CARH'S BROADCAST EMAIL - Legislative and Regulatory Update

August 13, 2019


CARH’S BROADCAST EMAIL – Legislative & Regulatory Update

August 12, 2019


Update on Various Legislative and Regulatory Issues of Importance to the Rural Housing Industry
 



LEGISLATIVE ISSUES:
 
1)  Budget and FY 2020 Appropriations Bills

On August 2, 2019, President Trump signed a two year budget blueprint that increases spending and lifts the nation’s borrowing limit through July 2021. This agreement, in part, removes the need for Congress and the Administration to negotiate an increase in the debt ceiling prior to the 2020 elections. Under this blueprint, the budget caps are deferred for two years, allowing defense spending to increase approximately three percent over current levels and nondefense spending to increase by four percent. Without this budget agreement, the caps would have gone into effect in October.  
 
The House passed the budget agreement by a vote of 284-149 with the Senate then passing the measure by a vote of 67-28. Both the House and Senate are now in recess until the first week of September.

While this blueprint agreement is good news, it is only the start of Congress’ work. The House and Senate Appropriations Committees must provide the actual spending levels for all programs administered by the federal government. All 12 appropriations bills for Fiscal Year (FY) 2020 must be passed prior to October 1, the start of the new fiscal year, or Congress will be forced to pass a Continuing Resolution to avert a government shut-down. As CARH members know from our July 3rd Broadcast Email, the House passed a Minibus Appropriations Bill (H.R. 3055) which includes  funding for a variety of agencies including the Department of Housing and Urban Development (HUD) and the United States Department of Agriculture (USDA). Funding levels envisioned in H.R. 3055 for the housing programs administered by both HUD and USDA are, in many instances, significantly higher than proposed in the Administration’s initial budget submitted in February. Click here to see the funding chart for USDA housing programs, and click here for HUD’s chart.
  
The Senate did not take up H.R. 3055 or other House passed appropriations bills because Senate Leadership, including the Chairman of the Senate Appropriations Committee, Richard Shelby (R-AL) first wanted the blueprint passed. Even though Congress is in recess, many Committee staff will be working so that as soon as Congress reconvenes, the House and Senate can complete action on the FY 2020 appropriations bills before the end of September.
 
What CARH Members Can Do:

We continue to encourage CARH members to showcase your affordable housing properties. Invite your members of Congress to your properties! This is particularly the case if you have just completed a rehab of your property or are in the process of doing one. Take them on a tour and show them how the programs work in unison and the importance of different sources of funding when undertaking capital improvements. Adequate funding of Rental Assistance (RA) is imperative. In fact, CARH would like to see the Appropriations Committee specifically instruct RD to use preservation RA. Preservation RA is important when undertaking a major preservation transaction. It is also important that members urge passage of the FY 2020 Appropriations bills so that there is no disruption of services. Please use the funding charts at the links noted earlier. In addition, CARH has prepared two issue briefs (Role of Affordable Rental Housing in Rural America and Infrastructure and Rural Housing) that can also be used in your discussions. However, as we have encouraged members in previous Broadcast Emails make your message personal, i.e., what affordable housing means to residents, the impact the reduction or interruption of funding has on residents, and how affordable housing has helped the community are just a few examples of how you can craft your message. A list of the members of the Senate Appropriations Committee is linked here. If you have a Senator on the Committee, please reach out and ask them to support the higher level of funding and note the need to provide and release all RA for housing preservation and RAD technology improvements at HUD.
         
2)  Affordable Housing Credit Improvement Act of 2019

On June 4th, Senator Maria Cantwell (D-WA), along with three other cosponsors, introduced legislation entitled the Affordable Housing Credit Improvement Act of 2019 (S. 1703) in the Senate. Representative Suzan DelBene (D-WA-1), along with three other cosponsors, introduced an identical companion bill in the House of Representatives (H.R. 3077).
 
The legislation would:  rename the Low-Income Housing Tax Credit to the Affordable Housing Tax Credit (Housing Credit); include a provision to increase the annual allocation for Housing Credits by 50 percent; establish a permanent minimum four percent credit rate; provide flexibility for existing tenants’ income eligibility; modify student occupancy rules; repeal the Qualified Census Tract (QCT) population cap; and allow states to grant a 30 percent basis boost if it is necessary to make a project financially feasible. The bills also would provide a basis boost to rural areas if needed for financial feasibility and would allow rural properties financed with Housing Bonds to base income limits on the greater of area median income or national non-metro median income. While the bills as introduced have many great features, they do limit tenant-based Housing Choice voucher payments in certain Housing Credit developments, which may create a negative impact for certain housing providers.
  
