Election of New House Speaker Allows Congress to Resume Legislating
After 22 days without one, the House elected Mike Johnson (R-LA-04) as Speaker. Johnson, the fourth official nominee for the position, followed the unprecedented removal of Former Speaker Kevin McCarthy (R-CA-20). Speaker Johnson, in one of his first actions, changed the House’s schedule to keep Representatives in Washington through November 17, which is when funding for the federal government is set to expire. As reported in ACTION’s October newsletter, Congress passed a stopgap funding measure, called a Continuing Resolution, or CR, for Fiscal Year (FY) 2024 appropriations on September 30.
During the period the Speakership was vacant, legislation could not move, which complicates the schedule, leaving little time for spending negotiations before the CR’s November 17 expiration. While efforts are being made to pass the bills quickly, the Speaker has acknowledged that another CR may be needed, with January 15 or April 15 being floated in terms of a CR end date. During this period, the Senate has been working to advance its 12 appropriations bills.
As ACTION has covered in previous newsletters, critical sources of gap financing for the Housing Credit remain in jeopardy, with the HOME Investment Partnerships Program still facing a 67 percent cut in the House. The Senate bills maintain more robust levels for funding programs, including HOME, which means there is a significant gulf that must be reconciled for final bills to advance.
Speaker Johnson was first elected to Congress in 2017 and has not served in any leadership positions prior to his election last week. Consequently, there is little public information about his positions on many policies, including tax. However, Speaker Johnson has stated publicly that he wants to be known for decentralizing power. This could mean he may cede decision on tax policy to Ways and Means Committee Chair Jason Smith.
The House’s internal operating rules for this Congress still includes the rule that reduced the threshold for initiating a Motion to Vacate the Speakership to just one vote, which was a part of the concessions McCarthy made in January to secure votes during his contentious Speaker race. This means that while Speaker Johnson was elected with unanimous Republican support, he must contend with the fact that any one House Republican could force a vote to oust him from this position at any time.
What this Means for the Housing Credit
With the House emerging from three weeks without a leader, the clock is quickly running out for Congress to negotiate a spending bill for FY24 that could carry a tax package. Should Congress move to address tax issues this year, it is critical that the Housing Credit be part of that package and advocates need to be pushing hard for the AHCIA’s inclusion.
To be successful, our AHCIA champions in Congress have urged us to continue building cosponsorship, which demonstrates the impressive support for AHCIA to Congressional tax writers and leadership and would help us when they are making decisions about a tax package. It is also critical for existing cosponsors to weigh in with leadership to let them know that the AHCIA is a top priority for them, so outreach to our supporters now is also key.
While it is possible that a second CR that funds the government through January 15 or April 15 could lead to a tax extenders package materializing early next year, conventional wisdom suggests that Congress is unlikely to act on tax policy in a substantive manner in an election year, especially the closer we get to the election, underscoring the urgency of moving a tax package as soon as possible.
Housing Credit Raised at Senate Hearings
On October 17, the Senate Banking, Housing, and Urban Affairs Committee’s (Banking Committee) Subcommittee on Housing, Transportation, and Community Development held a hearing on Community Development Financial Institutions (CDFIs), many of which are involved in the Housing Credit. One witness at the hearing, Julia Nelmark, president of ACTION member Midwest Minnesota CDC and CEO of ACTION member White Earth Investment Initiative, explained to the Subcommittee how important the Housing Credit is for the construction and rehabilitation of affordable housing. Nelmark also explained how critical the AHCIA would be to addressing the rural and Tribal affordable housing crises, especially via the rural and Tribal basis boost provisions included in the bill.
On October 24, the Senate Judiciary Committee’s Subcommittee on Competition Policy, Antitrust, and Consumer Rights held a hearing on consumer rights in housing markets. During that hearing, one of the witnesses, Diane Yentel, president and CEO of ACTION Steering Committee member NLIHC, had an exchange with AHCIA Republican bill lead Marsha Blackburn, where the two discussed the positive impacts the bill would have if enacted.
