CARH’s Broadcast Email—Legislative Alert
On Tuesday, August 24, 2021, the House of Representatives, by a vote of 220-212, passed a budget resolution which would authorize $3.5 trillion in spending and taxes during the next fiscal year and in many instances, for several additional years. Last week the Senate also passed the $3.5 trillion budget resolution as well as the $1.2 trillion infrastructure package. Passage in the House of Representatives was tenuous at best. While the House was in recess until the middle of September, Speaker Pelosi called members back to Washington this week to vote on the budget resolution as well as procedural votes for the infrastructure bill. Early Tuesday, a procedural agreement was reached with the House Leadership and centrist Democrats who had wanted the infrastructure legislation passed now and the budget resolution at a later date. The agreement between the Speaker and centrist Democrats calls for final House voting on the infrastructure bill by September 27, shortly before similar existing surface transportation expires.
While the bipartisan infrastructure bill contains specific spending and program enhancements for many our nation’s bridges, roads and waterways, the budget resolution, or the “human infrastructure bill” passed by both the House and Senate is just a blueprint and includes instructions for both the House and Senate authorization and tax writing committees to write a reconciliation bill that will authorize and fund close to $3.5 trillion in spending. The House Financial Services Committee has been allocated $339 billion and the Senate Banking, Housing and Urban Affairs Committee has been allocated $332 billion (the differences reflect slight differences in the Committee’s jurisdictions). Both funding allocations would provide historic levels of program funding for affordable housing. The House Ways and Means Committee and the Senate Finance Committee could also consider additional enhancements to the Housing Credit and Bond programs. It is the hope of the House and Senate Democratic leaders that all these recommendations can be finalized by the Committees by the middle of September, with Congress voting on both the infrastructure and budget bills by September 30, the end of the current fiscal year.
Both the House of Representatives and the Senate are in recess until the middle of September. As we have indicated, the budget reconciliation instructions to the House Financial Services Committee are to fund their programs at $339 billion and the Senate Banking, Housing and Urban Affairs Committee funding is $332 billion. In addition to the Department of Housing and Urban Development (HUD) programs, there are indications that key members of both Committees are supporting $5 billion for the United States Department of Agriculture’s (USDA) Rural Development (RD) housing programs. These funds would be allocated for both single family and multi-family programs. A substantial amount of funding would be authorized for the Multifamily Preservation and Revitalization (MPR) program, Section 515, and Section 521 Rental Assistance programs. In addition, the House Ways and Means Committee and the Senate Finance Committees are considering adding provisions of H.R. 2573 and S.1136, the Affordable Housing Credit Improvement Bill of 2021, which would, among other provisions, increase the housing credit authority by 50 percent phased in over two years and authorize states to provide up to a 30% basis boost to properties in qualifying rural areas.
What CARH Members Need to Do—A Call for Action
Members of Congress will be in their respective districts and states for the remainder of August and then until September 20 when both the House of Representatives and Senate are due to resume legislative business in Washington, DC. Take this opportunity to try to schedule a meeting with your elected officials – you may not be able to meet face-to-face with them due to the coronavirus pandemic and increase of positive cases due to the rise of the Delta variant in many areas. If you cannot meet face-to-face, try to schedule a virtual meeting with them and their staffs to explain the importance of including USDA’s rural housing programs in the reconciliation package. If you have an older property, explain the need for funding for the MPR program (proposals that many are supporting would provide $1.4 billion), the backlog of applications for MPR funding is five to seven years, this additional funding would clear this backlog; Section 515 would receive an allocation of $389.6 million which could be used for preservation or new construction and the Section 521 program would see $2.270 billion. Certainly, these numbers could change as negotiations go forward, but we are encouraged that unlike the legislation which addressed the coronavirus pandemic where rural housing programs received no new funding. The American Rescue Plan Act of 2021 (P.L. 117-2) provided $100 million for current non-RA residents in USDA properties, and there appears to be support beyond RA for funding USDA’s multifamily housing programs.
CARH members need to reinforce the message from the grassroots level that USDA needs this crucial funding. HUD has had strong support for funding of their housing programs. CARH members need to help their members of Congress understand that many of our funding programs originate at USDA and so rural properties cannot easily access HUD funds. This historic budget needs to include adequate funds for USDA multifamily housing programs.
If you cannot schedule a meeting, please send an email or call and ask to speak to the person on the member of Congress’s staff who is responsible for housing legislation. In your written email, you should make the following points:
- Affordable rental housing issues affect residents and a vast array of local government, non-profit, and limited-profit participants working together in partnership. Rural renters are more than twice as likely to live in substandard housing compared to people who own their own homes. With lower median incomes and higher poverty rates than homeowners, many renters are simply unable to find decent housing that is also affordable.
