Capitol Express Newsletter: Tax Reform Conference Continues, Congress Passes Two-Week CR, New Research on Housing Credit & NMTC
Programming note: because of the holidays, this will be the last Monday edition of Capitol Express in 2017. Please stay tuned for a special edition of Capitol Express in late December. To stay up to date on housing and community developments news, sign up to receive Community Developments as a daily email.
CONGRESSIONAL AND ADMINISTRATION NEWS
Tax Reform Conference Continues, Outreach Needed to Save Housing Bonds and the NMTC
Now that both the House and Senate have passed their versions of the Tax Cuts and Jobs Act, they have begun the work of negotiating the significant differences between their two bills. Their goal is to send an agreed-upon version of the bill back to both chambers for a vote so it can go to the President before Christmas. Though congressional leadership announced a formal conference committee last week, informal negotiations were already well underway and continued over the weekend. Negotiators are now finalizing a new version of the bill, and will likely release a draft conference report today or tomorrow in advance of Wednesday’s open meeting of the conference committee. Voting will likely begin next week after the bill goes through a formal process to ensure that its language and budgetary impacts fit within guidelines Congress has set for itself.
The Senate version of the Tax Cuts and Jobs Act would retain the Low-Income Housing Tax Credit (Housing Credit); private activity bonds (PABs), including multifamily Housing Bonds; the New Markets Tax Credit (NMTC) as currently authorized through 2019; and the historic rehabilitation credit. However, key programs remain at risk in conference negotiations, including Housing Bonds and the NMTC, since the House version of the bill would eliminate both. Multifamily Housing Bonds provide critical financing to more than half of the Housing Credit units built and renovated each year, and eliminating PABs would result in over 800,000 fewer affordable rental homes over the next decade.
Enterprise urges continued outreach to Republican Senators and Representatives as the tax reform bill is finalized to ensure that Housing Bonds and the NMTC are retained. Visit the ACTION Campaign’s Advocacy Toolkit for updated sample letters to members of Congress, talking points on Housing Bonds and more, and visit the NMTC Coalition website for resources to advocate for this critical community revitalization tool, including a new fact sheet on preserving the NMTC.
Congress Passes CR Until December 22, But Leaves Major Issues Unresolved
Congress avoided a government shutdown last week by passing a continuing resolution (CR) that funds the government until December 22. Lawmakers will try to use the next two weeks to reach an agreement that would raise the spending caps required in fiscal year (FY) 2018 by the Budget Control Act (BCA), and will likely pass another short-term CR before the end of the year to allow time for appropriators to negotiate a final FY 2018 spending bill once a budget deal is reached.
Complicating the year-end budget and appropriations negotiations are a host of issues that have yet to be resolved, including Children’s Health Insurance Program (CHIP) funding, a DREAM Act deal and a third tranche of disaster recovery dollars. Additionally, if the Tax Cuts and Jobs Act becomes law, Congress will need to decide whether to waive the pay-as-you-go (PAYGO) provision in the budget reconciliation process that would otherwise automatically enact a $150 billion per year sequester for the next ten years to offset the cost of the bill.
Congress Holds Hearings to Consider Next Round of Funding for Disaster Relief
Earlier this month, Federal Emergency Management Agency (FEMA) Administrator Brock Long and HUD Assistant Secretary for Housing and Community Development Neal Rackleff separately testified before House Appropriations subcommittees as lawmakers consider their next round of disaster recovery funding. Appearing before the House Appropriations Homeland Security Subcommittee, Administrator Long advised that communities need access to resources for disaster mitigation before a disaster hits. In his testimony before the House Appropriations Transportation, Housing and Urban Development (THUD) Subcommittee, Assistant Secretary Rackleff also recommended that the federal government be more proactive on disaster relief and recovery, noting that many communities have projects ripe for disaster mitigation, but do not have the resources to fund them. Numerous THUD appropriators, including Chairman Mario Diaz-Balart (R-FL-25) and Ranking Member David Price (D-NC-4), expressed concern that the Administration did not request additional Community Development Block Grant Disaster Recovery (CDBG-DR) funding specifically for recovery in Puerto Rico.
Congress has so far appropriated $51.75 billion for relief and recovery to address major disasters that have occurred this year, including $7.4 billion for CDBG-DR for Hurricanes Harvey and Irma. In November, HUD awarded $5.024 of CDBG-DR to the State of Texas and $616 million to the State of Florida for long-term term rebuilding from damage caused by Hurricane Harvey and Irma. Assistant Secretary Rackleff stated that HUD has not yet awarded CDBG-DR funds to Puerto Rico or the U.S. Virgin Islands for Hurricane Maria because FEMA has only completed 36 percent of the necessary site inspections on the islands. A third tranche of funding will likely be rolled into the expected spending legislation to fund the government after December 22. While it is expected to be larger than the $44 billion requested by the Administration in November, negotiations on exactly what will be included are ongoing.
