Register Now for the OCAH Member Appreciation Luncheon

Join us at the Annual Member Appreciation Luncheon at Harn Homestead in Oklahoma City on May 25, 2022, immediately following the OHFA Board of Trustees Meeting. Join us for lunch, networking and to hear a brief update about the work the QAP Task Force has done so far. Registration is complimentary to 2022 Coalition Members. Non-Members are welcome to attend as well to learn more about the Coalition and network with our members.
Member Admission: Complimentary | Non-Member Admission: $20
If you are unsure of your Membership status, please CLICK HERE to view a list of current members.

16 May, 2022 09:02

The U.S. Department of the Treasury (Treasury) has released Emergency Rental Assistance (ERA) spending data through March 2022. More than $714 million of ERA1 and more than $1.1 billion of ERA2 was spent in March, compared to $660 million of ERA1 and $1.3 billion of ERA2 spent in February. Overall, $26 billion of ERA1 and ERA2 – or 56% of total ERA funds – has been spent on assistance for households, administrative expenses, and housing stability services. The ERA program has made nearly 5.2 million payments since January 2021.

Read more of this article here

White House Announces Clean Energy Opportunities to Tackle Climate Change

On April 20, the White House announced new partnerships and initiatives designed to increase access to cost-saving clean energy resources and tackle climate change. These cost-saving clean energy resources, also known as Distributed Energy Resources (DERs), include rooftop solar, battery storage heat pumps, and electric vehicles. The resources would not only cut costs for consumers, but improve public health, cut greenhouse emissions, and strengthen the nation’s energy security by reducing the country’s dependence on natural gas and oil.

Under this effort, HUD is updating guidance to allow residents of HUD-subsidized housing to better access cost-saving community solar subscriptions through the “Solar for All” initiative. The initiative aims to bring the benefits of solar energy to 100,000 LMI families in the Washington, DC. HUD has determined that the “Solar for All” initiative’s community-net-metering credits will be excluded from renter household income and utility allowance calculations, and, accordingly, will not increase housing costs for residents in properties participating in HUD Multifamily rental assistance programs. Additionally, HUD is reviewing guidance to allow public housing authorities to more easily enter into power purchase agreements for low-cost clean energy.

Biden-Harris Administration’s efforts to ensure residents of HUD-assisted Multifamily housing benefit from solar energy without increasing their costs. These announcements will also advance the administration’s Justice40 initiative objectives, which aim to target 40 percent of the benefits from certain federal investments—such as those for clean energy—to underserved communities.

Senators Patrick Leahy and Susan Collins introduce LIFELINE ACT

On May 11, 2022, Senators Patrick Leahy (D-VT) and Susan Collins (R-ME) introduced S. 4181, the LIHTC Financing Enabling Long-term Investment in Neighborhood Excellence (LIFELINE) Act. The bill would allow state, local, territorial, and tribal governments to use Coronavirus State and Local Fiscal Recovery Funds (SLFRF) to make long-term loans to LIHTC developments. Nine additional Senators joined as original cosponsors, including Senator Ron Wyden (D-OR), Chairman of the Finance Committee (which has jurisdiction over the bill).

As a condition for accepting SLFRF loans, S. 4181 requires that project sponsors waive any right to request a qualified contract and requires them to repay the loan if the project becomes noncompliant. The legislation clarifies that SLFRF can only be used for LIHTC properties placed in service after the legislation’s date of enactment. The bill also requires the Treasury Department to provide annual reports to Congress regarding SLFRF obligations to LIHTC developments and the status of any repayment on SLFRF loans.

Representatives Alma Adams (D-NC) and David Rouzer (R-NC) introduced similar companion legislation (H.R. 7078) on March 15, 2022, and have been strong advocates for their legislation. On May 12, 2022, Rep. Adams raised affordable housing issues with Treasury Secretary Janet Yellen during a hearing before the House Financial Services Committee. She noted the introduction of her bill and urged her colleagues to cosponsor it. Secretary Yellen discussed the shortage of affordable housing and noted that the Administration urged states and localities to use SLFRFs to expand affordable housing.

