Nothing motivates Congress like a deadline. With government funding slated to expire tomorrow, Congress is on the verge of passing its $1.7 trillion omnibus spending bill to fund federal agencies and programs for the remainder of the current Fiscal Year (FY 2023).

For more details on funding amounts for programs affecting affordable housing, click here for a summary from the National Council of State Housing Agencies (NCSHA). 

LIHTC, other tax and community development measures not included. The affordable housing industry and its Congressional champions made a strong push for the omnibus to include resources for the LIHTC program, including restoration of the 12.5% allocation increase that expired in 2021. These provisions were not included in the bipartisan funding agreement despite a robust showing of support from the ACTION Campaign and a bipartisan effort, including signatures from key Members of Congress in Cinnaire's footprint.

Unfortunately, the failure of Congressional leaders to reach an agreement on the two parties' much larger competing tax priorities blocked potential inclusion of LIHTC and other tax items. Democrats sought to restore a pandemic-era expansion of the Child Tax Credit (CTC), which boosted nearly 3 million children out of poverty. Republicans, meanwhile, sought to allow businesses to fully expense their Research & Development expenses. The lack of compromise on these items meant there was no vehicle for other tax provisions.

Despite President Biden’s track record and interest in working across the aisle, Washington observers expect a bumpy year ahead. With a very slim majority in the House of Representatives, Republican House leadership (to be determined on January 3rd) will face the daunting task of unifying its fractured caucus and pressure to avoid dealmaking with the Biden Administration. In the year ahead, President Biden and Congress will need to deal with raising the nation’s borrowing limit and extending government spending when the omnibus spending bill expires at the end of September. As a result, there could be more opportunities for crises than bipartisan compromise.

The next likely opportunity for additional resources for tax credit programs will likely be in 2025, when many provisions from the Republicans’ Tax Cuts and Jobs Act (TCJA) begin to expire. In the meantime, it will be critical to continue building bipartisan support for LIHTC and other programs.

Regardless, it will be critical for the affordable housing and community development sectors to educate lawmakers on the value of programs for our work and the communities we serve in the new Congress. Stay tuned for updates on key legislation, which will need to be re-introduced next year, including the Affordable Housing Credit Improvement Act, the New Markets Tax Credit Extension Act, the Neighborhood Homes Investment Act, and other federal priorities.

Regulatory landscape. The lack of legislative activity will only heighten the importance of regulatory issues affecting the industry, especially the yet-to-be published final rule on the Community Reinvestment Act (CRA), expected in the first half of 2023. Cinnaire submitted comments on the proposed rule earlier this year. 

In addition, pressure will mount on the Biden Administration to take administrative and regulatory steps to support affordable housing. This year, both the HOME Coalition and the Capital Magnet Fund Coalition submitted letters to HUD and the CDFI Fund, respectively, requesting regulatory changes to the HOME and CMF programs to make them more efficient. 

The affordable housing industry may also benefit from clean energy incentives included in this summer’s Inflation Reduction Act, including enhanced tax incentives for solar production and energy efficiency as well as potential resources for CDFIs to help their partners with greenhouse gas reduction. Cinnaire will be monitoring these programs and their implementing regulations. For more information on these programs, please contact Chris Neary at cneary@cinnaire.com.

In September, J.T. Mackey started as Cinnaire’s Director for Policy, Research and Advocacy for state and local issues.

For questions about Cinnaire's state and local work, please contact J.T. at jmackey@cinnaire.com.

In the final days of the 2022 legislative session, Governor Whitmer signed HB 4416 into law to prohibit the recording of deeds that include prohibited restrictions, including racially restrictive covenants. The legislation also provides a legal pathway to remove prohibited restrictions from the official record.

Cinnaire is pleased to see this legislation signed into law and supported the bill during a committee hearing earlier this year. Cinnaire’s Anthony Winston, Legal Service Manager (pictured above), provided supportive testimony during the Senate Local Government Committee hearing and Lucius Vassar, Corporate Counsel and Executive Vice President for Equitable Engagement submitted a letter of support.  

Michigan House and Senate Democrats have introduced a legislative package to invest $1.65 billion in affordable housing and home retrofits over a five-year period. Under the proposal, funding would be prioritized for new single-family and multifamily homes for low-income residents. Additional funding for weatherization and energy efficient retrofits would be available for low-income households. The bills were introduced at the end of the year and ahead of budget negotiations with the Governor’s administration and the incoming Democratic leadership.

In 2023, Cinnaire will work with our community partners and the Michigan Housing Council to build support for a legislative solution to provide gap financing to LIHTC projects that are burdened by inflated construction prices. This proposal is especially needed with the lack of additional tax credit authority forthcoming from Congress. By utilizing funding from the American Rescue Plan Act, this legislative proposal would provide gap financing to burdened projects and preserve future allocations of tax credits.

The Indiana General Assembly established a Housing Task Force consisting of Indiana lawmakers and housing stakeholders to consider measures to encourage increased housing options in Indiana. The recommendations are not binding but provide further support for the state legislature to continue working on housing related legislation in 2023. The Task Force received input from a variety of stakeholders over three meetings and produced a report with 16 findings and recommendations for the General Assembly to consider. Some key recommendations include:

The Treasury Department’s CDFI Fund has solicited comments on a host of issues recently, including a years-long effort to update standards for organizations looking to become certified CDFIs and demonstrate accountability to the communities they serve. Given the vital missions of CDFIs across the country, it is critical that this certification maintain its integrity. This month, Cinnaire provided two comment letters on this effort on both the CDFI Fund’s proposed CDFI application and target market verification, including the need to allow support for LIHTC developments to be considered in a CDFI’s application. 

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For questions or additional information, please contact Chris Neary at cneary@cinnaire.com