Weekly update from the National Housing Conference
October 24, 2018
President's Message I By David M. Dworkin

With less than two weeks until the election, all eyes are on the Senate. Will Democrats upset the odds and take back control, or will we have a divided government with Republicans in charge of the White House and the Senate, while Democrats take back the House? I know that many of my friends who are life-long Democrats still fret about the House but take it from a life-long Republican who is now an Independent – stick a fork in it, it’s done. Nothing illustrates this better than the Cook Political Report’s House Ratings Chart, which shows 29 Republicans and only one Democrat with races rated as "toss-ups." Twelve more Republican seats lean Democrat while only one Democrat seat leans Republican. The House is going blue and no one knows it as well as my former colleagues in Republican offices who have resumes ready to go. It’s bad form to send them out now, but if you are in D.C. and have a staff of any size, you’ll be hearing from your GOP friends on the Hill come Nov. 7.

The Senate, however, now that’s a very different story. If Democrats take the Senate, it will be an election night miracle. That’s not because they don’t have good candidates, or a good message, it’s because they have a horrible “map.” With 35 of 100 seats up for grabs, 26 are currently held by Democrats and only nine by Republicans. That means that nearly three times as many Democrats have to defend their seats as Republicans, and the vast majority of Republicans don’t have to run at all. If that sounds unfair, it isn’t. In the next two elections (2020 and 2022) the tables will be turned in favor of the Democrats. The reason is because a third of the Senate runs for a six-year term every two years. As a coincidence of time, and the fact the batting order for reelection is set when a state joins the union, more bluish states are clumped together in one of the three groups. That also means if the Dems actually pull off a victory, they will have a huge advantage for the next six years.

Most of this year’s seats are easy to call. They are either solid or likely for the incumbent. States that lean blue, like Minnesota and New Jersey are likely to go blue. But New Jersey could be an upset given Democrat Senator Robert Menendez’s recent legal problems. Leaning red, North Dakota’s Senator Heidi Heitkamp (D) was barely holding her own until she voted against Justice Kavanaugh. She’s now running 16 points behind in a state Trump won by 36 points. Heitkamp won her last Senate election with only 50.2 percent of the vote and is polling 10 points behind her opponent, Rep. Kevin Cramer (R).

It’s the toss-ups, however, that will captivate our attention on Nov. 6, and half of them are held by Democrats (Florida, Indiana, Missouri and Montana). To change control of the Senate, every one of them must win. The Democrats must also take both the open seats in Arizona and Tennessee, formerly held by retiring Republicans, and defeat Senator Dean Heller (R) in Nevada. If either Menendez or Heitkamp lose, Senator Ted Cruz in Texas would also have to lose. If they both do, you can count on the numbers staying the same – 52 Republicans and 48 Democrats. Democrats must net three seats to control the Senate, since the vice president votes to break ties. It’s hard to see a path to victory for them, but if Cruz or Cramer lose, that will be a good indication that the tsunami will wash over the Senate as well.

When the dust settles on Nov. 7, one thing will still be true: NHC’s party is housing. NHC has a long history of working with all political sides to address the growing housing needs of Americans. We are committed to upholding that same reputation, no matter the outcome of the midterms. We will work to maintain or expand HUD’s budget, pass the bipartisan Cantwell-Hatch bill on LIHTC and build support for the Neighborhood Homes Investment Act. We will continue our productive engagement on Opportunity Zones, housing finance reform and flood insurance. In other words, NHC’s commitment to bringing people together to advocate for safe and affordable housing for all will not change. One example of this is our Solutions for Affordable Housing convening. This year’s convening will take place on Nov. 27-28 in D.C. Early Bird registration has been extended to Friday, Oct. 26. I hope to see you there.

David M. Dworkin
President and CEO
News from Washington I By Tristan Bréaux and
 Kaitlyn Snyder
Treasury releases NPR on Opportunity Zones 

The U.S. Department of the Treasury released a notice of proposed rulemaking and notice of public hearing on Investing in Qualified Opportunity Funds. Notably for housing, the proposed rule would provide a working capital safe harbor for the acquisition, construction and rehabilitation of property for up to 31 months. The proposed rule would also not take the basis attributable to the land into account when determining whether the building has been substantially improved. Treasury also stated that forthcoming proposed regulations would address information-reporting requirements, a key part of the comment letter submitted by NHC. Not covered in the proposed rule are any provisions regarding abuse, including using Opportunity Zones (OZ) to shelter income that causes displacement of low-income families.

