Congress has passed a last-minute deal with $900 billion in COVID-19 pandemic relief and $1.4 trillion in government funding for the rest of fiscal 2021. The pandemic relief and the omnibus package, which President Trump signed Dec. 27, contains big wins for Americans in need, including assistance for struggling renters, an extension on the eviction moratorium, and low-income housing tax credit (LIHTC) improvements.
One of the highlights of the bipartisan bill is the permanent minimum 4% LIHTC rate for housing bonds issued after Dec. 31. Affordable housing stakeholders have been advocating for this fixed rate for the past several years to help provide predictability to the marketplace and increase production by making more developments financially feasible.
According to the Affordable Housing Tax Credit Coalition (AHTCC), the 4% housing credit rate has fallen to lows hovering between 3.07% and 3.09% in recent months due to COVID-19 and ensuing cuts to federal borrowing rates, putting housing developments’ financial feasibility at risk. With the 4% floor, Novogradac & Co. estimates that an estimated 130,000 affordable homes could be created from 2021 to 2030.
The legislation also includes an additional allocation of $1.1 billion in housing tax credits for states impacted by disasters.
“The affordable housing provisions included in the year-end legislation are critical to support low-income families during the current crisis and as part of our nation’s recovery,” says Emily Cadik, AHTCC executive director. “The minimum 4% housing credit rate has been a key priority for the AHTCC, and we thank our champions in Congress for responding to this urgent need.”
David Gasson, executive director of the Housing Advisory Group, agrees that this is a long overdue success for the affordable housing industry.
“We have collectively been working for years to fix the 4% LIHTC and secure additional resources for the production of much-needed housing. At a time when the housing crisis is growing worse, the fixed 4% credit will add tens of thousands of additional units to the national inventory,” he says. “We will now focus our efforts on the remaining provisions of the Affordable Housing Credit Improvement Act. So much work remains, and, while we take this time to celebrate, we cannot forget the families, veterans, and seniors that rely on our efforts to provide them housing.”
The National Association of Home Builders also had championed the minimum 4% housing credit floor as well as other key provisions in the package, including small business relief from burdensome loan forgiveness requirements and assisting state and local home builder associations that had largely been excluded from previous relief measures.
In addition, the relief package provides measures for households facing financial distress, including $25 billion in rental assistance, $600 in direct stimulus checks for many Americans, $300 per week in enhanced unemployment benefits through March, and $284 billion for a second forgivable Paycheck Protection Program (PPP) loan.
The rental assistance being funded through the Coronavirus Relief Fund and administered by the Treasury Department, with each state receiving a minimum of $200 million. In addition, $800 million will be set aside for Native Americans, Alaska Natives, and Native Hawaiians, and another $400 million for U.S. territories.
Eligible renter households must have 2020 incomes at or less than 80% of the area median income (AMI), and states and localities must prioritize households earning at or less than 50% of the AMI or those who have been unemployed for 90 days.
At least 90% of these funds must cover financial assistance, including back and forward rent and utility payments, and other housing expenses. Assistance can be provided for 12 months. Up to 10% of the overall funding can be used to provide case management and other services related to the pandemic and keeping renters stably housed.
The bill also extends the Centers for Disease Control and Prevention’s (CDC’s) eviction moratorium, which was set to expire on Dec. 31, through Jan. 31.
Some housing advocates applaud the efforts, but say more work and more funding need to happen to protect renters during the pandemic.
“While extending the CDC eviction moratorium for just one month is insufficient to keep people housed for the duration of the pandemic, the extension provides essential and immediate protection for millions of renters on the verge of losing their homes in January. Extending the moratorium through January provides time for emergency rental assistance to be distributed, and for President-elect Biden to improve and further the moratorium immediately after being sworn into office,” says Diane Yentel, National Low Income Housing Coalition president and CEO. “Similarly, while $25 billion in rental assistance is clearly not enough to meet the estimated $70 billion in accrued back rent or the ongoing need for rental assistance to keep families stably housed, these resources are essential and desperately needed.”
David Dworkin, president and CEO of the National Housing Conference, agrees that the rental assistance is a practical start regarding the immediate threat of mass evictions across the country.
“More will be needed to prevent housing insecurity for millions of low- and moderate-income households who are managing the economic fallout of the pandemic,” he says. “Rapid deployment of the funds is the most important next step. Distributing them directly to the states through the U.S. Treasury will be the most efficient way to get the money quickly into the hands of those waiting for assistance. It is essential that Treasury fast-track regulations to guide distribution procedures, so that tenants and their landlords get the help they need now.”
National Multifamily Housing Council president Doug Bibby and National Apartment Association president and CEO Bob Pinnegar applauded congressional leaders for the passage of the package, but stated the eviction moratorium extension is not the answer for helping struggling renters. “We are heartened that the legislation includes such critical resources that will allow those impacted by COVID and resulting economic distress to meet their financial obligations, including rent. Unfortunately, it also extends the current CDC eviction moratorium until January 31, 2021. Eviction moratoriums fail to address a renter’s underlying financial distress and do not address housing instability. The resources provided in this package, as well as future support that will need to be extended in 2021, are essential to addressing apartment residents’ financial challenges—not interminable moratoriums."
The National Association of Counties also expressed some disappointment in the bill, saying while it provides some modest policy priorities for the nation’s counties, including the rental assistance, it doesn’t include critical aid to state and local governments on the front lines.
“As the level of government with vast public health, safety, economic, and other community responsibilities, our efforts fighting COVID-19 have resulted in massive budgetary effects—as much as $202 billion through fiscal year 2021. Many counties’ revenues are down, and our expenses are up,” says executive director Matthew Chase. “Counties have made difficult decisions to cut services and job-creating capital projects all while confronting challenges with testing, contract tracing, and vaccine distribution planning. Additionally, local governments have lost 1 million jobs since the pandemic began.”