October 16, 2018

Capitol Express Newsletter: Housing Advocates Eye Lame-Duck Session, Enterprise Releases New Paper on Gentrification

Capitol Express - a bimonthly policy newsletter from Enterprise


Midterm Elections Likely to Impact Affordable Housing and Community Development Programs

Funding for HUD and rural housing programs administered by USDA are currently operating under the continuing resolution (CR) through December 7. Considerable uncertainty remains as Congress seeks to reach full-year funding agreements for a number of federal agencies. With the midterm elections less than a month away, a resolution to the funding negotiations is likely to occur in the lame duck session, and the tone of those negotiations will be heavily dependent on the outcome of the midterms. Enterprise urges Congress to finalize full-year funding agreements as soon as possible to give critical affordable housing and community development programs certainty in their operations going forward.

House and Senate leadership have also suggested that tax legislation may advance in the lame-duck session, presenting an opportunity to advance provisions from the Affordable Housing Credit Improvement Act (S. 548/H.R. 1661), bipartisan legislation to strengthen the Low-Income Housing Tax Credit (Housing Credit), and the New Markets Tax Credit (NMTC) Extension Act (S. 384/H.R. 1098), bipartisan legislation that would permanently extend NMTC. Similar to funding negotiations for appropriated programs, a potential tax package in the lame-duck will be largely dependent on the outcome of the midterm elections. Advocacy leading into the lame-duck negotiations is critical, and Enterprise urges all Housing Credit and NMTC stakeholders to ask your representatives who have not yet signed on to support the Affordable Housing Credit Improvement Act or the New Markets Tax Credit Extension Act to do so now.

ACTION Campaign Releases Updated Housing Credit State Fact Sheets

Last week the ACTION Campaign, a national grassroots coalition of more than 2,200 organizations and businesses advocating in support of the Housing Credit, released updated state fact sheets showing the Housing Credit’s impact and the affordable housing needs that remain in every state. New to the state fact sheets this year is data demonstrating the impact that a 50 percent increase in the Housing Credit would have in each state. The Cantwell-Hatch Affordable Housing Credit Improvement Act (S. 548), bipartisan legislation to strengthen and expand the Housing Credit, includes a 50 percent increase in allocation authority. Recent estimates from accounting firm Novogradac & Company estimate that a 50 percent expansion would support the production of more than 264,200 additional affordable homes nationally over the next ten years. Enterprise urges all Housing Credit stakeholders to join the ACTION Campaign, share these state fact sheets with your elected officials, and ask those representatives to co-sponsor the Affordable Housing Credit Improvement Act (S. 548/H.R. 1661).

Freddie Mac Reenters the Housing Credit Market with a New Fund with Enterprise

Earlier this month Freddie Mac announced th/news-and-events/news-releases/freddie-mac-reenters-low-income-housing-tax-credit-market-fundat it has reentered the Housing Credit market with a new fund with Enterprise Community Investment. The fund will invest as much as $100 million and will focus on areas and transactions that have been underserved over the past decade, such as rural communities, properties financed with 4 percent Housing Credits, and developments that provide intensive supportive services to their residents. The fund has already closed its first transaction: Wintergreen West, which will provide 40 apartment homes for residents of Summit County, Colorado, a rural area 75 miles west of Denver. Freddie Mac was a large part of the Housing Credit equity market prior to conservatorship in 2008. Last year the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac would be allowed to reenter the Housing Credit market as equity investors. Each has an annual limit of $500 million, a 5 percent market share each, and is directed to focus on areas that FHFA has identified as underserved markets to complement the agency’s Duty to Serve priorities.