- While the demand for rental housing in rural areas remains high, the supply, particularly of new housing, has decreased. Housing instability has well-documented effects on the education and health of this country’s greatest asset, our children. Neither the private nor the public sector can produce affordable rural housing independently of the other; it needs to be a partnership.
- In 2002, RD estimated that 4,250 Section 515 properties with 85,000 units “will physically deteriorate to the point of being unsafe or unsanitary within the next 5 years.” At that time, RD estimated it would need $850 million to maintain just this portion of the portfolio, and that as much as $3.2 billion will be required for portfolio-wide rehabilitation. Little progress has been made since 2002. Adjusted for inflation, the 2002 $3.2 billion estimate is now approximately $5.6 billion. At this rate of lost properties, we encourage preservation prioritization of existing properties ahead of new construction, as it is much more cost effective to complete a substantial rehabilitation compared to the cost of building new.
- Authorizing and appropriating funding for this portfolio will not only assist the extremely low-income families and elderly residents, but will also, improve infrastructure and create jobs throughout rural America. For each 100 apartment units, 116 jobs (plus an additional 32 recurring local jobs) are created, generating more than $3.3 million in federal, state, and local revenue. Moreover, many rural areas are facing worker shortages due to the lack of available affordable housing near rural jobs.
- The rural residents who live in multifamily housing administered by RD are low-income and extremely low-income families and seniors with incomes of about $12,000 per household. Approximately 63% of RD’s rural rental housing households receive rental assistance from the RD’s Section 521 Rental Assistance (RA) program. At the same time, almost 72,000 households do not receive rental subsidy. RA, like project-based Section 8, pays the difference between 30 percent of a resident’s income and the basic rent required to operate the property. Rural renters are unable to benefit from the funding provided for many of HUD’s programs since the rural programs are administered through USDA, not HUD.
- While $100 million was provided in the American Rescue Plan of 2021 (P.L. 117-2) for current non-RA residents, CARH continues to believe that there needs to be an additional $300-400 million for the Section 521 program that could then be used for existing RA recipients, as well as to assist those renters who do not currently receive RA. RD’s current budget cannot cover the existing portfolio plus RA to previous non-RA recipients who need assistance due to COVID-19 related job losses.
- We recognize that a private-public partnership is needed for providing safe, decent, and affordable housing throughout rural America. The various housing programs that would receive direct funding from various legislative provisions as well as enhancements to the Housing Credit and Housing Bond programs, are evidence of the success of this partnership. The Emergency Coronavirus Legislation and Omnibus Appropriations Act (P.L. 116-260) provided for a flat rate for the 4% Housing Bond program.
- CARH believes that legislative proposals that will further modernize the Housing Credit and Housing Bond programs (S. 1136, the Affordable Housing Credit Improvement Act of 2021, introduced by Senator Maria Cantwell (D-WA) and H.R. 2573, a companion bill introduced by Representative Suzan DelBene (D-WA-1)) should also be considered. The legislation would further strengthen and expand the two programs so that rural housing preservation and new construction can take place. The legislation would increase the housing credit authority by 50 percent, phased in over two years. In addition, states would have the ability to provide up to a 30% basis boost to properties in rural areas if needed for financial feasibility by qualifying rural areas as Difficult Development Areas (DDAs). Both provisions are integral to furthering preservation for the rural housing portfolio.
- Furthermore, CARH is hearing reports from our members across the country that the pandemic has caused construction costs for multi-family transactions to increase due to increased shipping costs, worker-protection measures, delays in accessing building offices to obtain work permits and inspections, and delays in shipping materials. This, in turn, is resulting in delayed starts and completion of construction and rehabilitation work. Any measure that can allow more financing to cover emerging financing gaps is important.
- Thank them for their support of rural housing and communities throughout the country.
Again, these bullet points are only suggested items. CARH members need to make their message personal so that members of Congress and their staff can relate to a property or properties in their district or state. Please let the national CARH office know if you have been able to schedule a meeting with your member of Congress and whether you receive a commitment from them supporting rural housing funding. If they are opposed, we need to get that information as well.
The CARH board of directors will be meeting virtually on September 21-22. If there are members of Congress that you think the board should follow-up with, please let us know and we will attempt to schedule a virtual meeting during these two days.
If you have any questions or concerns, please contact CARH at email@example.com or 703-837-96001. As we said this could be an historic time for the affordable and rural housing community.
Help CARH with getting these needed funds to your properties, the residents who live in these properties and the communities where these properties are located.