LIHTC Expansion Among Solutions Cited During House Financial Services Committee Hearing on Homelessness, Affordable Housing Crisis

Published by Peter Lawrence on Tuesday, January 21, 2020 - 12:00am

On January 14, the House Financial Services Committee held a hearing called “On the Brink of Homelessness: How the Affordable Housing Crisis and the Gentrification of America is Leaving Families Vulnerable” that examined causes of the nation’s affordable housing crisis and ways to prevent homelessness. Among the solutions discussed was expanding and enhancing the low-income housing tax credit (LIHTC).

Cost-Burdened Renters and the Slide to Eviction

According to the Joint Center for Housing Studies there are 38 million cost-burdened households in the U.S. This means 31.5 percent of all households are spending more than 30 percent of their incomes on housing. Even worse off are renters, of whom nearly half (47 percent) are cost burdened. Cost-burdened renters are the most at risk for eviction and consequently possible homelessness, as an unexpected financial emergency can render a household unable to pay rent.

Hearing witness Matthew Desmond, researcher and author of Evicted: Poverty and Profit in the American City, highlighted the troubling statistics regarding evictions. Eviction rates in small towns rival the rates in big cities, and evictions can often negatively influence the ability of the family to move into affordable housing units.

Proposed Strategies

During the question and answer period, the witnesses offered a variety of strategies that the federal government could take to reduce homelessness, largely revolving around two central themes: preservation of existing affordable housing and increasing the housing supply. In her remarks, Priya Jayachandran, president of the National Housing Trust, emphasized the importance of strengthening incentives that exist for preservation, such as voucher programs, rental assistance contracts, competitions to encourage cities to promote inclusivity in housing, and the expansion of the low-income housing tax credit (LIHTC).

Witness Michael Hendrix, director of state and local policy at the Manhattan Institute, spoke to the importance of building more housing of all types, including both affordable and market rate homes. To that end, Hendrix emphasized the significance of deregulation and the hindrance of zoning. He said legalizing units such as accessory dwelling units, modular housing, and approving upzoning would help fill in the “missing middle housing.” Hendrix also spoke in support of expanding the LIHTC, because it encourages developers to build more affordable housing, and helps fill the financing gap that exists in housing construction.

Support for the Affordable Housing Credit Improvement Act

During the hearing H.R. 3077 and S. 1703, the Affordable Housing Credit Improvement Act (AHCIA), were also discussed in depth. Among other things, this legislation would maintain and expand the LIHTC. It was supported by all witnesses.

Rep. Ted Budd, R-N.C., stated his support of the legislation. Budd is an AHCIA co-sponsor. He called the AHCIA an “effective market-based approach to address affordable housing.” Jayachandran agreed with Budd, saying that the “LIHTC has been almost alone the single biggest driver of new affordable housing production since it was enacted in 1986 and the only shortcoming of the program has been that it hasn’t kept up pace with the increase in folks who need affordable housing.” Reps. John Rose, R-Tenn., and Carolyn Maloney, D-N.Y. also expressed their support. Rose said that only one in three LIHTC applications in Tennessee can currently be allocated LIHTCs.

Unfortunately, none of the provisions of the AHCIA were included in the 2020 appropriations bill that was approved at the end of 2019. That bill was the last major piece of legislation for 2019 that could be used to advance affordable housing and community development-related tax incentives. That said, supporters are hopeful the interest expressed in introducing infrastructure legislation in 2020 could provide an opportunity to move AHCIA provisions forward. 

Other Legislation

During the hearing, many other pieces of relevant legislation were discussed, including:

  • H.R. 1856, introduced by Rep. Maxine Waters, D-Calif., would allocate 13.27 billion dollars in mandatory emergency relief funding over five years to federal programs and initiatives to prevent homelessness. This $13.27 billion includes funding for:
    • $5 billion over five years to McKinney-Vento Homeless Assistance Grants
    • $2.5 billion over five years for new Special Purpose Section 8 Housing Choice Vouchers
    • $1.05 billion annually in mandatory spending dedicated to the National Housing Trust Fund
    • $500 million over five years in outreach funding to ensure that homeless people are connected to the resources they need
    • $20 million for states and localities to integrate healthcare and housing initiatives, which provide technical assistance to help state and local governments coordinate their healthcare and housing initiatives that are funded by federal programs.

H.R. 1856 was the main focus of the hearing. It was reported out of the Financial Services committee July 2019 and the bill awaits consideration by the full House.

  • S. 3030, introduced by Sen. Michael Bennet, D-Colo., would create a national eviction database and establish an Emergency Assistance Fund to provide financial assistance and housing stability-related services to eviction-vulnerable tenants. S. 3030 has been referred to the Senate Committee on Banking, Housing and Urban Affairs.
     
  • H.R. 4956, introduced by Rep. Virginia Foxx (R-NC), would provide Trump’s Executive Order to “establish a white house council on eliminating regulatory barriers to affordable housing” the full force and effect of law. H.R. 4956 has been referred to the House Committee on Financial Services.
     
  • H.R. 5599, introduced by Rep. Denny Heck, D-Wash., would dramatically increase the funding to the national Housing Trust Fund (HTF) by taking the 10-basis point (the 0.1 percent) guarantee fee currently levied by Fannie Mae and Freddie Mac that was mandated by Congress to offset other federal spending and redirecting it to the HTF. It is estimated this change would increase funding to the HTF by billions every year. H.R. 5599 has been referred to the House Committee on Financial Services.