Affordable Housing Preservation Solutions for State & Local Governments

Affordable Housing Preservation Solutions for State & Local Governments:
Tuesday, December 10, 2:00 p.m. ET

State and local governments play a critical role in supporting the preservation of affordable housing. Register for the second webinar of the NLIHC and Public and Affordable Housing Research Corporation (PAHRC) affordable housing preservation series, Affordable Housing Preservation Solutions for State & Local Governments. We’ve gathered a panel of seasoned practitioners to share first-hand knowledge on best practices and policies for local and state governments to support the long-term affordability of publicly supported rental homes.

Join us on Tuesday, December 10, 2019, at 2 p.m. EST to learn:

  • Best practices for state and local governments to advance affordable housing preservation strategies
  • How to overcome challenges implementing preservation strategies
  • Ways to develop strong partnerships with local governments, Housing Finance Agencies (HFAs), and Community Development Financial Institutions (CDFIs)

Presenters:

  • Laura Cox, director of asset management and guarantee program, Florida Housing Finance Corporation
  • Danilo Pelletiere, senior advisor, DC Department of Housing and Community Development
  • Brian Robinson, senior vice president, originations & capital markets, National Affordable Housing Trust
  • Moha Thakur, public engagement and policy associate, National Housing Trust
Register

Join the ACTION Campaign Monthly Call on Friday, December 6

Join the ACTION Campaign Monthly Call on Friday, December 6

The ACTION Campaign’s monthly call will be held on Friday, December 6 at 2:00 pm EST. Call-in information:

  • Phone number: 866-469-3239
  • Access Code: 625 036 783 #

Guest Speaker: On the December 6 ACTION call, National Association of Affordable Housing Lenders (NAAHL) President and CEO Buzz Roberts will provide an update on Community Reinvestment Act (CRA) modernization and what Housing Credit advocates need to know.

Call to ACTION to Advance the AHCIA

Senate and House leaders, including tax committee leaders, are currently negotiating what will likely become an end-of-year tax package intended to move alongside appropriations legislation. Now is the time to activate cosponsors and encourage them to go to their leadership to express that the Affordable Housing Credit Improvement Act is a top priority for them. We’ve all worked long and hard this year to build cosponsorship of the bill. Now we need to turn to those cosponsors and ask them to take this last important step. If tax committee and chamber leadership are not hearing from rank and file members that this is their priority, it will not be on the short list for those negotiations.

Specifically:

  • Senate Republicans should speak to Majority Leader Mitch McConnell (R-KY) and Finance Committee Chairman Charles Grassley (R-IA).
  • Senate Democrats should speak to Minority Leader Charles Schumer (D-NY) and Finance Committee Ranking Member Ron Wyden (D-OR).
  • House Democrats should speak to Speaker of the House Nancy Pelosi (D-CA) and Ways and Means Chairman Richard Neal (D-MA).
  • House Republicans should speak to Minority Leader Kevin McCarthy (R-CA) and Ways and Means Ranking Member Kevin Brady (R-TX).

We strongly encourage grassroots ACTION members to reach out to AHCIA cosponsors from your state and district and ask them to make member-to-member connections with their leadership, rather than reaching out directly to leadership. Click here to access the most recent list of AHCIA cosponsors and check out ACTION’s advocacy toolkit for additional support.

AHCIA Cosponsorship Update

Since ACTION’s last monthly update, an additional 16 Senators and 39 Representatives have signed-on in support of the AHCIA. The Senate now totals 36 cosponsors, including 46 percent of the Senate Finance Committee, while the House now totals 177 cosponsors, including 69 percent of the Ways and Means Committee. The AHCIA has gained strong momentum in the last month, and now more than one-third of the Senate and over 40 percent of the House have signed-on.

ACTION applauds these members of Congress for their leadership in supporting families who need affordable homes and thanks the many hard working advocates of the AHCIA for their efforts.

Other Policy News

President Signs Temporary Spending Bill, Congress Negotiating FY20 Appropriations

On November 21, the President signed a continuing resolution (CR) passed by Congress that will fund the government at current spending levels through December 20. There are no tax provisions included in the bill. Lawmakers now have four more weeks to reach a comprehensive Fiscal Year (FY) 2020 spending agreement. Sources are reporting that top appropriators in the Senate and the House have reached a deal on spending levels for the dozen yearly appropriations bills. Now that Congress has agreed to top-line spending numbers, known as 302(b)s, lawmakers will be able to begin determining spending levels for individual programs.

