Apartment Industry Victory
July 30 was a victorious day for both the multifamily and affordable housing industries. President Bush signed the Housing and Economic Recovery Act of 2008—what many are calling the most significant housing legislation in decades.

More Americans will get to remain in their homes, and neighborhoods hurt by the foreclosure crisis will be stabilized. And the measure includes provisions that affordable housing and multifamily industry advocates have been pushing for years—the creation of the National Affordable Housing Trust Fund and changes to the low-income housing tax credit (LIHTC) program.

The act balances single-family incentives with expanded rental housing incentives. I commend the National Multi Housing Council and National Apartment Association for their aggressive lobbying efforts and Congress for listening to the needs of both renters and homeowners.

Key LIHTC and tax-exempt bond provisions include:

• Increasing the LIHTC credit ceiling for 2008 and 2009 by 20 cents, or 10 percent;
• Increasing the tax-exempt bond ceiling by $11 billion nationally;
• Repealing a requirement that a bond be posted upon the disposition of a housing credit building or interest in order to avoid recapture;
• Providing permanent alternative minimum tax relief for housing tax credits and bonds; and
• Adopting a credit percentage that “shall not be less than” 9 percent through 2013 for new construction and rehabilitation projects that are not financed by tax-exempt bonds.

The act also creates a new federal regulator for Fannie Mae and Freddie Mac, called the Federal Housing Finance Agency, which will regulate both the capital requirements and affordable housing goals of the government-sponsored enterprises (GSEs). The new legislation effectively abolishes the Office of Federal Housing Enterprise Oversight and takes the task of monitoring the affordable housing goal away from the Department of Housing and Urban Development. The act also gives the Treasury Department temporary authority to extend the GSEs’ lines of credit and to take an equity stake in the companies if needed.

A key provision of the act concerns the creation of the National Affordable Housing Trust Fund, which is expected to raise about $600 million annually. The trust fund—a dedicated source of financing for affordable housing production not subject to the annual appropriations process—will be seeded by Fannie Mae and Freddie Mac. Seventy-five percent of the fund would be used for rental housing serving people with incomes less than 30 percent of the area median income (AMI), and another 15 percent would go toward rental housing serving those with incomes less than 50 percent of the AMI. The remaining 10 percent would go toward homeownership.

The act also modernizes some FHA multifamily programs, streamlining the review process, asset management requirements, and subsidy layering requirements for FHA-insured developments using LIHTCs.

The legislation also provides nearly $4 billion in “emergency funding”—effectively Community Development Block Grant funds—for the redevelopment of abandoned and foreclosed homes and residential properties.