July 2015 Newsletter Resources & Updates

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  • 22 Jul 2015
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T-HUD Appropriation Bills Update:  On April 28, 2015, the House T-HUD Appropriations Subcommittee released its draft funding bill for fiscal year 2016. The Senate T-HUD Appropriations Subcommittee followed on June 23. The House bill would provide a total of $42 billion for HUD in FY 2016 while the Senate bill would provide a total of $37.56 billion. Nearly all of the proposed funding levels for HUD’s affordable housing programs in the House and Senate bills were below the Obama Administration’s budget request for the upcoming fiscal year.

This is due in part to tight fiscal restraints imposed by previous budget agreements, which have presented numerous challenges in drafting the appropriations legislation for fiscal year 2016. Since the Bipartisan Budget Act, no comprehensive agreement on federal spending has been reached, and with the budget relief for 2014 and 2015 now expired, lawmakers on the Senate and House Appropriations Committees drafted their funding legislation for FY 2016 under challenging budget caps. The resulting bills contain steep cuts for affordable housing programs.

NAHMA Update on Senate Agriculture Appropriations Bill Markup: On July 14, the Senate Appropriations Agriculture, Rural Development and Related Agencies Subcommittee completed a markup of the subcommittee’s funding bill (S.1800) for fiscal year 2016; the bill passed by a voice vote. The full Senate Appropriations Committee also passed the bill on July 16 with a bipartisan vote of 28 to 2.

Below are the funding figures for rural affordable housing programs provided through Rural Development (RD) from the Senate bill in comparison with the House bill and the Obama Administration’s FY 2016 budget request:

Section 515 Section 521 Rental Assistance Section 538 (Loan Level) Revitalization and Rural Housing Vouchers
FY 2016 House Bill (H.R. 3049) $28.39 Million $1.167 Billion $150 Million $24 Million/ RHVs: $7 Million
FY 2016 Senate Draft Bill $28.39 Million $1.167 Billion $200 Million $24 Million/ RHVs: $7 Million
FY 2016 Budget Request $42.27 Million $1.172 Billion $200 Million $34 Million/ RHVs: $15 Million

One of NAHMA’s main concerns for this bill is that the funding for the Section 521 Rental Assistance (RA) program must provide adequate funding in FY 2016 to ensure full 12-month funding for all contracts. While the slated $1.67 billion exceeds the current funding level in FY 2015 ($1.088 billion), NAHMA is concerned if RD has the correct calculation for the true cost of the program. The Senate Appropriations Agriculture Subcommittee also has the same concern – in the committee report that accompanies each appropriations bill, lawmakers highlight their concerns for this program:

“The Committee does not concur with the President’s budget request regarding changes to the required time frame for which contracts must be renewed, and thus retains the currently enacted language requiring that RA agreements entered into or renewed during the current fiscal year shall be funded for a 1-year period… The Committee has lost confidence in USDA’s ability to accurately estimate rental assistance needs. The Department has a well-established history of faulty calculations and subsequent ad-hoc, informal, requests for additional funds to cover shortfalls. This behavior places very low- and low-income rural households at risk of untenable rent increases, and undermines the credit soundness of Rural Development’s $11,000,000,000 multi-family housing loan portfolio. The Secretary is directed to effect process changes that will result in the fiscal year 2017 budget request revealing the true amount needed to renew all expiring rental assistance contracts…In addition, the Committee has engaged the Government Accountability Office to perform a comprehensive review and to provide recommendations.”

NAHMA is encouraged that lawmakers in the Senate recognize the issues in the Rental Assistance program and we hope that these recommendations will be ultimately implemented.

The Senate Committee Report also address NAHMA’s concerns for the Section 515 program as a large number of properties begin to reach their mortgage maturity date naturally or through “paid ahead” status:

“The Committee is concerned about the increasing number of Section 515 multi-family housing loans that are reaching maturity and being paid off. As these loans mature and the projects leave the affordable housing program, low- and very low-income rural households could face untenable rent increases and possible eviction. The Committee has engaged the Government Accountability Office to analyze the circumstances and provide recommendations to stabilize the situation. In addition, the Secretary is directed to continue efforts to maintain the affordable multi-family housing portfolio and protect low- and very low-income rural residents from unmanageable rent increases.”

Again, NAHMA would like to see these efforts enacted and will continue discussions with RD to address the Section 515 situation.

NAHMA will monitor the progress of the House and Senate Agriculture Appropriations bills.To read more about the Senate Agriculture Appropriations Bill, please click here

National Disaster Tax Relief Act: On July 16, 2015, bipartisan disaster recovery legislation was introduced in the House and the Senate to provide tax relief to communities impacted by natural disasters from 2012 – 2015. This legislation would increase allocations of the Low-Income Housing Tax Credit (LIHTC) and the New Markets Tax Credit (NMTC) to communities for disaster recovery. This legislation provides an increased Housing Credit allocation equal to the higher of $8 per person in qualifying disaster areas or 50 percent of a state’s annual Housing Credit ceiling.

To accelerate the revitalization of distressed neighborhoods, community development entities serving disasters areas would be eligible to compete for an additional $500 million NMTC allocation for each year from 2012 through 2015. This legislation would also allow businesses to create natural disaster funds in order to prepare for disaster costs, including insurance. The bill text is currently unavailable.  For additional information on this bill, please visit S. 1795 and H.R. 3110.

Three Affordable Housing Bills Passed in House: On July 14, 2015, the House passed three bills related to HUD affordable housing programs: The Preservation Enhancement and Savings Opportunity Act of 2015, the Private Investment in Housing Act of 2015 and the Housing Assistance Efficiency Act. The bills now move to the Senate for legislative action.

Preservation Enhancement and Savings Opportunity Act of 2015: This bill amends and eliminates certain owner limitations under the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (LIHPRHA). This bill provides an ownership entity the ability to access its own funds to address tax liabilities or other expenses while ensuring continued preservation and adherence to the properties’ use agreements. For the past 15 years, HUD has administratively removed limitations on distributions where it had the authority, but it lacked this authority with the LIHPRHA portfolio. For additional information on this bill, please visit H.R.2482.

Private Investment in Housing Act of 2015: This bill allows the HUD to establish a “pay-for-success” demonstration program under which, in FY2016 through FY2019, the Secretary may execute budget-neutral, performance-based agreements (for up to 12 years each) that result in a reduction in energy or water costs with appropriate entities to carry out projects for energy or water conservation improvements at up to 20,000 residential units in multifamily buildings participating in project-based Section 8, Section 202, and Section 811 programs. For additional information on this bill, please visit H.R.2997.

Housing Assistance Efficiency Act: This bill would amend the McKinney-Vento Homeless Assistance Act to allow a private nonprofit organization to administer permanent housing rental assistance provided through the Continuum of Care Program under the Act. For additional information on this bill, please visit H.R.1047.

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