NPR for CRA Modernization Anticipated before the End of the Year

A Notice of Proposed Rulemaking (NPR) for CRA modernization from the Office of the Comptroller of the Currency (OCC) is anticipated before the end of the year. This NPR would follow the OCC’s Advanced Notice of Proposed Rulemaking (ANPR) published in August of 2018, which garnered over 1,500 comments largely objecting to adopting a dollar value to determine CRA ratings. As of this writing, we expect the Federal Deposit Insurance Corporation (FDIC) to join the OCC in the NPR. However, the Federal Reserve Board (FRB)—the third banking regulator responsible for implementing and evaluating the CRA—may not. In the past, the three regulators have issued joint rulemakings, and so a rulemaking that does not include all three would be a significant break from past practice. The ACTION Campaign is closely monitoring the CRA modernization process, as CRA is an important motivator for financial institutes to invest in the Housing Credit.

Membership Update

We are pleased to welcome the following new ACTION members who joined this November:

  • Barnes Realty, Oklahoma
  • Clark Hill, National
  • Hans Thomas & Associates, Missouri
  • New York Affordable Housing (NYAH) Advisors, LLC, New York
  • North Montgomery Citizens United for Prosperity (MCUP), Mississippi
  • Raga Properties, Missouri
  • Texas Low Income Housing Information Service (Texas Housers), Texas
  • You’re Homes Solutions, LLC, Georgia

Help us continue to grow by inviting your state and local partners to join ACTION. The larger our membership base, the better we can show members of Congress that organizations and businesses in every community support strengthening and expanding the Housing Credit.

In the News

On November 7, North Carolina’s WLOS news report, “Asheville organization urges residents to call senators over housing bill,” highlights the Asheville area Habitat for Humanity’s advocacy work urging residents to call their senators in support of the Affordable Housing Credit Improvement Act.

In a November 8 opinion piece from The Hill, “Congress must take action on affordable housing legislation,” Emily Cadik, executive director of the Affordable Housing Tax Credit Coalition, notes the growing bipartisan support for the Affordable Housing Credit Improvement Act.

On November 8, Presidential candidate Pete Buttigieg released an “Economic Agenda for American Families,” a wide-ranging set of policy proposals that would include substantial investments into affordable housing. The plan calls for increasing the supply of affordable housing using billions of dollars of investments in a number of programs, including the Housing Credit.

On November 12, NPR’s Public Radio from UA Little Rock released a “Community Development Minute: Low-Income Housing Tax Credits,” which gives a brief synopsis of the history of the low-income housing tax credit and its role in constructing and rehabilitating millions of rental units across the country.

A November 19 article from JD Supra, “2019 Affordable Housing Credit Improvement Act Gains Steam with Bipartisan Support” highlights the legislation’s growing momentum and discusses key provisions in the bill, including the minimum 4 percent credit rate for tax-exempt bond financed transactions and the increased housing credit volume cap by 50 percent over five years.

Opportunity Zone Investments Create Affordable Homes, Support Community Revitalization

Opportunity Zone Investments Create Affordable Homes, Support Community Revitalization

WASHINGTON, DC – Last week, the National Council of State Housing Agencies (NCSHA) and the Economic Innovation Group (EIG) published three case studies of developments that incorporate Opportunity Zone investment to create new affordable homes and support community revitalization efforts in Ohio, Maryland, and Florida. These are the first in a new series of Opportunity Zone Development Profiles that detail project financing, community socioeconomic data, and projected economic impact. The profiles demonstrate how Opportunity Zone investments are being utilized to develop affordable homes for very-low- to moderate-income households, and how that investment is furthering community revitalization efforts and enhancing positive community impact.

“These encouraging developments illustrate some of the ways Opportunity Zones are attracting investment in affordable housing and community revitalization,” said NCSHA Executive Director Stockton Williams. “We expect more will follow as state housing finance agencies, Opportunity Zone investors, and local communities deepen their collaborations in more distressed areas.”

“Opportunity Zones were developed as a flexible tool to address a wide range of needs in struggling areas across the country,” said John Lettieri, EIG’s President and CEO. “In many communities, the shortage of affordable and workforce housing places an enormous strain on local families. These development profiles show that, even at this early stage in the market, Opportunity Zones is helping meet some of the most urgent community needs.”

Data from NCSHA’s Opportunity Zone Fund Directory suggests that more such development in Opportunity Zones is forthcoming. As of October 2, 2019, 115 listed funds have identified affordable and workforce housing, as well as community revitalization, among their investment priorities—a nearly four-fold increase since the beginning of 2019.

