Administration Announces Immediate Steps to Increase Housing Supply
On Wednesday, the White House announced several steps that federal agencies have been ordered to take that to immediately begin to create and preserve nearly 100,000 additional affordable homes for homeowners and renters over the next three years. Specifically, federal agencies (HUD and Treasury) will seek to boost the supply of quality, affordable rental units by relaunching the partnership between Treasury’s (Treasury) – Federal Financing Bank (FFB) and HUD’s Risk Sharing Program. Other actions include raising Fannie Mae and Freddie Mac equity cap for the LIHTC. The Administration is also seeking to make more single-family homes available to individuals, families, and non-profit organizations – rather than large investors. Following the announcement from the White House, Treasury, HUD and FHFA announced actions underway to increase the housing supply. Specifically, the agencies will:
- Relaunching the Federal Financing Bank (FFB) and HUD Risk Sharing Program: To expand the supply of affordable multifamily rental housing, Treasury and HUD have finalized an agreement to restart the FFB’s support of HUD’s Risk Sharing program, which was suspended in 2019. The agreement will provide low-cost Ginnie Mae-comparable rates to HFAs that finance affordable housing development, enabling the development of new quality and affordable housing.
- Increasing Fannie Mae and Freddie Mac’s LIHTC Investment Cap: LIHTC is the nation’s largest federal program for the construction and rehabilitation of affordable rental housing. Currently, the Enterprises are permitted to invest up to $1 billion per year (or $500 million each) in affordable housing development and preservation supported by these tax credits. This targeted investment further reduces financing costs associated with affordable housing and spurs additional development. Today, FHFA is announcing that it is raising the Enterprises’ LIHTC cap to $1.7 billion (or $850 million each). FHFA is also announcing that it will increase the Duty to Serve (DTS) rural/targeted investment requirement from 40% to 50% of each Enterprise’s total LIHTC investment capacity, or $425 million in targeted investment and $425 million in unrestricted investment. By both raising the caps and targeting the investments at affordable rental housing, these actions will support the development and preservation of affordable units in areas most in need.
- Making Funding Available for Affordable Housing Production Under the Capital Magnet Fund: The Treasury Dept. is preparing to issue a notice of funding availability for the Capital Magnet Fund (CMF), including changes to strongly encourage affordable housing production. The CMF is a competitive grant program for Community Development Financial Institutions (CDFIs) and non-profit housing groups funded by allocations made each year from Fannie Mae and Freddie Mac. Funds must be used to leverage housing and economic development investments at least ten times the size of the award amount. This year’s pool of $383 million in available funding will facilitate the production of affordable housing units throughout the country.
To better partner with state and local governments in this critical work, the Administration also announced the following actions:
- Leveraging Federal Funding to Spur State and Local Action: To support state and local governments that receive flexible HUD block grant funding, HUD’s Office of Community Planning and Development will create a Housing Supply Toolkit that provides easy-to-implement strategies to deploy existing block grants and other resources to address supply and affordability challenges that have been deepened by the pandemic. In addition, HUD will form and support a cohort of communities working to address supply issues, helping accelerate their efforts to find solutions. In addition, the Interim Final Rule governing the American Rescue Plan’s $350 billion State and Local Fiscal Recovery Funds explicitly allows recipients (states, territories, Tribal governments, and localities, including cities and counties) to invest these funds in development and preservation of affordable housing, as part of the response to the public health emergency and its disparate impacts on certain populations and geographies. Already, at least 42 cities and 33 states have publicly proposed deploying resources on affordable housing investments of some type. Treasury will continue to engage with mayors, governors, and county executives to highlight this use, and encourage additional affordable housing production targeted to the households and communities struggling the most.
- Exploring Federal Levers to Partner with States and Local Governments to Reduce Exclusionary Zoning: Federal Housing Finance Agency (FHFA) announced that it will conduct a study on the degree to which the Enterprises’ mortgage activity is concentrated in jurisdictions with exclusionary policies. The report will provide data on the demographic characteristics of homeowners whose loans are purchased by the Enterprises and the overall effect of these purchases in allowing localities to sustain restrictive zoning measures or helping to support localities enacting inclusionary zoning policies.
