CARH'S BROADCAST EMAIL - Legislative Update

August 25, 2020

CARH Broadcast Email—Legislative Update

August 24, 2020



1)  Update on Congress and the Administration’s Action on COVID-19 Legislation


2)  What CARH Members Can Do While Members of Congress Are In Your States During the Next Two Weeks



1)  Update on Congress and the Administration’s Action on COVID-19 Legislation
 
On July 9, 2020, CARH sent a detailed broadcast email regarding the status of a variety of legislative items impacting the rural housing industry as the country attempts to deal with and recover from the coronavirus pandemic as well the status of various funding bills for Fiscal Year (FY) 2021. Since then, the status of a majority of the legislative proposals outlined in that email and earlier emails, have not changed. However, additional legislation has been introduced in the Senate to counter what has been passed by the House of Representatives.
 
Currently, both the House of Representatives and the Senate have left Washington until after Labor Day. However, the House of Representatives returned this past Saturday for a special session and passed legislation that would provide $25 billion in additional funding for the United States Postal Service (USPS). The vote was 287-150 in favor of the bill. More and more states have agreed to allow voters to vote by mail because of concerns that COVID-19 will limit voting in-person for the November elections. There have been reports that due to funding shortages at the USPS, mail-in ballots will not reach state elections commissions in those states in time to count votes as required by law. In fact, the USPS reportedly sent 46 state election officials letters dated July 29, 2020, following May 29th letters, that certain mail, including ballots cannot be guaranteed on time delivery. This additional funding as passed by the House is intended to address the funding shortfalls as well as block cost-cutting changes undertaken by the agency, that many in the House of Representatives believe would impede voters in states that permit mail-in voting to cast their ballots in a timely fashion.
 
It appears that the Senate will not take up funding for the USPS as passed on Saturday by the House of Representatives prior to returning in September. The Senate Republican leadership has  signaled that they intend to introduce an additional alternative bill or “Skinny Bill to H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions (HEREOS) Act. This latest alternative bill by the Senate is a scaled down version of the $1 trillion Health, Economic Assistance, Liability Protection and Schools Act (HEALS Act) that the Senate Republicans introduced at the end of July as a counter-offer to the $3.5 trillion HEROES Act.
Click here for a document that outlines the differences between the HEROES and HEALS legislation.
 
The draft Skinny Bill from the Senate would include a $300 per-week boost to unemployment benefits, more funding for the Paycheck Protection Program (PPP), $10 billion for the USPS and liability protections for businesses against COVID-19 lawsuits. Strengthening the PPP is one of the most agreed upon aspects of the next package. Specifically, the Republican leadership bill would restart the PPP, allow businesses to apply for second loans, and reduce paperwork requirements for loan forgiveness applications. It could then be merged with other provisions of the HEALS Act. Many believe that the various bills now in the Senate dealing with the coronavirus pandemic, will eventually be attached to a larger omnibus Continuing Resolution (CR) that will provide funding for FY 2021. A CR must be passed by October 1, the beginning of the new fiscal year to prevent a shut-down.

As we reported in the July 9th Broadcast email, on July 1st, the House of Representatives passed H.R. 2, the INVEST in America Act. The bill, if enacted into law, would provide $1.5 trillion for infrastructure spending for communities as they recover from the COVID-19 pandemic. In addition to the funding provisions in H.R. 2, the legislation would also include many of the provisions CARH strongly supports from H.R. 3077, the Affordable Housing Credit Improvement Act, including enacting a permanent minimum 4 percent Housing Credit rate, lowering the “50 percent test” for bond-financing, and providing up to a 30% basis boost to properties in rural area if needed for financial feasibility by qualifying rural areas as Difficult Development Areas (DDAs). This bill also includes provisions CARH has opposed, which would remove Qualified Contracts from future Housing Credit developments and retroactively amend Qualified Contract rights and provisions to cap property valuations at tax credit rent levels.  None of the Senate bills outlined above contain provisions that would include the important enhancements to the Housing Credit and Bond programs. It is important that these provisions be included in whatever final legislation that deals with the coronavirus pandemic is agreed to by Congress.
   
Moving to action by the Administration,  President Trump on August 8th signed one executive order (EO) and three memoranda after negotiations between White House officials and Democratic leadership failed to produce a new coronavirus relief package prior to both the House and Senate returned to their districts and states until after Labor Day. The administration’s stated goal of these actions is to sustain millions of Americans facing uncertainty as crucial benefits and programs created through the CARES Act expired at the end of July.

The President's EO does not reauthorize the eviction moratorium for properties with government-backed mortgages that expired at the end of July and was initially put in place by the CARES Act. Instead, it directs the Departments of Treasury and Housing and Urban Development to see if they can find additional funds to help support renters and homeowners who are struggling to keep up with their monthly payments. The EO also calls for the Department of Health and Human Services and the Centers for Disease Control and Prevention to "consider" whether an eviction ban is reasonably necessary to prevent further spread of COVID-19. Finally, the order directs the Federal Housing Administration to "review all existing authorities and resources that may be used to prevent evictions and foreclosures for renters and homeowners."
 
