Congress Returns to Deal with Numerous Housing, Economic Proposals
By Caitlin Jones & A. J. Johnson
8 min read
FEDERAL LAWMAKERS, just returned to Washington for the start of the 2nd session of the 110th Congress, have a number of unfinished pieces of housing- and economic-related legislative proposals on their plate awaiting consideration or final approval.
These include legislative proposals relating to federal tax credits, the creation of a national housing trust fund, spending bill, and others.
“We do expect a lot of activity” by Congress in 2008, Barbara Thompson, executive director of the National Council of State Housing Agencies (NCSHA), said 1/13/08, in talking about the outlook for housing legislation in 2008 in Congress, in opening comments to NCSHA’s HFA Institute conference in Washington, DC.
Following is a rundown of key legislation Congress is likely to act on or consider in coming months:
Housing Credit/Bond Legislation
Congress is likely to soon consider proposed legislative amendments to the federal low-income housing tax credit (LIHTC) and tax-exempt housing bond programs.
House Ways and Means Committee Chairman Charles Rangel (D-NY), an author and champion of the LIHTC program, has had committee staff put together a list of nearly 20 possible amendments to the housing credit and housing bond programs. These changes are designed to make the programs more flexible, efficient, and productive in creating or renovating affordable rental housing units. (For details, see Tax Credit Advisor, January 2008, p. 1.)
A number of these proposed changes for “modernization” of the two programs were part of bills introduced in the 109th Congress.
Thompson said estimates of the projected federal revenue cost, if any, of each of the proposed changes in the package were expected to be issued momentarily by the congressional Joint Committee on Taxation. These estimates may well determine which of the specific proposals are eventually considered in a legislative markup by the Ways and Means Committee.
Thompson said one potential, near-term tax vehicle for some of the housing credit and bond amendments might be an economic stimulus bill. The Bush Administration and Democratic leaders in Congress strongly favor the quick passage of a legislative package to rekindle the nation’s ailing economy and address current housing woes. “We are hoping that they will tuck as many of those modernization changes into a stimulus bill,” Thompson. One particular candidate she mentioned is a proposal that would exempt the LIHTC and tax-exempt housing bonds from the corporate alternative minimum tax.
Thompson cautioned the audience that some of the more farreaching proposed changes to the credit and bond programs “may have to wait for a second-wave tax bill” moving through Congress later on in 2008.
Thompson also was hopeful that Congress might include in an economic stimulus bill a temporary increase in the current annual state-by-state volume caps for taxexempt private activity bonds for use for housing. The Bush Administration and several senators have floated different proposals for bond cap increases, including to help refinance troubled subprime loans.
Garth Rieman, NCSHA Director of Housing Advocacy and Strategic Initiatives, also spoke on the panel with Thompson. In related comments, he anticipated that House Financial Services Committee Chairman Barney Frank (D-MA) will soon introduce a bill proposing multiple changes to federal housing programs — administered by the U.S. Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), and USDA’s Rural Development — “that would help facilitate use of those programs with the [housing] credit, and hopefully make production easier and less expensive and faster.”
New Markets, Historic Credits
Supporters of the federal new markets tax credit (NMTC) and historic rehabilitation tax credit will also be pressing Congress to pass legislation this year.
The NMTC program is set to expire 12/31/08. Two pending (H.R. 2075, S. 1239) would extend the program through 2013, and provide for inflation adjustment after 2008 of the annual amount of available NMTC allocation authority.
Congress might ultimately pass a shorter-term extension of the NMTC, like the one-year extension enacted in late 2006. In 2007, the House approved a broad bill that contained a one-year renewal.
Separately, advocates will be pushing a series of substantive amendments to enhance the historic credit program contained in identical bills (H.R. 1043, S. 584) introduced in early 2007. (For details, see Tax Credit Advisor, May 2007, p. 15.)
One provision, which is also among the package of possible amendments to the LIHTC program, would eliminate the current requirement that the eligible basis of a housing credit project be reduced by the amount of historic credits also received by the project.
National Trust Fund/GSE Reform
In October, the House approved a bill (H.R. 2895) to establish a national affordable housing trust fund. It would be capitalized partly with monies contributed by Fannie Mae and Freddie Mac — the two government- sponsored enterprises (GSEs) — to a new GSE affordable housing fund that would be created by a separate House-passed GSE reform bill (H.R. 1427).
H.R. 2895 would initially allocate $800 million to $1 billion a year to states and local communities. The fund’s goals would be to produce, rehabilitate, and preserve 1.5 million affordable housing units over 10 years.
In December, Sen. John Kerry (D-MA) introduced a similar bill (S. 2523) to establish a national housing trust fund. Like H.R. 2895, it would require at least 75% of the funds awarded be for housing for households at or below 30% of area median income.
No GSE reform bill has been introduced yet by Senate Banking Committee Chairman Chris Dodd (D-CT). However, Sen. Jack Reed (D-RI) has introduced a proposal to set out the parameters of the affordable housing fund piece of any Senate-passed GSE reform bill. With Dodd no longer a presidential candidate and back in Washington, his Senate Banking Committee may be moving more housing bills this year.
FY 2009 Budget
President Bush is expected on 2/4/08 to submit to Congress his proposed annual budget for Fiscal Year 2009, which begins 10/1/08. As a lame-duck president in his last year facing a Democratic controlled Congress, the president’s final budget request may not have much legs. Still, any president’s annual budget proposal is always a starting point for discussion and action by Congress. In the past two fiscal years, though, the Administration and Congress have deadlocked on appropriations legislation and not passed the usual separate appropriations bills to fund federal departments and agencies. Instead, they have finally resorted to a single catch-all spending bill to fund government operations for the balance of the fiscal year.
FHA Modernization
The House and Senate have passed different versions (H.R. 1852, S. 2338) of legislation to modernize the Federal Housing Administration (FHA), and negotiators will seek to craft a compromise measure for final passage.
Both bills focus on FHA single- family home loan programs. But the House bill would also raise FHA multifamily mortgage limits in high-cost areas, make it easier to sell foreclosed FHA rental properties to localities for use as affordable housing, and authorize the annual transfer of $300 million from excess FHA profits to a new national housing trust fund.
HOPE VI Reauthorization, Changes
The House on 1/17/08 approved a bill (H.R. 3524) that would extend through FY 2015 and significantly revise requirements for the HUD HOPE VI program, which funds redevelopment and revitalization of distressed public housing complexes into mixed-income communities. H.R. 3524 was introduced by Rep. Maxine Waters (D-CA), chair of the House housing subcommittee.
A much different Senate bill (S. 829), which would continue HOPE VI through 2012 with annual funding of $600 million and add educational service requirements to the program, is pending in the Senate Banking Committee.
Other Legislation
Other House-passed bills pending in the Senate include:
- H.R. 2930, which would amend the HUD Section 202 program that finances supportive rental housing projects for the elderly. The bill would make changes to foster greater construction and rehabilitation of Section 202 projects, and to allow for adjustment of rent subsidy contracts to offset fluctuations in project costs and to address emergencies such as spikes in utility costs.
- H.R. 1851, which would revise HUD’s Section 8 Housing Voucher Program. Among other things, it would make it easier for public housing agencies to project-base vouchers, and authorize 100,000 additional new vouchers over the next five years.