The ACTION Campaign (ACTION), which CARH is a member of, is a coalition of over 2,200 national, state, and local organizations, and businesses working to address our nation’s severe shortage of affordable rental housing by protecting, expanding and strengthening the Housing Credit. ACTION has created a section-by-section summary of the bill that can be found here

Since introduction, several Representatives and Senators have joined as cosponsors of the respective bills. As CARH members know, several changes were made last year to the Housing Credit and Bond programs that will help in the preservation of the existing affordable housing stock as well as further new construction in many areas of the country. However, the legislation introduced in this Congress will further these efforts and so it is important to show that there continues to be overwhelming bipartisan support in both the House and Senate, particularly as the need to provide more affordable housing becomes more of an issue in both rural and urban communities throughout the country.

What CARH Members Can Do:

CARH has prepared a listing which indicates if your Representative or Senator cosponsored the Housing Credit legislation in the 115th Congress and whether they also signed on as current cosponsors in the 116th Congress. If you live or have properties in a district where they have yet to cosponsor the current legislation, we would ask you to contact that member of Congress and their staff and urge them to again cosponsor the legislation. At the same time, if you do not see your member of Congress’ name, you need to reach out to them and explain the need for the legislation, how the Housing Credit and Bond programs have been used to preserve much of the rural portfolio, and their need to support the legislation and be listed as a cosponsor. To contact your Senators, click here. To contact your Representatives, click here. House members should contact Representative DelBene’s office and Senators should contact Senator Cantwell’s office to cosponsor the respective pieces of legislation. If your member of Congress is a member of the House Ways and Means Committee or the Senate Finance Committee, it is even more important that they support and cosponsor this legislation. The Housing Credit and Housing Bond and Rural Housing Issue Brief can be used in your discussions as can the ACTION sheets referenced above. However, we again urge members to make their discussions pertinent to the communities where your properties are located.  
                
3)  Rural Housing Preservation

On July 11, 2019, the full House Financial Services Committee passed by a vote of 57-0, H.R. 3620, the Strategy and Investment in Rural Housing Preservation Act. The bill would, among many things, permanently authorize Rural Development’s (RD) multifamily preservation and revitalization program (MPR) which has been a demonstration program for the last 13 years. It would also require RD to develop a preservation plan including how to deal with the maturing mortgage issue and protecting residents who live in properties where the mortgage has matured. This legislation is a direct result of the hearing that was held by the Housing, Community Development, and Insurance Subcommittee of the House Financial Services Committee on April 2, 2019, at which Tanya Eastwood, CARH’s Chairman of the Board testified. CARH has been working with congressional offices on the many important provisions contained in this bill. We recommend the bill go further in certain respects. Specifically, RA contracts should be extended 20 years for all renewing owners and properties, not just those completing a further preservation review. 

There needs to also be some correlation between this new preservation process and the current ELIHPA preservation process, which could be read to conflict with one another. It should also be clarified that a Section 514/516 owner includes a for-profit entity with a nonprofit general partner or managing member. This bill should also have a stronger direction to USDA to circulate all returned RA for preservation and to fully expend all RA on renewals. The full House has not yet scheduled action on the bill nor is there comparable legislation in the Senate. While CARH does support the concepts envisioned in the legislation, we do believe that there are some changes that need to be made before it is passed by the Congress.

What CARH Members Can Do:

CARH is supportive of the concepts contained in H.R. 3620. However, we believe that some provisions need to be amended. Please ask your members of Congress to support the bill and add 20 year RA for all renewals, spending all RA funds appropriated for renewal and preservation. We also need Senators to introduce a companion bill, one that should support these additional provisions.


REGULATORY ISSUES:

1)  Fair Housing

CARH has been reviewing information circulating about HUD’s soon to be proposed changes to its disparate impact regulations. CARH expects to submit further comments to any such regulatory change. The changes under discussion appear to bring HUD rules in line with the Supreme Court’s decision in Inclusive Communities. That decision created a refined test for demonstrating disparate impact violations that puts more focus on demonstrating a “robust” causal connection between the challenged policy and the harm alleged, and showing that the challenged practice constitutes an “arbitrary, artificial and unnecessary” barrier to housing for persons in protected classes, among other changes

2)  Opportunity Zones

The Internal Revenue Service (IRS) has updated its Frequently Asked Questions with added clarification in meeting tests for being an opportunity zone business. This follows IRS’ July 9th hearing reviewing the program and first and second rounds of proposed regulations. Senator Tim Scott (R-SC) is collecting success stories. Please contact the CARH staff if you have any to pass along.

If you have any questions, please contact CARH at carh@carh.org or 703-837-9001.

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