2)  What CARH Members Can Do While Members of Congress Are In Your States During the Next Two Weeks:

  1. Funding for RD’s Section 521 Rental Assistance Program
    Urge your members of Congress, specifically your Senators, to support $309 million in additional funding for RD’s Section 521 program.

    Additional funding is needed for Rural Development’s (RD) Section 521 Rental Assistance (RA) program to help current residents who currently receive RA and may have lost their jobs or had their income reduced because of the coronavirus pandemic. However, current non-RA residents are of particular concern and need assistance as well. H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, as passed by the House of Representatives on May 15, 2020, would provide an additional $309 million for the Section 521 program. This level of funding would provide additional assistance for current RA residents and, most importantly, would provide assistance to current residents of Section 515 properties who do not currently receive RA from the Section 521 program. Allocation of this $309 million level, would according RD, provide $200 million for current non-RA residents and $109 million for current RA residents. This money would remain available until September 30, 2021.

    The HEALS Act, would provide $113.4 million for the Section 521 program. Again, this funding would remain available until September 30, 2021. This funding level would only cover current RA residents. The CARES Act (P.L. 116-136) provided funding for many of the Department of Housing and Urban Development’s (HUD’s) rental assistance programs. It did not provide any funding for RD’s Section 521 rental assistance programs. HUD funding does not help rural housing residents. Non-RA residents in rural properties have had their incomes decreased because of lost jobs because of the coronavirus pandemic and need assistance. We need to provide assistance for these residents. The $309 million is needed for the Section 521 program.

    Approximately 63% of RD’s rural rental housing households receive rental assistance from the RD’s Section 521 RA program. Those residents live in properties financed through RD’s Section 515 program. At the same time, almost 69,000 households do not receive rental subsidy. RA, like HUD’s project-based Section 8, pays the difference between 30 percent of a resident’s income and the basic rent required to operate the property.

    Rural renters are unable to benefit from the funding provided for many of HUD’s programs since they are limited to, or targeted at, urban and suburban households and rural programs are administered through USDA, not HUD. In previous COVID-19 legislative packages, HUD received hundreds of millions of dollars for residents who live in programs administered by HUD. RD received no additional monies for residents to help with COVID-19 related job losses and income.

    The additional $309 million for the Section 521 program would be used for existing RA recipients as well as to assist those renters who do not currently receive RA. RD’s current budget cannot cover the existing portfolio plus RA to previous non-RA recipients who need assistance due to COVID-19 related job losses.

    Click here to view a two-page informational sheet that you can use when speaking with your members of Congress. The second page provides the relevant information based on RD’s latest Occupancy Report (Unnumbered Letter, December 5, 2019, Results of 2019 Multifamily Annual Fair Housing Occupancy Report). 

     
  2. Inclusion of Bi-partisan Changes to the Housing Credit and Housing Bond Programs
    Urge your members of Congress that any coronavirus legislation should contain provisions that would enhance and improve the Housing Credit and Housing Bond programs.  

    CARH recognizes that a private-public partnership is needed for providing safe, decent, and affordable housing throughout rural America. The various housing programs that receive direct funding, as well as the Housing Credit and Housing Bond programs, administered through the tax code are evidence of the success of this partnership. 

    We support Congress’ ongoing effort to provide a set 4% tax credit rate (rather than a floating 3% rate that historically has been targeting for 4% but has been closer to 3%) for the 4% Housing Bond program. We do not believe this increases the amount or cost but allows housing agencies the flexibility to aggregate tax credits and attract more private capital for housing developments where needed.  Rural areas are particularly sensitive to this issue as private investors will tend to invest at lower rates in the typical, smaller properties located in rural towns. That means either finding more sources to make up the gap or to not develop or preserve needed housing.

    Also, CARH is hearing reports from members that the pandemic has caused construction costs for  multi-family transactions to increase due to increased shipping costs, worker-protection measures, delays in accessing building offices to obtain work permits and inspections, and delays in shipping materials. This, in turn, is resulting in delayed starts and completion of construction and rehabilitation work.    Any measure that can allow more financing to cover emerging financing gaps is important, and the flat 4% credit allows a greater aggregation of equity dollars in properties, helping to fill such gaps.

    States should also have the ability to provide up to a 30% basis boost to properties in rural areas if needed for financial feasibility by qualifying rural areas as Difficult Development Areas (DDAs). Both provisions are integral to furthering preservation.

