Finance Committee Chairman Wyden Introduces Sweeping Affordable Housing Legislation

Senate Finance Committee Chairman Ron Wyden (D-OR) today released the Decent, Affordable, Safe Housing for All Act (DASH Act), which would make substantial investments in affordable housing, addressing both supply and demand needs, with the goal of ending homelessness. This comprehensive bill — which includes both tax and spending measures — seeks to ensure all families with children experiencing homelessness are able to receive a voucher within the next five years; expands health, child care, financial, and nutrition services for families and individuals; increases the production of affordable housing; and invests in homeownership in underserved communities. The production provisions in the bill would result in more than three million additional homes.

NCSHA worked closely with the senator’s office on many aspects of the bill, which includes many of NCSHA’s top priorities. Some of the key provisions in the bill follow.

Tax Provisions

  • Significantly increasing the Housing Credit volume cap — bringing the per capita and small state minimum amounts, respectively, to $3.88 or $4,462,734 for calendar year 2021; $4.92 or $5,670,462 in 2022; and adjusted for inflation thereafter. The bill would require states to reserve 10 percent of their Housing Credit authority for properties in which at least 20 percent of the units are reserved for extremely low-income (ELI) households and rent restricted at that level. The bill would also allow up to a 50 percent basis boost for properties eligible to receive the ELI set-aside dollars, to be applied only to the basis associated with ELI units.
  • Lowering the bond financing test from 50 percent to 25 percent for bond-financed 4 percent Housing Credit developments in which the bond obligation is issued in calendar years 2021 through 2024.
  • Repealing the Housing Credit qualified contract provision for properties that receive an allocation of Credits in 2021 or later. Existing projects would still be eligible to go through the qualified contract process, but the price would be fair market value as restricted.
  • Changing the right of first refusal for nonprofit general partners to a purchase option for future Housing Credit properties and clarifying that the right of first refusal for existing Housing Credit properties includes the partnership interest and assets related to the property, and that nonprofit general partners may exercise their right of first refusal with or without the approval of the limited partner and in response to any offer, including one by a related party to the general partner.
  • Extending for 12 months the Housing Credit 10 percent test, placed-in-service, and rehabilitation expenditure deadlines for developments receiving Housing Credit allocations from 2018 through 2022.
  • Allowing up to a 30 percent basis boost for properties in rural or Indian areas, and for bond-financed properties at the discretion of the state Housing Credit agency.
  • Prohibiting states from requiring or providing points solely for local government contributions to Housing Credit properties.
  • Establishing the Neighborhood Homes Investment Credit. The credit would incentivize the building and rehabilitation of single-family homes in distressed neighborhoods by providing the developer a credit to cover the “appraisal gap” between the rehabilitation cost and the price for which the home sells. This provision is similar to legislation, the Neighborhood Homes Investment Act (S. 98), supported by NCSHA. At NCSHA’s request, the version in the DASH Act expands the list of qualified census tracts where the credit can be allocated to include federally declared disaster areas. NCSHA continues to push for even greater flexibility so states that do not have sufficient allowable geographies under the current limitations would be best able to utilize this proposed resource.
  • Creating a First-Time Homebuyer Tax Credit, through which a first-time home buyer could claim a refundable tax credit for 20 percent of their home’s purchase price, with a maximum allowable credit of $15,000. The credit would phase out for homes purchased at 110 percent or above the conforming loan limits for Fannie Mae and Freddie Mac and for taxpayers earning $100,000 or above ($200,000 for joint filers).
  • Creating a tax credit to fund supportive services in Housing Credit properties.
  • Establishing a renters’ tax credit.
  • Authorizing a tax credit to incentivize development of rental housing for households earning no more than 100 percent of area median income (AMI).

Spending Provisions

  • Authorizing vouchers for households experiencing or at risk of homelessness earning 50 percent or less of AMI. In 2022, the bill would provide funding for 250,000 new vouchers, and in each fiscal year thereafter, 400,000 new vouchers until all eligible households have access to a voucher. The funding for these vouchers, including their renewals, would be mandatory and permanent and thus not part of the annual discretionary appropriations process. The bill would also prohibit source-of-income discrimination. The bill sets up a system of state accountability for the new vouchers. Public housing agencies (PHAs) administering the voucher would have to make regular reports to the state in which the PHA is located on their progress serving eligible households, and in turn, each state would be required to report to the HUD Secretary annually on the overall progress of PHAs in the state in hitting certain benchmarks, depending on the state’s rate of homelessness. Failure to make those benchmarks could result in a reduction in federal highway funds, though states are exempted from penalty if quarterly unemployment in the state exceeds six percent.
  • Authorizing the appropriation of $10 billion annually for the Housing Trust Fund (HTF) in fiscal years 2022 through 2032. The bill would require the HUD Secretary to adjust the HTF funding formula to consider the impact of the COVID-19 pandemic, vacancy rates, the rate of unsheltered homelessness, poverty, and the gap between supply and demand for housing for very low- and extremely low-income households. States would be required to commit each year’s appropriation of HTF dollars within five years of receiving it, though there would be no time limit for placement in service of the properties.
  • Establishing a $65 million annual capacity building grant program for states to help them accomplish the goals of the DASH Act and the use of the resources it provides to states.
  • Incentivizing jurisdictions to modify zoning and land-use practices to encourage affordable housing, including a competitive grant program providing funds jurisdictions could use for Community Development Block Grant-eligible activities. Jurisdictions would be awarded funding based on the extent to which they adopt zoning rules favorable to the provision of affordable housing. Jurisdictions that keep in place certain prohibited zoning methods that make affordable housing development more difficult would not be eligible to receive funding.
  • Creating a new HUD pilot program to provide grants to states and local agencies, tribal governments, nonprofits, and private companies to support the construction of affordable modular homes. The pilot would be authorized to receive $2 billion in funding for fiscal years 2022 through 2027.
  • Investment in rural multifamily housing programs; authorizing the appropriation of $78 million annually for Section 514 and 516 loans and grants, $100 million annually for Section 515 loans, and $2.5 billion for the Section 521 rural rental assistance program, all through 2032. Section 514, 515, and 516 properties entering into loan restructuring discussions with USDA would also be eligible to extend their rental assistance contracts for 10–20 years. Further, it would permanently establish the housing preservation and revitalization program for Section 514, 515, and 516 properties and make other modifications to rural housing programs.

The bill will be formally introduced in September upon Congress’s return to Washington.

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