Below is a summary of the first three profiled projects:

  • The Tappan — A mixed-use, mixed-income building in Cleveland, OH, developed by hometown firm Sustainable Community Associates with 95 apartments and a ground-floor bakery operated by a local entrepreneur. The development includes 59 apartments that are affordable to households earning between 80 and 120 percent of Area Median Income (AMI). The Tappan is financed with a combination of Opportunity Zone equity from local investors and debt and Opportunity Zone equity from PNC Bank, as well as loan and tax incentives from the City of Cleveland. The development increases housing options for workers who typically are not eligible for housing assistance due to their income levels but tend to be overly burdened by housing costs.
  • Ox Fibre Apartments — An adaptive reuse of an historic paintbrush factory in Frederick, MD, into 83 affordable apartments. The financing includes 4 percent Low Income Housing Tax Credits (Housing Credits) from the Maryland Department of Housing and Community Development, federal historic credits, Opportunity Zone equity, tax-exempt permanent financing from Freddie Mac, and additional debt from state and local sources. The layered financing and Opportunity Zone location allowed the developer, EquityPlus, to create new homes for families earning between 40 and 60 percent of AMI with rents as much as $500 less than local market rates.
  • Parramore Oaks — A new energy-efficient building in Orlando, FL, with 96 affordable and 24 market-rate apartments. Located in a neighborhood that is a city priority for reinvestment, it is one of the first developments to combine the Opportunity Zone tax incentive with 9 percent Housing Credits, which were allocated by the Florida Housing Finance Corporation. SunTrust Community Capital provided the equity investment as well as a construction loan and permanent financing; the Orlando Community Redevelopment Agency contributed additional debt. Developed in partnership with its affiliate Invictus Development, Alliant has made apartments affordable to families earning between 40 and 60 percent of AMI, including people with special needs or transitioning from homelessness.

In the weeks ahead, a series of Opportunity Zones webinars will feature insights from key stakeholders, such as the state housing finance agencies, developers, and fund managers that participated in the first three projects highlighted in the Opportunity Zone Profile series.

Senate Banking Committee Holds Hearing on Affordable Housing Access and Safety, AHCIA and Housing Credit Uplifted

Senate Banking Committee Holds Hearing on Affordable Housing Access and Safety, AHCIA and Housing Credit Uplifted

On November 7, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing on “Examining Bipartisan Bills to Promote Affordable Housing Access and Safety.” Ivory Mathews, Interim Executive Director of the Housing Authority of Columbia, South Carolina; Mark Yost, President and Chief Executive Officer of the Skyline Champion Corporation; and Peggy Bailey, Vice President for Housing Policy at the Center on Budget and Policy Priorities provided witness testimony on housing legislation introduced in the 116th Congress, including the CO ALERTS Act of 2019 (S.2160), the HUD Manufactured Housing Modernization Act (S.1804), and the Fostering Stable Housing Opportunities Act (H.R.4300).

Although the Affordable Housing Credit Improvement Act (AHCIA) was not one of the bills being discussed, as it does not fall under the Banking Committee, the AHCIA and the Housing Credit were mentioned several times during the hearing. Senator Catherine Cortez Masto (D-NV) noted, “We need to pass the Affordable Housing Credit Improvement Act, we should expand the Low Income Housing Tax Credit by 50 percent, helping to build more than 3,400 additional affordable homes in Nevada over the next ten years and millions more nationwide.”

Senator Jon Tester (D-MT) said that he believes that in Montana, affordable housing and workforce housing are the “biggest inhibitors for economic development that we have, because there’s simply not any housing.” Senator Tester asked witnesses several questions prompting further discussion of the Housing Credit. Witness Bailey noted that the Housing Credit is the largest investment in capital resources and that when coupled with the Housing Trust Fund, finances units for people at the lowest income levels. Witness Mathews spoke of how the utilization of the Housing Credit has resulted in positive impacts on the housing market, how more Housing Credits could be used, and how if made available, would be used as effectively as what is currently available.

Enterprise commends these Senators for raising this important issue and highlighting the bipartisan AHCIA. To view the hearing, click here.

Senate Passes Fiscal Year 2020 Minibus Spending Package

Senate Passes Fiscal Year 2020 Minibus Spending Package

On October 31, the Senate passed a Fiscal Year 2020 (FY20) minibus spending package that includes four of the dozen appropriations bills that fund the government — Agriculture-FDA, Commerce-Justice-Science, Interior-Environment, and Transportation-HUD. Critical affordable housing and community development programs mostly received level funding with Fiscal Year 2019 (FY19), as lawmakers rejected the cuts contained in the President’s budget request. Overall, the spending bill provides HUD programs with more than $11.9 billion above the President’s FY20 request and $2.3 billion above FY19 enacted levels.

