By David Gasson, Housing Advisory Group

As Members of Congress return from the August recess, a myriad of issues will confront them including funding the government, potentially more recission requests from the administration and a continued push by the House to elevate issues uncomfortable for the administration.  Let’s discuss some of these and others that might provide opportunities and challenges for affordable housing.

First, FHFA finally announced what we had been hinting at for a few months now, that both Fannie and Freddie would have their equity investments in community development expanded from $1 billion to $2 billion each.  They will continue to have goals for investment in difficult to develop areas through the Duty to Serve program.  A challenge will be how quickly the entities can ramp up their ability to invest as they have already had issues getting the $1 billion they had out the door. Nonetheless, the timing of this announcement was welcome as the industry begins to recon with the additional resources that will be available beginning in 2026 with the increase in the 9% allocations and reduction of the bond test.  Still more demand is needed and that is also something the industry is working to address.

As for funding the budget and specifically, HUD. We are pleased that both the House and Senate THUD subcommittees fully funded rental assistance in their proposed budgets.  The House did zero out HOME (we wonder if this can pass the full House) but the Senate continued to fund HOME and other programs necessary to address housing needs. Neither of the budgets have come to a vote in the full House or Senate and considering the continued angst between both chambers and the administration regarding impoundment (the administration not allocating funds appropriated by Congress), it is likely the best-case scenario at this point is a continuing resolution (CR) on October 1.  It is also possible that the issue of impoundment may lead to the first government shutdown since the first Trump administration, which lasted 34 days.

If Congress and the administration agree on a CR, we expect there to be anomalies, or exceptions to the funding levels of the CR to allow for increases in funding for rental assistance, included in the CR as they did for the FY 2025 CR.

And now for some good news for housing.  We in Washington have been working with the House and Senate on initiatives to increase the availability of housing and eliminate regulatory and community led barriers to housing production.  Specifically, legislation has been introduced or is pending in the House and Senate that would expand HOME, utilize the CDBG program to knock down barriers to housing production and introduce regulatory reforms to both programs that could significantly reduce the cost of producing housing.

The Senate Banking Committee unanimously passed the Renewing the American Dream Housing Act. The broad piece of legislation includes provisions eliminating the cap on RAD program, modifies NEPA requirements, increases the public welfare cap for financial institutions from 15% to 20%, increases housing in Opportunity Zones and so much more.  It incorporates over 27 bills introduced in the Senate, 23 of which had bipartisan support. You can view a Section by Section review of the legislation here. While the ROAD to Housing Act is very comprehensive, we would like to see some of the proposals go further and will be working with the Banking Committee, Senators and Members of Congress on these.  Some of the legislation being offered in the House, in our opinion, hits the right mark.

We are working with Congressman Mike Flood’s (R-NE) staff, as well as his Democratic cosponsors, on his HOME reform bill and the  Identifying Regulatory Barriers to Housing Supply Act, which would leverage the CDBG program to address zoning and regulatory barriers to housing production.  The HOME reform bill would address a number of regulatory barriers to production and utilization including:

• removing requirements that participating jurisdictions give a preference to rehabilitation projects over other uses of HOME funds.
• adds new eligible uses of HOME funds by allowing infrastructure improvements directly related to HOME projects or Low-Income Housing Tax Credit (LIHTC) projects in areas that do not receive assistance from the Community Development Block Grant program.
• raises the threshold at which Davis-Bacon labor requirements would apply to a construction project from 12 units to 50 units.
• creates new categories of activities under the HOME program that are exempt from review under the National Environmental Policy Act of 1969 (NEPA). New construction on infill lots, acquisition of real property for affordable housing, rehabilitation projects and new construction projects of 20 units or less would all be activities that are exempt from NEPA review.
• ensures that the Build America, Buy America Act—as enacted in the Infrastructure Investment and Jobs Act—does not apply to the HOME program.
• ensures that the requirements of Section 3 of the Housing and Urban Development Act of 1968 do not apply to projects of less than 50 units.

We are endeavoring to further enhance this legislation as well as building bipartisan support, which will be a challenge with inclusion of the Davis Bacon and NEPA language.  Nonetheless, we are already having some successes and ask that CCAH make these bills a legislative priority with your delegation.

We are also hopeful, based on our efforts over the past nine months, that the Administration may soon come out with regulatory reforms to programs affecting housing production. 

We want to maintain the positive vibe around housing and encourage you to keep up your advocacy with the CA delegation. 

Thank you for your continued efforts.

David Gasson

Housing Advisory Group