January 8, 2018

Capitol Express Newsletter: HUD Delays Implementation of Fair Housing Rule, Congress Considers Short-Term CR

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CONGRESSIONAL AND ADMINISTRATION NEWS

HUD Suspends Implementation of Affirmatively Furthering Fair Housing Rule

Last week HUD announced that it will delay implementation of the Affirmatively Furthering Fair Housing (AFFH) rule until October 2020 at the earliest. The notice in the Federal Register does not revise the rule or change the Assessment of Fair Housing requirement. The AFFH rule was issued in 2015 to provide clarity and guidance around a mandate in the Fair Housing Act of 1968, which requires local governments to work to desegregate their communities. Since the final rule was published, 49 cities and counties have submitted proposals to HUD, although HUD rejected 35 percent of these initial proposals, which the agency claims is evidence that localities need more technical assistance to comply with the rule.

Proponents of the AFFH rule argue that delaying implementation could cripple the federal government’s first major commitment in decades to address racial inequality in housing. Enterprise’s Senior Vice President and Chief Program Officer Laurel Blatchford notes that Enterprise, along with many in the housing and community development field, is profoundly troubled by this notice. “The Assessment of Fair Housing is an important tool for addressing entrenched segregation and economic inequality. Many communities across the country have already used this process to begin creating greater opportunity and more equitable neighborhoods, and its suspension will put that progress in serious jeopardy.”

Congress Negotiating Budget Deal, Another Short-Term Continuing Resolution Likely

Congress appears likely to pass another short-term continuing resolution (CR) to fund the government through mid-February while lawmakers settle on fiscal year (FY) 2018 spending caps. Leaders in both parties are considering a two-year spending deal that would raise the caps above the current FY 2018 levels set by the Budget Control Act. Once a deal is reached, omnibus appropriations legislation is expected to follow shortly thereafter. Even though Congress hasn’t reached a conclusion on FY 2018 spending legislation, discussions over next year’s appropriations will also kick off shortly, as the Administration is expected to release its FY 2019 budget request in mid-February.

Lawmakers are also negotiating a third disaster recovery bill, which could be included in the upcoming CR or final FY 2018 appropriations package. The House passed a $81 billion aid package before the winter holidays, but the Senate has not yet released its version of the legislation.

Upcoming Omnibus Spending Package Offers Opportunity to Strengthen and Expand the Housing Credit

The Tax Cuts and Jobs Act, which President Trump signed into law on December 22, retains all core affordable housing and community development programs: the Low-Income Housing Tax Credit (Housing Credit); private activity bonds, including multifamily Housing Bonds; the New Markets Tax Credit (NMTC); and the historic rehabilitation tax credit. The bill also lowers the top corporate tax rate from 35 to 21 percent, effective January 1, 2018. Read more about the tax reform bill’s impact on affordable housing in Enterprise’s blog post.

Preserving these critical programs in tax reform is a major feat that was made possible by the tremendous grassroots advocacy of stakeholders across the country. Housing Credit advocates are now turning that momentum towards strengthening and expanding the Housing Credit and Housing Bonds. The upcoming omnibus spending bill is likely to be paired with other legislative priorities, including a tax package, which presents an opportunity to advance the Affordable Housing Credit Improvement Act, including the 50 percent cap increase in Housing Credit allocation authority in the Senate version of the bill. All advocates should reach out to co-sponsors of H.R. 1661 and co-sponsors of S. 548 urging them to convey their support for affordable housing to House and Senate leadership by asking that they include the Affordable Housing Credit Improvement Act in any omnibus and tax package. For more information about the Affordable Housing Credit Improvement Act, including talking points and advocacy resources, see the ACTION Campaign blog post and visit the ACTION Campaign Advocacy Toolkit.

