November 12, 2018

Capitol Express Newsletter: Legislative Outlook for Lame Duck and 116th Congress, Priorities for a Modernized CRA

Share Posted By:
Capitol Express Banner

To stay up to date on housing and community developments news, sign up to receive Community Developments as a daily email. 


Lame Duck Session Presents Opportunities for Affordable Housing and Community Development Programs

The results of last week’s midterm elections will shape the legislative outlook for the next Congress, with Democrats assuming control over the House of Representatives and Republicans maintaining, and likely expanding, their majority in the Senate. Finalizing fiscal year (FY) 2019 appropriations will be a priority for the remainder of this year, as the continuing resolution (CR) currently funding many government functions, including key affordable housing and community development programs, expires on December 7. However, it remains to be seen whether the lame duck Congress will complete spending negotiations before the deadline in December, and there is a possibility of another CR or shutdown next month. Finalizing FY 2019 spending legislation as soon as possible is vital to ensuring affordable housing and community development programs, and all others impacted by the CR, are able to plan and continue their work with a full picture of the funding available to them. 

There is also the potential for Congress to consider a tax package before the end of the year, presenting an opportunity to strengthen and expand the Low-Income Housing Tax Credit (Housing Credit) and permanently extend the New Markets Tax Credit (NMTC). NMTC is set to expire at the end of 2019, but there is strong bipartisan support to make the Credit permanent as part of a tax extender bill. Reps. Steve Stivers (R-OH) and José Serrano (D-NY) are also circulating a sign-on letter urging their House colleagues to support NMTC permanency in the lame duck session. And if Congress broadens potential legislation beyond extenders, there may be an opportunity to advance provisions from the Affordable Housing Credit Improvement Act (S. 548/H.R. 1661), including the minimum four percent Credit rate and an expansion of the Credit. Advocacy in support of these programs will be critical to ensure that they rise to the top of the list in any potential negotiations that take place. Stay tuned to the ACTION Campaign website for updates on Housing Credit advocacy, and the NMTC Coalition website for updates on NMTC advocacy.

Enterprise Shares Priorities for a Modernized Community Reinvestment Act 

At the end of August, the Office of the Comptroller of the Currency (OCC) released an advance notice of proposed rulemaking (ANPR) soliciting public feedback on possible regulatory changes to the Community Reinvestment Act (CRA), a 1977 law that requires financial institutions to lend and invest where they accept deposits, including in low- and moderate-income (LMI) communities. The affordable housing and community development industry has greatly benefited from CRA: the law has been an important driver of financial institution investments in nonprofit organizations, the Housing Credit, NMTC, and Community Development Financial Institutions (CDFI) among other critical activities benefiting LMI communities and residents. Estimates suggest that banks have made $796 billion in community development loans since 1996, supporting affordable housing and community development projects benefiting LMI communities and individuals. Enterprise’s aim for modernized CRA regulations is to ensure a consistent, transparent system that properly gives banks credit for sound community development work. This includes retaining a focus on affordable housing, updating assessment areas to address national challenges, and moving to a more metrics-based system that neither directly nor indirectly reduces total lending and investment under CRA. We strongly urge all industry stakeholders to submit comments by the November 19 deadline (next Monday) in support of retaining CRA regulations that emphasize robust investment in affordable housing and community development. 

Stakeholders Consider the Potential of Opportunity Zones, Urge Transparency of Investments

With a first round of proposed rules for the new Opportunity Zones tax benefit now publicly available, potential investors, fund managers, community groups and other stakeholders are examining the potential benefits and challenges of this new investment tool. An article in The New York Times notes that Opportunity Zones could do a lot of good for people living in the zones and earn investors money, or simply enrich investors. Rob Lalka, cofounder and partner at Medora Ventures and Professor at Tulane’s A.B. Freeman School of Business, and Scott Shalett, managing partner and head of public affairs at Medora Ventures, write in The Hill that the private sector and communities must lead on impact reporting in the absence of the government requiring reports on metrics like job creation and poverty reduction. Lalka and Shalett write that “embedding an impact focus and seeking community input at the outset is far easier and more effective early on, rather than attempting to retroactively measure such non-monetary results or rebuild trust with communities after investments have been made.” Enterprise encourages the submission of comments on the initial set of regulations to the IRS by the December 28 deadline to identify ways to improve the regulations and prevent abuse of this economic development tool.


New Data Shows Stark Disparities in Homeownership Rates Between Populations

The Enterprise Policy Development & Research team has updated its interactive report on trends in housing tenure – that is, whether people own or rent -- using data from the U.S. Census Bureau’s third quarter 2018 Housing Vacancy Survey (HVS). The interactive graphics in the report, which break down tenure trends by age, race/ethnicity and income, reveal stark disparities in the share of homeowners among these subsets of households, as well the narrowing of some tenure gaps and the expansion of others. While homeownership among Hispanic, Asian and non-Hispanic White households has increased to 47.1, 55.7 and 72.8 percent, respectively, over the past two years, rates for non-Hispanic Blacks have been nearly flat at 42 percent, creating the widest gap with non-Hispanic White households in this 25-year series. Households with incomes above the national median have a homeownership rate above 78 percent, but the homeownership rate among below-median-income households rose to over 50 percent for the first time since 2013. Addressing these gaps will require action at the local, state and federal levels, including local and regional zoning reforms that can reduce barriers to building more affordable rental housing and national-level initiatives that can increase access to homeownership.

