NAHMA Washington Update April 2017 KEY LEGISLATIVE ISSUES: Political Transition 115 th Congress U.S. Senate: Republican 52 Majority Leader - Sen. Mitch McConnell (R-KY) Democratic 46 Minority Leader - Sen. Chuck Shumer (D-NY) Independent 2 (both caucus with Dem.) U.S. House of Representatives Republican 241 Speaker of the House - Rep. Paul Ryan (R-WI) Democratic 194 Minority Leader - Rep. Nancy Pelosi (D-CA) 1
Congressional Committee Leadership Senate Appropriations Committee Chairman Sen. Thad Cochran (R-MS) Ranking Member Sen. Patrick Leahy (D-VT) T-HUD Subcommittee Chairwoman Sen. Susan Collins (R-ME) T-HUD Ranking Member Sen. Jack Reed (D-RI) Agriculture Subcommittee Chairman Sen. John Hoeven (R-ND) Agriculture Subcommittee Ranking Member Sen. Jeff Merkley (D-OR) House Appropriations Committee Chairman Rep. Rodney Frelinghuysen (R-NJ) Ranking Member Rep. Nita Lowey (D-NY) T-HUD Subcommittee Chairman Rep. Mario Diaz-Balart (R-FL) T-HUD Subcommittee Ranking Member Rep. David Price (D-NC) Agriculture Subcommittee Chairman Rep. Robert Aderholt (R-AL) Agriculture Subcommittee Ranking Member- Rep. Sam Farr (D-CA) Congressional Committee Leadership Senate Banking, Housing, and Urban Affairs Chairman Sen. Mike Crapo (R-ID) Ranking Member Sen. Sherrod Brown (D-OH) House Financial Services Chairman Rep. Jeb Hensarling (R-TX) Ranking Member Rep. Maxine Waters (D-CA) Senate Finance Chairman Sen. Orrin Hatch (R-UT) Ranking Member Sen. Ron Wyden (D-OR) House Ways and Means Chairman Rep. Kevin Brady (R-TX) Ranking Member Rep. Richard Neal (D-MA) Senate Agriculture Chairman Sen. Pat Roberts (R-KS) Ranking Member Sen. Debbie Stabenow (D-MI) House Agriculture Chairman Rep. Mike Conway (R-TX) Ranking Member Rep. Collin Peterson (D-MN) KEY LEGISLATIVE ISSUES: Budget and Appropriations FY 2017 and FY 2018 2
FY 2016-2017 Federal Budget Agreement On 10/30/15, Congress passed a two-year budget agreement for FYs 2016 and 2017 Provides relief from spending caps with an additional $80 billion in funding over 2016-2017($50B for FY16 and $30B for FY17) On 2/9/16, the Obama Administration issued its FY 2017 budget request to Congress For HUD, the budget requested a $1.9 billion increase over the FY 2016 enacted level for a total amount of $48.9 billion Pending FY 2017 Appropriations -HUD In the 114 th Congress, funding bills for HUD and USDA-RD were passed in Committee, but were not enacted into law The Senate THUD bill was passed on 5/20/2016 with a recorded vote of 89 9; the House THUD bill passed on 5/24/2016 A Continuing Resolution (CR) was enacted instead to temporarily fund the federal government at FY16 levels. NAHMA supports the increases that have been made to nearly all housing programs in the pending THUD bills In the 115 th Congress, THUD bills need to be passed through each chamber Bills are currently being debated under an omnibus provision as the temporary funding (CR) deadline of April 28, 2017 looms Pending FY 2017 Appropriations HUD (Figures in million) FY 2017 Senate Bill FY 2017 House Bill FY 2016 Enacted Tenant-Based Rental Assistance $20,431 $20,188 $19,628 Contract Renewals [18,335] [18,311] [17,682] Project-Based Rental Assistance $10,901 $10,901 $10,622 Contract Renewals [10,501] [10,501] [10,407] Contract Administrators [235] [235] [215] Housing for the Elderly (Sec. $505 $505 $432 202) Service Coordinators [75] [75] [77] Supportive Housing for Persons $154 $154 $150 with Disabilities (Sec. 811) Community Development Grant $3,000 $3,000 $3,000 HOME $950 $950 $950 3
Pending FY 2017 Appropriations HUD (Senate) Under the Senate THUD bill, the number of units that can convert under RAD program is increased from 185k to 250k Sunset date is removed Language is included to protect a tenants right to continue to live in their apartment unit after a RAD conversion Section 202 PRAC properties may convert to PBRA through RAD $4 million is provided in the bill to assist properties with this conversion Pending FY 2017 Appropriations HUD (Senate) Amendments: Bill Nelson (D-FL) and Marco Rubio (R-FL) amendments regarding physical inspections of HUD-assisted properties: Require HUD to take enforcement action on properties that receive insufficient UPCS scores Shorten owner response time for violation of contract Shorten time to develop enforcement plan Require HUD to prepare report analyzing the effectiveness of Real Estate Assessment Center (REAC) physical inspections Pending FY 2017 Appropriations HUD (Senate) Amendments (continued): Dean Heller (R-NV) amendment to prohibit housing assistance to individuals convicted of certain criminal offenses: Includes murder, aggravated sexual assault, and child pornography Kelly Ayotte (R-NH) amendment would prohibit the Continuum of Care homeless assistance program unless HUD allows the program to be used for "zero-tolerance" recovery housing HUD currently allows Continuum of Care funding to be used for recovery housing 4
