Join the ACTION Campaign Monthly Call
The ACTION Campaign monthly call will be held on Friday, November 6 at 2:00 PM EST. We encourage all who are able to join to sign-on via video.
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Video Link: https://enterprisecommunity.zoom.us/j/193634880?pwd=eFNvanhPTG5YM01DdWUvRDN3ZlN0QT09
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Phone number: 929-205-6099
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Meeting ID: 193 634 880
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Password: 256387
ACTION Updates
Legislative Outlook & Housing Credit Advocacy Strategy
Despite continued negotiations and speculation of a possible relief bill, Congress will not pass new coronavirus legislation before election day, tomorrow. Earlier this month, the House passed a $2.2 trillion scaled back version of the $3.4 trillion coronavirus relief bill it initially passed in May. The $2.2 trillion package has served as the House Democrats proposal in negotiations with the White House. While the White House has presented offers of over $1.8 trillion, including emergency housing assistance, funding and policy differences between the two sides remain. The Senate, meanwhile, attempted but failed to pass a far more limited $500 billion package, and it remains to be seen whether the White House will be able to convince Republican Senators to support a more robust package if an agreement between the White House and House Democrats is reached.
As we have long expected, none of the coronavirus relief proposals on the table include ACTION’s Housing Credit priorities. However, the “lame duck” session after the election may still present opportunities to advance the 4 percent minimum rate and other ACTION Housing Credit proposals, as historically Congress considers expiring tax legislation —commonly called tax extenders— during this time due to tax provisions that would otherwise expire at the end of the calendar year. If a tax extenders package were to move, that would provide an opportunity to advance Housing Credit provisions along with it. Moreover, with the current Continuing Resolution funding the government set to expire on December 11, tax legislation could be combined with must-pass spending legislation.
ACTION Campaign members and supporters need to be ready to mobilize after the election to ensure a relief bill passes and our Housing Credit priorities are top of mind for any lame duck legislation. Our advocacy strategy will depend in part on the outcome of tomorrow’s election, and we are hopeful that by Friday’s monthly call we will know the official results and can begin sharing our advocacy strategy for the lame duck session this winter.
Regardless of the election results, ACTION urges affordable housing advocates to remain active in their Housing Credit advocacy. It is important to continue to reach out to members of Congress – especially those who are already supportive of the Housing Credit and are current cosponsors of the Affordable Housing Credit Improvement Act (AHCIA), S. 1703 and H.R. 3077 – to ask that they elevate our Housing Credit provisions to key leaders in Congress.
AHCIA Gains More Bipartisan Support with Eight New Cosponsors
On October 23, the House version of the AHCIA, H.R. 3077, gained additional bipartisan support from eight new cosponsors, including three Republicans and six Democrats. The cosponsors – Representatives Donald Norcross (D-NJ-01), Andrew Carson (D-IN-07), Ted Deutch (D-FL-22), Lloyd Smucker (R-PA-11), Ann Wagner (R-MO-02), Michael McCaul (R-TX-10), Rosa DeLauro (D-CT-03), and Denny Heck (D-WA-10) – bring the total tally of support in the House to 232 member of Congress, including 69 percent of the Ways and Means Committee. In the Senate, there are a total of 41 cosponsors, including 50 percent of the Senate Finance Committee.
We encourage ACTION members and supporters – especially those working in the states represented by these new cosponsors – to join us in thanking these members of Congress for their support of the Housing Credit. Check out ACTION’s updated list of AHCIA cosponsors for a list of Congressional cosponsors by state.
IRS Publishes Proposed Rule on the Housing Credit Average Income Test
On October 30, the IRS published a notice of proposed rulemaking on the Housing Credit Average Income Test (AIT) minimum set-aside. Once finalized, the rule will provide guidance on the implementation of the AIT, as established by the Consolidated Appropriations Act, 2018. ACTION championed the AIT—originally a provision within the AHCIA—and its enactment was a major victory.
AIT—commonly referred to as income averaging—is a third minimum set-aside option that permits new developments to serve households earning up to 80 percent of area median income (AMI), so long as the average income in the low-income units in any given property would be no higher than 60 percent of AMI. Prior to this change, only households earning up to 60 percent of AMI were permitted to move into Housing Credit properties. AIT allows developments to better serve very low- and extremely low-income households and makes more properties feasible in rural and other areas where incomes are depressed.
A violation of the minimum set-aside (regardless of whether it is AIT or one of the other two options) has significant implications for investors and may prevent taxpayers from claiming credits. In its proposed AIT rule, the IRS requires that all low-income units in a property average 60 percent of AMI or less in order to meet the minimum set-aside requirement. If a unit goes out of compliance, the proposed rule provides up to 60 days after the end of the year to take a mitigating action to prevent the project from violating the minimum set-aside and being disqualified from receiving credits for that year (or ever if the violation occurs in year-one). Learn more about the proposed rule in a recent blog from NCSHA. Comments on the proposed rule are due on December 29.