Nominees for FHA Head and Other HUD Positions Advance to Consideration by Full Senate
The Senate Banking Committee voted 18-5 to approve Brian Montgomery’s nomination to serve as Assistant Secretary of Housing for HUD and commissioner of the Federal Housing Administration (FHA). Montgomery previously held the FHA Commissioner position under President George W. Bush. His nomination will now move to a full Senate vote, and a coalition of housing industry groups sent a letter to Senate Majority Leader Mitch McConnell (R-KY) and Minority Leader Chuck Schumer (D-NY) urging the Senate to confirm Montgomery to the position. If approved, Montgomery would replace acting FHA commissioner Edward Golding. The committee also advanced the nominations for Suzanne Tufts to serve as HUD Assistant Secretary for Administration, and Robert Kurtz to serve as HUD Assistant Secretary for Public and Indian Housing.
House Housing and Insurance Subcommittee Holds Hearing on Housing Finance Reform
The House Financial Services Subcommittee on Housing and Insurance held its fourth hearing on sustainable housing finance last week. The hearing, Sustainable Housing Finance: Private Sector Perspectives on Housing Finance Reform, Part IV, focused on the credit risk transfer programs (CRTs) of Fannie Mae and Freddie Mac (the government-sponsored enterprises or GSEs), as well as ways to expand private capital in the system without increasing credit risk for taxpayers. CRTs were first developed in 2012 and are intended to reduce the overall risk that GSEs assume in loan acquisitions to protect taxpayers while the GSEs remain in government conservatorship. Proposals to reform the housing finance system are currently under discussion in the Senate as well. Sen. Bob Corker (R-TN) and Sen. Mark Warner (D-VA) are circulating a plan that would preserve key infrastructure of the existing system - most notably the conservatorship of the GSEs - in addition to a government guarantee to protect mortgage investors in the event of catastrophic losses and greater access for small lenders in the secondary mortgage market. One of the primary concerns about CRTs, expressed by both members and witnesses at the recent hearing, was how reforming the housing finance system would affect the CRT market.
Secretary Carson Announces First EnVision Center Hub in Detroit
Last week HUD Secretary Ben Carson announced the launch of the first EnVision Center hub in Detroit. The EnVision Center Initiative will launch 10 pilot hubs across the country, all designed to provide those receiving housing assistance with long-term skills and training “to help people take the first few steps towards self-sufficiency.” The Initiative also incorporates a mobile app that offers job listings and other resources.
RESEARCH AND REPORTS
Report Links the Housing Credit with Positive Health Outcomes
A new report from the Bipartisan Policy Center, Building the Case: Low-Income Housing Tax Credits and Health, uses the robust evidence base linking affordable housing to better health outcomes to conclude that the Housing Credit “contributes positively to the nation’s public health.” While more research is required to demonstrate specific ways Housing Credit projects can improve health, main findings from the report include the positive impact of affordable housing on children; the importance of lowering housing cost burdens on access to health care; and the effectiveness of incorporating supportive services with housing to improve health outcomes. The report also explores innovative efforts to leverage the Housing Credit to improve individual and community health, most notably the incorporation of Health Impact Assessments into the development of qualified allocation plans governing how states allocate Housing Credits. Read a full summary of the report on Enterprise’s blog.
New Report Highlights the NMTC’s Significant Economic Benefits
The NMTC Coalition released a new report last week highlighting the economic impact of the NMTC. Between 2003 and 2015, NMTC investments generated more than $156 billion in economic activity, creating over 1 million jobs and $6.7 billion in state and local tax revenues. The report shows that the federal tax revenue generated by NMTC investments more than pays for the cost of the program, as the NMTC generated $872 million in federal tax revenue in 2015, exceeding the $759 million annual cost of the program. The report also highlights that most NMTC financing goes to severely distressed communities that far exceed program requirements for poverty and income, to rural communities and to healthcare facilities. This new report comes as Congress considers eliminating the NMTC in tax reform conference negotiations. Visit the NMTC Coalition website for resources to advocate for this critical community revitalization tool.
New HUD Report Shows Rise in Homelessness
HUD’s 2017 Annual Homeless Assessment Report to Congress shows that 553,742 individuals experienced homelessness on a single night in 2017, an increase of 0.7 percent from January 2016. Between 2016 and 2017, the number of families with children experiencing homelessness declined 5.4 percent; however, veteran homelessness and chronic homelessness among individuals increased 1.5 and 12.2 percent, respectively. Since 2010, family homelessness has decreased by 27 percent, veteran homelessness by 46 percent and chronic homelessness by 18 percent. The report suggests that the increase in the number of individuals experiencing homelessness can be largely explained by the spike in unsheltered homelessness in larger cities on the West Coast, where affordable rental housing is often the most constrained.