Multiple amendments with bipartisan support also cleared the Senate, including several related to affordable housing. These include: Senators Tina Smith (D-MN) and Patty Murray’s (D-WA) amendment allowing owners of properties financed through USDA Section 514 and 515 loans to extend affordability provisions an additional 20 years; Senator Shaheen’s (D-NH) amendment creating a tax incentive for owners of manufactured home communities to transfer properties to nonprofit organizations and residents; Senator Heinrich’s (D-NM) amendment providing a modest increase in funding to tribal housing authorities and their homeless veteran programs; Senator Hassan’s (D-NH) amendment calling on HUD to conduct a review of insurance programs meant to increase access to affordable housing and reduce evictions for high risk populations; and Senator Portman’s (R-OH) amendment allowing HUD’s Housing Choice Voucher program to support the Family Unification Program.

The House and Senate must now try to reach a final agreement on bipartisan, bicameral funding levels. Senate Appropriations Chairman Richard Shelby (R-AL) and House Chairwomen Nita Lowey (D-NY) are set to meet this week to further advance negotiations. With the current stopgap continuing resolution set to expire on November 21, the House will vote this week on a measure to keep federal agencies open by passing a second stopgap spending measure. For more information on funding levels of key housing programs see Enterprise’s blog post on the topic.

IRS Releases 2020 Housing Credit and Private Activity Bond Volume Cap Levels

IRS Releases 2020 Housing Credit and Private Activity Bond Volume Cap Levels

November 19, 2019

A few weeks ago, the Internal Revenue Service published Rev. Proc 2019-44, which provides the per capita and small state minimum levels for the Low Income Housing Tax Credit (Housing Credit) and Private Activity Bonds (PAB). In 2020, states will receive the greater of $2.81 per capita or $3,217,500 in Housing Credit authority, slight increases over the 2019 Housing Credit authority levels of $2.76 per capita or $3,166,875. The per capita PAB volume cap will be $105 per capita, the same amount as in 2019, but the small state minimum for PAB volume cap will increase to $321,775,000 from $316,745,000.

Washington Report from our friends at NCSHA

Washington Report from our friends at NCSHA
Housing industry analyst John McManus predicts that, within a few years, at least three of the top 10 home-building companies will have a business model aimed at the affordability crisis and at least two will have a top-five market share of new construction.

Of the four firms McManus believes are most likely to lead a residential construction disruption, one is a tech company (Amazon), one is a tech-based prefab builder (Katerra), and one is a global real estate company that widely uses new technologies (Osaka-based Sekisui House).

The fourth is the country’s largest manufactured home builder, Clayton Homes, which raises an overlooked point: For all the excitement about cutting-edge prefab and modular approaches, it’s the much more common manufactured home that has actually achieved scale as a much-lower-cost option.

Manufactured homes represent roughly 10 percent of the housing stock and account for 9 to 10 percent of annual new single-family starts, according to the Manufactured Housing Institute. The institute says manufactured units cost less than half as much as site-built homes to produce and sell for an average price of less than $71,000.

The inventory is still associated with the generally poor condition of the 25 percent of it built before federal quality controls were imposed in the ’70s and strengthened in the ’90s, according to the Lincoln Institute of Land Policy. Poor perceptions fuel unfavorable zoning treatment. “Cheaper materials and processes are still common in the industry” as well, reports Prosperity Now. And research by the Urban Institute has shown that manufactured housing financing options generally come with worse terms and fewer protections for borrowers than conventional mortgage loans.

In proposing last week to reduce its support for manufactured housing lending starting next year, Fannie Mae (see below) pointed to additional obstacles: “delayed communication timelines from manufacturers; limited consumer visibility of manufactured home options; fragmentation in distribution model and lack of meaningful support from industry trade groups.”

Nevertheless, the prospects for manufactured housing may be brightening. More lenders seem to express sentiments like those of David Battany of Guild Mortgage, who said, “It’s totally different today. I used to work in construction. I could not tell the difference between a manufactured home and a stick-built home.” Preliminary data from the Federal Housing Finance Administration suggests newer units may appreciate at around the same rate as stick-built housing.

HFAs are giving manufactured housing a second (or third) look because it represents the most compelling, if imperfect, proof of concept for delivering a much lower-cost, but still good-quality, home. Eleven state HFAs have created or expanded manufactured home programs in the last few years.

HFAs are also driving innovation in prefab and modular production. This week in Pierre, I got a tour of South Dakota HDA’s DakotaPlex prototype, a custom two- to four-unit rental modeled on the agency’s award-winning Governor’s House single-family program. The cost to deliver a three-bedroom unit is less than $67,000.

Why settle for bending the cost curve when you can break it?

Stockton Williams | Executive Director