FHFA Seeks Public Input on Modifications to GSEs’ Duty to Serve Plans

Earlier this month the Federal Housing Finance Agency (FHFA) announced that it is seeking public input on proposed modifications to Fannie Mae and Freddie Mac's (the Government Sponsored Enterprises, or GSEs) 2018-2020 Underserved Markets Plans under the Duty to Serve program. The Duty to Serve requirements, which were introduced in the Housing and Economic Recovery Act (HERA) of 2008, require the GSEs to facilitate a secondary mortgage market for low- and moderate-income families in three underserved markets: manufactured housing, affordable housing preservation, and rural housing. The GSEs are responsible for providing three-year plans that detail the specific objectives and activities for meeting their Duty to Serve requirements. The GSEs are allowed to request to modify their Duty to Serve plan at any time, but FHFA must provide approval for the modification before it can become part of a GSE’s plan. The GSEs have proposed changes to their 2018-2020 Duty to Serve Plans. FHFA has determined that public input would be helpful in considering some of the changes to Fannie Mae's plan; Freddie Mac has submitted one modification that FHFA considers to be a modest correction, so the agency is not seeking public input on this proposal. Public input on the proposed modifications is due by Friday, November 2, 2018.

Senator Heller Introduces Seniors Affordable Housing Tax Credit

Last week Senator Dean Heller (R-NV) introduced a new Seniors Affordable Housing Tax Credit to incentivize housing owners and developers to rent to low-income seniors. The bill would create a tax credit program that allocates credit to states, with states responsible for awarding the Credits to owners and developers who rent their properties to low-income seniors. Qualified seniors would pay no more than 30 percent of their income for rent and utilities, with the rental unit’s owner receiving a federal tax credit as compensation for any potential loss. Senator Heller was an original co-sponsor on the Cantwell-Hatch Affordable Housing Credit Improvement Act (S. 548), as well as the Task Force on the Impact of the Affordable Housing Crisis Act (S. 3231), bipartisan legislation introduced in July to examine the impact that the national shortage of affordable housing has on all areas of life. Enterprise thanks Senator Heller for his commitment to addressing the nation’s affordable housing crisis. 

Investments in Disaster Recovery Need to Be Complemented by Pre-Disaster Mitigation

Last week the United Nations’ Intergovernmental Panel on Climate Change (IPCC) issued a report that anticipates climate impacts more severe and sooner than previously thought. The report explains that if greenhouse gas emissions continue at the current rate, the atmosphere will warm by 2.7 degrees Fahrenheit above pre-industrial levels by 2040, at which point the most severe effects of climate change would begin — including food shortages, intensified wildfires and storms, inundated coastlines and coral reef die-off. 

The increasing frequency and severity of natural disasters will inevitably be expensive to governments, businesses and property owners. Low-income communities and communities of color are often hit hardest and the last to recover from disaster because they are more likely to live in homes that are less resilient to floods, fires, and wind, and are more likely to live in areas with greater hazard risks. Coordinated disaster relief and recovery efforts by federal agencies are needed more than ever, as is a focus on pre-disaster mitigation (PDM). PDM reduces the costly cycle of ‘damage and repair,’ and makes communities better prepared for the inevitable. The president recently signed the Disaster Recovery Relief Act (DRRA) into law, which creates a set-aside for PDM and could result in over $800 million in federal investments through competitive grants annually. Additionally, the upcoming spending of $15.9 billion in Community Development Block Grant – Disaster Recovery (CDBG-DR) funds for mitigation activities in areas affected by major disasters in recent years could provide a model for how states and communities can strategically invest in mitigation, collect and share accurate and current risk data, and cultivate a transparent system for stakeholder engagement.

Enterprise has submitted a set of ten recommendations to HUD on how to maximize the benefit from these mitigation investments, including maintaining a continuous feedback loop on whether programs are sufficient to meet community needs and provide continued protection; setting physical standards for mitigation projects that meet or exceed previous standards; adopting and enforcing forward-looking building codes and land use regulations; and gathering, assessing, and disseminating updated hazard risk information so business and property owners know their real risk. 


