House Hearing on Future Affordability of Housing

On Tuesday, March 22, the House Financial Services Housing and insurance Subcommittee held a hearing entitled “The Future of Housing in America: Government Regulations and the High Cost of Housing.” There were several witnesses at this hearing, including:

  • Clyde Holland, Chairman and Chief Executive Officer, Holland Partner Group, on behalf of the National Multifamily Housing Council (NMHC) and the National Apartment Association(NAA)
  • Jayar Daily, Chief Operations Officer, American Homestar Corporation, on behalf of the Manufactured Housing Institute (MHI)
  • Vicki Been, Commissioner, New York City Department of Housing Preservation and Development (HPD)
  • Granger MacDonald, Chief Executive Officer, MacDonald Companies, on behalf of the National Association of Home Builders (NAHB)
  • Professor A. Mechele Dickerson, The University of Texas at Austin School of Law

In his opening remarks, Subcommittee Chairman Blaine Luetkemeyer (R-MO) stated” Is the stock of affordable market rate housing plentiful enough to support the people seeking it? The unfortunate answer is no. According to a recent study by NYU and Capital One, the renter population is growing while affordable housing options, those that consume less than 30 percent of household income, are shrinking.” He continued that the committee is closely examining all aspects of the United States housing affordability crisis, but sated that federal, state and local rules and regulations are contributing to the issue and preventing the development of more affordable units. He specifically cited Davis-Bacon wage rates and zoning restrictions.

Subcommittee Ranking Member Emanuel Cleaver (D-MO) also highlighted the growing unaffordability of housing in the United States but cited federal priorities to alleviate the burden, including strong funding for Section 8 rental assistance and full funding for the HOME Investment Partnership Program and the Community Development Block Grant program.

The witnesses then each had an opportunity to deliver testimony. Like the panel’s Chair and Ranking Member, each witness commented on the increasing rental prices for housing, but there too was disagreement over the federal government’s role in the issue. Mr. Holland, representing NMHC and NAA, cited that “while the cost to develop and operate rental housing increases annually, the median renter household income is virtually unchanged since 1981.” He continued that developers simply cannot keep pace with demand and stated “Even in communities that want and desperately need new multifamily development, the numerous hurdles that must be overcome include entitlement expenditures, zoning rules, environmental site assessments, impact fees, mandates like inclusionary zoning or rent control, and labor expenses and building code requirements.”

Ms. Been of the New York City Department of Housing Preservation and Development presented key initiatives undertaken in the New York City to help address the critical need for affordable housing. She noted that the capital funding that the city is providing to create and preserve affordable housing has been doubled to $8.2 billion over ten years and they are making major updates to zoning laws to encourage more senior affordable housing and remove regulatory barriers to the production of affordable housing. She also appealed to lawmakers on federal initiatives that could sponsor more development such as amending the low income housing tax credit (LIHTC) to allow income averaging so that developers could offer units affordable to tenants earning between 40 percent and 80 percent of area median income (AMI). Ms. Been further stated that Congress should restore funding for the Section 202, Housing for the Elderly program.

Mr. MacDonald, speaking on behalf of NAHB, cited several federal barriers that increase the price of housing. He noted the Obama Administration’s flood plain executive order. This order expands the floodplain management requirements far beyond the long-established 100-year floodplain, and Mr. MacDonald discussed major concerns that HUD has not mapped the geographical limits of the expanded floodplain or analyzed the costs and benefits of implementing new standards. HUD has indicated it will apply the order to all federal projects such as HOME, CDBG and federally insured multifamily projects, such as FHA-backed loans.

After the witnesses opening remarks, Chairman Luetkemeyer began the questioning part of the hearing. He first asked Mr. Holland to provide his thoughts on what is the biggest barrier or the most burdensome rule regulation that prevents further affordable, multifamily housing development. Holland responded that in high population areas “the biggest impact to providing affordable housing is the lack of zoned land or land that’s entitled for high density housing.” He stated that one of NAA’s studies has shown that 40 percent of the cost of a rental apartment unit has to do with regulation.

Ranking Member Cleaver then had his first opportunity to ask questions and focused on the LIHTC. He asked first Ms. Been on what the federal government can do to attract a greater number of corporations and individuals to the LIHTC who are interested in some kind of a housing development. He also stated that “only about 10 percent of those tax credits are used.” Ms. Been replied that New York uses every available credit, and she also again mentioned the desirability of income averaging for tenants. Cleaver asked the same question to Mr. MacDonald who stated that in Texas, there’s five projects for ever one that gets funded so the state could use more LIHTC due to the demand.

During her opportunity to ask questions, Representative Nydia Velazquez (D-NY) asked Ms. Been if it is possible to build affordable housing without federal rental subsidies like project-based rental assistance or the LIHTC in high cost areas like New York City. Ms. Been replied that the federal contribution is absolutely critical because it reaches the very lowest income families that the private market cannot provide for and in poorer neighborhoods, federal money helps stabilize the environment for families to pursue jobs.

Representative Velazquez then asked Mr. Holland to discuss the importance of Congress increasing funding for affordable housing programs, like Section 8. He sated “Yes, absolutely. From the National Multi-Housing Council and the National Apartment Association standpoint, we support full funding for these programs from that standpoint.” Mr. Holland also noted that on the tax-exempt bond side, the 4 percent LIHTCs have largely gone unused because of the lack of credit enhancement. He pinpointed the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac are limited under conservatorship despite the multifamily portion of their portfolio being successful, even throughout the financial crisis.

