Each year, the NALHFA Board as its winter meeting adopts the Association's Legislative and Regulatory Priorities. They are drawn from the Legislative Program and reflect the issues that are timely for accomplishment during that session of Congress. Both are included below.
NALHFA Adopted Legislative and Regulatory Priorities for the Second Session of the 112 th Congress
In its second session the 112 th Congress is expected to continue its focus almost exclusively on efforts to reduce the federal budget deficit and possibly laying the ground work for comprehensive reform of the Internal Revenue Code.
Thus, NALHFA’s priority advocacy efforts must be focused on preservation of existing funding for affordable housing and neighborhood revitalization programs as well the ability to use tax-exempt single-family and multifamily housing bonds and Low-Income Housing Tax Credits. It must also pursue a strategy to secure a Round 2 of the New Issue Bond Purchase (NIBP) program. It also supports an extension of the New markets Tax Credit program.
In the first session of the 112 th Congress enacted the FY 2011 and FY 2012 HUD Appropriations Acts. Despite a huge grassroots efforts led by NALHFA Congress sharply reduced funding for core HUD programs such as Community Development Block Grants (CDBG) and HOME Investment Partnership funds (HOME). In FY 2011, CDBG funding was decreased by 16.3% from $3.94 billion to $3.3 billion. This was followed by another reduction to $2.94 billion in FY2012. NALHFA did succeed in eliminating a 50% reduction of the CDBG planning and administrative cap from the final bill. The HOME program was reduced in FY 2011 from $1.82 billion to $1.6 billion a reduction first recommended by the Obama Administration. IN FY 2012 HOME was further cut to $1 billion, in part as a reaction to several unbalanced articles about the program in the Washington Post.
Therefore, in FY 2013 NALHFA must urge a restoration of funding for CDBG and HOME to the FY 2011 levels of $3.3 billion and $1.6 billion. Funding at least these levels is critical to maintain the federal government’s commitment to its national policy (first enunciated in the National Housing Act of 1937) of a decent home in a suitable living environment for every America. In addition, NALHFA must advocate for full funding for the renewal of project-based and tenant-based Section 8 rental assistance.
In 2011 a bi-partisan "Super Committee” was established to develop a plan to cut between $1.2 trillion and $1.5 trillion over 10-years from the budget deficit. They were expected to draw on the work of two bipartisan task forces, the President’s National Commission on Fiscal Responsibility and Reform and the Bipartisan Policy Center’s Debt Reduction Task Force. Those groups proposed that domestic discretionary spending be significantly reduced to address the federal deficit. In addition, they have proposed that tax expenditures be eliminated as part of the same deficit-reduction effort. Although not specified, this puts tax-exempt single-family and multifamily housing bonds as well as the Low-Income Housing Tax Credit at considerable risk.
These proposals, or some variation thereof, could very well be included in the President’s FY 2013 budget, the FY 2013 congressional budget resolution or by the congressional appropriations and/or tax-writing committees.
NALHFA must be vigilant in protecting the tax exemption for single-family and multifamily housing bonds and the ability to allocate Low-Income Housing Tax Credits
Reform of the Government-Sponsored Enterprises, Fannie Mae, Freddie Mac and the Federal Home Loan Banks is also a priority for the Congress, although it may not occur until 2013.
NALHFA must be part of the debate and seek to maintain the critical role of the GSE’s in the housing finance system. This includes serving as a secondary market for single-family and multifamily mortgages, and, when profitable their purchase of tax-exempt housing bonds and Low-Income Housing Tax Credits.
Since being placed into receivership by the Federal Housing Finance Agency in September 2008, Fannie Mae and Freddie Mac have operated as wards of the federal government. The congressional leadership in the 111 th Congress deferred action on their reform until the 112 th Congress. The future of their composition and charters, including relationship to the federal government, are sure to be controversial. Some have suggested that they be wound down and terminated over a period of years. The Obama Administration is expected to unveil its proposals early in 2011.
