New Policy Landscape for Housing

AFFORDABLE HOUSING FINANCE • October 2008

BY STOCKTON WILLIAMS

The affordable housing community will look back on the summer of 2008 as one of great accomplishment in working with members of both parties and the administration to enact the most farreaching housing law in decades, the Housing and Economic Recovery Act of 2008.

Now we must look ahead to opportunities to advance affordable housing solutions in the discussions of issues likely to dominate domestic policy in the next Congress and administration, in addition to the economic and housing market recovery: climate change, energy independence, and transportation.

On climate change, a proposal to cap greenhouse gas emissions stalled in the Senate last summer, after passing in committee in 2007. Most observers—and a growing number of leading corporations and financial institutions—believe the United States will adopt a system similar to Europe’s to put a price on pollution in the next several years. Barack Obama and John McCain both support such an approach, although they differ on the specifics.

The affordable housing community must get active in the climate change policy debate. Homes and apartments consume about 20 percent of our energy and emit more than 20 percent of greenhouse gases. More energy-efficient homes, newly built as well as rehabilitated and retrofitted, can cut energy use by up to 40 percent or more and significantly reduce greenhouse gas emissions— while saving low-income people and rental property owners hundreds of dollars per unit every year.

A balanced climate change policy should include additional resources for bringing home the benefits of energy efficiency to the nearly 30 million very low income households in this country. Revenues from any new carbon system should be available for housing block grants and to support states, cities, and affordable housing owners and developers to achieve better energy performance and lower greenhouse gas emissions.

On energy independence, the opportunities for our industry’s leadership are significant as well. In fact, the energy bills of 2005 and 2007 contained a number of housingrelated provisions, creating new tax incentives and increasing energy-efficiency requirements in Department of Housing and Urban Development-assisted properties.

The existing energy-efficiency tax credits, as well as the 30 percent solar credit that has been combined with low-income housing tax credits to generate solar power for affordable properties, are part of the contentious “tax extender” bill that Congress has been unable to pass this year.

Going forward, the tax credits for energy efficiency and renewable energy should be strengthened to address affordable housing more effectively. And new incentives should be created. One promising idea is the tax credit bond program for residential energy efficiency proposed by House Ways and Means Committee Chairman Rangel.

On transportation, Congress will rewrite the highway and transit bill next year. Transportation is the largest discretionary spending program at $48 billion a year. How and where these funds are spent at the local level has huge impacts on housing affordability.

We should ask policymakers to require closer coordination of housing and transportation resources within regions and encourage innovation in housing finance to expand “location efficient” mortgages. The housing community has much at stake—and a great deal to offer—in federal policymaking on climate change, energy independence, and transportation.

We need to reach out to and find common ground with environmental, energy, and transit leaders who are active on these issues—and who would welcome a constructive partnership with our field.

And we need to drive a strong and consistent message that environmentally sustainable affordable housing must be a key part of our country’s domestic policy.