the GSEs first published in June 2022 at FHFA’s direction, outline the activities each firm will undertake to support equitable access to affordable and sustainable housing. The letter, spearheaded by Senator Bill Hagerty (R-TN), argues that the GSEs’ plans are legally problematic because they encourage proposals that would favor some homebuyers over others on the basis of race. It also contends FHFA lacks the statutory authority to issue the proposed rule, asks FHFA to maintain all records related to the proposed rule and the plans to comply with future congressional oversight and possible legal challenges to the proposal, and requests answers by October 6 to a series of questions regarding FHFA’s process for developing the proposed rule.

Ginnie Mae Announces Social Bond Designation for Single-Family MBS
Ginnie Mae last week announced that Ginnie Mae-guaranteed single-family mortgage-backed securities (MBS) will be eligible to be categorized as “social bonds.” Specifically, Ginnie Mae amended the prospectus issuers must publish before issuing Ginnie Mae single-family MBS to include pertinent information on how the loans help advance affordable and green housing. It will be up to individual investors to determine whether a Ginnie MBS qualifies as a social bond based on the information in the prospectus. Ginnie Mae hopes the revised prospectus will increase demand for Ginnie Mae MBS by new investors. The new policy takes effect October 1.

In related news, Fannie Mae and Freddie Mac announced that beginning December 6, they will add social impact disclosures for MBSs that are comprised of smaller MBS issuances that have been pooled into larger securities.

Consortium Formed to Access EPA Funds for Affordable Housing
Calvert Impact, Community Preservation Corporation, and Self-Help have formed Climate United, a consortium that will compete to manage an award from the $14 billion National Clean Investment Fund, a component of the EPA-administered Greenhouse Gas Reduction Fund (GGRF). The consortium intends to leverage public funds to transform under-resourced markets in pursuit of more inclusive low-carbon transition. The consortium has identified affordable housing as one of its investment priorities if it receives federal funding and has said it envisions HFAs as important potential financing partners. Climate United is hosting a webinar for state and local government partners on September 29 at 2:00 pm EDT. Registration information is available here.

Looking Ahead…

Legislative and Regulatory Activities

• September 22 | Comments Due to NCSHA | EPA Proposed Rule on Reconsideration of the Dust-Lead Hazard Standards and Post-Abatement Clearance Levels
• September 27 | Senate Banking Committee Hearing on The State of Flood Insurance in America
• September 29 | Comments Due | Council on Environmental Quality Proposed Rule on National Environmental Policy Act Implementing Regulations Revisions Phase 2
• September 29 | Comments Due | HUD Proposed Rule on Modernization of Engagement with Mortgagors in Default
• October 2 | Comments Due | EPA Proposed Rule on Reconsideration of the Dust-Lead Hazard Standards and Dust-Lead Post-Abatement Clearance Levels
• October 4 | Comments Due to NCSHA | RHS Proposed Rule to Update Manufactured Housing Provisions
• October 6 | Comments Due to NCSHA |Treasury’s Interim Final Rule to Implement Amendments to the Coronavirus State and Local Fiscal Recovery Funds
• October 12 | Application Deadline EXTENDED | Solar for All Notice of Funding Opportunity
• October 16 | Comment Deadline | RHS Proposed Rule to Update Manufactured Housing Provisions

NCSHA, State HFA, and Industry Events

• September 24 – 26 | Louisiana Housing Conference | Baton Rouge, LA
  Stockton Williams is speaking at this event.
• September 28 – 29 | Novogradac 2023 Housing Tax Credit and Bonds Conference | New Orleans, LA
  Jennifer Schwartz is speaking at this event.
• October 4 | Maine Affordable Housing Conference | Portland, ME
  Stockton Williams is speaking at this event.
• October 14 – 17 | NCSHA’s 2023 Annual Conference & Showplace | Boston
• October 23 – 24 | North Carolina Affordable Housing Conference | Raleigh, NC
  Stockton Williams is speaking at this event.
• October 24 – 26 | NAHMA Biannual Top Issues in Affordable Housing Fall Conference | Washington, DC
  Jennifer Schwartz is speaking at this event.

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