NCSHA Washington Report | September 30, 2022
Comments submitted to HUD this week revealed deep opposition throughout the affordable housing industry to the department’s high-risk proposal to radically restructure the long-running successful system for administering rental assistance in thousands of HUD-financed properties across the country.
The National Leased Housing Association (NHLA), which represents hundreds of private-sector owners and managers of those properties, “typically prefers to stay out of HUD’s contracting processes” but felt compelled to weigh in on the proposal because “we believe [it] will have a serious negative impact on housing providers, tenants and HUD staff.”
HUD wants to replace proven state-by-state administration of project based contract administration (PBCA) with regional oversight that would bottleneck through HUD’s understaffed field offices. And it seems intent on stacking the deck against HFAs and local public housing authorities, which have been the primary service providers for more than 20 years, in favor of private contractors without public missions.
“We cannot even begin to envision how a transition will be possible in any less than several years and without extreme disruption to participants, owners, managers, etc.,” wrote NHLA President Denise Muha. “We see no realistic ability for HUD to take on this increased workload without a significant negative impact on the program.”
Stewards of Affordable Housing for the Future (SAHF), whose mission-driven owners control and operate more than 145,000 rental units across the country — more than a third of which are in properties assisted with rental assistance – wrote that HUD’s approach “risks increased costs for operating and preserving critically needed affordable housing and dis-incentivizes preservation — something our nation cannot risk.”
SAHF reminded HUD that “many contract renewals are done as part of a larger transaction, which may include refinancing, acquisition, rehabilitation, or debt restructuring,” which is often provided by state HFAs also administering assistance contracts. “The expertise in these areas brought by HFAs has been essential to successful transactions and the understanding of variation in local programs creates efficiencies and often avoids programmatic and timing conflicts.”
NCSHA and the Local Housing Administrators Coalition in a joint comment raised a large set of serious statutory, regulatory, administrative, and procedural concerns about the HUD proposal. Separately, NCSHA also strenuously objected to the department’s apparent intention to prevent HFAs from even having a fair opportunity to compete to continue providing the services many have for decades.
HUD has started hearing from members of Congress, too. Representative Davids (D-KS), vice chair of the House Transportation and Infrastructure Committee, wrote HUD Secretary Fudge that “ignoring state HFAs’ local expertise, on-the-ground relationships, and ability to manage multiple affordable housing programs would be extremely harmful to local residents and housing owners.”
A growing number of Senators and House members in both parties plan to communicate their concerns to HUD about its flawed proposal in the coming weeks. If you want to join them and us in expressing yours, please let us know.
Stockton Williams | Executive Director
State HFA Emergency Housing Assistance
In This Issue
- NCSHA Welcomes New Members
- NCSHA Recommends HUD Withdraw or Revise Contract Administration Procurement Proposal
- Housing Credit Average Income Test Rule Imminent
- Congress Approves Continuing Resolution Keeping Agencies Running Through Dec. 16
- Updated IRS FAQs Clarify Tax Treatment of DPA from Fiscal Recovery Funds
- FHA to Allow Buyers to Use Rental Payments in Credit History
- HUD Selects 18 PHAs for Moving to Work Demonstration Program
- HUD Awards $125 Million in Lead Hazard Reduction Grants
- HUD Finalizes Regulation on Compliance with HOME Commitment Requirement
- NCSHA in the News
- Looking Ahead
NCSHA Welcomes New Members
NCSHA welcomed these new affiliate members in September: Builders Patch Inc.; Default Mortgage Servicing Consultants LLC; Evercrest Advisors; Insight One; Rinck Advertising; and Tidal Basin Group. If you work with a partner interested in joining NCSHA, please contact Phaedra Stoger.
NCSHA Recommends HUD Withdraw or Revise Contract Administration Procurement Proposal
On September 28, NCSHA sent the Department of Housing and Urban Development a letter urging it to withdraw or substantially revise its draft solicitation to procure contractors to provide Housing Assistance Payments contract support services to HUD to help it administer approximately 17,000 project-based rental assistance contracts. NCSHA’s letter objects to the draft solicitation’s regional approach, conflict-of-interest provision, command-and-control structure taking over contract administration tasks currently performed by contract administrators, and other provisions making it harder for HFAs and other public housing agencies to compete for the new contracts.
Housing Credit Average Income Test Rule Imminent
NCSHA expects Treasury and IRS to publish the final rule for the Housing Credit Average Income Test (AIT) minimum set-aside imminently. The last step in the regulatory approval process, final sign-off by the Office of Management and Budget’s Office of Information and Regulatory Affairs, appears to be complete, paving the way for publication. Last May, the White House published its Housing Supply Action Plan, which set forth a September 30 deadline for the AIT regulations. NCSHA will publish a blog post providing details of the final rule upon its publication.
Since Treasury and IRS published the proposed rule on the AIT in October 2020, NCSHA has been a lead voice expressing concern the proposed rule would not work in practice and calling on IRS to enact significant reforms to the regulations in the final rule. In addition to providing our own detailed comments and testifying at an IRS/Treasury hearing on the proposed rule, NCSHA led a group of Housing Credit industry participants on a consensus proposal to IRS and Treasury and worked with key supporters of the Housing Credit in Congress on a congressional letter to IRS and Treasury urging action to release a final rule with the modifications proposed by the industry.