Federal Agencies Update Flood Insurance Regulation Q&As

Wednesday the five federal regulatory agencies issued jointly revised questions and answers (Q&As) regarding federal flood insurance law and regulations.

These Q&As replace those originally published by the agencies in 2009 and 2011 and consolidate Q&As proposed by the agencies in 2020 and 2021.

According to a join release, the new Q&As “cover a broad range of technical flood insurance topics, including the escrow of flood insurance premiums, the detached structure exemption to the flood insurance purchase requirement, force placement procedures, and private flood insurance.”

Learn more HERE.

Tulsa Abode Initiative: AHTF Applications Due by May 20th for June Review

The Affordable Housing Trust Fund is open for applications! The Affordable Housing Trust Fund is a city-wide fund for production and preservation of affordable housing through provides gap financing in the form of zero interest loans for new construction, rehabilitation and preservation projects to increase the stock of affordable rental housing in Tulsa.

If you are planning to apply to the Affordable Housing Trust Fund, applications received on or before May 20, 2022 will be reviewed by the Affordable Housing Trust Fund Committee in June 2022.

Applications received after May 20, 2022 will be reviewed at a subsequent Affordable Housing Trust Fund Committee meeting in September 2022.

​Before submitting an application to the Affordable Housing Trust Fund, you must attend an information session. If you have not attended an information session, please contact me to request a recording of the information session to review before submitting an application.

Federal Banking Regulators Propose CRA Overhaul

Last week, the three major federal banking regulators — the Federal Deposit Insurance Corporation, the Federal Reserve, and the Office of the Comptroller of the Currency — released a proposed rule that would substantially amend their Community Reinvestment Act (CRA) regulations. The stated purpose of the proposed rule is to update the CRA rules to reflect market developments since the regulations were last overhauled in 1995 and to encourage more critical investment and lending to benefit low- and moderate-income households and communities.

NCSHA is analyzing the proposal to determine how it will impact the Housing Credit, Housing Bonds, and other HFA programs, as well as affordable housing generally. The regulators will accept comments until August 5. NCSHA will submit comments on behalf of all HFAs. If you have any input for NCSHA to consider in its comments, please contact Greg Zagorski by COB on July 11.

Some of the rule’s major provisions are summarized below.

New Evaluation Framework for Large Banks

Under current CRA regulations, large banks must meet three tests to comply with CRA guidelines: the lending test, service test, and investment test. The proposed rule would replace this system with four new tests: the retail lending test, which would account for 45 percent of a bank’s evaluation; the retail services test, which would account for 15 percent; the community development financing test, which would account for 30 percent; and the community development services test, which would account for 10 percent.

The community development financing test includes all activities, including lending and investments, that support activities whose primary purpose is one or more of the following community development activities:

  • affordable housing
  • economic development that supports small businesses and small farms
  • community supportive services
  • revitalization activities
  • essential community facilities
  • essential community infrastructure
  • recovery activities in designated disaster areas
  • disaster preparedness and climate resiliency activities
  • activities with minority depository institutions, women’s depository institutions, low-income credit unions, and Community Development Financial Institutions
  • financial literacy
  • qualifying activities in Native Land Areas

Included within affordable housing is participation in federal, state, and local government programs, with the Housing Credit and HOME Investment Partnerships program explicitly cited as examples. For most affordable housing activities, banks will get CRA credit for the proportion of the project that is affordable. For example, if a bank finances a $100 million loan for a multifamily housing building in which 50 percent of the units are affordable, the bank would get CRA credit for $50 million. The proposed rule includes an exception for Housing Credit investments, allowing banks to get CRA credit for the entire investment regardless of the share of affordable units.

Other eligible activities under affordable housing are support for naturally occurring affordable housing, support for affordable single-family housing (except for individual mortgage loans, which would count under the retail lending test), and purchases of mortgage-backed securities that contain loans for affordable housing.

