Reconciliation Package Excludes Housing, Other Domestic Priorities
PHADA President David A. Northern, Sr.
PHADA started working with House Financial Services Committee Chairwoman Maxine Waters (D-CA) a few years ago on legislation that would boost spending for the public housing capital fund by $70 billion. The goal is to provide a onetime infusion that would address the large backlog of unmet modernization needs. Shortly after the 2020 presidential election, the association and others began communications with the Biden transition team and lawmakers on a similar package, which increased capital funding by $65 billion. It also provided $24 billion for new Housing Choice Vouchers and significantly expanded the Low-Income Housing Tax Credit (LIHTC) program.
The $2 trillion “Build Back Better” (BBB) legislation passed the U.S. House of Representatives in November 2021. As we know too well, the measure stalled in the Senate and was scaled back significantly because of some key lawmakers’ cost concerns and worries about inflation.
The Final Deal
President Biden signed the latest iteration of BBB, the “Inflation Reduction Act,” in mid-August. As Rep. Waters lamented in her House floor speech, “…there is not one nickel, not one dime, not one dollar, for the development of housing in this bill.” She added, “We can no longer afford to have housing as an afterthought, a ‘nice to have,’ or simply something that can wait until later. It is foundational to the prosperity of families, key to a healthy economy, and crucial to fighting inflation.”
Like her other House majority colleagues, Waters voted for the legislation because it did contain other high priorities, mostly focused on climate change and prescription drug cost reductions. Most of the other domestic programs including housing, childcare tax credits, new preschool funding, and several other priorities were omitted from the final deal negotiated between Senate Majority Leader Charles Schumer (D-NY) and Sen. Joe Manchin (D-WV).
PHADA appreciates the efforts of Rep. Waters and her staff, along with so many other supporters. They include Rep. David Price (D-NC), HUD Secretary Marcia Fudge and Deputy Secretary Adrianne Todman, and Sen. Sherrod Brown (D-OH), among others.
I also want to thank all our members and other housing advocates who fought to try and get the House-passed version to the finish line. We did not make it – this time. We will, however, continue to make the case for more capital funding because it would be effective and makes the most policy sense.
Best Way to Preserve Units
Some contend that there are better ways to address housing preservation and production needs. We believe these arguments miss some key points, however. For example, some say Congress should simply appropriate more money for the Housing Choice Voucher program. We support that approach to a considerable extent, but it is not a panacea. Vouchers cannot be used in some communities because of faulty and inadequate Fair Market Rents (FMRs) and the lack of affordable housing. In addition, growing inflation means more dollars are consumed just to renew the existing voucher pool.
The Rental Assistance Demonstration (RAD) has been an effective tool in preserving units and even developing new units using the creative Faircloth authority initiative. However, the methodology used to determine RAD rents still results in insufficient amounts to meet the capital needs of thousands of public housing properties. Similar problems exist with LIHTCs. They are a great development and preservation tool, but competition for them is fierce and the supply is far too limited.
The fact is we need all these approaches PLUS a large infusion of capital funding to preserve at-risk public housing. Additional appropriations would result in greater formula distributions that HAs could use immediately, improving the quality of life for tens of thousands of residents.
Greater appropriations could also leverage outside sources of money that would further help HAs reduce energy costs and improve building safety and security. Previous and current HUD leaders in both political parties have said that residents’ health and safety are big priorities under the new NSPIRE inspection program. Thus, the Biden Administration and Congress should not hesitate to devote more resources to the capital fund.
Given the razor thin voting margins in Congress, we realized all along that getting BBB’s capital fund increase signed into law was an uphill battle. That goal may prove to be even more challenging in the next congressional session that convenes in about four months. Nevertheless, it is a commonsense and cost-efficient approach to our industry’s most vexing problem. Accordingly, PHADA will continue to make the case for the variety of tools referenced above – including desperately needed additional capital funds.