In This Edition

Tax package with Housing Credit provisions remains stalled
Federal spending legislation signed into law
Biden Administration calls for more action on housing
State policy updates and innovations
Cinnaire Advocacy in Action
Resources and news

Tax Package with Major Housing Credit Boosts Remains Stalled in the Senate

Despite an overwhelming bipartisan vote by the U.S. House of Representatives in January, the bipartisan tax package that includes major boosts to the Low-Income Housing Tax Credit (Housing Credit) program remains stalled in the Senate.

The legislation would be the most significant increase in resources for affordable housing in some time, leading to the production or preservation of more than 200,000 homes across the country. As we’ve noted previously, the legislation would restore a 12.5 percent allocation increase to the Housing Credit that expired at the end of 2021 and reduce from 50 percent to 30 percent the amount of private activity bond financing required to access the four percent Housing Credit.

Senate Republicans, led by Senate Finance Committee Ranking Member Mike Crapo (R-ID), pictured above, remain largely opposed due to concerns about the package's expansion of the Child Tax Credit. It is not clear how Senate Majority Leader Chuck Schumer (D-NY) will proceed when the Senate returns from its recess in two weeks.

There will be a narrow window for the Senate to consider the legislation. The unofficial deadline for the Senate to pass the package is the upcoming tax filing deadline (April 15). Although it is possible for Congress to pass the legislation after the tax filing deadline passes, the path forward for any substantive legislation becomes increasingly challenging the further we get into the calendar in a presidential election year.

Congress Passes Full-Year Federal Spending Legislation

Although we are about halfway through the fiscal year, Congress completed its work this weekend on full-year spending bills for all discretionary spending programs, avoiding a partial government shutdown. Earlier this month, Congress enacted its first set of spending bills (known as a "minibus"), including funding for HUD and USDA programs. Late last week, Congressional leaders released text of legislation for the remaining six spending bills that will fund about 70% of the federal government. President Biden signed the bill into law this weekend.

Additional details on the HUD/USDA funding levels in the first minibus are provided below. Specific funding levels for all programs can be found in this helpful chart from NCSHA.

The enactment of full-year appropriations measures instead of stopgaps means that earmarks – now known as "Congressionally Directed Spending (CDS)" projects) – will be funded. That may be a source of funds for our partners' projects.

HUD

$32.4 billion for tenant-based rental assistance, sufficient funding to renew all existing Section 8 vouchers and issue a limited number of new incremental vouchers for youth aging out of foster care and veterans at risk of homelessness.
$16 billion for project-based rental assistance (PBRA), sufficient funding to renew all existing PBRA contracts, despite significantly higher rental costs.
$1.25 billion for the HOME Investment Partnerships Program, a decrease of $250 million from the FY23 enacted level but significantly higher than the $500 million amount proposed by House GOP appropriators.
$6.7 billion for the Community Development Fund (CDF), $322 million (5%) above FY23 enacted. Of this, $3.3 billion is allocated for the Community Development Block Grant (CDBG) program, equal to FY23 enacted. $3.3 billion in CDF is for earmarks and congressionally directed spending items, which is an increase of $307 million (10%) compared to the FY23 enacted.
$913 million for Section 202 Housing for the Elderly, $162 million (15%) below FY23 enacted.
$208 million for Section 811 Housing for People with Disabilities, a $152 million (42%) decrease from FY23 enacted.
$100 million for a Yes In My Backyard (YIMBY) program that provides grants to communities enacting pro-housing policies.

USDA

Most USDA programs were cut, as described in this analysis by the Housing Assistance Council (HAC). Some highlights include:

The 521 rental assistance program saw an 8% increase, estimated to be enough to fully fund the program.
$400 million for the USDA Section 538 guaranteed loans to preserve and rehabilitate USDA rental housing, level with FY23 enacted.
$60 million for the Section 515 Rural Rental Housing program, $10 million (14%) below FY23.
The legislation included progress on decoupling, establishing a pilot program to decouple up to 1,000 Section 521 Rental Assistance units from Section 515 or 514 mortgages.

CDFI Fund

The CDFI Fund received level funding ($324 million) from last year. Although level funding is disappointing, it is a relatively good outcome given the House GOP's proposals to significantly cut the CDFI Fund and the budget constraints appropriators were working under.

Biden Administration Calls for Congressional Action on Housing

In his State of the Union address earlier this month, President Biden urged Congress to take action on housing and “bring those rents down” by enacting his housing supply plan. The Biden Administration called for Congress to enact a new first-time homebuyer tax credit and reiterated his call for Congress to expand the Low-Income Housing Tax Credit and enact the Neighborhood Homes Credit. In addition, the President’s recently released budget proposed the creation of a new $20 billion Innovation Fund for Housing Expansion, which would be a competitive grant fund to support communities across the country to build more housing and lower rents and homebuying costs.