Renters Struggle More than Homeowners to Pay for Food, Health Care

A new analysis by the Urban Institute found that renters are more likely than homeowners to struggle with paying for basic needs like food and health care, by 46 to 30 percent. Based on data from the Urban Institute’s 2017 Well-Being and Basic Needs Survey and adjusted for socioeconomic differences, the analysis shows that 30 percent of renters reported food insecurity, with 13 percent reporting trouble meeting rent payments. By comparison, only 19 percent of homeowners experienced food insecurity and less than 9 percent missed a mortgage payment in the last year. Although low-income homeowners generally fare better than low-income renters, nearly half of homeowners earning less than 200 percent of the federal poverty line also reported difficulties meeting basic needs. The analysis points out that these findings add to growing evidence that “resource-strapped families face impossible decisions and trade-offs when paying for housing and basic needs like food and medical care every month.” 


Midterm Elections Result in Local Affordable Housing Victories

The midterm election saw voters weigh in on 155 separate state and local ballot measures, many of which were designed to provide critical funding for affordable housing. Among the notable measures to pass were Propositions 1 and 2 in California: Proposition 1 authorized $4 billion in bonds to be spent on affordable housing and veterans’ homeownership, while Proposition 2 allocates $2 billion to provide services for homeless populations with serious mental illness. In Oregon, voters approved changing the state constitution to allow local governments to use bond money in partnerships with private business and nonprofits to build affordable housing; in Portland, Oregon, voters authorized $652 million in bonds for affordable housing; and in Austin, Texas, voters authorized $250 million in bonds for affordable housing. For more information about state and local ballot measures, see Enterprise State and Local Policy Director Flora Arabo’s in-depth round up of housing-related ballot measures from across the nation.

New Orleans’ City Planning Commission Urges Adoption of Inclusionary Zoning Practices

A new report from the New Orleans City Planning Commission (CPC) urges the city to adopt inclusionary zoning (IZ) practices that require the inclusion of affordable units into all new developments, arguing that IZ is integral to addressing the city’s affordability challenge. Earlier this year the City Council tasked the CPC staff with studying three types of inclusionary zoning policies as part of the “Smart Housing Mix Ordinance” study. The report recommends updating the city’s Comprehensive Zoning Ordinance to incorporate three potential mandatory inclusionary initiatives: establishing a mandatory IZ overlay district in certain areas with disparities in affordable housing options; creating a new mandatory IZ district to impose an affordable housing requirement on all applicable developments; and creating a mandatory IZ zoning planned development classification that offers flexibility in zoning for developments that include affordable housing. The issue now heads to City Council for consideration. Louisiana Governor John Bel Edwards vetoed 2017 legislation that would have barred inclusionary zoning, but has suggested he would sign it in 2019 if the city does not enact IZ policies in the interim.


News Updates from Community Developments

In recent Community Developments, we highlighted a report by CoreLogic that shows that U.S. home prices in September increased 5.6 percent year-over-year, an essay on the connection between architecture and social equity, a growing number of public libraries that are hiring social workers to help connect homeless individuals with housing, healthcare and food, and much more. Sign up here to receive the Community Developments newsletter.


Upcoming Hearings and Mark-Ups

•    November 14: Oversight of Pilot Programs at Fannie Mae and Freddie Mac, Senate Banking, Housing, and Urban Affairs Committee
•    November 14: Semi-Annual Testimony on the Federal Reserve’s Supervision and Regulation of the Financial System, House Financial Services Committee
•    November 15: Semi-Annual Testimony on the Federal Reserve’s Supervision and Regulation of the Financial System, Senate Banking, Housing, and Urban Affairs Committee

Upcoming Events

November 2018
•    November 13-14: Arizona Housing Coalition Conference, Arizona Housing Coalition (Phoenix)
•    November 27: Solutions for Affordable Housing, National Housing Conference (Washington, DC)
•    November 29-30: 2018 Tax Credit Housing Finance Conference, Novogradac & Company (Las Vegas)
December 2018
•    December 3-7: Pittsburgh NeighborWorks Training Institute, NeighborWorks (Pittsburgh)
•    December 5-7: 2018 HAC Rural Housing Conference, Housing Assistance Council (Washington, DC)
•    December 12-13: 2018 Annual NMTC Conference, New Markets Tax Credit Coalition (Washington, DC)
January 2019
•    January 10-11: 2019 Affordable Housing Conference: Using RAD and the LITHC to Improve Communities, Novogradac & Company (Miami Beach, FL)
•    January 24-25: 2019 New Markets Tax Credit Conference, Novogradac & Company (San Diego)
•    January 28-29: 2019 AHTCC Annual Meeting, Affordable Housing Tax Credit Coalition (New Orleans)

Opp360 logo

For full access to our tools and resources, please provide the information below.

We use this data to better understand our users; we do not sell or share this data. By providing this information, you can expect to receive newsletters and other updates from Opportunity360.