NALHFA leaders and staff continue work on a variety of issues that impact members’ affordable housing and neighborhood revitalization programs. They include:
NALHFA’s Advocacy Aimed at Protecting the Tax Exemption for Municipal Bonds in Tax Reform
Advocacy by NALHFA members and staff continue to focus on efforts to protect the tax-exempt status of municipal bonds, including single-family and multifamily private activity bonds and Low-Income Housing Tax Credits. The efforts took on new urgency in the spring of 2014 when Rep. Dave Camp (R-MI) proposed the “Tax Reform Act of 2014.” That legislation, characterized as a “discussion draft,” proposed to significantly reduce top individual and corporate tax rates to 25%. As a means of paying for that reduction the bill proposes to eliminate many so called “tax expenditures.” This includes repealing the tax-exemption for private activity bonds and the 4% Low-Income Housing Tax Credit. NALHFA and other members of the Municipal Bonds for America Coalition (MBFA) swung into action. NALHFA sent the letter to Chairman Camp extolling the benefits of tax-exempt single-family and multifamily housing bonds and the 4% Low-Income Housing Tax Credit. See also the sign-on letter from the Municipal Bonds for America Coalition and a letter addressed to President Obama by the MBFA.
The Camp proposal also included a 10% surcharge on the income of wealthy tax payers which, like a proposal from the Obama Administration to cap the value of the exemption at 28%, would increase the borrowing costs for state and local governments issuing tax-exempt bonds by as much as 70 basis points. Click here for an MBFA issue brief on the impact of these proposals, and here for an MBFA issue brief on protecting the municipal bond market.
In the fall of 2012 NALHFA became a founding member of the Municipal Bonds for America Coalition, a group of national and state associations, local governments and individuals united to protect the ability of public agencies to issue a variety of tax-exempt municipal bonds. The Coalition is also focused on preventing the capping of the exemption at 28% as was proposed by the President in his FY 2013, 2014, and 2015 budgets.
The MBFA’s Executive Committee, which is currently chaired by Columbia, SC Mayor Steve Benjamin, includes NALHFA Board member Richard Froehlich, Senior Vice President and General Counsel at the New York City Housing Development Corporation, and NALHFA Executive Director John Murphy. The Coalition has been engaged in meetings with key Capitol Hill tax staffers and members of Congress.
FY 2015 Appropriations for CDBG and HOME
As the FY 2014 appropriations process concluded, NALHFA and the other members of the CDBG Coalition immediately began advocating for higher funding levels for the Community Development Block Grant (CDBG) and HOME programs, at levels of $3.3 billion and $1.2 billion respectively over their FY 2014 funding levels. If enacted, these modest increases would return both programs to their FY 2011 funding levels.
The House has passed H.R. 4745, the FY 2015 Transportation and Housing and Urban Development Appropriations bill. It calls for a slight $30 million reduction in CDBG to $3 billion and a drastic cut in HOME to $700 million, down from the FY 2014 level of $1 billion. Both funding levels were the result of a $1.2 billion shortfall in the allocation of budget authority to the Transportation and Housing and Urban Development Appropriations Subcommittee than its Senate counterpart.
In late June the Senate began floor debate on the first appropriations bills for FY 2015. The “minibus” appropriations bill, H.R. 4660, contains three bills: FY 2015 Commerce-Justice-Science bill, S. 2437, Transportation and Housing and Urban Development (THUD) bill, S. 2348, and the Agriculture bill, S. 2389, designed to secure quick passage and move the bills to a House-Senate Conference Committee to reconcile differences with the House-passed versions. However, the bill stalled on the floor as a result of a dispute over the how the bill might be amended. NALHFA and others succeeded in securing higher funding levels for CDBG and HOME over the House bill, namely $3.02 billion for CDBG and $950 million for HOME.
NALHFA and others have been pressing the Secretary of HUD to seek language in the Senate version of the bill that would nullify a directive to HUD from the Inspector General’s Office that it modify use of a first-in, first-out method of accounting in the HOME program. Click here for a copy of the letter.
Click here for a chart comparing the FY 2014 funding for HUD programs, the Administration’s FY 2015 budget request and the House and Senate versions of the FY 2015 THUD bills.
As in past years NALHFA and the other members of the CDBG Coalition took a number of actions to help secure the highest funding levels possible for CDBG and HOME. These included:
- Helped securing signatures on a sign-on letter to the House and Senate Appropriations Committee leadership urging the highest possible allocation of budget authority to the THUD Subcommittees. The March 19, 2014 letter contained 3,267 national, state and local organizations
- Submitting outside witness testimony to the House and Senate THUD Subcommittees. Click here for a copy of the NALHFA staff- drafted statement.
- Secured signatures of members of Congress on letters to the THUD Subcommittee urging $3.3 billion for CDBG and $1.2 billion for HOME.
Housing Finance Reform
This spring the Senate Banking Committee marked up S. 1217, the Housing Finance Reform Act of 2014. This bi-partisan bill, authored by Committee Chairman Tim Johnson (D-SC) and Ranking Republican Mike Crapo provides for a phase-out of Fannie Mae and Freddie Mac and their replacement by a new Federal Mortgage Insurance Corporation. The bill is designed to shift more of the risk for losses from mortgages away from the federal government to the private sector.
In a May 12th letter to the Chairman and Ranking member, NALHFA and three other national organizations sought clarification in the legislation that state and local government down payments assistance programs could be used to pay the minimum 3% down payment requirement for first-time homebuyers. It also asked that clarification that the new Federal Mortgage Corporation explicitly permitted to engage credit enhancement and providing liquidity among its powers. Click here for a copy of the letter. Because the bill was approved on a close vote of 12-10, it is unlikely to see Senate floor action in this session of Congress.
FY 2014 HUD Appropriations Process Concludes
In January 2014 Congress passed and the President signed H.R. 3547, the FY 2014 Omnibus Appropriations bill. The bill included a consolidation of 12 separate appropriations bills, including the Transportation and Housing and Urban Appropriations bill, for the balance of the fiscal year ending September 30, 2014.
The bill provides $3.03 billion in formula grants under the Community Development Block Grant program, a $40 million decrease over FY 2013. The HOME program gets $1 billion, a $50 million increase over the post-sequestration level of $950 million. NACCED, NACo and other members of the Community Development Block Grant Coalition pressed appropriators to provide the levels of funding contained in the Senate version of the FY 2014 appropriations bill, namely $3.03 billion for CDBG formula grants and $1 billion for HOME formula grants.
The bill specifically limits to 20% the amount of CDBG funds that a grantee may use for program planning and administration. It also contains a prohibition on the selling, trading or transferring all or a portion of CDBG funds between or among grantees. The bill also provides $150 million in loan guarantee authority under the Section 108 program. It also gives HUD the discretion to impose fees on grantees for extending the guarantee.
The HOME portion of the bill contains language clarifying that funds allocated to HOME projects before August 23, 2013 will be governed by the restrictions put in place by the FY 2012 Appropriations Act. They contain restrictions on development capacity in Community Housing Development Organizations (CHDO), time limits on the use of funds and proper underwriting of projects. HOME funds committed after August 23, 2013 will be governed by the Final HOME rule that became effective on that date.