Harvard JCHS Examines Costs of 2017’s Natural Disasters
The Harvard Joint Center for Housing Studies (JCHS) has analyzed the estimated annual cost of natural disasters alongside annual estimates of disaster-related home repairs and improvements and concluded that the total cost of the natural disasters that occurred in 2017 could exceed disaster-related damages from any year in the last two decades. While inflation-adjusted, disaster-related damages have averaged about $40 billion a year between 1994 and 2015, Hurricanes Harvey, Irma, and Maria together caused about $150 billion in damages, according to estimates from CoreLogic and Moody’s Analytics. The analysis also suggests that this year's record-setting disasters will result in substantial spending on rebuilding, repairs and improvements to disaster-damaged homes, and the bulk of repairs and improvements will take up to three years.
STATE AND LOCAL POLICY
Localities Highlight Potential Impacts of Federal Tax Reform on Affordable Housing Production
Op-eds around the country have highlighted the potential damage of the proposals in the House tax reform’s plan to eliminate multifamily Housing Bonds: 9,340 fewer in North Carolina, 3,400 fewer in Minnesota, 2,850 fewer affordable homes in Oregon and nearly 2,000 fewer in Maine over the next decade, to name a few. In California, more than 20,000 affordable homes are at risk annually, amounting to over 260,000 homes in the next decade, a devastating possibility for a state already facing a severe shortage of affordable rental housing. Some localities are attempting to counteract the potential impacts of tax reform: in Washington D.C., Mayor Muriel Bowser announced that her administration will “issue up to $500 million tax-exempt PABs, as well as introduce a Convertible Option Bond to preserve the city’s bond cap,” as a measure to maintain the city’s affordable housing funds in light of the potential cuts in tax reform. Last week the Philadelphia City Council also adopted a resolution calling on Congress to reject the Tax Cuts and Jobs Act, with Council President Darrell Clarke stating that the GOP’s tax plan would be particularly harmful for housing affordability. For more on tax reform and affordable housing, see the ACTION Campaign’s round-up of recent news.
Land Trust Expected to Create 700 Homeownership Opportunities for Low-Income Families in Denver
A newly created land trust is expected to secure 700 homes in and around Denver so they can remain permanently affordable for low-income families. With $24 million in seed-funding from several foundations and nonprofits, the Elevation Community Land Trust would be the largest of its kind in Colorado. In states like Colorado where the cost of homeownership is increasing or permanent sources of funding for affordable housing are scarce, governments and nonprofits alike have been exploring land trusts as vehicles for making homes affordable in perpetuity for low-income, first-time homebuyers. But there are still some unknowns, including whether public funds will be available to support the full vision for the land trust – especially when a city is facing budgetary pressures and competing affordable housing demands.
IN CASE YOU MISSED IT
News Updates from Community Developments
In recent Community Developments, we highlighted connections between economic distress and health inequality, an analysis that examines trends in renter credit quality over time, the Atlanta BeltLine inclusionary zoning legislation, and much more. Sign up here to receive the Community Developments newsletter.
HUD Releases 2017 Program Guide
HUD has released the newest edition of the Programs of HUD resource guide, which provides a summary of all the agency's grant, regulatory and mortgage insurance programs, along with the corresponding statutory and regulatory authorities.
HEARINGS AND EVENTS
Upcoming Hearings and Mark-Ups
- December 12: Markup to Consider a Series of Bills Relating to the Banking System, House Financial Services Committee
- December 13: Open meeting of the Tax Cuts and Jobs Act (H.R. 1) House-Senate Conference
- December 12: Identifying Expiring Affordable Housing with the NHPD (National Housing Preservation Database), Public and Affordable Housing Research Corporation and the National Low Income Housing Coalition (Washington, D.C.)
- December 12: Transforming Communities, LISC (webcast)
- December 12: Affordable Housing and Homelessness Task Force Meeting, Empower Missouri and the National Low Income Housing Coalition (webinar)
- December 13: Building the Case: The Low Income Housing Tax Credit and Health, Bipartisan Policy Center (Washington, D.C.)
- December 13-14: 2017 New Markets Tax Credit Coalition Annual Conference, NMTC Coalition (Washington, D.C.)
- January 7-10: PHADA Commissioners’ Conference, Public Housing Authorities Directors Association (San Diego)
- January 7-12: The HFA Institute, National Council of State Housing Agencies (Washington, D.C.)
- January 8-19: Affordable Housing and Community Development Forums, CohnReznick (various cities)
- January 10-12: Beyond Housing 2018: A National Conversation on Child Homelessness and Poverty, The Institute for Children, Poverty, and Homelessness (New York)
- January 11: Novogradac 2018 Tax Credit Developers Conference, Novogradac & Co. (Miami Beach, Fla.)
- January 22 – 23: Affordable Housing Tax Credit Coalition Annual Meeting, Affordable Housing Tax Credit Coalition (Austin, Texas)
- January 23: Novogradac 2018 New Markets Tax Credit Conference, Novogradac & Co. (San Diego)