Policy Update: Housing Provisions of the Economic Recovery Bill

Summary:

The $825 Billion economic recovery plan now being finalized in Congress is critically important legislation.  Both the Senate and the House versions include essential new spending on expanding the health safety net, developing new green technology, and relief for schools, states, and local governments. 

The plan is likely to provide somewhere between $14 and 16.4 Billion in new spending for all housing or HUD administered programs.  This falls well short of the over $40 Billion in projects jointly proposed by a broad range of housing organization (including CAPACD) and even of the informed estimates offered by insiders even a few weeks ago. Hence many advocates have expressed disappointment with the present housing provisions.

The House adopted its version last week.  The Senate is scheduled to act this week—with potential amendments that could impair or strengthen its impact on affordable housing programs.

Details on the housing allocations:

The House and Senate versions vary on priorities.  These differences will be reconciled in conference committee after the existing versions are passed.  At this point, funding allocations are as follows (in billions of dollars):

As discussed in the section below, both versions of the bills also include adjustments to the low income housing tax credit program. 

States and local governments receiving funding will be required to expedite allocation of the funds.  For example, the House HOME program requires cities to prioritize projects that can enter into construction contracts within 120 days of receiving the grant.

Incomplete housing agenda:

A number of programs proposed for funding were either omitted or only partially addressed in the stimulus bills. 

The Low Income Housing Tax Credit is in a particularly precarious position.  With projects across the country unable to find investors, Enterprise, LISC and others have estimated that $5 Billion is needed to fill the current equity gap in addition to increasing the incentives for investors. 

At present neither bill sets aside additional funding for LIHTC projects.  The House bill instead offering a process for states to exchange unused credits from the 2008 allocation and 40% of 2009 tax credits into grants to states from the Treasury—such grants would be converted into equity for pending projects.  The existing Senate version increases incentives for investment in tax credits by allowing credit holders to ‘carry back’ credits to prior years.  A proposed amendment to the Senate bill would further increase the value of credits by allowing owners to accelerate the use of the credits from ten years to five years.  Both Senate approaches are supported by organizations such as Enterprise and LISC. 

Other proposals to fund the National Housing Trust Fund, additional housing vouchers and even larger HOME program increases were completely omitted from both versions.  Earlier drafts apparently included seed money for the Trust Fund—but were later victim of the Administration’s shift from spending and toward expanding tax cuts.

Not over yet:

Assuming the Senate approves its version of the economic recovery program, the conference committee could make decisions that could tilt toward or against the interests of affordable housing programs.   Meetings, calls, or letters in the coming days to Congressional offices could make a big difference.  If you are interested in supporting our advocacy in this crucial period, contact: Nira Ly ().

Stimulus bill highlights need for other policy reforms:

Other elements of the recovery bills touch on priority areas for CAPACD members beyond housing.  Both versions increase in funding for job training and small business development but the bills do not address structural barriers within the existing programs.  For example, the job training program does not expand adult ESL as CAPACD and other API organizations urged.    Similarly, the increased funding for small businesses lending without other reforms may miss many minority businesses.

As we look forward beyond the stimulus bill and to the normal appropriations process, CAPACD may have greater opportunity to press for reforms to overcome the structural barriers for immigrants and those with limited English language skills.

More Information:

See National CAPACD’s summary on Housing Funding here.