Senate Rejects Resolution to Overturn OCC’s Final CRA Rule; Fed issues CRA Advance Notice of Proposed Rulemaking
On October 19, the Senate voted 48-43 – largely along party lines – to reject resolution H.J. Res. 90, which would have overturned the Office of the Comptroller of the Currency’s (OCC) final rule to modernize the Community Reinvestment Act (CRA). Under the Congressional Review Act, Congress can overturn a new regulatory rule during the 60 legislative days following congressional receipt of the rule and, if required, its publication in the Federal Register.
CRA is intended to ensure that banks serve low- and moderate-income communities, and one way of meeting those obligations is to invest in the Housing Credit. Approximately 85 percent of annual Housing Credit equity investment is CRA-driven. The OCC’s final rule would substantially revise its CRA regulations. There are several elements of the final rule that raised concerns among ACTION Campaign Steering Committee members, such as the elimination and replacement of the investment test and the expansion to the list of qualifying activities for CRA credit in the community development category.
Meanwhile, the Federal Reserve Board of Governors (the Fed), one of the other two regulators of financial institutions that oversees CRA compliance for its member banks, on October 19 published its own advance notice of proposed rulemaking (ANPR) to modernize the CRA. The Fed’s ANPR differs significantly from the OCC’s final rule, and ACTION Steering Committee members are examining the proposal with an eye towards its impact on the Housing Credit. Comments on the Fed’s ANPR are due on February 16, 2021.
The other regulator, the Federal Deposit Insurance Corporation, has not advanced its own CRA modernization proposal. In general, experts, including those at the three regulatory agencies, prefer a unified approach to CRA regulations across the regulators. As the OCC’s final rule would not take effect until 2023 for larger banks and 2024 for smaller banks, this is still possible.
HUD Releases Difficult Development Area and Qualified Census Tract Designations for 2021
On September 24, HUD issued its annual designation of difficult development areas (DDAs) and qualified census tracts (QCTs) for 2021. DDAs are areas with high development costs relative to incomes; QCTs are census tracts where at least half of the households have incomes less than or equal to 60 percent of AMI or a poverty rate of greater than or equal to 25 percent. Housing Credit properties located in these areas qualify for up to a 30 percent basis boost, allowing for a larger maximum Housing Credit allocation. These designations apply to all Housing Credit properties, regardless of whether they are 4 percent or 9 percent properties, that are issued and placed-in-service on or after January 1, 2021. Learn more about these designations in Novogradac’s recent blog.
Business Roundtable CEOs Announce Initiative to Advance Racial Equity, Housing Policy Recommendations Cite Housing Credit
On October 15, Business Roundtable, an association of chief executive officers representing nearly 200 leading American companies, announced corporate actions and public policy recommendations to advance racial equity and justice and increase economic opportunity in the United States. Centered around six key systems – employment, finance, education, health, housing, and criminal justice – the initiative outlines specific housing-related goals and calls on the federal government to double funding from $14 billion to $28 billion for fiscal years 2021 to 2026 for “existing effective affordable housing programs,” naming the Housing Credit as one such program.
ACTION Membership
The ACTION Campaign is pleased to welcome the following new members, who joined our coalition in October:
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Colorado Housing Finance Authority, Colorado
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Twining Properties, New York
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DGA Residential, LLC, Tennessee
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Knoxville Area Association of Realtors, Tennessee
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Baylor University, Texas
ACTION is the largest coalition of Housing Credit advocates in the country. Help our coalition continue to grow by inviting your state and local partners to join ACTION.
Housing Credit Research
Novogradac Analysis Estimates Housing Credit Provisions from the Moving Forward Act by State
In last month’s ACTION newsletter, we covered a Novogradac analysis estimating that 1,014,000 additional affordable rental homes could be financed between 2020 and 2030 if the Housing Credit provisions from H.R.2, the Moving Forward Act, were to be enacted. This month, Novogradac has released additional analysis on how these projected affordable rental homes could be distributed by state, which can be accessed here.
Report on Racially Concentrated Areas of Poverty Examines Opportunity, References Housing Credit
Researchers from Case Western Reserve University have released a report called Changing the Narrative and Playbook on Racially Concentrated Areas of Poverty. The report, which examines the narratives and policies that have historically surrounded economically disadvantaged communities of color, calls for a shift from the presumption that in order to access opportunity, low-income people of color must move from their communities into “opportunity neighborhoods.” The report references the Housing Credit and how state housing finances agencies use qualified allocation plans to increase projects located in “areas of opportunity.”
Housing Credit In the News
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An October 28 CPR News article, “How Your Vote Could Help Alleviate Colorado’s Housing Crisis,” details how the Housing Credit program is helping make the development of affordable rental properties for veterans, homeless populations, and other vulnerable groups possible in Colorado. It highlights the AHCIA as an important piece of legislation to grow the Housing Credit program and to allow for the production of hundreds of additional affordable rental units in Colorado each year.
