The housing affordability crisis is affecting counties and residents across the country. In rural, suburban and urban areas, county leaders are working to provide residents with adequate housing without overwhelming costs.
NACo supports an increase in the supply of affordable housing through increased federal appropriations for key housing and community development programs as well as the expansion of federal housing tools, such as the Low-Income Housing Tax Credit program. While federal housing funding has declined generally, many housing assistance programs received an increase in funding for FY 2018, including the Home Investment Partnerships (HOME) program, Community Development Block Grant (CDBG) program, and Homeless Assistance and Section 8 Vouchers.
HOME: The FY 2018 federal omnibus package includes $1.36 billion for HOME, an increase of $412 million over FY 2017 funding levels. Authorized in 1990, HOME assists state and local governments in providing affordable housing opportunities for low-income families.
CDBG: CDBG is funded at $3.3 billion in the FY 2018 omnibus, an increase of $300 million over FY 2017 funding levels. Counties use the flexibility of CDBG funds to support projects addressing community and economic development priorities, including housing, water, infrastructure and human service needs.
Homelessness Assistance Grants: Another HUD program serving families in need of affordable housing is the Homeless Assistance Grants. These grants were funded at $2.5 billion, a $130 million increase over the FY 2017 levels. The omnibus also allocates $80 million of the $2.5 billion to addressing youth homelessness.
Housing Choice Vouchers: The FY2018 omnibus provides $22 billion for Housing Choice Vouchers (Section 8), an increase of $1.7 billion over FY2017 levels. Section 8 vouchers help low income families obtain safe, decent affordable privately-owned housing by reimbursing landlord the difference in what a family can afford and the actual rent, known as a housing assistance payment.
Public housing: Both the Public Housing Capital Fund and the Operating Fund received increases in the FY 2018 omnibus. The capital fund increased by $800 million for a total of $2.7 billion and the operating fund increased by $150 million, for a total of $4.55 billion. Public housing provides decent and safe rental housing for eligible low-income families, the elderly and persons with disability. Public housing can vary from single family houses to high rise apartment buildings.
Rental Assistance Demonstration (RAD): RAD was created to give public housing authorities (PHAs) a tool to preserve and improve public housing properties, in particular the maintenance. It allows PHAs to leverage public and private funding in order to reinvest in the public housing stock. It is cost-neutral and does not increase HUD’s budget, but rather shifts units to the Section 8 voucher program from the public housing program so that providers may leverage private capital to make improvements. The RAD program did not receive any federal funding for FY2017 or FY2018.
National Housing Trust Fund (HTF): Enacted under the Housing and Economic Recovery Act of 2008, HTF is a formula grant program administered by states to increase and preserve the supply of affordable housing, primarily for extremely low-income and very low-income households. It is funded through assessments from the government sponsored enterprises Fannie Mae and Freddie Mac, which provided close to $222 million for HTF in FY2017.
NACo supported programs such as HOME, CDBG, Section 8 vouchers and public housing are all HUD initiatives that provide affordable housing opportunities for low-and moderate-income families in counties throughout the United States. Another key program for affordable housing is the Low-Income Housing Tax Credit.
Low Income Housing Tax Credit (LIHTC): NACo supports the Low-Income Housing Tax Credit (LIHTC) which was created in 1986, and is the largest federal source of new affordable rental housing in the U.S. The program is administered by the Internal Revenue Service (IRS). The program provides tax incentives to encourage developers to create affordable housing. The tax credits are provided to each state based on population and distributed to the state’s tax credit allocating agency. The state’s designated agency then distributes them to developers based on each state’s application process and affordable housing goals. The tax credit to developers is provided over a 10-year period.
There are two types of tax credits allocated to states: 9 percent and 4 percent. A 9 percent tax credit raises about 70 percent of the cost of development, and 4 percent raises about 30 percent. Developers can choose to either set aside 20 percent of the units for households with income at or below 50 percent of area median income (AMI), or 40 percent of the units for households with income at or below 60 percent of AMI.
In addition to increases in FY2019 T-HUD funding, lawmakers have also introduced legislation that would amend current housing assistance programs. Key legislation introduced in the 115th Congress, include the following:
Rural Housing Preservation Act of 2018, (S. 2574 & H.R. 5352), sponsored by Sen. Jeanne Shaheen (D-N.H.) and Rep. Ann Kuster (D-N.H.) respectively. The bills would offer several provisions to extend rental assistance for certain multifamily Rural Development rental housing programs.