    For additional background and information, the A.C.T.I.O.N. coalition, of which CARH has been a member of the steering committee since inception, developed State and District Fact Sheets that show the impact of the Housing Credit in every congressional district, including the number of affordable apartments created or preserved, the jobs that Housing Credit development supports and other economic benefits. The fact sheets also provide information on the affordable housing shortage in each state, underscoring the vast need for the Housing Credit. Click here to access the Fact Sheets for your members of Congress. However, it is equally as important to reference your work and how enhancements will help current residents and enhance the housing in rural communities throughout the country.  

     
  3. Eviction Moratorium
    Urge your members of Congress to not extend the eviction moratorium of the CARES Act without rental assistance, including funding for the USDA’s Section 521 RA program.

    The CARES Act included a temporary eviction moratorium that responded to the immediate uncertainties and difficulties at the outset of this crisis. H.R. 6800 would extend this moratorium until next year. Today, we better understand the scope of the housing challenges we face and must establish long-term solutions to avert serious damage to America’s renters and housing providers. An extended eviction moratorium is not the answer to the financial distress that renters may experience and could in fact cause considerable injury to the housing sector as a whole. The HEALS Act does not contain provisions extending the moratorium.

    A protracted eviction moratorium is unsustainable and does nothing to address a renter’s underlying financial distress or risk of housing insecurity. In contrast, the creation of a robust rental assistance program for rural and urban residents or other financial aid would provide real support for American families, while also helping preserve critical stability for property owners, managers, their employees and the construction trades that need to be paid to continue construction, rehabilitation and maintenance of renters’ homes. An eviction moratorium without a federal funding commitment creates conditions for a systemic market failure.Missed rent will quickly become uncollectible rent, trading strain on operators to provide decent housing with strain on families to pay rent.That is a zero-sum, no-win formula that housing providers should not be forced into, even if the goal is well-intentioned renter protections.Moratoriums, without replacement funding and rent subsidy put the stability of the entire rental housing sector in danger of failure and further complicate our shared efforts to address longstanding housing affordability challenges across the nation.

     
  4. Funding for Affordable Housing Programs for Fiscal Year 2021
    Urge your members of Congress to continue to fund affordable housing programs, especially at USDA at or above the FY 2020 level of funding. With all of the uncertainty surrounding the COVID-19 pandemic and the impact on the economy, the most vulnerable need assurance that affordable housing will continue. Hopefully, there will be some form of full year funding bills.

    While Congress continues to grapple with funding for the COVID-19 pandemic, Congress is beginning to consider FY 2021 funding bills, but on a separate track. The House of Representatives on July 24, 2020 passed H.R. 7608, the State, Foreign Operations, Agriculture, Rural Development, Interior, Environment, Military Construction, and Veterans Affairs Appropriations Act of 2021, and on July 31, 2020 passed H.R. 7617, the Defense, Commerce, Justice, Science, Energy and Water Development, Financial Services and General Government, Labor, Health and Human Services, Education, Transportation, Housing, and Urban Development Appropriations Act of 2021.

    Click here to see the funding chart for USDA housing programs and click here for HUD’s chart. Of note for USDA’s RD programs, is that funding remains primarily at FY 2020 levels, with a slight increase in the Section 521 RA and the Section 542 voucher programs. The total for the RA accounts would be $1.450 billion. Language from the FY 2020 Appropriations Act for 20-year RA contracts would be retained.

    As proposed by the Administration in its FY 2021 budget request, the rural housing voucher program would be funded under the Section 521 RA account rather than from the MPR account. For budget purposes all rental assistance and vouchers would be under one account. For FY 2021, rural housing vouchers could also be used by residents who live in a property where there is a maturing mortgage and owner has paid-off the mortgage. Current law only allows for vouchers to be used when there is a prepayment or foreclosure on a property.

    The Section 515 program would be funded at $40 million; the MPR program at $30 million and the Section 538 program would have $230 million in budget authority.

    H.R. 7617 would increase discretionary spending broadly for HUD. Tenant-based rental assistance would increase $1.9 billion from FY 2020 enacted levels to $25.8 billion. Project-based rental assistance would increase to $13.4 billion. HOME would increase to $1.7 billion. Basically, all funding categories are proposed for increase—Native American funding, homeless assistance, community development, public housing. There is also proposed $250 million for Choice Neighborhoods and $100 million for HUD cyber-security and technology.

    The Senate has not yet acted on any of the funding bills for FY 2021. While there is limited time left for the Senate to consider individual appropriations bills before the end of the current fiscal year, there is chance that the Senate could pass “minibus” bills. However, it is consensus that there will be a Continuing Resolution that will pass Congress that will fund the government at current levels until after the November elections.    

We urge CARH members to take time during the next two weeks to contact your members of Congress and their staffs. While you can use any of the information in this email, it is important that you try to make your correspondence as specific to your business and properties. To contact your Senators to express these issues noted above, click here and click here to contact your Representatives.

Should you have any questions before or after you contact your member of Congress,  please contact CARH at carh@carh.org or 703-837-9001. In addition, if more information is needed on any of the issues, we are happy to provide this information to you or to the Congressional Offices. 

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