Pending FY 2017 Appropriations - RD The Senate Appropriations Committee passed its Agriculture bill on 5/19/16 House Appropriations Committee passed its bill on 4/19/16 Neither bill received final floor votes Nearly all of RD s affordable housing programs would receive an increase under the Senate and House bills Do not contain non-renewal language Authority to recapture RA from properties that received too much is included Pending FY 2017 Appropriations RD Program ($ in millions) FY 2017 House Bill FY 2017 Senate Bill FY 2016 Enacted Section 521 Rental Assistance $1,405 $1,405 $1,389 Section 515 $35 $40 $28.398 Multifamily Revitalization $40 $40 $37.0 Rural Housing Vouchers [$18.0] [$18.0] [$15.0] Section 538 Loan Level $200 $230 $150 Pending FY 2017 Appropriations - RD In August 2016, RD released a report on capital needs for its multifamily rental housing programs Portfolio needs an additional $5.6 billion, over current funding levels Section 515 portfolio alone (384,216 units) has an estimated 20-year replacement reserve deficit of $4.7 billion 5
FY 2017 Continuing Resolutions In the 115 th Congress, 2017 funding bills need to be passed through each chamber Bills are currently being considered under an omnibus provision as the temporary funding (CR) deadline of April 28, 2017 looms According to House Appropriations Committee staff, lawmakers are finalizing a bipartisan spending package ( omnibus ) to avoid a government shutdown NAHMA continues to advocate for full funding for FY2017 Potential impact of a full year CR for FY17 at 2016 funding levels could create shortfalls, disruptions in renewal payments: Project-based Section 8 would experience a shortfall of $200 million, not all contracts would receive full 12-month funding Some 100,000 housing choice vouchers could be lost Section 202 PRACs would experience a shortfall of $72 million President s FY18 Budget Request On March 16, 2017, the Trump Administration released its Budget Blueprint Offsets $54 billion increase in defense spending with deep cuts to other federal programs: 21% proposed cut to USDA 13% proposed cut to HUD Eliminates HOME, CDBG, Choice Neighborhoods More details expected in May 2017 Bipartisan Congressional push-back to the request To read our recent NAHMAnalysis of the Budget Blueprint, click here. KEY LEGISLATIVE ISSUES: LIHTC and Tax Reform 6
Tax Reform in the 115 th Congress Administration to submit tax reform plan following April recess: Treasury Department considering broad tax overhaul, including both business and individual tax restructuring Targeted tax cuts may be more likely than comprehensive tax reform due to party fractions Tax Reform Task Force silent on the LIHTC, but Ways and Means Committee Republicans voted informally to support LIHTC in December 2016 Meanwhile, there are some legislative efforts to improve the LIHTC A recent NAHMAnalysis on LIHTC and tax reform is available on the NAHMA website. Affordable Housing Credit Improvement Act On 3/7/17, Senators Cantwell (D-WA) and Hatch (R- UT) and Representatives Tiberi (R-OH) and Neal (D- MA) re-introduced versions of a bill that would: Increase LIHTC authority by 50% over five years (Senate version only) Set a minimum 4% rate for both acquisition credits and for housing bond-financed credit properties Provide an income-averaging option for households earning up to 80% of AMI, if the average income limit within the property is 60% of AMI or less, allowing LIHTC developments to accommodate more extremely-low income units Affordable Housing Credit Improvement Act S. 548 / H.R. 1661 also provide: Purchase option for non-profit or government sponsor to buy properties after the 15-year compliance period expires New incentives to target homeless or extremely low income with a 50% credit boost Opportunity to claim energy credits such as the Energy Efficient New Homes Credit (Senate bill differs from House) Standardization of income limit rules for rural projects Alignment of LIHTC student limits more closely with the HUD student rule NAHMA continues to strongly support this bill 7