- Launching Learning and Listening Sessions with Local Leaders: The persistent imbalances in the U.S. housing market have formed over many decades and it will take concerted effort and iterative policymaking to correct them. To this end, the White House, HUD, and FHFA will convene state and local officials and stakeholders for a series of peer learning and listening sessions. These sessions will allow for the exchange of best practices on locally led zoning reform to address supply and affordability challenges, including a virtual session on accessory dwelling units hosted by FHFA in September. The sessions will also identify the obstacles to implementation that remain, which the President’s Build Back Better Agenda and potentially federal administrative action, can help address.
Additionally, HUD’s Office of Policy Development and Research announced that next week that they will release its latest research on actions that state and local governments have taken to increase housing supply, providing useful examples for others to follow. Lessons learned will be incorporated into HUD’s Regulatory Barriers Clearinghouse, a searchable electronic database that contains over 4,800 barriers and solutions spanning all 50 states and over 460 cities and counties.
To view the White House press release on the immediate steps the Administration and federal agencies are taking to increase the affordable housing stock, click here.
Proposed Emergency Rental Assistance Program Reforms Key Focus of House Committee
Chairwoman of the House Financial Services Committee, Representative Maxine Waters (D-CA), has proposed legislation to reform the Emergency Rental Assistance Program (ERAP) and to expedite aid to renters and housing providers alike. After the House was unable to pass an extension of the eviction moratorium in July, I immediately set to work on a legislative solution to address issues with the slow implementation of the emergency rental assistance programs Congress passed in December 2020 and in February 2021. Chairwoman Waters indicated that her legislation would address issues with the slow implementation of the emergency rental assistance programs Congress passed in December 2020 and in February 2021. So far, only $5.1 billion or 11% of the $46.6 billion in emergency rental assistance funds has been spent by state and local governments to aid struggling renters and housing providers. While the Treasury Department has taken steps to improve the delivery of emergency assistance, Chairwoman Waters said her legislation is needed to further reform ERAP to greatly strengthen its effectiveness and identify ways to improve the distribution of assistance by grantees. The bill would seek to assist the many renters and housing providers that have applied to receive assistance through local and state programs but have been left waiting due to delays by grantees in reviewing and processing applications. Other provisions include providing access or the technology needed to apply online and require additional supports to access assistance and increasing outreach to renters and landlords who remain unaware of the availability of assistance. To address these issues and others within the emergency rental assistance program, Chairwoman Waters plans to advance a bill through Congress that would:
- Remove the barriers preventing tenants from receiving assistance, including by requiring grantees to accept the self-attestation of a tenant and to provide assistance directly to tenants in certain circumstances;
- Allow landlords to directly apply for back rent after providing notice to their tenants that they intend to apply, and conditioning the federal assistance the landlord receives on certain requirements, such as the tenant being able to remain stably housed for at least 120 days after receiving the assistance
- Direct Treasury and grantees to conduct additional outreach to prospective tenants and landlords, including by sending mailings to all taxpayers stating that they may be eligible to apply, and taking out radio, tv, and internet ads to promote the program. The bill would provide Treasury with an additional $25 million to conduct such outreach;
- Direct Treasury to provide more guidance to grantees on how they can engage with local governmental bodies, such as schools and libraries, to better facilitate the awareness and distribution of emergency rental assistance; and
- Require poor performing grantees to develop a performance improvement plan that describes how they will adopt best practices to improve the distribution of relief.
On September 10th, the full House Financial Services Committee will convene for a virtual hearing titled Protecting Renters During the Pandemic: Reviewing Reforms to Expedite Emergency Rental Assistance, which will focus on the proposed ERAP reform legislation. The full committee will begin considering the bill’s provisions on September 13th. To view the letter Chairwoman Waters sent to House members outlining her ERAP reform legislation, click here.