Affordable housing advocates are exploring various options to advance key provisions of the stalled Build Back Better (BBB) bill.
Hopes of passing the sweeping $2 trillion proposal faded late last year when Senator Joe Manchin (DW.Va.) said he would not support the bill that would increase the annual low-income housing tax credit (LIHTC) of 9% included. a reduction in the 50% bond funding threshold test to 25% and other significant changes. In an evenly divided Senate, Manchin’s vote is likely to decide the fate of the bill.
“Build Back Better is life support,” says industry veteran Bob Moss. “It’s not happening in public. I think that’s intentional on the part of the administration and the legislature.”
Proponents note that Capitol Hill officials remain optimistic that the bill can receive Congressional approval, but the timing is unknown. In early January, lawmakers turned their focus to voting rights and other issues.
BBB has never had a target date, Moss says, but there are other deadlines approaching — February 2. On March 18, when the rolling resolution expires, and on March 1, when President Biden delivers his State of the Union address — which are significant for Congress and the administration to respond to key targets.
Moss and David Gasson are partners in MG Housing Strategies, a boutique advocacy shop focused on housing.
One of the big concerns is the reduction in the LIHTC allocation cap, which fell to $2.60 per capita this year after a 12.5 percent increase in the cap expired after four years, Gasson says.
The drop in allocations means fewer affordable housing projects will be funded this year, particularly for projects facing rising construction and labor costs. BBB calls for increasing the annual LIHTC cap for multiple years along with other program improvements.
While it’s disappointing that the legislation didn’t pass, Gasson says there are opportunities to expand resources for affordable housing later this year.
In January, Democrats and Republicans resumed negotiations over the fiscal 2022 federal budget, with the proviso that the pending resolution expires the following month, Gasson says.
Both sides have priorities they would like to see in the budget, which could mean an omnibus package of tax extensions or a separate tax package.
“We would absolutely work to include the 12.5% LIHTC hike that expired last year,” says Gasson.
If it’s a tax package, the industry might consider potentially including other provisions that are in BBB and maybe even a little more, such as: B. a baseline increase for bond deals or parts of the Affordable Housing Credit Improvement Act and the Decent, Affordable, Safe Housing for All Act, he says. This would be a bipartisan process, so support for the LIHTC on both sides of the aisle could benefit this effort.
Besides Build Back Better, there are a few other important themes in 2022.
Other priorities include working with the White House, the Home Affairs Council, the Department of Commerce and other groups to stem the rising cost of wood and other materials.
“It’s a clear threat and it’s a drain on resources,” says Moss. As a result, advocates are working with White House officials to explain how lumber costs are affecting construction and rehabilitation projects. Officials also hope that the Internal Revenue Service will soon issue median income test regulations for LIHTC developments using the median income option.
Public housing priorities
The Council of Major Public Housing Authorities (CLPHA) remains committed to housing investment in BBB. “The need hasn’t changed,” says CLPHA Managing Director Sunia Zaterman. “The question is how best to drive the increase in housing funding this year. Whether through Build Back Better or the appropriation process, our goal is to keep housing issues at the forefront.”
The legislation provides $65 billion to address deteriorating public housing in the country and $25 billion to expand housing credits to about 300,000 households.
“Recapitalizing the public housing stock and expanding the voucher program have been our consistent and long-term priorities,” says Zaterman.
CLPHA is also closely monitoring the fiscal 2022 budget. Both the House and Senate have proposed significant increases to the Department of Housing and Urban Development (HUD) budget. Zaterman notes that the budgetary appropriations bill envisages extending the rent subsidy to an additional 125,000 households.
Another focus is the continued implementation of emergency shelter vouchers funded by the American Rescue Plan Act of 2021. Through the Shelter Voucher Program, HUD is providing 70,000 vouchers to public housing authorities to help homeless individuals and families at risk of homelessness. or escaping domestic violence and other situations. Almost all CLPHA members have received an allocation of the vouchers.
“What the shelter voucher program teaches us is that high-risk, high-need households will need connections to ongoing services,” says Zaterman. “We have to expand this infrastructure further.”
Budget proposal for California
California. Gov. Gavin Newsom has made headlines with his latest budget proposal for 2022-23, which earmarks billions of dollars to end homelessness. Newsom, who has made homelessness one of his key issues, calls for spending $2 billion more on the issue in addition to the $12 billion multi-year commitment in last year’s budget.
The focus will be on people with mental health problems and cleaning up camps.
According to Newsom, the state will invest in 55,000 new homes and treatment beds to address the problem.
The proposed budget also includes $500 million over two years to support the Infill Infrastructure Grant program, $300 million over two years to the Affordable Housing and Sustainable Communities program, and $100 million over two years to to expand affordable housing development and adaptive reuse opportunities on government lands. The budget also earmarks $200 million over two years for the California Housing Finance Agency to provide developers with mixed-income rental housing loans, particularly for households earning between 30% and 120% of the AMI.