Later on, Representative Anthony Barr (R-KY) asked Mr. Holland to describe how Congress can effectively deliver Section 8 vouchers in a more cost-effective way based on the existing allocations. Mr. Holland responded that streamlining the process is an obvious choice, but another key aspect is confidence in the process from a private sector standpoint. He stated that owners need to know it’s funded and all of that uncertainty for owners who have to rely on making their payment on the first is really challenging, citing sequestration as a major issue which made more owners ill at ease. Representative Barr asked for more detail on the streamlining activities HUD could complete, and Mr. Holland cited inspections and his belief that owners should be allowed to move tenants in right away without having to wait and re-inspect every unit every time there is a vacancy.

Other questions focused on manufactured housing, first-time home buyers, and zoning laws which may impact housing development. Overall, this hearing demonstrates that members of both parties are taking affordable housing issues seriously. With the conversation open, NAHMA sees this as an opportunity to further promote funding for affordable housing.

To view the written testimony of the witnesses at this hearing, and to watch an archived webcast, please click here

Legislation Aims to End Homelessness

On Thursday, March 24, Representative Maxine Waters (D-CA) introduced the Ending Homelessness Act of 2016 (H.R.4888). This bill would provide significant resources to end homelessness in America through $13.27 billion in emergency funding over the next five years. Representative Waters estimates that this bill would provide 405,000-410,000 units of housing for the homeless. It would also implement a holistic strategies that would provide funding for outreach and case management, as well as technical assistance to help states and local jurisdictions better align their healthcare and housing. The specific funding breakdown is directed at the following programs:

  • $5 billion over five years for McKinney-Vento Homeless Assistance Grants – Estimated to provide an additional 85,000 new permanent supportive housing units.
  • $2.5 billion over five years for new Special Purpose Section 8 Housing Choice Vouchers – Estimated to provide an additional 295,000 – 300,000 housing vouchers, and would give preference to those who are homeless or at risk of becoming homeless.
  • $1.05 billion in mandatory annual appropriations for the National Housing Trust Fund (permanent) -Estimated to create 25,000 new rental units for extremely low income households.
  • $500 million over five years for outreach funding – To be provided on a competitive basis to jurisdictions to provide case management and social services for homeless or formerly homeless persons.
  • $20 million for HUD’s Healthcare and Housing (H2) Systems Integration Initiative (one-year only)

In a press release, Representative Waters stated “We can solve the problem of homelessness, and save taxpayers money, by investing in Housing First interventions that get homeless people housed quickly and keep them housed. The Ending Homelessness Act of 2016 would do that and more. It would provide communities with the help they need to end chronic homelessness.”

This bill will be referred to the House Financial Services Committee, of which Rep. Waters is the Ranking Member.

Wounded Warrior Housing Reform Act of 2016

On March 16, Representative Juan Vargas (D-CA) introduced H.R. 4753, the Wounded Warrior Housing Reform Act of 2016. This bill would exclude Service-connected disability compensation, and pensions paid to a veteran age 65 or older from consideration as income for affordable housing programs. The bill was cosponsored by Representative Dan Donovan (R-NY)

Many veterans use federal benefit programs and disability payments to meet their needs. However, HUD currently considers a handful of these programs a part of a veteran’s income. This ultimately reduces the housing assistance available for low-income disabled veterans. The Wounded Warrior Housing Reform bill seeks to exclude disability compensation and certain pensions from counting as income in an effort to allow more disabled veterans to qualify for affordable housing.

In a press release, Representative Vargas stated “Veterans sacrificed or risked everything to protect our country. The least our country can do is be there for them in their time of need. This legislation is a commonsense way to make sure injured service members have access to safe housing, and I’m proud to support it.”

H.R. 4753 has been referred to the House Financial Services Committee. NAHMA will monitor the progress of this bill and alert members if it passes the committee.

Senator Cantwell Seeks Expansion of the LIHTC

This week, Senator Maria Cantwell (D-WA) declared her intention to introduce legislation to expand Low Income Housing Tax Credit (LIHTC) authority by 50 percent and to make other changes to strengthen the program at an event in Seattle, WA.

she stated that her plan would allow state Housing Credit allocating agencies to provide a 50 percent basis boost for properties targeting families with incomes of 30 percent of area median income (AMI) or less (extremely low-income families) and homeless families and individuals, and to revise the program’s tenant income limits to allow for income averaging to broaden the income-mixing in Housing Credit properties. Cantwell claims her proposal would finance approximately 400,000 additional units of affordable housing nationwide over the next decade.

“We’re here today to launch a national campaign to say that we need to increase the amount of tax credits so more affordable housing units can be built in the United States of America,” Cantwell said at the Seattle event. “We know this is a big challenge, but the housing crisis is a big challenge.”

Senator Cantwell has also recently issued a report “Addressing the Challenges of Affordable Housing & Homelessness: The Housing Tax Credit,” which found that across the country there are 3.9 million extremely low-income families that lack access to affordable housing. She has long been a major supporter of the LIHTC and was one of the driving forces to make the 9 percent minimum credit rate permanent in the recent tax extenders legislation.

A formal bill has not been released, but it is expected to be issued soon.

To view Senator Cantwell’s report on the LIHTC, please click here