President Signs Consolidated Appropriations Act for FY 2016 and the Protecting Americans from Tax Hikes (PATH) Act of 2015

CARH’S BROADCAST E-MAIL – Legislative Update

December 23, 2015

On Friday, December 18, 2015, the President signed the Consolidated Appropriations Act for Fiscal Year (FY) 2016 and the Protecting Americans from Tax Hikes (PATH) Act of 2015 into law (P.L. 114-113). Prior to passing the Congress, the spending and tax packages, totaling a combined $1.8 trillion, became one bill. As CARH’s December 16th Broadcast Email indicated, there are some very positive provisions in the legislation that will greatly aid affordable rural housing throughout the country. This legislation represents the combined work of many within the affordable housing industry, both in Washington, DC, and within individual States and Congressional districts. Grassroots efforts on the part of CARH members, be it ribbon cutting ceremonies, meetings with members of Congress and staff, involving residents, and various articles in newspapers on the issues, were all integral parts of the success.

As CARH members know from previous broadcast emails, Congress was not able to reach agreement on individual appropriations bills prior to the beginning of the fiscal year on October 1, 2015. Therefore, a series of Continuing Resolutions kept the government operating until a consolidated bill could be acted upon. At the same time, it was important that the framework for both spending and revenue be passed by Congress. Prior to Speaker Boehner’s retirement in October, he was able to forge with his colleagues in the House, the Senate and the President, a two year bipartisan budget framework which lifted the spending caps and sequestration which would have again been in place beginning October 1. This Bipartisan Budget Act of 2015 (P.L.114-74) paved the way for the consolidated spending and tax legislation that was signed into law on December 18th.

Protecting Americans from Tax Hikes (PATH) Division of Legislation

Affordable Rental Housing ACTION (A Call To Invest in Our Neighborhoods) is a national, grassroots coalition of over 1,000 national, state, and local organizations focused on ensuring that low-income working families have access to decent, safe, affordable rental housing. The mission of the ACTION Campaign is to protect, strengthen and expand the Housing Credit program and preserve Housing Bonds. CARH, as a member the ACTION Steering Committee, has worked very closely with other industry groups on promoting to Congress and the Administration the importance of the Housing Credit program. Many CARH members throughout the country have also demonstrated to members of Congress the need for the program and role it plays in preservation as well as providing new construction. The Housing and Economic Recovery Act of 2008 (HERA) set a flat rate for the 9% Housing Credit program from each state’s allocation. This removed the uncertainty and financial complexity of the floating rate system, simplified state administration, and facilitated development of affordable housing after HERA’s enactment. This provision expired for apartments placed in service after 2013, with a temporary extension at the end of last year for 2014 allocations. The consolidated legislation signed into law on December 18th permanently extends this flat rate for the 9% credit. While legislation had been introduced that would provide a flat rate for the 4% credit, Congress did not recommend inclusion in the final bill. CARH, together with the other members of the ACTION Coalition, will continue to urge Congress to agree to a flat rate for the 4% credit during the next year.

Other provisions in the PATH section of the consolidated bill include the following:

  • Extends the New Markets Tax Credit for five years at $3.5 billion annually through 2019.
  • Extends bonus depreciation through 2019 (50 percent for first three years then phasedown).
  • Extends the renewable energy production and investment credits, but phased down over the next five to seven years, depending on the credit). Wind facilities that begin construction before 2020 would still be eligible for a credit. Solar facilities would receive the full 30% investment tax credit if qualifying construction begins before 2020, but the credit is reduced for construction began in 2021 or 2022.

With passage of the consolidated bill and the revenue provisions, it is doubtful that when Congress reconvenes in January for the Second Session of the 114th Congress, that tax reform will be a priority. No doubt election year politics will hamper the bipartisan work that took place at the end of this year. However, it will be important for everyone in the industry to remain vigilant and also to continue to work on items impacting the housing credit program that can make it more efficient. It is also important that we continue to monitor reports from the Government Accountability Office (GAO), as many in Congress have asked for a review of the housing credit program, particularly cost and oversight by the Internal Revenue Service (IRS). Therefore, it will be important that CARH members continue their successful grassroots efforts.

Provisions in the Consolidated Appropriations Act for 2016

1)  United States Department of Agriculture (USDA’s) Rural Development (RD) Programs

As CARH members know from the numerous broadcast emails sent this year (click to view the most current emails dated November 2, 2015; October 10, 2015; September 24, 2015; and August 11, 2015),   resolving the budget issues associated with the Section 521 Rental Assistance (RA) program budget was a top priority for CARH. This issue grew from affecting “maybe 50” properties as the Agency initially identified the issue, to approximately 800 and continued to grow and potentially could have impacted most RA assisted properties during 2016. While CARH authored many of the letters to Capitol Hill that included signatories from other groups representing the affordable housing industry, national non-profits and tenant representatives as well as other communications to key members of Congress and their staffs, the support and grassroots efforts by many CARH members throughout the country, resulted in a very positive response from the Congress in the consolidated bill.

Many CARH members joined in this issue and actively educated their congressional representatives to raise awareness and urge their colleagues to resolve the crisis developing. In addition to the board of directors in September meeting with many members of Congress, Tony Chrisman, a CARH member and Vice President and Owner of Chrisman Development in Enterprise, Oregon testified before the Senate Agriculture, Rural Development, Food and Drug Administration and Related Agencies Appropriations Subcommittee in October on the RA issue, as the Subcommittee examined the administration of a myriad of programs by RD. This hearing resulted in Senators discovering that their efforts to remove the prohibition on the re-renewal language in the first Continuing Resolution did not result in the Agency backfilling contracts that had run out of money in FY 2015. This hearing demonstrated to the Chair of the Subcommittee Senator Jerry Moran (R-KS) and the ranking member Senator Jeff Merkley (D-OR) as well as their counterparts in the House, Representatives Robert Aderholt (R-AL) and Sam Farr (D-CA) that a solution to the problem had to be part of the consolidated bill. This effort reinforces the notion that CARH is your vehicle for rural housing advocacy but you are essential to the process.