Under the proposed rule, all bank assistance for affordable housing and other community development financing activities, whether in the form of loans or equity investments, will count equally toward a bank’s CRA score. In addition, the proposed rule will allow banks to receive CRA credit for the outstanding balance of community development loans originated in previous evaluation periods if they remain on the balance sheet. Currently, banks receive credit only for previous periods’ equity investments, not loans.

Assessment Areas

The proposed rule maintains much of the current regulations’ approach of evaluating bank CRA activity predominately in geographically defined assessment areas surrounding a bank’s headquarters, branches, and deposit-taking ATMs. To address the rise in online banking and ensure banks support those areas in which they do business, the proposed rule would require large banks to delineate retail lending assessment areas where they have concentrations of home mortgage lending (at least 100 or more mortgages per year) and/or small business lending (at least 250 small business loans per year) outside of their facility-based assessment areas.

The regulators also propose to allow banks to receive credit under the community development financing and services tests for activities conducted in areas outside their assessment areas. Specifically, banks could receive consideration for qualifying activities anywhere in a state or multistate metropolitan area in which they maintain a facility-based assessment area, regardless of whether the activities occur specifically in the assessment area. In addition, banks could receive CRA credit for any qualifying activities conducted nationwide.

FHFA Releases Final Duty to Serve Plans

On April 27, the Federal Housing Finance Agency (FHFA) published the final approved Duty to Serve (DTS) Underserved Markets Plans for Fannie Mae and Freddie Mac, the Government-Sponsored Enterprises, or GSEs. The GSEs are required to prepare and submit to FHFA three-year underserved markets plans that specify activities and target performance levels to address longstanding needs in the manufactured housing, rural housing, and affordable housing preservation markets. The newly approved plans are updated versions of the plans originally submitted in May 2021, which were sent back to the GSEs for failing to meet FHFA’s standards for approval. The updated DTS plans just released were determined to meet standards and are now in force. (The plans are deemed to be in effect retroactively to the beginning of 2022.)

A number of changes in the final plans reflect the comments from Enterprise and the Underserved Mortgage Markets Coalition, including the need for higher targets for many activities and a willingness to further revise targets as additional funds for affordable housing become available. Among other new activities, Fannie Mae’s plan includes a voucher acceptance pilot, equity investments in rural CDFIs, and support for rural small and medium-sized multifamily properties; Freddie Mac’s updated plan commits to strengthened support for small and medium-sized multifamily properties, new preservation rehab loan products, and a personal loan product for manufactured housing. A press release by FHFA notes that the approved plans demonstrate a strengthened commitment to serving manufactured housing, affordable housing preservation, and rural housing.

Treasury Signals Protections for Housing Credit in Implementation of Global Minimum Tax

In recent days, the Treasury Department has made public comments indicating protections for the Housing Credit and other tax credit investments as part of the implementation of a 15 percent global minimum tax. As previously reported by the AHTCC, serious concerns have arisen around the potentially major impact of the global minimum tax on multinational corporations’ appetite to invest in the Housing Credit and other community development tax credits. The AHTCC has been at the forefront of efforts to advocate for the protection of the Housing Credit as global minimum tax implementation guidelines are established, including by meeting with the Treasury Department and key congressional members and staff.

The primary issue is the way in which the Organization for Economic Cooperation and Development’s (OECD) Pillar Two model rules for implementing the global minimum tax would account for the Housing Credit and other business tax credits in effective tax rate calculations. If these credits are included in the calculation, it would bring the effective tax rate for many major investors well below the 15 percent threshold, at which point investors would be required to pay a top-up tax to foreign countries in which they also do business. According to an initial survey of major investors in the Housing Credit market, the investors whose appetite would be significantly impacted by the global minimum tax represent at least 48 percent of equity financing, and likely more. These concerns were conveyed to the Treasury Department in a letter sent last month, as part of a group of 30 national trade associations representing community development credits and financing tools.