GAO Reports on LIHTC On 7/23/15, the Government Accountability Office (GAO) issued a report on IRS oversight of LIHTC Critical of the IRS oversight of the 56 state housing finance agencies (HFAs); recommended joint HUD-IRS oversight On 6/8/16, the GAO issued a second report on state agency practices of concern Oversight of allocating agencies continues to be minimal, particularly in reviewing QAPs; more than half of the qualified allocation plans analyzed did not explicitly mention all criteria and preferences that are required On 3/1/17, a third GAO report issued on the role of syndicators in LIHTC GAO made no recommendations in the report Another GAO is expected in late 2018 on LIHTC development costs KEY LEGISLATIVE ISSUES: Implementation of Recently Passed Laws FAST Act Housing Amendments The Fixing America s Surface Transportation Act (FAST) was signed into law on 12/4/15 Major transportation bill that includes an amendment with affordable housing initiatives: Triennial Recertification, Energy Retrofit Demonstrations HUD FAST Act implementation: Rulemaking is on hold Allows owners to conduct full income recertification for families with 90% or more of their income from fixed income every 3 years, instead of annually 90%+ fixed income family certifies that 90% of their unadjusted income is fixed and income sources have not changed Non-fixed income owners don t have to adjust non-fixed income at year 2 and 3, but they may if they want to 8
Pay-for-Success Demonstration Under the Private Investment in Housing Act of 2015, (included in the FAST (Transportation) Act), HUD may enter into budgetneutral, performance-based contracts for energy and water conservation improvements Up to 20,000 units may participate Measurement and verification protocol that include: Establishment of a weather-normalized and occupancy-normalized utility consumption baseline established pre-retrofit; Annual third-party confirmation of actual utility consumption and cost for utilities; and Annual third-party validation of the tenant utility allowances in effect during the applicable year and vacancy rates for each unit type Housing Opportunity through Modernization Act (HOTMA) Signed into law by President Obama on 7/9/16 HOTMA: Streamlines physical inspection protocols and income reviews Increases the maximum contract term for project-based vouchers from 15 to 20 years Authorizes HUD to collect utility data Implementation pending On October 24, Federal Register notice outlined implementation strategy for all of HOTMA, including two sections most relevant to MF programs: Sections 102 changes in income and income review requirements Section 104 limitations on resident assets TBD: rulemaking or issue guidance KEY LEGISLATIVE ISSUES: Current and Pending Legislation 9
Housing Accountability Act of 2017 On 1/9/17, FL Senators Marco Rubio (R) and Bill Nelson (D) re-introduced the bill from 2016: Requires HUD, through PBCAs, to survey tenants twice a year about property conditions and management performance Sets penalties for property owners who repeatedly fail the tenant surveys; and Requires HUD to produce a report detailing the adequacy of capital reserves for Section 8 properties The original bill came after a visit by Sen. Rubio to an affordable housing property that had neglect and mismanagement issues reported in the media NAHMA strongly opposes this bill HUD Inspection Process and Enforcement Reform Act of 2017 On 1/17/17, Senator Rubio (R-FL) re-introduced the 2016 bill Shortens time for owners to respond to violations (from 30 to 15 days) and for HUD to prepare Compliance, Disposition, and Enforcement Plans (from 60 days to 30 days) REAC inspection process would be audited and reported to Congress HUD would be required to take action on projects that: Receive a UPCS inspection score of 30 or below; Fail to certify in writing to HUD within 3 days of receiving the score that all urgent health and safety deficiencies identified by the inspector at the project have been corrected; or Receive a UPCS inspection score between 30 60 and have received consecutive scores of less than 60 on UPCS inspections Investing in Opportunity Act Introduced by Senators Scott (R-SC) and Booker (D-NJ) and Representatives Tiberi (R-OH) and Kind (D-WI) on 2/2/17 Incentivizes investments in areas defined by state governors as Opportunity Zones Temporarily defers recognition of capital gains that are reinvested in the zones Modestly reduces or exempts capital gains made available to long-term investments Assigned to the Senate Committee on Finance and the House Ways and Means Committee Companion bills in House and Senate have gained significant bi-partisan support 10