While welcome, the Biden Administration has limited authority to move the needle on these policies without Congressional action, which is very unlikely in an election year. These proposals may set the table for more robust action on housing depending on the outcome of November elections.

President Biden reiterated his calls for action on housing in a speech in Las Vegas last week. The New York Times reported on the Administration's heightened focus on housing and specifically its calls for a more aggressive approach by the federal government to encourage local governments to reform zoning laws and other barriers to housing development.

Last week, the Biden Administration also released the 2024 Economic Report of the President – essentially the Biden economic advisers' views and recommendations along with robust data. The proposal includes an entire chapter on housing. The report discusses the supply gap and describes at length Housing Credit’s role in addressing housing affordability.

State Policy Updates

Michigan

Legislation in the Michigan Statehouse has slowed due to a 54-54 split in the House of Representatives after two lawmakers won their mayoral elections. Special elections will be held in April to fill these seats which may improve the pace of legislative activity in the House. Several important bills are waiting final consideration in the House including SB 417 to amend MSHDA’s pass-through bond program to allow private-placement structures and increase the maximum allowed outstanding balance per developer. Cinnaire and other affordable housing partners support the bill’s passage. SB 293 is also awaiting final consideration and would modify the state housing trust fund to allow MSHDA to utilize it to advance the work of the regional housing partnerships of the Statewide Housing Plan. Cinnaire joined over 100 organizations in support of SB 632 which would cap payday lending loans at 36%. The legislation recently passed the Senate and awaits further action in the House.

Indiana

The Indiana legislature concluded its 2024 session in March. Cinnaire monitored several pieces of legislation including a bill that would have ended a rapid bus transit line in Indianapolis and jeopardized future equitable transit-oriented developments along the planned route. The legislation passed the Senate, but the stakeholders reached an agreement to address the bill sponsor’s concerns and the bill died. Another bill would have repealed the Economic Enhancement District law and ended Indianapolis’ ability to levy a tax to pay for low barrier shelters for homeless individuals. The legislation was ultimately amended and preserved this provision. When the legislature returns in 2025, they will consider a new 2-year budget. Housing advocates are beginning to discuss policies that would improve affordable housing in the state such as a state loan fund for affordable housing preservation.

The Indiana Housing and Community Development Authority is in the process of revising its 2025 QAP. The draft revisions are proposing to remove the Large City set-aside for 2025 and reinstate it in the 2026-27 QAP. The set asides for Small City, Rural and Supportive Housing would grow as a result. Additionally, the QAP would favor communities that have not seen 9% investments within the past 5, 10 or 15 years and expand the Housing Need Index to provide points for areas with aged housing stock, low vacancy rates and low housing supply. Cinnaire provided comments on the draft QAP and engaged with the Indiana Affordable Housing Council as they provided feedback.

Delaware

State Senator Russell Huxtable introduced a package of legislation aimed at addressing many of the housing challenges in the state. The legislative package would provide a state grant up to 20% of the investment for workforce housing developments, allows the building of accessory dwelling units, and reduces the realty transfer tax for affordable housing developments. Other bills in the package would allow the lodging tax to be used for affordable housing, make the Delaware Emergency Mortgage Relief Program permanent, establish a housing repair program for 80% AMI households, and provide protections for residents of manufactured housing. Several of the bills will be heard by the Senate Housing and Land Use Committee tomorrow, March 27.

Legislation in Maryland has advanced out of the House to create a Housing Innovation Pilot Program to provide local housing authorities with additional resources for affordable housing creation. The legislation would create a low or no-cost loan fund, local authorities would be eligible to borrow if they provide matching funds, have a majority ownership stake in the housing production and keep the housing affordable for 99 years.

In Pennsylvania, a growing coalition of stakeholders called the Pennsylvania Housing Choices Coalition is urging the state government to improve zoning in the state to create more missing middle housing, amend land use policies to allow more modest starter homes, legalize apartments in commercial areas to pair housing with jobs and more. The coalition includes a wide variety of stakeholders from community action agencies to home builders.

State and Local Policy Innovations

Based on feedback from our survey of Policy Pulse readers, we’ll occasionally highlight innovations and successes on housing policy at the state and local levels. We’ll start with a feature from the Housing Partnership Network, an award-winning business collaborative of 100+ of the nation’s leading housing and community development organizations, including Cinnaire. If you have suggestions for state and local policies to highlight, please contact J.T. Mackey.