In our initial comment letter to Treasury, NHC made clear that “any investments targeted specifically at distressed communities with the purpose of deferring an investor’s capital gains taxes must demonstrate a community benefit and demonstrate that is does not displace residents or eliminate affordable housing for which there is demand without a plan for replacement to be eligible for the tax incentive.” We also recommended that Treasury should “eliminate any benefit if the new development displaces any affordable housing and does not replace it with housing affordable at the same or lower income levels in the same or adjacent areas.” We will reiterate that position in the current comment period. A recent study by the Urban Institute found that in many large cities, a significant percentage of the census tracts in their Opportunity Zones are already undergoing socioeconomic change that could indicate gentrification is already taking place. In Washington, D.C., for instance, nearly a third of tracts have undergone such changes. In Oakland, California, the number of tracts is 37 percent and in Seattle it is 40 percent. New York City, on the other hand, has 21 percent of tracts with similar economic activity – but that compares with only 3.7 percent nationally. As we noted in our first comment letter, it would be tragic if taxpayers made OZ investments that contributed to the elimination of affordable housing that initially qualified the community for designation in the first place.

Comments are due on Dec. 22, and the public hearing will be held on Jan. 10, 2019. 
New report shows challenges in LIHTC properties at 30 years

The National Low Income Housing Coalition and the Public and Affordable Housing Research Corporation released a new report, “ Balancing Priorities: Preservation and Neighborhood Opportunity in the Low Income Housing Tax Credit Program Beyond Year 30.” The report sheds light on preservation challenges with an examination of the neighborhood characteristics of LIHTC units reaching the end of their affordability and income restrictions. It also discusses how scarce resources for affordable housing lead to the dilemma between prioritizing the preservation of affordable housing versus promoting mobility for low income families to access higher-opportunity neighborhoods. The report addresses this dilemma by offering a broader vision for a housing safety net.
Tackling the housing affordability and supply issue 

The nation’s housing supply isn’t keeping up with demand, which, in turn, adds to the housing affordability issue. Housing inventory is at the lowest levels since 1999. The National Association of REALTORS® (NAR) is working with state and local REALTOR® associations to address the housing affordability and availability in each community. NAR has developed resources that works uniquely in each community to address the specific issues related to housing supply. Find valuable information and tools to start the dialogue in your community here
Rep. Clyburn introduces the HOME Act

Rep. Jim Clyburn (D-S.C.), the Assistant Democratic Leader, introduced the Housing Opportunity, Mobility and Equity (HOME) Act of 2018 ( H.R. 7050) the companion version of S. 3342 introduced by Sen. Cory Booker (D-N.J.). The bills would require Community Development Block Grant recipients to develop a strategy to support inclusive zoning policies and create refundable tax credit for housing. The tax credit would pay the difference between 30 percent of a renter’s income and the fair market rent. 
Seniors Affordable Housing Tax Credit

Sen. Dean Heller (D-Nev.) introduced the Seniors Affordable Housing Tax Credit ( S. 3580). The bill would allocate tax credits to rental properties for low-income seniors who are at least 55 years old. Starting in 2019, each state would have a credit amount equal to $1.75 multiplied by the state population or a minimum of $2 million annually, with the amount adjusted annually for inflation.
Housing Innovation Act introduced

Rep. Mark DeSaulnier (D-Calif.) introduced the Housing Innovation Act ( H.R. 7054), which would establish an Office of Housing Innovation within HUD. The new office would be responsible for “exploring and developing new approaches for increasing and diversifying the supply of housing and for meeting the challenges of housing shortages, housing affordability and traffic congestion.” The bill recommends $50 million for FY 2019 appropriations, the money would be spent on grants for local planning for housing (90 percent), research and pilot projects (5 percent) and education activities (5 percent). 
HUD designates DDAs, QCTs for 2019

The Federal Housing Administration (FHA) announced revised requirements for Home Equity Conversion Mortgage (HECM) servicers when they assign FHA-insured reverse mortgages to the agency for claim payment. Effective immediately, FHA-approved HECM servicers can use alternative supporting documentation in lieu of previously required materials that, in many instances, delayed claim processing.
HUD launches Humans of HUD photoblog

Last week, HUD launched Humans of HUD, a photoblog dedicated to documenting the journeys of people who are impacted by HUD’s programs and services. The series will be featured regularly on HUD’s Facebook, Twitter and Instagram pages, and archived on HUD.gov/HumansofHUD. Individuals interested in sharing their story with Humans of HUD can submit it to HumansofHUD@hud.gov.  
The National Housing Conference has been defending the American Home since 1931. We believe Everyone in America should have equal opportunity to live in a quality, affordable home in a thriving community. NHC convenes and collaborates with our diverse membership and the broader housing and community development sectors to advance our policy, research and communications initiatives to effect positive change at the federal, state and local levels. Politically diverse and nonpartisan, NHC is a 501(c)3 nonprofit organization.
Defending our American Home since 1931
Copyright © 2018. All Rights Reserved.