CARH’s Broadcast Email—Legislative Alert

Background

On November 19, the House of Representatives, by a vote of 220-213, passed the Build Back Better (BBB) Act (H.R. 5376). This vote occurred after several months of negotiations between centrist and progressive Democrats in the House and the White House. Although the bill passed the House, there remain several controversial proposals that are yet to be agreed to by Democratic centrists in the Senate, most notably extended paid leave, expansion prescription drug coverage, as well as the amount of spending proposed.

Passage of the BBB came on the heels of the House passing and sending to President Biden for his signature the Infrastructure and Investment Jobs Act (P.L.117-58) which provides over $550 billion in funding for the “traditional bricks, roads, bridges infrastructure spending.” As was reported in several of CARH’s Broadcast Emails (see emails of  September 17, October 14, and October 26), the original spending level of $3.5 trillion for the BBB needed to be reduced not only to garner support of the centrist Democrats in the House, but also due to spending concerns in the Senate. The BBB which passed the House on Friday did reflect those concerns and the bill now totals $2.2 trillion in new spending and revenue provisions. It was long known that there would be no Republican support for the BBB bill in the House. Even with the reduction in spending, it is uncertain of the BBB’s fate in the Senate. Historic investments in education, health care, combating climate change, as well as $150 billion in affordable housing programs, including $2 billion for the United States Department of Agriculture’s (USDA) Rural Development (RD) multifamily housing programs and the largest expansion of the Housing Credit and Bond programs since the two programs were created in 1986 are part of the BBB.

Congress is currently in recess for the Thanksgiving Day holiday but will be returning next week. Upon returning, both the House and Senate will need to pass another Continuing Resolution (CR) for Fiscal Year 2022 funding which will keep the government funded past December 3, as well as consider legislation that will raise the debt ceiling. Negotiations will also continue on the BBB legislation in the Senate, with spending reductions likely. The bill would then be sent back to the House for final approval before it would be sent to the President for signature.

What is at Stake for Affordable Housing Programs

The BBB would provide over $150 billion in funding for numerous affordable housing programs, including funding for RD’s multifamily housing programs. While the original levels of funding as recommended by the House Financial Services Committee in September were reduced for both RD and HUD, the level of funding that passed the House in the BBB are levels that RD, the industry, and residents have not seen in decades.

Under the terms of the BBB the following monies would be appropriated for RD’s multifamily housing programs:

• $1.8 billion for the purpose of conducting new construction, improvements to energy and water efficiency or climate resilience, the removal of health and safety hazards, and the preservation and revitalization of housing authorized under Sections 514, 515, and 516 of the Housing Act of 1949. The bill also provides language outlining terms and conditions for preservation that track language from prior Multifamily Preservation and Revitalization (MPR) Federal Register Notices of Funding Availability.
• $100 million for Section 521 Rental Assistance (RA). These funds will ensure that residents who were not current RA recipients but qualified under the American Rescue Plan of 2021 (ARP) to receive RA, will continue to receive funding thus bringing funding for those non-RA residents to $300 million, the level of funding that CARH had been advocating was needed. (See CARH’s March 11, 2021, Broadcast Email that provides details about these ARP funds.)
• $100 million for the costs to RD of administering and overseeing the implementation of the information technology, financial reporting, research and evaluations, and other costs in support of programs. As CARH members know, we have advocated that the agency needs to upgrade its existing technology systems and hopefully a substantial portion of these funds will be for that purpose.

