2022 Midterm Election Recap
Following November’s election results, 2023 will begin a two-year period of divided government in the 118th Congress. Currently, it is projected that the U.S. House of Representatives will be controlled by the Republican party. While a run-off election in Georgia will take place on December 6th between incumbent Sen. Raphael Warnock (D) and former football star Herschel Walker (R), Democrats will have retained control of the Senate for the 118th Congress. Under divided government, both parties will have to work together to advance legislation. However, the prospects seem dim.
In the meantime, the current Congress must finish their work with several significant items still on the year-end agenda. Congress will once again need to either pass a bill to fund the government beyond December 16th, when the current deadline is set to expire. A full-year FY23 funding package could also be the potential legislative vehicle for additional legislation, such as a year-end tax bill. Democrats are hoping to revive and pass a reformed version of the Child Tax Credit, which expired at the end of 2021 and Republicans are pushing to pass a reformed Research & Development tax credit. Affordable housing industry groups are advocating to restore and expand on the LIHTC 12.5% allocation increase and lowering the “50 percent test” bond financing threshold to 25 percent to allow states to finance twice as much affordable housing with their existing bond cap. NAHMA is currently advocating for a full-year funding bill with robust funding levels and LIHTC increase tax measures.
Senator Requests FTC to Review Whether Rental Pricing Algorithms Violate the Law
Senator Sherrod Brown (D-OH), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, sent a letter to the Chair of the Federal Trade Commission (FTC), Lina Khan, to urge the FTC to review property owners’ and landlords’ use of price optimization software like RealPage’s YieldStar and AI Revenue Management to set rents. The letter follows reports that the software’s algorithm inflated rents and suppressed competition in the housing market, allowing for anticompetitive and potentially unlawful collusion among competitors at the expense of consumers.
To view Sen. Brown’s letter to the FTC, click here.
House Hearing Examines Persistent Poverty in Rural Communities of Color
This week, the House Financial Services Subcommittee on Housing, Community Development and Insurance hosted a hybrid hearing titled, “Persistent Poverty in America: Addressing Chronic Disinvestment in Colonias, the Southern Black Belt, and the U.S. Territories.” This hearing focused on persistent poverty in the colonias, the Southern Black Belt region (Black Belt), and the U.S. territories, The colonias are defined by HUD and USDA as communities located within the 150-mile region along the U.S.-Mexico border that lack adequate water, sewer, or decent housing, or a combination of all three. The Black Belt encompasses predominately Black rural communities in the area extending between Arkansas and North Carolina. The hearing explored the challenges and the housing and community development needs in these predominantly rural communities.
In his opening statement, Chairman of the Subcommittee, Rep. Emanuel Cleaver (D-MO), noted that many rural communities continue to lack safe, decent, and affordable housing, and existing rural community development challenges continue to be exacerbated by diminishing federal and private investments. Within these rural communities, a subset population also experiences “persistent poverty,” which refers to counties with poverty rates over 20% or more for three consecutive decades. While rural counties represent a population of approximately 46.1 million people, they have an overall poverty rate of 15.4% compared to 10.5% nationwide. Rural renters also are more than twice as likely to live in substandard housing compared to people who own their homes, reflecting the lack of investment in these localities more broadly.
Witnesses described how programs focusing on rural areas have been financially short-changed time after time, when compared to their urban counterparts. They also highlighted how this is compounded by the fact that government agencies have been limited on staff levels and training resources. Most of the existing rural housing is 30 plus years old with no stable revenue streams towards preservation or rehabilitation outside of LIHTC (which predominantly goes to urban and suburban areas). Less than 14,000 properties remain in the USDA portfolio, with the prospect of three quarters of all section 515 mortgages maturing in the next decade. This would affect approximately 250,000 families and elderly persons. In 300 counties, section 515 properties are the majority of project based subsidized units and 90% of all section 515 properties are in counties with persistent poverty. Section 521 currently subsidizes 63% of the 515 units that are created, and witnesses called on Congress to increase this percentage.
Other policy proposals included strengthening and expanding LIHTC to boost affordable housing production in rural areas nationwide; allowing USDA’s Rental Assistance contracts to be renewed for a ten to twenty year period in properties after the USDA loan is paid off to preserve the affordability of subsidized multifamily housing; boosting funding for the HOME program to provide flexible housing funding to rural communities; and investing in community development financial institutions to expand rural lending, particularly in communities of color.
To view the full hearing, click here. To read the hearing memorandum, click here.