The capital market for tax-exempt housing bonds has not returned to normal by early 2012 and is not expected to as long as the nation’s economy is in recovery. Local housing finance agencies need a second round of the Treasury New Issue Bond Purchase program and, through NALHFA, will seek its authorization either from the Treasury or the Federal Reserve bank.
Local Housing Finance Agencies cultivated a terrific partner in the U.S Department of the Treasury when it responded to NALHFA’s recommendation that it create a market for their tax-exempt single-family and multifamily housing bonds in October 2009. Using authority granted to it by the Housing and Economic Recovery Act of 2008 Treasury committed to purchase a total of $15.3 billion in tax-exempt housing bonds in 2010 which were securitized by Fannie Mae and Freddie Mac. Through NALHFA’s advocacy important changes were made to the program in 2010 to facilitate local HFA participation. As of September 30, 2011, 44 of 47 local HFAs had created nearly 17,000 affordable housing opportunities for first-time homebuyers and very low-income renters. This includes assisting 7,540 homebuyers, 97% of whom are first-time homebuyers and creating or preserving 9,427 rental units are affordable to very low-income households with incomes at or below 60% of area median income.
New Markets Tax Credit
NALHFA supports an extension of the New Markets Tax Credit Program a t a funding level of $5 billion.
In December 2000 President Clinton signed the Community Renewal Tax relief Act, which authorized the New Markets Tax Credit (NMTC) program. Program has been extended several times since that year. The NMTC is intended to provide a tax incentive to stimulate private sector investment in low-income communities. The incentive provides to private investors a 39% tax credit over seven years – a 5% credit in each of the three years and a 6% credit in each of the last four years. The investor receives the credit when it provides a Qualified Equity Investment in a Community Development Entity. The CDC in turn uses the capital for the purpose of making loans or investments in businesses and projects in low-income communities. This competitive program is administered by the Treasury Department’s Community Development Financial Institutions Fund.
NALHFA will look for other opportunities beyond these priorities to advance other parts of its Legislative Program (attached).
Adopted by the NALHFA Board January 20, 2012
Revised and Re-adopted by the NALHFA Board April 25, 2012
NALHFA Proposed Legislative Program for the Second Session of the 112 Congress
The Legislative Program complements the NALHFA Legislative and Regulatory Priorities.
Changes to Tax-Exempt Housing Bonds
Advocate for changes to the multifamily bond recycling provision included in the Housing and Economic Recovery Act of 2008 to make it easier to use. Extend the period during which recycled bond cap can be used from six months to twelve months; modify the language in HERA to specify that only "one recycling” can occur, rather than the current law language, which specifies that only "one refund” can occur.
Changes to the Low-Income Housing Tax Credit Program
Advocate for a true 4% tax credit when used with tax-exempt multifamily bonds, rather than the current 30% present value.
Advocate for making the 9% tax credit permanent.
Support a provision that would provide greater flexibility in the program by permitting developers to serve incomes up to 90% of median income in order to encourage development of units that serve those at 30% of median income as long as the average income of those serve is 60% of median income.
Support a provision that would allow investors of existing tax credits to carry back for up to five years tax credits from the returns they file in 2008-2010 as long as they reinvest credit amounts carried back in new affordable rental housing.
Support a provision that would permit taxpayers to carry back tax credits generated by new tax-credit-financed housing up to five years as they arise during the 10-year credit period.
Support a provision that would allow S Corporations, Limited Liability Companies, and closely-held C Corporations to offset revenue that would otherwise be taxed when passed through to the owners of these businesses.
Section 8 Reform
Advocate for legislation that would reform the Section 8 Rent Subsidy Program. Specifically support:
- An increase it the amount of subsidies that can be project-based from the current 20% to 25%, with an additional 5% for projects that serve the homeless.
- Simplifying rent calculations, recertification, and inspection rules to reduce costs and compliance burdens.
Proposed to the Board of Directors, January 20, 2012