Help Keep up the Momentum for AHCIA
ACTION’s video series detailing the provisions of the AHCIA of 2023 has been posted! In these videos, NCSHA’s Director of Tax and Housing Advocacy Jennifer Schwartz and Enterprise’s Senior Director of Public Policy Ayrianne Parks provide an overview of the bills’ specific provisions. Please share them widely to promote the AHCIA and use these videos in your advocacy efforts!
The ACTION Campaign has a number of advocacy materials to help support your outreach, including updated National, State, and Congressional District Fact Sheets, updated statewide ACTION Campaign member lists, an in-district advocacy guide, sample emails for outreach, as well as detailed information about the legislation in our Advocacy Toolkit. We also have a complete list of cosponsors from last Congress, where you can check if your Senator or Representative has cosponsored in the past, as well as the most up-to-date list of current cosponsors.
October AHCIA Cosponsorship Update
The AHCIA currently has 38 percent of Congress cosponsoring, with supporters evenly divided by Republicans and Democrats. In the House, there were four new cosponsors this past month, bringing the total number of cosponsors to 174.
- Garret Graves (R-LA-06), October 2
- Valerie Foushee (D-NC-04), October 2
- Juan Ciscomani (R-AZ-06), October 12
- Kevin Mullin (D-CA-15), October 12
Cosponsorship of the Senate version of AHCIA stands at 30 Senators, split evenly between both parties.
As of this writing, there are also 19 Senators and 14 House Democrats in the queue.
Community Reinvestment Act Regulations Released
On October 24, the three federal entities that regulate financial institutions—the Board of Governors of the Federal Reserve (the Fed), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) released the final rule to revise the implementation of the Community Reinvestment Act (CRA). The CRA, enacted into law in 1977, is intended to incentivize banks to meet the credit needs of the communities in which they operate, including low- and moderate-income communities that had suffered disinvestment in the decades leading to the enactment of the CRA. The CRA helps stimulate investment in the Housing Credit by allowing banks to get CRA credits for their equity investments in these properties. Approximately 85 percent of Housing Credit investment is CRA-motivated. The three bank regulators maintain that the new rule modernizes CRA requirements to reflect market developments since the rules last overhaul in 1995.
In its August 2022 comments on the proposed rule, the ACTION Campaign raised concerns about the regulators’ proposed consolidation of the lending and investment tests under the prior rule into a single community development financing test, arguing that this could result in less investment if banks determine lending to be more advantageous to them than investment. The final rule codifies the consolidation of these two previously separate tests into a single community development financing test.
However, the regulators did adopt another proposal made by the ACTION Campaign in its proposed rule comment—to give equal weight to the newly created retail and community development financing tests. The final rule gives equal weight to community development and retail activities; this 50/50 weighting replaces the previous 60/40 weighting in the proposed rule.
Another important change in the regulations will provide for banks to receive CRA credit for activities conducted outside their assessment areas in certain circumstances. This change could lead to greater investment and lending in areas that previously did not benefit from the CRA, including some rural areas.
Banking experts are still analyzing the rule, which is complex and multifaceted, to determine how it might impact low-income communities broadly and Housing Credit investment specifically. The rule, just under 1,500 pages long, will technically go into effect April 1, 2024, but the new rules for exams become applicable on January 1, 2026. However, some amendments will be delayed indefinitely (with effective dates to be published in the Federal Register). ACTION will continue to analyze the final rule and report relevant findings.
IRS Reallocates $3.2 Million in Unused Housing Credits to 28 States
On October 10, the IRS published Revenue Procedure 2023-32, which allocates unused Housing Credit carryovers to qualified sates from the National Pool for Calendar Year 2023. The IRS will allocate $3,245,624 in credits to 28 states. The list of states and dollar amount of credits they will each receive is available in the Revenue Procedure. A Notes from Novogradac post explains that this relatively small amount demonstrates the high nationwide demand for the Housing Credit, as almost 99.7 percent of the 2023 9 Percent Credit allocation was used.
Final Davis-Bacon Rule Goes into Effect
As a reminder, on October 23, a final rule published by the Department of Labor pertaining to the Davis-Bacon Act of 1931 and related laws went into effect. This rule is the first comprehensive regulatory update to Davis-Bacon in almost four decades. The nearly-100-year-old law requires that federal contractors pay local prevailing wages to mechanics and laborers working on construction projects funded by the government. While the Housing Credit itself is not subject to Davis-Bacon, other federal programs that are frequently used as gap filler in Housing Credit developments require compliance with Davis-Bacon.