In terms of funding for the RA program, Congress agreed to provide $1.390 billion, an increase of $217 million over the Administration’s requested level. This increase was due to officials finally admitting to the Subcommittee leadership in both the House and Senate that their budget request would, in fact, short the RA program in FY 2016. In addition, the prohibition on re-renewing RA contracts more than once in a fiscal year that had been included in the FY 2015 Appropriations Act and requested again by the Administration in its FY 2016 budget, was also removed. In an effort to again backfill contracts, the consolidated bill includes the following language:  “the Secretary may recapture rental assistance provided under agreements entered into prior to fiscal year 2016 for a project that the Secretary determines no longer needs rental assistance and use such recaptured funds for current needs as well as unmet rental assistance needs from fiscal year 2015.” Furthermore, the consolidated bill includes the following language as well “That of the total amount provided, up to $75,000,000 shall be available until September 30, 2017, for renewal of rental assistance agreements within the 12-month contract period.” This language is for the express purpose of contracts that in fact do run out of money during a fiscal year, which according to the Agency should not happen unless there are extenuating circumstances or happen because the Agency has moved to a new system that is to determine actual RA usage on a property versus state wide averages that the Agency had been using for many years.

Finally the Agency is to keep Congress apprised of RA usage throughout the year. As was recommended by the Senate Subcommittee when the stand alone Agriculture, Rural Development, Food and Drug Administration and Related Agencies Appropriations bill was reported during the Summer (see July 20th Broadcast Email), GAO has been asked to examine the RA program both from an operations standpoint as well as reviewing the program vis-à-vis expiring Section 515 mortgages. The findings by the GAO will no doubt impact program direction in the next several years.

It is our understanding that a majority of CARH members whose RA contracts ran out of money in FY 2015 have now received funding. However, we do know that there are several CARH members who have yet been compensated. The language in consolidated bill as outlined above should allow this to happen. There may be some administrative lag time even though the consolidated bill has been signed into law. If you do not receive backfill payments by the end of January, it is important that you let CARH’s national office know that the issue has not been resolved. Finally it is important that should RA contracts run out of money during the next fiscal year, it is important that you keep us appraised so that we can communicate unresolved issues to Congress.

Other RD programs were essentially funded at the Administration’s requested level of funding. Click here to view a chart prepared that shows funding for some of RD’s programs. Additional monies were provided above the initial House and Senate Appropriations Committees recommendations for the Section 542 voucher program. The Administration’s requested level of $15 million for vouchers was provided.

In the administrative provisions of the bill, the Agency is allowed access to the same social security data as HUD for wage and income matching. The Agency may also charge a fee (up to $50 per loan) to lenders to access the Department’s loan guarantee systems.

2)  Department of Housing and Urban Development

As CARH members know from previous emails (see Broadcast Emails of November 19; July 20; July 9; and June 23), the Senate Transportation and Housing and Urban Development (THUD) Appropriations Subcommittee would have funded the HOME program at $66 million, essentially eliminating the program. Many believe the draconian cuts made by individual subcommittees, such as the THUD Subcommittee, was an effort to spur movement by the Senate leadership to work with their counterparts in the House to increase the budget caps that would have gone into effect on October 1, the beginning of the 2016 Fiscal Year. The Bipartisan Budget Act that later passed the Congress in October, reversed sequestration for two years.

CARH has been part of the HOME Coalition which joined many industry groups together in order to garner support for the program in Congress and in the Administration. The HOME Coalition actively worked to bring attention to the importance of the HOME program after the Subcommittee had made its recommendations and after the Bipartisan Budget Act established a blueprint for future budgets. The work of the HOME Coalition included a series of meetings with key members of Congress and their staffs throughout the summer as well as a special Congressional briefing. The outcome in the consolidated bill resulted in funding for the HOME program at $950 million. This level of funding is $50 million above the FY 2015 level. While the consolidated bill was signed into law last Friday, several members of the HOME coalition, including CARH, met with OMB this week in an effort to garner continued support for the program as the Administration formulates its budget submission for FY 2017, the last budget that will be proposed by the Obama Administration.

Other highlights (click here to view the HUD funding chart) from the $38.6 billion HUD funding measure for FY 2016 include tenant-based vouchers at $19.629 billion, with $60 million in new vouchers in the VASH veterans program. The bill also funds project-based Section 8 rental assistance at $10.6 billion. The Public Housing Capital Fund is funded at $1.9 billion, and the Public Housing Operating Fund is funded at $4.5 billion. The Public Housing Moving to Work program is being increased with 100 new Moving to Work Agencies in the next seven years. The emphasis on Moving to Work follows hearings this past year by the House looking to increase greater private sector participation in federal housing programs and a belief voiced by some members that Moving to Work helps facilitate that effort.  The Community Development Block Grant (CDBG) program is funded at $3 billion, holding steady from FY2015, and above the FY 2016 Administration request.

During CARH’s Committee meetings and in several of the sessions scheduled for CARH’s January 2016 Midyear Meeting in San Antonio, Texas, these legislative issues will be discussed in more detail.  You will not want to miss attending the meeting. If you have not already done so, click here to register for the meeting, and click here to review the meeting brochure/agenda.

In the meantime, if you have any questions or concerns, please do not hesitate to contact CARH’s national office at 703-837-9001 or

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