Common Sense Housing Investment Act Introduced by Representative Ellison (D-MN) on 2/7/17 Replaces the mortgage interest deduction (MID) with a 15% flat rate tax credit on interest paid on mortgages up to $500,000, by lowering the deductible cap on allowable interest paid on a mortgage down from $1 million Extends previous reach of MID from 43 to 60 million homeowners Generates more than $200 billion in revenue over ten years Revenue would be invested in expanding LIHTC, Section 8, the public housing capital fund, and the National Affordable Housing Trust Fund Housing for Homeless Students Act On 2/16/17, Senators Franken (D-MN) and Portman (R-OH) and Representatives Ellison (D-MN) and Paulsen (R-MN) reintroduced a bill that would: Amend LIHTC to qualify units for children, youth, and veterans who are full-time students and have been homeless during any portion of the preceding 7 years (youth) or 5 years (veterans) Homeless Children and Youth Act On 3/13/17, Senators Feinstein (D-CA) and Portman (R-OH) and Representatives Stivers (R-OH) and Loebsack (D-IA) reintroduced a bill that would: Align HUD s definition of homelessness with that of other federal homelessness assistance programs, expanding access to programs Energy Savings and Industrial Competitiveness Act On 2/15/17, Sens Shaheen (D-NH) and Portman (R-OH) and Representatives McKinley (R-WV) and Welch (D-VT) reintroduced a bill that would: Establish a demonstration program under HUD for energy or water cost reductions in up to 20,000 multifamily units Generational Residences and Nurturing Dwellings or GRAND Act On 2/28/17, Representative Serrano (D-NY) introduced a bill that would: Establish an assistance program for up to five eligible non-profit organizations for the purpose of expanding the supply of specialized housing and social services for elderly relatives who are raising a child 11
Equal Opportunity for Residential Representation Act Introduced by Rep Ellison (D-MN) on 2/16/17 Establishes a pilot program to make grants to provide legal assistance to low-income families regarding housing disputes Preserving Investment in Neighborhoods Act Introduced by Rep Tiber (R-OH) on 3/7/17 to exclude gross income contributions to the capital of a partnership and set forth rules for determining the basis of property and money contributed Permanently Protecting Tenants at Foreclosure Act Introduced by Representative Ellison (D-MN) and Senator Blumenthal on 2/7/17 Extends the Tenant Protections enacted in 2009 Landlord Accountability Act of 2017 Introduced by Rep Velasquez (D-NY) on 1/3/17 to reduce income discrimination in rental housing Housing Fairness Act of 2017 Introduced by Rep Al Green (D-TX) on 1/3/17 Directs HUD to conduct nationwide test measuring the prevalence of discriminatory practices across housing mortgage lending markets Local Zoning Decisions Protection Act Introduced by Senator Lee (R-UT) and Representative Gosar (R-AZ) on 1/11/17 Nullifies AFFH; prohibits the use of federal funds for a community racial disparities database; requires federal consultation with state, local government, and PHA officials to develop fair housing policies Veterans Housing Tax Credit Introduced by Representative Brownley (D-CA) on 1/30/17 Establishes a refundable tax credit for veteran s housing equal to 10% of the amount of annual rental assistance received Protect Our Schools from Tax Delinquents Act of 2017 Introduced by Senator Lee (R-UT) and Meehan (R-PA) on 1/23/17 Abates all rental assistance amounts to the taxing authority until tax delinquency is eliminated Housing America s Workforce Act of 2017 Introduced by Representative Velazquez on 1/31/17 Establishes a business-related tax credit for up to 50% (100% for small business owners) of qualified housing expenses for the benefit of their employees 12
FHA Alternative Credit Pilot Program Reauthorization Act of 2017 Introduced by Rep Al Green (D-TX) on 1/3/17 Extend from 5 to 14 years the pilot program establishing the process for providing alternative credit rating information for mortgagees Safe Recovery and Community Empowerment Act Introduced by Rep Issa (R-CA) on 1/12/17 Amends the Fair Housing Act to better protect persons with disabilities and communities Housing for Homeless Students Act of 2017 Introduced by Representative Ellison (D-MN-5) on 2/16/17 with a bipartisan co-sponsor KEY LEGISLATIVE ISSUES: Looking Ahead A Better Way: Poverty, Opportunity, and Upward Mobility On 6/7/16, House Speaker Paul Ryan and a Republican Task Force released an anti-poverty agenda, including housing recommendations: Require housing to align with TANF benefits Create individual choice in housing assistance Reduce duplication and overlap across programs Reform tax code and federal assistance programs with a pro-growth emphasis 13