After several months of uncertainty around how tax credits would be treated in the new OECD regime, recent public statements from Treasury Department officials have signaled protections for Housing Credit investments. Assistant Secretary for Tax Policy Lily Batchelder shared last week in remarks to the D.C. Bar Association that the tax policy team at the Treasury Department has been engaging with the OECD to "clarify the treatment of general business credits under the minimum tax." Batchelder said further, "We are confident that the value of many of our general business credits is preserved under the OECD rules, and we have established a process with the OECD for working towards additional clarifications…because of the way those investments are structured and accounted for, the income or loss and the income tax consequences of those investments typically will be excluded from the effective tax rate calculation — so those credits generally should not be impacted.

In addition, in an April 25 OECD public consultation meeting on Pillar 2 rules, the OECD stated, “when the equity method is applied to investments according to the relevant accounting standard… it would be inconsistent to include the tax consequences in the [effective tax rate] computation.”

Though we are awaiting further clarification from both the Treasury Department and the OECD, these comments and our engagement with the Treasury Department in subsequent meetings imply an interpretation of the model rules that would exclude any credits using the “equity method” from the OECD effective tax rate calculations, which would generally allow for Housing Credits to fall outside of these calculations. If the Treasury Department and the OECD make this clarification that the rules allow for the exclusion of Housing Credits using the equity method from the OECD effective tax rate calculations, and if the other countries participating in the global minimum tax agreement do not issue conflicting guidance, this interpretation could greatly mitigate the risk to Housing Credit investment that the global minimum tax would have posed.

While the Treasury Department initially indicated that a solution to this issue could be making the tax credits refundable in order to come into compliance with the OECD’s Pillar 2 model rules, the new statements suggest a change in approach that allows for accounting for the credits within existing rules without changing their fundamental structure.

The AHTCC will continue to work closely with the Treasury Department and the Housing Credit investor and accounting community to urge the protection of the Housing Credit in any regulations implementing a global minimum tax. As AHTCC Executive Director Emily Cadik recently stated in Bond Buyer (paywall), "Treasury has made some very encouraging statements in recent days indicating their intention that the Housing Credit and other credits would largely not be impacted by the Pillar 2 rules implementing a global minimum tax. However, additional clarity and guidance will be needed, and the details will be important to ensure continued robust investment in the Housing Credit."

Learn more about this issue and the AHTCC’s advocacy in our April 5 alert to members, Affordable Housing Finance, Bond Buyer (paywall), Bloomberg (paywall), and POLITICO Pro (paywall).

Senators Leahy, Collins Introduce Legislation to Facilitate Use of Fiscal Recovery Funds with Housing Credit

Today, Senators Patrick Leahy (D-VT) and Susan Collins (R-ME) introduced the LIHTC Financing Enabling Long-term Investment in Neighborhood Excellence (LIFELINE) Act, which would allow state, local, territorial, and tribal governments to use Coronavirus State and Local Fiscal Recovery Funds (FRF) to make long-term loans to Housing Credit developments. The bill is companion legislation to the House version of the LIFELINE Act (H.R. 7078), introduced by Representatives Alma Adams (D-NC) and David Rouzer (R-NC) in March.

Both the House and Senate versions of the LIFELINE Act allow FRF to be loaned to Housing Credit developments as a soft financing source to fill debts with loan maturities of 30 years or more and allow repayments on those loans to be used to finance affordable housing, including future Housing Credit properties.

The Senate bill clarifies that FRF loans are available only to Housing Credit properties that will place in service after the bill’s enactment. The bill requires project sponsors to waive the right to request a qualified contract as a condition of receiving the FRF loan and to agree to repay the FRF loan if the project becomes non-compliant and ceases to qualify as affordable housing at any point during its extended use commitment period. The Senate bill also requires the Treasury Department to provide annual reports to several House and Senate committees on FRF obligations to Housing Credit projects and the status of any repayment on FRF loans.

NCSHA strongly supports the legislation and encourages Housing Credit stakeholder groups to ask members of Congress to cosponsor the bills and to urge congressional leadership to pass this legislation as soon as possible. If your organization would like to be listed as an endorser of the LIFELINE Act, contact Jennifer Schwartz.