CARH’s Broadcast Email—Legislative Alert
As reported in CARH’s August 26, 2021, Broadcast Email, both the House and Senate passed a budget resolution which would authorize $3.5 trillion in spending and taxes during Fiscal Year (FY) 2022 and in many instances, for several additional years. The budget resolution passed by both the House and Senate was just a blueprint. However, it included instructions for the appropriate authorizing committees to write a reconciliation bill that would authorize funding for the programs envisioned in the resolution. The House Financial Services Committee was allocated $339 billion, and the Senate Banking, Housing and Urban Affairs Committee was allocated $332 billion (the differences reflect slight differences in the jurisdiction of the Committees). The House Ways and Means Committee and the Senate Finance Committee were also given instructions that would make changes in the tax code, help pay for the increases in spending programs, and at the same time enhance other tax preference such as the Housing Credit and Housing Bond programs.
On Tuesday evening, September 14, the House Financial Services Committee by a party-line vote of 30-24, advanced its reconciliation bill. The bill would provide over $300 billion in funding for numerous affordable housing programs, including funding for the United States Department of Agriculture’s (USDA) Rural Development (RD) multifamily housing programs. The level of funding is something that RD, the industry, and residents have not seen in decades. Under the terms of the bill the following monies would be appropriated:
- $4.36 billion for the purpose of conducting new construction, improvements to energy and water efficiency or climate resilience, the removal of health and safety hazards, and the preservation and revitalization of housing authorized under sections 514, 515, and 516 of the Housing Act of 1949. The bill also provides language outlining terms and conditions for preservation that track language from prior Multifamily Preservation and Revitalization (MPR) Federal Register Notices of Funding Availability.
- $200 million for Section 521 Rental Assistance (RA). These funds will ensure that residents who were not current RA recipients but qualified under the American Rescue Plan of 2021 (ARP) to receive RA, will continue to receive funding thus bringing funding for those non-RA residents to $300 million, the level of funding that CARH had been advocating was needed. (See CARH’s March 11, 2021, Broadcast Email that provides details about these ARP funds.)
- $240 million for the costs to RD of administering and overseeing the implementation of the information technology, financial reporting, research and evaluations, and other costs in support of programs. As CARH members know, we have advocated that the agency needs to upgrade its existing technology systems and hopefully a substantial portion of these funds will be for that purpose.
Also contained in the bill as reported to the full House by the House Financial Services Committee are a host of funding increases for a variety of programs administered by The Department of Housing and Urban Development. Included in the bill is funding for the following:
- $15 billion for Project-Based Rental Assistance.
- $75 billion for Housing Choice Vouchers, with $24 billion targeted to individuals and families experiencing or at risk of homelessness and survivors of domestic violence and human trafficking.
- $10 billion for a new Housing Investment Fund which provides grants to CDFIs and other nonprofit developers.
- $34.77 billion for HOME.
- $36.77 billion for the Housing Trust Fund, with the funds to remain available through FY 2031.
- $8.5 billion for the Community Development Block Grant program, with $1 billion set aside to address housing and infrastructure needs in colonies and $500 million set aside to support manufactured housing needs.
- $76.5 billion to support capital repairs for public housing.
- $2.75 billion for an initiative similar to the Choice Neighborhoods program.
- $2.536 billion for Section 202 Supportive Housing for the Elderly.
- $898 million for housing for persons with disabilities.
- $10 billion for lead paint removal.
- $480 million to subsidize 20-year mortgages for Federal Housing Administration borrowers.
- $100 million to support a pilot program supporting small-dollar ($100,000 or less) lending.
On the tax front, on September 15th, after four days of consideration, the House Ways and Means Committee, by a vote of 29-19, advanced its proposal which would help pay for many of the spending recommendations of the authorizing committees. At the same time, the proposal would also provide far-reaching support for affordable housing through enhancements for the Housing Credit and Bond programs. (See Chairman Neal’s Press Release and the ACTION Campaign’s September 13th letter.) The provisions in the House Ways and Means Committee markup reflect, like the House Financial Services Committee document, the blueprint of the budget resolution. Some highlights of the Ways and Means Committee measure include the following:
- A temporary 60 percent cap increase that would be phased in at 15 percent for four years, beginning in 2022. In years 2026-2028, Housing Credit authority would be the amount authorized for 2025 adjusted for inflation. The cap increase would sunset after 2028, with the Housing Credit authority returning to what it would have been without the cap increase.
- Provide if needed for financial feasibility, a 30 percent basis boost for rural properties. This would be a permanent change for the credit.
- State housing finance agencies would be able until December 31, 2028, to provide a discretionary basis boost of up to 30 percent to bond financed properties.
- The bond financing test would be lowered from 50 percent to 25 percent for four percent properties financed with an obligation of bond authority issued from 2022-2028.
- There would be a permanent repeal of the qualified contract option for newly financed properties and a modification of the statutory formula for determining the qualified contract price for an existing property.
- In order to pay for many of the current tax code expansions, the Ways and Means Committee has recommended that the corporate tax rate be increased from 21 percent to 26.5 percent. The top rate for individual filers would be increased to 39.6 percent and the current capital gains rate to 28.8 percent. Other limitations would be placed on deductions for interest income.
What CARH Members Need to Do—Continued Call for Action
Thirteen of the House Committees have favorably reported their reconciliation proposals. The House Budget Committee will then consolidate those recommendations in one large bill before advancing it to the House Committee on Rules, which is the final procedural step before floor consideration in the House.
There is very little room for error when the bill is finally considered by the full House in that the majority holds only an four-vote margin. There already is intense pressure to reduce the size of the proposal, even before a vote by the full House and before proposal is then sent to the Senate for consideration. There will no doubt be competing interests from all industries and even within industries. Therefore, it is important that CARH members continue their grass roots efforts to ensure that rural housing funding remains in the proposals as recommended by the House Financial Services Committee and that enhancements to the Housing Credit and Bond programs remain as also recommended by the Ways and Means Committee.
CARH would like to have more funding for RD’s Section 521 Rental Assistance program.
We believe that preservation of the portfolio would be more cost effective in the long run if properties were allocated RA to provide for rent increases and thus allowing for capital improvements as a property ages. It is important to continue efforts in both the House and Senate as well. Again, we emphasize that you should provide personal stories of what these spending proposals and tax changes would do to provide stability to your properties, residents and communities where located. However, you may also take any of the suggested points that we included in our August 26th Broadcast Email.
Don’t forget to keep the national CARH office appraised of your contacts, their response, and if follow-up is needed from the national CARH staff with specific members of Congress and or their staffs.
Please contact the CARH national office at firstname.lastname@example.org or 703-837-9001 should you have questions or concerns. For other news and information affecting the affordable rural housing industry, please visit the Newsroom on CARH’s website, www.carh.org.