Cinnaire’s Policy Pulse: Build Back Better Agenda & What it Means for Affordable Housing

This week will be a major test for Democrats in Congress, who are working to pass both a bipartisan infrastructure bill and an ambitious “Build Back Better” plan – while also keeping the government open. Where do things stand, and what does this all mean for affordable housing?

As detailed previously in Policy Pulse updates, the Biden Administration’s Build Back Better agenda proposed historic levels of investment in affordable housing programs. Last week, key committees in the U.S. House of Representatives passed several bills that included these investments, including major increases to the Low Income Housing Tax Credit and affordable housing programs.

Without Republican support for the Build Back Better plan, however, Democrats will need party unity to enact this agenda. Right now, Democrats in Congress are split on the size and scope of the Build Back Better legislation. That split is holding up both the plan and the bipartisan infrastructure bill. With Speaker Pelosi promising a vote on the bipartisan infrastructure package on Thursday, Democrats will need to make some progress this week to find a path forward for the Build Back Better plan that satisfies moderates and progressives alike.

What Does This Mean for Affordable Housing?

Affordable housing has been a key element of both the Biden Administration’s and Congressional Democrats Build Back Better proposals. Legislation passed by key House committees last week provided more than $300 billion for housing programs, an historic recognition of the need to address the housing affordability crisis that affects so many communities we serve.

However, keep in mind if Democrats are able to pass a bill, it’s likely to be a much lower overall spending number, meaning that these proposals and others will be much less robust.

Details on the House’s proposed investments in these programs are below:

• A $30 billion investment in LIHTC, the largest expansion since the program’s inception. Many of these provisions come from the Affordable Housing Credit Improvement Act, including a major allocation increase, a reduced bond financing threshold, rural and Extremely Low-Income (ELI) basis boosts, and more. These proposals would sunset in 2028. The bill also repeals the Qualified Contract provision and reforms the Right of First Refusal (ROFR) for nonprofits. For more details on the Housing Credit provisions in the House’s bill, click here.
• A permanent New Markets Tax Credit (NMTC) with temporary allocation increases
• A new single-family development tax credit modeled on the Neighborhood Homes Investment Act
• $90 billion for rental assistance;
• $80 billion for public housing capital needs; 
• $37 billion for the National Housing Trust Fund;
• $35 billion for the HOME program; 
• $8.5 billion for the Community Development Block Grant program; 
• $10 billion for first-time, first-generation homebuyer down payment assistance; 
• $2 billion for the Indian Housing Block Grand Program
• A new $9.5 billion Housing Investment Fund to be administered by the CDFI Fund, which would operate similarly to the Capital Magnet Fund
• A new Community Restoration and Revitalization Fund

Busy Legislative Agenda

Assuming Democrats can agree on a package, these bills still need to work their way through the House, where Democrats have a thin majority and can only afford to lose three votes to pass, as well as the Senate, where Democrats can’t afford to lose any votes.

Looming over all of this is the need to keep the government funded by Thursday. It’s likely there will be a Continuing Resolution to keep funding at this year’s levels. In addition, before approximately October 18th, Democrats must also identify a path forward on legislation to keep the government funded and avoid default. Republicans have indicated they will not support this effort, which could prompt a major crisis for the economy.

Now Is the Time to Weigh In

With many other competing proposals — and likely a lower top line spending amount — it is more important than ever that advocates for affordable housing push for these programs to be included.

Our coalitions continue to encourage Congress to prioritize the Housing Credit and other key programs. Recently, 111 House Democrats sent a letter to House leadership calling on them to expand and strengthen LIHTC as part of any infrastructure reconciliation legislation. The House’s LIHTC provisions are estimated to finance more than 1.38 million homes.

If you are interested in learning more or participating in advocacy, please contact Chris Neary.

Earlier this month, the Biden Administration released a fact sheet on steps it is taking to increase the supply of affordable housing. The scope is limited to actions the Administration can take without Congress.

As part of the fact sheet, the Biden Administration announced that the Federal Housing Finance Agency (FHFA) will be increasing the caps on Fannie Mae’s and Freddie Mac’s LIHTC investments from $1 billion ($500 million for each enterprise) to $1.7 billion (or $850 million per enterprise). The Biden Administration also announced a re-launch of the Federal Financing Bank and HUD Risk Sharing Program, which enables HFAs to provide low-cost loans for affordable housing.

The fact sheet also notes that there is an upcoming notice of funding availability for the Capital Magnet Fund, which is not a new initiative but will see a historically high level of funding this year.

While all eyes are on Congress, the Biden Administration finally announced a nominee to lead the Office of the Comptroller of the Currency (OCC), the lead banking regulator tasked with overseeing the nation’s largest banks and the Community Reinvestment Act (CRA).

After several trial balloons, President Biden nominated Cornell University law professor Saule Omarova to head the OCC. Her skepticism of large financial institutions’ power and controversial views on financial regulation are likely to result in opposition by Senate Republicans and a contentious nomination process.

Meanwhile, the Biden Administration has yet to nominate a permanent head of the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac.

On September 23rd, Rep. Tim Walberg (R-MI), a longtime champion of Andy’s Place, presented Mike Hirst with the Affordable Housing Tax Credit Coalition’s (AHTCC) prestigious 2021 Edson Award for an Outstanding Development in the Special Needs Category, recognizing developments and organizations that have demonstrated especially meaningful impactful use of the Low Income Housing Tax Credit (LIHTC).

Mike Hirst, who lost his son to heroin addiction, envisioned Andy’s Place to address the need for safe, affordable housing paired with onsite support services for individuals suffering from opioid addiction. Andy’s Place is the nation’s first Permanent Recovery Supportive Housing development developed in conjunction with the Treatment Courts.

Cinnaire’s Bob Beck introduced the Congressman, who gave a heartfelt tribute to Mike Hirst and the power of this innovative model to help those individuals and families affected by addiction.

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