NCSHA Updates Recommended Practices for Housing Credit Administration

Last month, the National Council of State Housing Agencies (NCSHA) issued the Task Force on Recommended Practices in Housing Credit Administration’s (Task Force) final report, which updates the organization’s guidance on administering the Housing Credit. Over an 18-month period the Task Force revised NSCHA’s previous recommendations to respond to current program challenges and opportunities, and incorporated 13 new practices related to Housing Credit allocation, underwriting and compliance monitoring. Recommendations include supporting the preservation of affordable housing, promoting choice and opportunity for Housing Credit residents, encouraging fair housing compliance, and ensuring reasonable development costs.

Court Rules that HUD Must Implement Small Area Fair Market Rent Rule in 2018

Last month, a U.S. District Court ruled that HUD must implement its Small Area Fair Market Rent (SAFMR) rule starting January 1, 2018. The SAFMR rule was adopted in November 2016 with an effective date of January 1, 2018, but late last year HUD tried to delay its mandatory implementation for two years, citing plans to review public comments and do more analysis of costs and benefits. In November, civil rights groups responded by filing a lawsuit challenging HUD’s suspension of the rule, arguing that HUD’s action violates the Administrative Procedures Act, a law that governs how federal agencies propose and implement regulations. The goal of the SAMFR rule, which affects 24 metropolitan areas, is to allow more housing choice voucher holders to move into higher-opportunity neighborhoods. It pursues this goal by changing the calculation for housing voucher payments by using zip codes as the geographic boundary for the payment standards, rather than metropolitan boundaries.

RESEARCH AND REPORTS

New Report Details Shortfalls in and Recommendations for Federal Housing Assistance

A new study from the Urban Institute, The Case for More, Not Less: Shortfalls in Federal Housing Assistance and Gaps in Evidence for Proposed Policy Changes, provides an overview of the current landscape of federal housing assistance. The report finds that only one in five renter households who qualify for housing assistance actually receive it, down from one in four as recently as 2016. The report also examines the vital role of housing assistance in the safety net, the history of reform to housing assistance programs, and gaps in the evidence for proposed policy changes, such as work incentives and support services. The authors conclude that a serious review of current affordable housing policy, with a focus on strengthening the evidence base, is required before large-scale reform to federal housing assistance is attempted. 

JCHS Study Highlights Tight Conditions at the Low End of Housing Market

A new analysis by the Harvard Joint Center for Housing Studies (JCHS), America's Rental Housing 2017, shows that while rental markets are cooling nationally, conditions remain extremely tight at the low end of the market. According to the report, lower-priced housing is increasingly hard to find not only in high-cost coastal areas but also in many inland areas where rents are generally lower. In 14 of the 50 largest metros, vacancy rates for less expensive units were less than or equal to 5 percent last year, compared to 2006, when only three of the 50 metros had such tight conditions. The tightest market conditions were in San Francisco, Los Angeles, Seattle and Portland, where vacancy rates for less expensive units were under 3 percent. The analysis suggests that because vacancy rates for less expensive units are extremely low, cooling rental markets offer little relief to affordability pressures faced by renters with the lowest incomes. 

STATE AND LOCAL POLICY 

Philadelphia City Council to Consider Inclusionary Zoning Bill

The Philadelphia City Council is considering an inclusionary zoning bill that aims to improve overall affordability amid rising housing costs. The measure would require developers to reserve 10 percent of new rental or for-sale units as affordable for households earning between 50 and 80 percent of the area's median income. In addition, the measure would allow developers to pay a fee in lieu of on-site production into a city housing fund, offering them a density bonus. Advocates of inclusionary zoning argue that it preserves existing affordable housing and helps create new affordable units, while opponents argue that inclusionary zoning can make it too expensive to build in these areas. Multiple cities have explored or adopted inclusionary zoning policies, including Atlanta, Buffalo, Detroit, Nashville and Pittsburgh

IN CASE YOU MISSED IT

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HEARINGS AND EVENTS

Upcoming Hearings and Mark-Ups

There are no housing or community development-related hearings or mark-ups scheduled at this time. 

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