February 5, 2018

Capitol Express Newsletter: Congress Looks to Another Short-Term CR, Mayors Make Affordable Housing a Priority

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CONGRESSIONAL AND ADMINISTRATION NEWS

Congress Prepares to Pass Another Short-Term CR This Week

Following the brief government shutdown two weeks ago, Congress passed a short-term continuing resolution (CR) for fiscal year (FY) 2018 appropriations that expires this Friday, February 8. Lawmakers are expected to pass another short-term CR until mid-March to allow more time for Congressional leaders and the Administration to negotiate a deal to raise the budget caps for FY 2018 and FY 2019. It is possible that a budget deal will significantly increase the spending caps for non-defense discretionary programs for the next two years. If that is the case, appropriators will need to quickly allocate new spending levels to their subcommittees and rewrite FY 2018 spending legislation. It is also possible that this legislation could include "tax extenders" or other tax legislation.

Additionally, the long-awaited third tranche of disaster recovery funding could be included as part of the upcoming CR, an FY 2018 omnibus package, or its own legislation. The House passed an $81 billion disaster recovery bill in December, but the Senate has yet to release its version.

Implementation Begins for New Opportunity Zones Program

The Tax Cuts and Jobs Act passed late last year authorized the creation of the Opportunity Zones Program, designed to drive long-term capital into eligible low-income communities. The program provides tax benefits on investments in Opportunity Funds, which allow investors to pool and deploy their resources in low-income census tracts. A recent article in the New York Times notes that distressed communities lost 6 percent of their jobs and a similar share of their business establishments between 2011 and 2015, suggesting that Opportunity Zones have the potential to help neighborhoods and towns that are starved for investment. Under the program, governors in each state and U.S. territory will have the ability to identify up to 25 percent of their total low-income census tracts to be eligible to receive private investment over the next decade. The 90-day determination period for designating Opportunity Zones began in late December, meaning that governors have only until March 21 to identify these census tracts.

Find more information about the Opportunity Zones Program on the Enterprise website, including a policy brief that provides an early overview of the program and a national map that identifies which census tracts are eligible for Opportunity Zones designation. Enterprise will also be hosting a webinar on February 7 that will include an overview of the program and a demonstration of our mapping tools for Opportunity Zones designation.

Tax Reform Threatens Affordable Housing Production

An editorial in the New York Times, “The Affordable Housing Crisis Is About to Get Worse,” highlights the significant threats to affordable housing production following enactment of last year’s major tax reform package. The Tax Cuts and Jobs Act reduced the top corporate tax rate from 35 to 21 percent, which has likewise reduced pricing for Low-Income Housing Tax Credits (Housing Credit). The Housing Credit is the country’s primary tool for developing new affordable housing; it has been responsible for financing three million affordable homes since 1986, providing housing to families, veterans, seniors and people with disabilities. The lower corporate tax rate, however, is estimated to reduce affordable housing production by 235,000 affordable homes over the next decade, according to Novogradac and Company  a devastating impact considering the vast and growing need for affordable housing nationwide. The Affordable Housing Credit Improvement Act (S. 548), bipartisan legislation in the Senate, would expand the Housing Credit by 50 percent, resulting in a sorely needed 400,000 additional affordable homes over the next decade. See the ACTION Campaign’s Advocacy Toolkit for resources to advocate for the Affordable Housing Credit Improvement Act.

President Trump Calls for Infrastructure Bill in State of the Union Address

Last week President Trump delivered his first State of the Union address, in which he called on Congress to write an infrastructure bill that generates at least $1.5 trillion of investment in the nation’s infrastructure. In response to the State of the Union address, Enterprise President and CEO Terri Ludwig released a statement saying “housing is fundamental to our national infrastructure and must be part of any infrastructure plan. Opportunity for Americans begins with affordable, well-designed homes in thriving communities.” Ludwig also added that creating more affordable homes is “a must to promote equitable outcomes for working families and to reach our full potential as a nation.” Additionally, a press statement from the Campaign for Housing and Community Development Funding notes that investments in affordable housing infrastructure not only create more homes but also boost productivity and economic growth and support local job creation. Read more about including affordable housing in an infrastructure package on Enterprise’s blog.

Banking Regulators Announce CRA Consideration for Investments in Puerto Rico and the Virgin Islands

The federal bank regulatory agencies have announced that financial institutions will be eligible for credit under the Community Reinvestment Act (CRA) by supporting community development efforts in the U.S. Virgin Islands (USVI) and Puerto Rico, even if these two areas do not fall under an institution’s assessment area. The CRA was enacted in 1977 with the goal of encouraging banks and other depository institutions to meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods. This recent CRA consideration aims to increase capital flows into areas seeking to rebuild from Hurricane Maria this fall. Both Puerto Rico and the USVI continue to face a host of barriers after Maria destroyed wide swaths of each island’s economy, housing and infrastructure. As the islands await further appropriated resources from Congress, private investments that may be eligible for CRA credit could help finance some needed repairs. This announcement comes as the Treasury Department looks towards proposing changes to the CRA in early 2018. Learn more about the announcement in Enterprise's blog post.

