Weekly update from the National Housing Conference

Dear Friend,

This month we are inaugurating a new feature, a Guest Member Note, where a member of NHC’s Leadership Circle has an opportunity to write our Member Note.This Guest Member Note has been written by Alice Carr, head of community development banking at JPMorgan Chase. It originally appeared on commercialobserver.com on May 6, 2019.

We’re in a 50-Year Affordable Housing Crisis 

The American Dream has been defined, in part, as the ability to afford a decent roof over your head. Half a century ago, that aspiration seemed more or less attainable for a broad portion of the country. Fast forward to today and that dream has become significantly harder to realize. Since the Great Depression, federal housing assistance programs have been necessary to help address a growing shortage of affordable housing.

Today, in the 50 largest metropolitan areas, only 37 affordable rental homes are available for every 100 low-income renter households, according to the National Low Income Housing Coalition ( NLIHC). With homelessness increasing and rent prices soaring, we are facing a shortage of more than 7 million (NLIHC) affordable and available rental homes in the U.S.—and that number is growing.

It’s a start, but it’s not enough

The mission to provide low-income people with quality, affordable places to live through public housing started with the U.S. Housing Act of 1937. For years, the federal government and private entities have created various programs to promote fair housing, attract private investors and create new affordable rental housing.

In the late 1950s and 1960s, Congress created several programs offering low interest rates subsidies to private owners to spur affordable housing construction. In the 1970s, the Housing and Community Development Act made significant changes, putting more responsibility on local jurisdictions to create housing programs and meet the needs of their residents. In the mid-1980s came the creation of the Low Income Housing Tax Credit (LIHTC) program, a federal subsidy that helps finance the construction and rehabilitation of low-income affordable rental housing. Since its inception, over 3 million affordable housing units have been created, according to the LIHTC database created by the U.S Department of Housing and Urban Development.

LIHTC has helped provide stable, long-term and safe housing, and is critical to addressing the larger issue of affordable housing—but is it enough to solve the crisis? When we look at how many housing units were being created 20 to 30 years ago compared to today, the market is still not delivering enough to meet demand. In addition, federal policy and government investments in housing have traditionally prioritized home ownership over affordable rental housing. The largest government housing subsidy is the mortgage interest rate deduction, which typically benefits middle-income and wealthier homeowners.

Tackling the issue together

To solve the growing affordable housing crisis, we need to think bigger and address federal housing policy and the investments needed from both the government and the private industry. To achieve long-term affordability, all industry players—from private and public sectors to for-profit and nonprofit entities—need to come together to create sustainable solutions that lead to naturally occurring affordable and workforce housing.

One example of industry innovation is a recently launched program from JPMorgan Chase called AdvancingCities. The $500 million, five-year initiative encourages long-term economic growth in cities across the world—the first winning cities were just announced. Up to $250 million of that commitment will be low-cost, long-term capital, enabling the firm to combine its philanthropic programs and business expertise to address the issue. We’re dedicated to supporting community development by providing loans and investments for affordable housing and neighborhood revitalization projects in order to help diverse communities in need not only catch up, but thrive.

With increasing demand for affordable units and the issue at the forefront of the political agenda, we expect growth in affordable housing lending to continue. We need to continue to encourage communities to take more ownership, engage government entities and partner with key industry players to tackle the issue head-on.

HUD acknowledges that proposed immigration rule would displace 55,000 children

Last Friday, HUD published a proposed rule in the Federal Register that would prohibit undocumented immigrants from receiving federal housing assistance, including public housing. The Washington Post reported that HUD acknowledged that the rule could displace more than 55,000 children who are in the country legally. HUD Secretary Ben Carson explained on FOX Business that his priority was serving “legitimate American citizens.” The proposed rule, however, was met with a wave of criticism from many different housing and immigration groups, including NHC. In a letter to Carson, a group of 20 Democrats on the House Financial Services Committee, including Chairwoman Maxine Waters, wrote that HUD’s proposed rule is “consistent with the Trump administration’s previous egregious attempts to intimidate immigrant communities, separate families, and undermine American values.”

Calabria discusses releasing Fannie and Freddie from conservatorship

Recently confirmed FHFA Director Mark Calabria discussed plans to release Fannie Mae and Freddie Mac from conservatorship in an appearance at the National Association of REALTORS® 

Legislative Conference and in two interviews last week with Bloomberg and FOX Business News.

Calabria emphasized the temporary nature of conservatorship that Congress intended that when “Fannie or Freddie got in trouble, they enter conservatorship, we fix the problem and they move on.” Calabria cautioned however that going beyond the structure created in HERA is not an option."I've got two entities, I've got the current business model — I'm stuck with that. I can get them out of conservatorship, I can try to make sure they're better capitalized, better regulated, but essentially, the model is the model. Whether Congress wants to come in and create a utility or a multi-guarantor model, I see my role as offering input on what I think would work and what I would not think would work…," said Calabria. "We will not be putting forth a proposal for, 'OK, this is what we think you should do with the overall system.' We'll put forth a proposal that says, if this is the model, these are the regulatory tools I need to make sure this model is safe."

Meanwhile, Senate Banking Committee Ranking Member Sherrod Brown said he is “not optimistic" about the changes of releasing the GSEs from conservatorship. It is NHC’s position that gaining bipartisan support is an essential component of any sustainable housing finance reform effort.

Treasury seeking information on data collection requirements in Opportunity Zones 

The Treasury Department published a notice and request for information (RFI) to seek public input on the development of public information collection and tracking related to investment in qualified opportunity funds (QOFs). Comments are due by May 31, 2019. The request is in response to calls by NHC and others for Treasury to issue reporting requirements for investors in Opportunity Zones. In our August 15, 2018 comment letter, NHC urged Treasury to issue an RFI “so that it may prepare a detailed report to Congress as required by the (law’s) Conference Report.” NHC recommended 15 data points be reported, noting that investors would already by collecting them as part of their standard business procedures and would not be an undue burden. We will be resubmitting the complete list as part of our reply to the RFI.