Housing as Infrastructure In January 2017, Senate Democrats released a new infrastructure proposal, including housing Proposes $100 billion to Revitalize America s Main Streets, including addressing housing challenges Lead remediation Neighborhood revitalization Expanding tax incentives Proposes $10 billion to close the infrastructure financing gap with seed money for projects across sectors over 10 years includes affordable housing Republican infrastructure plan yet to be released SEAL: Service-Enriched Affordable Living In October 2016, LeadingAge s Campaign for Healthy Aging Through Housing published a proposal called SEAL to address the housing and services needs of low-income seniors: Preserve Existing Affordable Senior Housing Increase Supply of Service-Enriched Affordable Senior Housing Permanently Fund Services Expand Project-Based and Tenant-Based Subsidies NAHMA is working with its committees to establish a policy position on SEAL Possible Topic for Congressional Attention Two hearings on 9/21/16 show that some lawmakers are interested in a transition of project-based rental assistance to vouchers House Financial Services and Senate T-HUD appropriations Subcommittee These lawmakers also want to lower administrative burdens in housing assistance programs similar to HOTMA NAHMA is opposed to any action that will convert PBRA to voucher assistance PBRA properties are sound investments for distressed areas and also provide a better basis for additional services 14
Congressional Focus on Federal Regs Congress has resurrected the Congressional Review Act, enacted in 1996 under then Speaker Newt Gringrich Congress can overturn newly issued rules without legislation by simple majority vote in both houses, and an agency can t issue a similar rule without express authorization of Congress Pertains to rules issued up to 60 days prior in the Congressional calendar (not the regular calendar) Must target single rules at a time for vote So far has been used to target environmental regulations Congressional Focus on Federal Regs In early 2017, the House passed the Midnight Rule Relief Act, which would amend the CRA to allow lawmakers to bundle together multiple rules and overturn them en masse with a joint resolution of disapproval The House also passed the Regulations from the Executive in Need of Scrutiny (REINS) Act, which requires any major regulatory change with an economic impact of more than $100 million to be approved by Congress The House also passed the Regulatory Accountability Act in January 2017, requiring agencies to select the least costly option available for the task they are trying to accomplish while preventing large rules from being implemented if they are being challenged in court HOW TO GET INVOLVED: Grassroots Advocacy 15
Grassroots Advocacy NAHMA provides members with an online Grassroots Advocacy Toolkit Delivers numerous documents that outline the legislative process and assist members in conducting grassroots advocacy Toolkits items specifically designed for AHMA members and others tailored for executive members: FAQs on grassroots advocacy Fact sheets on the legislative process Information on 501(c)3 organizations and lobbying Video testimonials from AHMA and executive NAHMA members on their advocacy experiences Grassroots Advocacy NAHMA has also launched the next generation version of NAHMA Maps The online program at the NAHMA website (also accessible on mobile devices) allows a user to search for the number and types of affordable housing properties in an entire state or district Search features also allow you to easily find your Congressional Representatives and their contact information NAHMA Maps Grassroots Advocacy We highly encourage members to invite their representatives to site visits at one of your properties Site visits are an excellent opportunity for representatives to experience the positive enrichment that affordable housing provides to low-income individuals and families These site visits will also provide you with time to discuss important housing issues and challenges with your representative Please contact NAHMA staff for additional information about grassroots advocacy and meeting your representatives: NAHMAnalysis 2017-0214 115 th Congress: Who to Contact for Affordable Housing Policy Juliana Bilowich, jbilowich@nahma.org, 703-683-8630 x 116 16