RESEARCH AND REPORTS

New Guidance Proposes Opportunities for Hospitals to Improve Health through Housing

Enterprise and the Catholic Health Association (CHA) have released Housing and Community Benefit: What Counts?,” guidance for tax-exempt hospitals on what housing-related activities they can report as a community benefit to the IRS. The paper provides examples to inform hospitals about current activities and to help identify future opportunities, such as offering home environmental assessments for patients who present to the emergency room with asthma, and creating housing programs for formerly incarcerated individuals. Enterprise and CHA will co-host a webinar on February 8 examining the evidence base that connects health and housing and the specifics of the guidance.

Urban Institute Examines Role of AFFH Rule in Addressing Housing Segregation

A blog post by the Urban Institute highlights how HUD's Affirmatively Furthering Fair Housing (AFFH) rule helps communities analyze patterns of segregation comprehensively and at a regional scale. The AFFH rule requires local governments that receive HUD funding to examine patterns of segregation within their borders and across their regions by conducting an Assessment of Fair Housing (AFH). The AFFH rule also created several mechanisms for communities to work together to identify barriers to housing choice and develop regional solutions to combat segregation. However, the Urban Institute notes that suspending the AFH requirement, which HUD did on January 5, may weaken incentives for comprehensive and regional analyses and the ensuing strategies that localities develop to overcome these patterns of segregation.

JCHS Looks at Barriers to Inclusionary Communities

A blog post by the Harvard Joint Center for Housing Studies (JCHS) looks at strategies for overcoming exclusionary barriers and promoting more affordable housing options in metropolitan neighborhoods. The blog post highlights a paper that examines two principal patterns of political geography in metropolitan areas that affect decision making about neighborhood inclusion. One is fragmentation, when control of land-use is in the hands of many local governments; the other is polycentricity, when larger county governments dominate the land-use policy landscape. The post also highlights case studies on residential segregation and strategies for fostering inclusive communities from Chicago, Houston and Washington, D.C. These publications were originally presented at “A Shared Future: Fostering Communities of Inclusion in an Era of Inequality,” a national symposium hosted by JCHS in 2017.

STATE AND LOCAL POLICY 

Survey Shows Mayors are Concerned about Affordable Housing

The 2017 Menino Survey of Mayors, conducted by the Boston University Initiative on Cities, revealed that more than half of mayors who responded to the survey were concerned about high housing costs and residents’ inability to afford living in their cities. Only 13 percent of mayors overall reported that their housing stock meets their residents’ needs, and fewer than one in five mayors of the least-expensive housing markets reported that the housing stock was well-suited to residents, indicating that the affordable housing crisis is present across the country. The concerns ranged from lack of affordable housing to opposition to new units being built. However, the mayors’ perception of how to address the housing concerns varied. For example, mayors in the Northeast and Midwest reported that their housing stock needs to be modernized, while mayors in the South and West did not share the same concern. The survey, based on interviews with 115 mayors from across the country, also showed that mayors were concerned about climate change and weak federal financial support for meeting infrastructure needs.

Mayors and CEOs Launch New Affordable Housing Initiative

Fourteen mayors and a number of corporate leaders are launching “Mayors & CEOs for U.S. Housing Investment,” which calls on the federal government to invest more money into affordable housing and homeless services. The coalition is focused on federal policy changes, such as maximizing funding for federal housing programs, including successful grant programs that encourage innovation and partnerships. The coalition is also calling for the creation of a Housing Stabilization Fund that HUD would use to provide one-time, short-term emergency housing assistance to households below 80 percent of area median income. The group of mayors and CEOs represents a bipartisan and geographically diverse range of communities across the country, including Denver, Little Rock, Los Angeles, Oakland, Philadelphia, Phoenix, and Washington, D.C., as well as Airbnb, GHC Housing Partners and Sutter Health. San Francisco Mayor Ed Lee, who passed away suddenly last year, initiated the effort.

IN CASE YOU MISSED IT

In recent Community Developments, we highlighted the potential consequences of expanding work requirements for recipients of housing assistance, the use of manufactured housing to address the shortage of affordable homes, LA's efforts to address its homelessness crisis, and much more. Sign up here to receive the Community Developments newsletter.

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