Also contained in the BBB as passed by the House, are a host of funding increases for a variety of programs administered by the Department of Housing and Urban Development (HUD). Included in the bill is funding for the following:

• $10 billion for the HOME Investment Partnership Program (HOME);
• $2 billion for Improving Energy Efficiency or Water Efficiency or Climate Resilience of Affordable Housing;
• $1.6 billion for Revitalization of Distressed Multifamily Properties;
• $1 billion for Project-Based Rental Assistance;
• $1 billion for Native American Communities;
• $500 million for Section 811 Supportive Housing for People with Disabilities;
• $500 million for Section 202 Supportive Housing for the Elderly program;
• $3 billion for the CDBG program;
• $5 billion for Lead-Based Paint Hazard Control and Housing Related Health and Safety Hazard Mitigation;
• $1.75 billion for the Unlocking Possibilities program;
• $800 million for Fair Housing Activities and Investigations;
• $65 billion investment in the nation’s public housing infrastructure;
• $24 billion for Housing Vouchers;
• $15 billion for the national Housing Trust Fund (HTF)

On the tax front, as outlined for spending as recommended by the House Financial Services Committee, the Ways and Means recommendations were altered from the Committee’s September marks. However, the provisions that have been included in the House passed BBB would do the following for the Housing Credit and Housing Bond programs

•  The 9 percent credit allocation increases 10 percent plus inflation for each of the three years from 2022 to 2024 over the current baseline, which includes the 12.5 percent increase in effect for the past three years, with a reversion in 2025 to a lower baseline that doesn’t include the 12.5 percent increase. CARH along with the ACTION Coalition is working to have the three years extended through 2025.
• The lowering of the bond financing threshold from 50 percent to 25 percent for five years, from 2022 to 2026.
• Permanent 50 percent basis boost for properties serving extremely low-income (ELI) tenants and an 8 percent minimum set-aside for ELI properties, with a limitation that the state can use no more than 13 percent of its state Housing Credit ceiling or 8 percent of its private activity bond cap on properties that receive the ELI basis boost.
• Permanent 30 percent basis boost for Native American areas. CARH is continuing to work to have rural included in this 30 percent basis boost.
• A repeal of the Qualified Contracts (QC) option and changing the statutory purchase price for existing properties that apply for the QC.
• Changes the right of first refusal.
• Provides for a New Markets Tax Credit in tribal areas.
• Makes the Energy Tax Credit easier to use with Housing Credits by allowing Energy Credits without reducing Housing Credit eligible basis.
• Creates a Neighborhood  Homes Investment Tax Credit to fund affordable housing home ownership.

What CARH Members Need to Do

As we have relayed the direct spending that would be directed toward RD is historic. The $1.8 billion would provide the necessary funding to clear the preservation pipeline that currently exists. There is still a five to six year waiting period for applications submitted for MPR funding, the funding in the BBB as passed by the House would erase that time period. New construction of rural properties would also be possible in many communities.

CARH would like to have more funding for RD’s Section 521 Rental Assistance (RA)program. We believe that preservation of the portfolio would be more cost effective in the long run if properties were allocated RA to provide for rent increases and thus allowing for capital improvements as a property ages.

We again emphasize that you should provide personal stories of what these spending proposals and tax changes would do to provide stability to your properties, residents and communities where located. CARH would also like to have rural properties receive a basis boost under the Housing Credit recommendations to compensate for the lack of credit and the smaller project size and corresponding higher per unit construction costs of rural housing.

It is important if you have properties or do business in states where Democratic Senators serve on the Senate Banking, Housing and Urban Affairs Committee that you contact these members and urge them to support the $2 billion in funding for RD. In addition, on the tax front it is also important that you contact Democratic Senators on the Senate Finance Committee and urge them to support inclusion of the BBB provisions relating to the Housing Credit and Bond programs. We would also encourage you to ask them to support inclusion of rural in the basis boost. Finally, other key members include Senate Majority Leader Chuck Schumer (D-NY), Senator Jeff Merkley (D-Or), Senator Debbie Stabenow (D-MI), Senator Joe Manchin (D-WVA) and Senator Krysten Sinema (D-AZ).

Don’t forget to keep the national CARH office apprised of your contacts, their response, and if follow-up is needed from the national CARH staff with specific members of Congress and or their staffs.

Please contact the CARH national office at carh@carh.org or 703-837-9001 should you have questions or concerns. For other news and information affecting the affordable rural housing industry, please visit the Newsroom on CARH’s website, www.carh.org.