The AIT allows owners of Housing Credit properties to opt to serve households earning up to 80 percent of area median income (AMI), as long as the average designation of low-income units in a building is no more than 60 percent of AMI, meaning that to serve higher-income (but still low-income) households, the owner must also set aside units for even lower income households. Congress enacted the AIT in 2018, which previously had been a provision in the Affordable Housing Credit Improvement Act.
Congress Approves Continuing Resolution Keeping Agencies Running Through Dec. 16
Congress has enacted a continuing resolution (CR) keeping the federal government funded and running past the September 30 fiscal year-end and until December 16. The Senate passed the bill Thursday, and the House approved it earlier today. President Biden is expected to sign the CR later today. The CR also includes $1 billion for low-income heating assistance, $2 billion to help communities affected by disasters in 2021 and 2022 rebuild, and $20 million to address water quality issues in Jackson, MS.
Updated IRS FAQs Clarify Tax Treatment of DPA from Fiscal Recovery Funds
Down payment assistance provided to home buyers with Coronavirus State and Local Fiscal Recovery Funds (SLFRF) is not considered taxable income, the Internal Revenue Service clarified in updated FAQs published Wednesday. Home buyers will not have to pay federal taxes for these benefits, and the issuing government entity will not be required to issue recipients the related tax Form 1099. NCSHA asked the Treasury Department to issue this clarification. Nearly a dozen HFAs have indicated they intend to use SLFRF funds to finance down payment assistance for low- and moderate-income home buyers. The updated FAQs also state SLFRF assistance for mortgage insurance premiums will not be considered taxable income.
FHA to Allow Buyers to Use Rental Payments in Credit History
On Tuesday, the Federal Housing Administration (FHA) published Mortgagee Letter 2022-17, which updates FHA’s Technology Open To Approved Lenders (TOTAL) Mortgage Scorecard to include a borrower’s positive rental payment history (i.e., the on-time payment by a borrower of all rental payments in the previous 12 months) as part of the credit risk analysis when applying for FHA-insured financing. This guidance may be implemented for TOTAL scoring events on or after October 30, 2022, and for case numbers assigned on or after September 20, 2021. Read HUD’s announcement.
HUD Selects 18 PHAs for Moving to Work Demonstration Program
On September 27, HUD announced it has selected 17 local public housing agencies (PHAs) and New Hampshire Housing to participate in the Asset Building cohort of the Moving to Work (MTW) Demonstration Program. Through this cohort, HUD will evaluate asset-building activities that encourage the creation and growth of savings accounts and/or aim to build credit, through rent reporting, for assisted households. MTW is a demonstration that gives PHAs program flexibility to address local community needs in innovative ways.
HUD Awards $125 Million in Lead Hazard Reduction Grants
On Wednesday, HUD announced it has provided $125 million in grants to 26 state and local government agencies to remove lead and other home health hazards in their communities. The grants were issued through HUD’s Lead Hazard Reduction Grant Program — with $13 million coming from HUD’s Healthy Homes supplemental funding — which is used to identify and clean up dangerous lead health hazards in low-income families’ homes. The 26 state and local government agencies — including the Indiana Housing and Community Development Authority — will use the grants to remove significant lead and other home health hazards from more than 4,000 homes. A project-by-project summary of the award recipients is available here.
HUD Finalizes Regulation on Compliance with HOME Commitment Requirement
On September 22, HUD published final regulations on how it determines the compliance of participating jurisdictions (PJs) with the HOME Investment Partnerships program’s statutory 24-month commitment requirement. Specifically, the final rule makes permanent the grant-specific method for determining compliance with the commitment requirement and the method of administering program income to prevent PJs from losing allocated HOME funds when they expend program income. The final rule is identical to an interim rule that has been in effect since late 2016.
NCSHA in the News
Affordable Housing Finance, 9.21.22, Study: LIHTC Deals See 30% Cost Increase
Legislative and Regulatory Activities
- October 4 | FHFA Listening Session on FHFA Review of Federal Home Loan Bank System
Greg Zagorski will speak at this event. - October 7 | Comments Due to NCSHA | FHFA Proposed Affordable Multifamily Housing Goals for Fannie Mae and Freddie Mac
- October 10 | Comments Due to NCSHA | FHFA Review of Federal Home Loan Bank System
- October 12 | Comments Due to NCSHA | HUD RFI on Green and Resilient Retrofit Program
- October 17 | Comments Due | FHFA Proposed Affordable Multifamily Housing Goals for Fannie Mae and Freddie Mac
- October 20 │ Applications Due │ HUD Continuum of Care Program Supplemental Funding Opportunity to Address Unsheltered and Rural Homelessness
- October 21 | Comments Due | FHFA Review of Federal Home Loan Bank System
- October 27 | Comments Due to NCSHA | HUD RFI on Green and Resilient Retrofit Program
NCSHA, State HFA, and Industry Events
- October 6 | The Coalition of HUD-Approved Housing Counseling Intermediaries 2022 Meeting | McLean, VA
Rosemarie Sabatino will speak at this event. - October 18 | Ohio Housing Council Fall Symposium | Columbus, OH
Jennifer Schwartz will speak at this event. - October 19 – 21 | Affordable Housing Investors Council 2022 Affordable Housing Summit | Minneapolis, MN
James Tassos will speak at this event. - 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 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.
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