Worst Case Housing Needs Full Report Published
HUD recently published the full Worst Case Housing Needs: 2023 Report to Congress. The report, which is based on the 2021 American Housing Survey conducted by the Census Bureau on HUD’s behalf, found that worst-case housing needs grew notably across the country between 2019 and 2021. HUD previously published the Executive Summary in August.
On October 10, the National Leased Housing Association published a comprehensive report analyzing the results from their recent property insurance survey, which received over 400 responses from affordable housing providers. Key takeaways include the fact that for 2022-23 policy renewals, 29 percent of housing providers saw their premiums increase 25 percent or more, while only 17 percent of providers saw premiums increase by that amount for 2021-22 policy renewals; limited markets and capacity are the primary driver of most increases in premiums, followed by claims history / loss and renter population; and 93 percent of respondents said that they would take action to mitigate cost increases caused by higher insurance premiums.
ACTION will be working with its members to explore policy proposals to alleviate this burgeoning crisis.
NCSHA Publishes Recommended Practices for Housing Credit Administration
On October 27, ACTION co-chair NCSHA published the 7th Edition of its Recommended Practices in Housing Credit Administration. The Practices include updates of numerous recommendations from the previous version, to address rising development and operating costs, pressure on the continued long-term affordability of existing properties, siting considerations, and the need to expand opportunity for renters and industry participants of color. The updated Recommended Practices also includes a new practice focused on tenant protection policies. Prior to this effort, NCSHA last updated the Recommended Practices in late 2017. Read the summary here.
In October, the ACTION Campaign welcomed five new members to the coalition. Please help us welcome the following new members:
- Community Housing Association for Rehabilitation Measures and Effective Development, Oklahoma
- Housing for Communities, Inc., Oklahoma
- TTG Development, LLC, Kentucky
- Catholic Charities USA, Virginia
- NHE, Inc., South Carolina
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 to follow and join us.
Housing Credit Research
- An October 16 Notes from Novogradac article analyzes data that the IRS recently released about Calendar Year 2020 (CY20) Private Activity Bonds and compares it to similar CY20 data published by the Council of Development Finance Agencies, a national trade group.
- Another October 16 Notes from Novogradac article analyzes the outlook for HUD’s 2024 income limits.
- Novogradac recently updated its Housing Credit mapping tool to include properties that were placed in service through 2021.
- An October 18 Notes from Novogradac article explores data related to the 2024 DDAs and QCTs.
Housing Credit in the News
- An October 1 article in Business Insider covers the Chair of the White House Council of Economic Advisers Jared Bernstein’s exhortation of Congress to strengthen and expand the Housing Credit, in line with President Biden’s FY24 Budget Proposal.
- In an October 3 interview with WBBM-Chicago, Enterprise’s Senior Director of Public Policy Ayrianne Parks explained the predicted benefits of the AHCIA and touted ACTION’s Local Government Leaders’ letter to Congress.
- An October 13 article in Bloomberg CityLab examines the AHCIA and its unusual position as a bill with incredibly robust bipartisan, bicameral support despite this divided Congress. The article quotes many ACTION Campaign members, who all urge for its passage or inclusion in a year-end tax package.
- An October 13 article in the Lincoln City (OR) News Guard covers comments by AHCIA bill lead Sen. Ron Wyden describing bipartisan interest in Congress to include the Housing Credit in an end-of-year tax package.
- An October 17 press release from Fannie Mae covers its commitment of $3.2 billion in net equity since reentering the Housing Credit market in 2018, which has been invested in over 1,000 Housing Credit equity properties located in 49 states, DC, Guam, Puerto Rico, and the US Virgin Islands.
- An October 19 article in Affordable Housing Finance covers the upcoming retirement of longtime ACTION Steering Committee member Buzz Roberts, CEO of the National Association of Affordable Housing Lenders. Mr. Roberts played a key role in crafting the Housing Credit program and AHCIA for many years.
- An October 23 article in the Washington Examiner notes that the AHCIA has bipartisan support in Congress and would be an effective tool to counter the housing crisis.