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Legislative State of Play
FY 2023 President’s Budget and Treasury’s Green Book Released
President Biden released his Fiscal Year (FY) 2023 budget proposal today, which comes on the tail of the March 15 enactment of the $1.5 trillion Fiscal Year FY 2022 Omnibus Appropriations Bill. The budget request signals to Congress the administration’s funding priorities as they chart out the annual appropriations bills for FY 2023, which begins on October 1. In addition to robust funding for affordable housing for HUD at $71.9 billion, the budget also requests $50 billion in mandatory funding to increase the nation’s affordable housing supply, including an additional $10 billion for the Housing Credit over a 10-year period, as well as $35 billion for a new Housing Supply Fund at HUD and $5 billion for the Community Development Financial Institutions (CDFI) Fund at Treasury.
In Treasury’s “Green Book,” which details the revenue raising or tax-related provisions in the budget request, the additional $10 billion for the Housing Credit is described as non-geographic, discretionary basis boosts for private activity bond (PAB) -financed projects. This boost for PAB projects, which is similar to the discretionary boost on the 9% side of the Housing Credit program, would only apply to new construction or substantial rehabilitation that would add new net units.
Missing from the budget are provisions that had been included in the Build Back Better Act (BBB) legislation, including Housing Credit policies such as a cap increase and lowering the 50 percent test threshold for bond-financed developments. While the budget does not specifically name BBB, it notes that the president supports legislation that would take on various priorities that had been addressed in BBB, including affordable housing. It goes on to say that because discussions with Congress continue on these issues, the budget includes a deficit neutral reserve fund to account for future legislation. This is being interpreted as the administration’s ongoing support for those policies, even though they are not specifically named in the budget.
What’s Next for the 117th Congress
Congress has turned its attention to other critical and timely matters, including Supreme Court confirmation hearings and the Russian invasion of Ukraine. In conversations with Senate Democratic leadership, they have shared that they intend to recommence BBB negotiations after they address those other pressing legislative matters. However, there is an expiration date they must contend with—in order to proceed under the reconciliation instructions from the FY 2022 Budget Resolution passed in August 2021, the legislation must be passed by the end of FY 2022 on September 30, 2022.
In addition, efforts are still underway to amend the American Rescue Plan Act statute governing Coronavirus State and Local Fiscal Recovery Funds (SLFRF) to facilitate its use with the Housing Credit. As you may recall, a letter organized by ACTION co-chair NCSHA and signed by over 80 organizations was sent to Congress in February, urging them amend the SLFRF to allow it to be used as long-term loans to Housing Credit-financed developments. The hope had been that Congress would include such language in the FY 2022 appropriation omnibus that passed last month. While the final FY 2022 spending legislation did not include that provision, ACTION members continue to pursue the fix.
In a strong showing of bipartisan support, Representatives Alma Adams (D-NC-12), David Rouzer (R-NC-07), and Carolyn Maloney (D-NY-12), introduced the LIHTC Financing Enabling Long-term Investment in Neighborhood Excellence Act (LIFELINE Act), H.R. 7078, on March 17. The bill proposes a legislative fix to allow SLFRF to be used to provide long-term loans to Housing Credit developments, which Congresswoman Adams shared at NCSHA’s legislative conference during her remarks on March 16. Companion legislation is expected to be released soon by Senator Patrick Leahy (D-VT) in the Senate. We will continue to keep ACTION members and supporters apprised of any legislative progress on the issue, in addition to any further agency guidance.
ACTION continues to build on the strong bipartisan, bicameral support for the Affordable Housing Credit Improvement Act (AHCIA) and will also keep pushing for the inclusion of the Housing Credit production provisions in the BBB should the reconciliation bill advance. These efforts are especially urgent given the expiration of the 12.5 percent expansion at the end of 2021 and inflationary pressures on housing production and preservation.
Affordable Housing Credit Improvement Act Gains Additional Bipartisan Support in the House
On March 9, ten new members of the House of Representatives signed on as cosponsors to the AHCIA, H.R. 2573. Please join ACTION in thanking the following legislators for their recent cosponsorship: Representatives Chellie Pingree (D-ME-01), Bonnie Watson Coleman (D-NJ-12), Jared Huffman (D-CA-02), Seth Moulton (D-MA-06), Ilhan Omar (D-MN-05), Joe Courtney (D-CT-02), Chrissy Houlahan (D-PA-06), Bobby Rush (D-IL-01), Andrew Garbarino (R-NY-02), and Ken Calvert (R-CA-42).
