Congress Closes A Door But White House Opens A Window

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By Thom Amdur, NH&RA

August is always slow for Congressional watchers, but especially so this election year. Complicated by extreme partisanship, many key pending Congressional initiatives critical to our industry, including tax extenders legislation and small business legislation, are in limbo. With few legislative days left before the November elections, critical housing legislation may not be passed before then — or even in a lame duck session.

Still, there are some bright spots. The Obama Administration is making renewed efforts to raise the profile of multifamily affordable rental housing. On July 7, the White House Domestic Policy Council convened key federal regulators overseeing multifamily development — from the U.S. Department of Housing and Urban Development, U.S. Treasury, USDA’s Rural Development, IRS, Council of Economic Advisors, and others — with key industry stakeholders (including NH&RA), for the first of what we hope will be an ongoing dialogue about improving and coordinating the myriad of federal multifamily affordable housing programs.

For five hours, affordable housing industry participants had the undivided attention of key decision makers such as Derek Douglas (Special Assistant to the President for Urban Affairs), Carol Galante (HUD Deputy Assistant Secretary for Multifamily Housing), Tammye Trevino (USDA Rural Development Administrator for Housing and Community Facilities), and Mark Mazur (Deputy Assistant Secretary for Tax Analysis, U.S.Treasury).

This working group’s goal is to insure that federal rental housing policy gets the necessary attention to sustainably foster the production and maintenance of the nation’s affordable housing stock. We were invited to suggest ways to streamline processes across federal agencies that will not require new legislation.

The working group discussions focused mainly on underwriting, tenant rules, project servicing/financing issues, and project supervision/operations compliance. The underwriting session was particularly fruitful, where much of the talk was about simplifying duplicative and/or unnecessary processes that add time and costs to transactions. For example, it was pointed out that current subsidy layering review requirements are ripe for revisiting. Subsidy layering review was an important safeguard for the federal government in the pre-LIHTC days. However, as affordable housing programs have evolved, this requirement has become increasingly cumbersome, especially when multiple agencies are involved. The federal government has a great opportunity to make reforms here, such as establishing cross-agency uniform review guidelines, or identifying a lead agency for reviews.

Another improvement would be for HUD, RD, and the IRS to simplify procedures and requirements for multifamily property capital needs assessments, physical needs assessments, appraisals, environmental reviews, Davis-Bacon wage determinations, and market studies. In each of these areas, existing timing, requirements, and methodologies can vary across agencies and even within programs of the same agency, causing confusion and duplicative action by program users. A single national standard for market studies, for instance, like that proposed by the National Council of Affordable Housing Market Analysts, could greatly accelerate the processing of funding applications, reduce pre-development costs, and benefit both developers and regulators.

Another topic of discussion — dear to NH&RA’s Council for Energy Friendly Affordable Housing (CEFAH) — was about allowing project residual receipt and reserve account funds to be used to pay for energy retrofits. We reiterated the need for greater flexibility in the use of these funds, and encouraged the agencies to allow federal grants, such as weatherization assistance dollars, to be provided to projects as loans.

Additional areas of discussion were dispositions criteria, workouts, tenant selection policies, income verification, lease requirements, subordination requirements, utility allowances, site inspections, and REAC scores.

While we will continue to focus on NH&RA’s legislative priorities, we welcome the opportunity to work more closely with the Administration on regulatory improvements as well. We anticipate an ongoing dialogue and encourage you to join in. If there is an administrative issue that you’d like to see raised in this dialogue, contact me, at 202-939-1753, [email protected].

Thom Amdur is Associate Publisher of the Tax Credit Advisor and Executive Director, National Housing & Rehabilitation Association