Enterprise Releases New Paper on Defining and Measuring Gentrification

Last week Enterprise released a new report, Gentrification: Framing our Perceptions, which examines the many definitions and measurements for gentrification and why they matter. Written by Rachel Bogardus Drew, senior research analyst with Enterprise’s Policy Development and Research group, the report notes the lack of consensus in recent studies about how to define gentrification, with different variables and criteria applied to designate communities as gentrified. This leads to conflicting findings about this form of neighborhood change, resulting in greater confusion, rather than clarification, about where and how gentrification occurs, as well as its effects on low-income communities and their residents. Inconsistent definitions of gentrification also have important ramifications for housing policy, which relies on evidence about changing conditions to prescribe effective responses. This report is the first in a new series on gentrification, and lays the framework for a forthcoming study that will apply different measures of gentrification to a nation-wide dataset of neighborhood conditions over time. Future research will also look at the intersection of policy decisions and gentrification. Read more about the report in Enterprise’s blog post, and stay tuned to the Enterprise blog for upcoming work in this new series on gentrification.

Enterprise’s President Highlights Efforts to Turn Market Failures into Opportunities for Equitable Growth

Last week Enterprise Community Partners President Laurel Blatchford published an article in the Federal Reserve Bank of Philadelphia’s Cascade publication highlighting Enterprise’s efforts to address market failures faced by low-income communities and people of color. Blatchford cites the Housing Credit, one of the country’s most effective public-private partnerships, as a critical example of a federal resource designed to address a market failure, namely the lack of private capital available for the development of affordable housing. It is economically infeasible for developers to build housing at rent levels affordable to low-income households without a subsidy like the Housing Credit. Blatchford also highlights the Community Reinvestment Act (CRA), a law enacted in 1977 requiring banks to lend and invest in low- and moderate-income communities where they do business, as another federal tool that attempts to address a market failure – in this case, discriminatory lending practices. CRA has resulted in 551,000 community development loans worth $796 billion since 1996. Finally, Blatchford cites Opportunity Zones as a new tool with the potential to attract economic activity into areas the private market has historically neglected. She also notes the importance of the federal government collecting data on Opportunity Zone investments so that stakeholders are able to track the impacts of this new tool.

Urban Institute Analyzes Rural Counties with Severe Affordable Housing Needs

A report from the Urban Institute identifies 152 rural counties – defined as those that qualify for USDA housing programs – with the most-severe needs for affordable rental housing. The report identifies common threads among these communities, including low vacancy rates for rental homes (indicating few available rentals), more overcrowding, high rates of severely cost-burdened households and fewer federally subsidized rental units. Households across the nation, from urban to rural communities, are finding it increasingly difficult to pay rent no matter where they live. Rural areas can present a particular challenge to finance affordable rental housing because the market is smaller, rural rental housing developments tend to be smaller than urban rental housing, and rural areas often lack critical infrastructure, such as water systems, that enable the development of housing. The report recommends providing incentives to developers to boost rental housing development in underserved rural areas, including manufactured housing, and additional federal resources for subsidizing affordable housing in rural neighborhoods. 


Seattle City Council Passes Resolution Prioritizing Affordable Housing Development on Public Land

The Seattle City Council has passed a resolution that requires city departments to prioritize affordable housing development in surplus public land disposition. Previously, city departments sold surplus land to the highest bidder or to other departments, with the profits from these sales typically retained within the seller’s budget. This resolution affirms Seattle’s participation in a recent state law that authorizes all agencies to sell their surplus land at a discounted price to support affordable housing development. Enterprise’s James Madden, senior program director, notes that building affordable housing on publicly-owned property in central neighborhoods creates an important opportunity to establish integrated neighborhoods with affordable housing and numerous services. Enterprise recently released its Home & Hope Site Mapping Tool, which allows users to filter tax-exempt land within King County's urban growth area to identify potential sites for affordable housing and early learning centers.


News Updates from Community Developments

In recent Community Developments, we highlighted a report by CoreLogic that shows that U.S. home prices in August increased 5.5 percent year-over-year, an analysis that looks at the impact of student homelessness on academic achievement in the state of Washington, and much more. Sign up to receive the Community Developments newsletter.


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