Policy Potpourri: Bipartisan Commission Makes Housing Recommendations

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A bipartisan commission has called for expanding the annual amount of federal low-income housing tax credits and deeper targeting of federal rent subsidies, as part of a package of national housing policy recommendations.

Unveiled February 25 by the Bipartisan Policy Center (BPC), a Washington, D.C. think tank, the recommendations are contained in a report entitled Housing America’s Future: New Directions for National Policy.

The policy proposals were developed over 16 months by a 21-member housing commission established by BPC. Co-chairs were former U.S. Senate Majority Leader George Mitchell (D-Me.), former U.S. Sen. Christopher “Kit” Bond (R-Mo.), former U.S. Department of Housing and Urban Development Secretary Henry Cisneros, and former U.S. Senator/HUD Secretary Mel Martinez (R-Fla.).

The report contains recommendations for national policies pertaining to homeownership, rental housing, housing finance reform, aging in place, and rural housing.

Speaking at a Washington news conference, Mitchell opened by saying, “Some of you here today, and others around the country, may ask, why a housing commission? Why this report? Why now?”

“The answer,” he said, “lies in the fact that six years after the collapse of the housing market that caused so much chaos and suffering around the country, the problems in housing remain both severe and urgent.” Mitchell said many creditworthy families can’t pay their mortgage or buy a home; the nation “still lacks a clear vision for the future of housing finance” four years after Fannie Mae and Freddie Mac were placed in conservatorship; and the country is facing a “rental crisis,” with only one in four eligible households receiving federal rental assistance.

Some of the recommendations would require enactment of legislation. For example, the panel recommends replacing Fannie Mae and Freddie Mac with a new government corporation that would provide a limited catastrophic government guarantee for single-family and multifamily housing loans and securities. This “public guarantor” would step in to cover any shortfalls or losses only after all private-sector capital sources have been exhausted.

LIHTC, Rental Recommendations

Other recommendations include:

  • Expanding the annual amount of allocated 9% low-income housing tax credits by 50% above current levels. The report, though, indicates that policy makers may wish to switch to a different formula for apportioning these credits among states. “One approach,” it says, “might be to allocate additional credits based on a formula that measures a state’s share of cost-burdened renters; another approach might be to base allocation on the relative size of a state’s renter population. Either would be an improvement over the existing allocation formula, which is based on a per capita calculation and does not reflect differences from state to state in the share of the overall population who rents or has a rent burden.”
  • Increasing appropriations for HUD’s HOME program to provide extra gap funding for LIHTC projects and for one-time emergency assistance to households making between 30% and 80% of the area median income (AMI).
  • Generally limiting HUD housing vouchers to households at or below 30% of AMI; the current cap is 80%. The report, however, suggests authorizing short-term rental assistance for households between 30% and 80% of AMI who need emergency aid such as because of a job loss or major medical crisis.
  • Reforming HUD’s rental assistance programs to mandate greater accountability and to reward better performance by housing providers.
  • Continuing federal tax incentives for homeownership.

(Report: http://tinyurl.com/b3vuzl9)