Affordable Housing Credit Improvement Act, S. 548 & H.R. 1661, sponsored by Sen. Maria Cantwell (D-Wash.) and by Rep. Patrick Tiberi (R-Ohio) respectively. The bills would amend the Internal Revenue Code (IRS) code of 1986 to increase state allocations for the low-income housing tax credit, modify the cost-of-living adjustments, and revise tenant eligibility requirements.
Access to Affordable Housing Act, H.R. 4185, sponsored by Rep. Suzan DelBene (D-Wash.). The bill would amend the IRS code to increase state allocations for the low-income housing tax credit.
Promoting Resident Opportunity through Rent Reform Act, discussion draft sponsored by Rep. Dennis Ross (R-Fla.) and similar to the legislative proposal by U.S. Department of Housing and Urban Development Secretary Ben Carson, titled the Making Affordable Housing Work Act. It would raise the amount that low-income families would be expected to pay for rent, to 35 percent of the housing recipient’s gross income (an individual or family’s income adjusted for exclusions but not deductions) from 30 percent of adjusted gross income (an individual or family’s income adjusted for the deductions they claim), and allow public housing authorities to impose work requirements.
Affordable Housing - The U.S. Department of Housing and Urban Development (HUD) designates housing as affordable if the gross costs to live in that housing unit, including utilities, do not exceed 30 percent of the gross income of the resident(s).
Area Median Income (AMI) - To determine whether housing costs or rents are affordable for residents of a certain community, HUD uses the area median income (AMI). In a designated area, half of the population makes more than the AMI, and the other half makes less than the AMI.
For example, the AMI for a single -person household in San Francisco is $82,900; in Cuyahoga County (Cleveland), Ohio, $45,660.
HUD designates households to certain income groups based on their income relative to the AMI:
– “Extremely Low Income”: Below 30 percent of AMI
– “Very Low Income”: Below 50 percent of AMI
– “Low Income”: Below 80 percent of AMI
– “Moderate Income”: Between 80 and 120 percent of AMI
Note: All of these levels are adjusted based on how many people are in a household.
Housing Trust Fund - The Housing Trust Fund Project defines housing trust funds as distinct funds established by state, county or other local governments to support the preservation and production of affordable housing. These funds have ongoing dedicated sources of public funding, as opposed to an annual budget allocation.
Social Impact Bond (SIB) - Social impact bonds, also called “pay for success” programs, allow county governments to pay only for programs that achieve their objectives. Instead of forming an agreement to pay an organization for the services it provides, counties will agree upon a set of outcomes, and will pay the outside organization according to the outcomes it achieves. Expanding housing affordability is one of the many ways counties use SIBs.
Inclusionary Zoning (IZ) - According to HUD, inclusionary zoning (IZ) practices refer to any kind of policy or ordinance that requires or encourages developers to set aside a certain percentage of housing units in a new or rehabilitated project for low- and/or moderate-income residents. IZ policies help to integrate lower-income residents with higher-income residents so that all have access to the same high-quality services and amenities.
Affordable Housing Resources for Counties
- National Association of Affordable Housing Lenders (NAAHL) - NAAHL’s mission is to expand economic opportunity through responsible private financing for affordable housing and inclusive neighborhood revitalization.
- U.S. Department of Housing and Urban Development (HUD) - Community Development Block Grants (CDBG), HOME Investment Partnerships (HOME), Housing Trust Fund
- U.S. Department of the Treasury - Low-Income Housing Tax Credits (LIHTC) creates market incentives for the acquisition and development, rehabilitation of affordable rental housing.
- U.S. Department of Agriculture (USDA) Rural Housing Service - offers a variety of programs to build or improve housing and essential community facilities in rural areas. USDA offers loans, grants and loan guarantees for single- and multi-family housing, nursing homes, housing for farm laborers and much more.
- National Council of State Housing Agencies (NCSHA) - Non-profit, non-partisan organization created by the nation’s state Housing Finance Agencies to coordinate and leverage their federal advocacy efforts for affordable housing.
- List of Housing Finance Agencies, by state
- National Low-Income Housing Coalition (NLIHC) - NLIHC is dedicated solely to achieving socially-just public policy that assures that people with the lowest incomes in the United States have affordable and decent homes.
- National Association of Local Housing Finance Agencies (NALHFA) - National association of professionals working to finance affordable housing in the broader community development context at the local level. Non-profit that focuses on advocacy and provides technical assistance to city and county agencies, non-profits and private firms.
- National Association of Home Builders (NAHB) - A federation of more than 700 state and local associations, NAHB represents more than 140,000 members and is the voice of America’s housing industry. They work to ensure that housing is a national priority and that all Americans have access to safe, decent and affordable housing, whether they choose to buy or rent.
- Housing Assistance Council (HAC) - National non-profit organization that helps build homes and communities across rural America.