The AHCIA now totals 155 cosponsors in the House, including 99 Democrats and 56 Republicans, comprising 72 percent of the Ways and Means Committee. In the Senate, S. 1136 has a total of 32 cosponsors, including 22 Democrats and 10 Republicans, making up 50 percent of the Senate Finance Committee. Check out ACTION’s update cosponsorship list to see the Members of Congress currently signed on. ACTION is continuing our advocacy outreach to build cosponsorship for the legislation and encourage our members and partners to help us keep building support through outreach to your Members of Congress if they have not yet signed onto the AHCIA.
The ACTION Campaign is pleased to welcome the San Francisco Mayor’s Office of Housing and Community Development, who joined the coalition this past month. Help ACTION continue to grow our membership and advocacy strength by encouraging your networks to support affordable housing and the Housing Credit by joining the coalition. Membership is free.
Together, we can demonstrate to Members of Congress the widespread support for the Housing Credit across the country. You can also help strengthen our reach by following the ACTION Campaign’s LinkedIn page and inviting your connections follow and join us!
Housing Credit Research
- In January, the Treasury Inspector General for Tax Administration released an audit report on oversight of the Housing Credit program. A recent analysis from Novogradac summarizes the main findings of the report, finding that the federal audit activity “has not identified significant noncompliance” by Housing Credit property owners.
- A recent study in the American Journal of Preventative Medicine called “The Association of Low-Income Housing Tax Credit Units and Reports of Child Abuse and Neglect” finds that the use of Housing Credits was associated with a four to six percent decrease in Child Protective Services (CPS) reports. Although the study has some limitations (for example, lack of available data on how many children who are reported to CPS live in Housing Credit properties) this study highlights that housing affordability can help prevent child maltreatment.
- A recent report from the Federal Reserve Bank of San Francisco details the link between rent inflation and the forecast for overall inflation, predicting that higher rent inflation points to significant upside risks in the overall inflation outlook.
- In recent years, the demand for private activity bonds (PABs) has been increasing. A new blog post from Novogradac compares and contrasts the use of and requirements for 9% Housing Credits versus the increasingly demanded PABs.
- On March 21, the IRS published its population figures for Calendar Year 2022 Housing Credit and PAB limits for all 50 states, DC, and United States territories, revealing a national population increase of 0.7 percent. Check out a recent blog post from Novogradac to learn more.
Housing Credit News Highlights
- A March 1 article in Cleveland.com highlights a recent hearing held by the House Select Committee on Economic Disparity and Fairness, “Promoting Economic Prosperity and Fair Growth Through Access to Affordable and Stable Housing.” Witnesses at the hearing, including the Executive Director of CHN Housing Partners Kevin Nowak (who is featured in the article) and the President of Solutions Division at Enterprise Community Partners Jacqueline Waggoner, both emphasized the critical role of the Housing Credit in promoting economic mobility and prosperity in communities across the country.
- A March 15 article in News Star features a new affordable housing development in the rural community of Lake Providence, Louisiana called Lakeshore Family Homes that will serve as a replacement for blighted residential properties in the area.
- A March 18 article in Affordable Housing Finance called, “Rising Costs Hit Affordable Housing Projects,” details how increasing building material costs are creating greater strain on affordable housing deals, emphasizing the need for additional funding for the Housing Credit program.
- A March 18 article in Politico called, “The main driver of inflation isn’t what you think it is,” cites the housing shortage as a main driver of the rising inflation, noting rental prices rose 17.6 percent over the last year.
- A March 21 op-ed in Politico by CEO of Habitat for Humanity International Jonathan T.M Reckford called, “When It Comes to Inflation, Our Focus Should Be On the Cost of Housing,” details the issue of rising inflation and names several housing focused solutions to address this, citing the Housing Credit as a key solution.
- A March 21 article in WCNC Charlotte highlights the newly introduced LIFELINE Act in the House, which would allow the streamlined use of SLFRF resources with the Housing Credit.
- A March 23 article in the Atlanta Civic Circle highlights a new affordable housing project in Peoplestown, Atlanta funded in part with 4% Housing Credits.