Housing Partnership Network White Paper Calls Attention to Maine’s Zoning Reforms

In 2021, the Maine legislature created a commission to study ways to increase housing stock in the state. One of the recommendations from the commission was to eliminate or limit exclusive single-family zoning. Maine’s then Speaker of the House, Ryan Fecteau, introduced legislation to implement the recommendations of the commission and it became law in April 2022. The new law includes the following zoning related provisions: right to build accessory dwelling units, density bonus for affordable units, locally designated growth areas can allow more units on lots, technical assistance for communities to improve zoning, and statewide housing production goals. While the impact of these policies may take time to yield results, Maine is leading New England in housing production per capita.

Check out HPN’s white paper on Maine’s approach, including the partnerships that yielded legislative success.

Urban Institute Hosts Policy Discussion on Zoning Reforms to Improve Housing

The Urban Institute recently gathered a policy discussion on the impact zoning reform can have on improving access to housing. At the most basic level, regulating residential density affects how many housing units can be built, what types of units exist, and where they exist. In practice, most residential zoning limits development to single-family detached homes.

Since reforming zoning policies often comes with heated debate and controversy, the Urban Institute has begun to chronicle the findings of zoning reforms to provide advocates with evidence and tools to make improvements in their own communities. The presentation covered two zoning reforms in Oregon and Austin, TX with greater detail provided in the Local and State Policies to Improve Access to Affordable Housing report.

In 2019, Oregon passed a law requiring municipalities with 10,000 or more residents to update their zoning codes to allow duplexes to be built anywhere single-family detached dwellings were permitted. For municipalities with 25,000 residents and cities in the Portland metropolitan area, the law requires allowing triplexes, cottage clusters, and townhomes. While outcome data is still limited, there have been promising signs of increased permits for housing other than single-family detached homes.

In Austin, Texas, a program called Affordability Unlocked provides density bonuses and development requirement waivers if a housing development includes certain percentages of affordable housing. Since the program’s creation, it has approved 7,678 new rental and ownership housing units with approximately 70% being affordable at 80% AMI.

Visit here to view a recording of the policy discussion.

Cinnaire Advocacy in Action

Cinnaire’s Mike Witt and Chris Jillings joined Chris Neary in Washington, D.C., as part of the National Council of State Housing Agencies' (NCSHA) Legislative Conference for meetings with the Michigan and Wisconsin Congressional delegations. After a meeting led by the Wisconsin Housing and Economic Development Authority (WHEDA) and Cinnaire, freshman Rep. Derrick van Orden (R-WI) cosponsored the Affordable Housing Credit Improvement Act (AHCIA), bringing the total number of cosponsors to 220, evenly divided between Democrats and Republicans.

MI CDFI Advocacy Day – Lucius Vassar and J.T. Mackey joined colleagues from the MI CDFI Coalition to advocate for policies to grow the lending capacity of CDFIs. As a coalition, the group met with 14 lawmakers representing communities throughout the state and provided testimony in front of the Senate Appropriations Subcommittee on LEO/MEDC. The Coalition is advocating to make the state CDFI Fund permanent and provide $15 million each year. This fund provides grants to CDFIs to further their impact. Additionally, the Coalition would like the state to establish a Capital Fund for CDFIs to borrow low-cost capital from the state.

Chris Neary attended the Housing Partnership Network’s (HPN) policy meetings – the first in-person meeting of HPN members focused on public policy since the pandemic began. As part of these meetings, Chris joined Scott Cordes from the Project for Pride in Living (PPL), a Minnesota-based nonprofit and fellow HPN member, to meet with members of the Minnesota Congressional delegation, including Rep. Ilhan Omar (D-MN).

Prosperity Indiana Advocacy - Prosperity Indiana is the state association for community economic development. Cinnaire has been a long-time member of the organization and Keith Broadnax serves as the Board Secretary. Keith and J.T. participated in Prosperity Indiana’s advocacy day to promote policies that improve housing, wealth building and consumer protections. The Indiana legislature recently adjourned sine die and will return for a budget session in 2025.

Resources and News

JUST ACTION: Key Takeaways from Cinnaire’s Conversation with Richard Rothstein. Last month, Cinnaire published a paper with some of the key takeaways from our discussion with Richard Rothstein and Just Action, the book he co-authored with Leah Rothstein. It’s intended to serve as a resource for individuals to help them take action to address residential segregation in their own communities. You can also subscribe to Richard and Leah Rothstein’s newsletter, which is aimed at helping readers "understand the many opportunities they have to effect change in the racial segregation of their cities and towns.”

Additional Resources and News: