The National Housing Trust Fund was the subject of discussion at a Senate Committee on Banking, Housing and Urban Affairs hearing and a House Committee on Financial Services mark up, both on March 15.
The Senate Committee held a hearing on the Administration’s report to Congress to reform America’s housing finance market. The White House delivered Reforming America’s Housing Finance Market to Congress on February 11 (see Memo, 2/11). This report calls for a dedicated funding mechanism to produce and preserve rental housing for the lowest income families and specifically references the National Housing Trust Fund as a model for such a fund.
Committee Chair Tim Johnson (D-SD) said that the hearing marked the start of a long-term discussion of the future of housing policy in America. Committee Ranking Member Richard Shelby (R-AL) criticized the Administration’s report, saying that it purports to discuss the future of U.S. housing policy but says virtually nothing at all about Section 8, low income housing tax credits and other housing programs, which he said currently receive little scrutiny by Congress.
Senator Jack Reed (D-RI) said that, in the recent past, “We were obsessed with homeownership.” Senator Reed went on to talk about the value of affordable rental housing. “I think this report says that we really have to have a balance. For many people, the best form of housing for them is affordable, decent rental housing…. Our goal should be providing people with options so they can chose the best form of housing for their family, their work…. One of these is the National Housing Trust Fund, which is devoted to trying to build affordable housing.”
In response to Senator Reed, HUD Secretary Shaun Donovan called the NHTF very important and described the current housing market. “As we’ve gone through the housing crisis, we’ve seen rents come down and vacancies increase at the top end of the market. At the same time,” Secretary Donovan said, “at the lower end of the market, for those with the lowest incomes and even for some with moderate incomes, rents have increased.” Secretary Donovan went on to say that rents for the lowest income households have gone up to such an extent that HUD’s recent report to Congress on worst case housing needs showed the most greatest increase in worst case housing needs that HUD has ever measured. A household with worst case housing needs is a very low income renter household that is either paying more than half of its income for housing or is living in substandard housing (see Memo, 2/4).
“Clearly, the range of options that were providing the focus on affordable rental housing has not been strong enough to meet those needs. There is a need for some kind of targeted, focused effort,” the Secretary said.
Also on March 15, the House Committee on Financial Services marked up its Views and Estimates on the FY12 budget proposal by the President, which included an unfavorable position on the NHTF (see Memo, 3/11). The Committee asserted that “the Trust Fund duplicates other Federal housing programs, such as the HOME Investment Partnership program, that provide grants to state and local governments to be used for increasing home ownership and affordable housing opportunities for low- and very low-income Americans.”
The National Housing Trust Fund Campaign sent a letter to Committee Chair Spencer Bachus (R-AL) and Subcommittee on Insurance, Housing and Community Opportunity Chair Judy Biggert (R-IL) expressing concerns that the budget views and estimates did not accurately represent the NHTF’s purpose as described in statute or in HUD regulatory proposal (see Memo, 3/11).
“The rationale behind the NHTF is that none of the existing housing programs address the need that the NHTF was created to address….The NHTF will produce, rehabilitate, preserve, and operate homes that are affordable specifically for extremely low income Americans (income at or below 30% of the area median.) At least 75% of NHTF dollars must be for extremely low income households by statute. By regulation, HUD is proposing that 100% of the units produced in year one be for this income group. By contrast, the HOME statute requires that at least 90% of units are for households under 60% of AMI, with remainder for households up to 80% AMI,” NLIHC President and CEO Sheila Crowley wrote in the March 11 letter.
Representative Gwen Moore (D-WI) offered an amendment to the Views and Estimates stating that the NHTF is unique from other federal housing programs, including the HOME program, because it would use 90% of funding for rental housing and target 75% of funds to extremely low income households. In her statements to the Committee, Representative Moore criticized the large amount of money spent by the federal government to provide a subsidy to homeowners in the form of the mortgage interest deduction, saying that the federal government should not be subsidizing wealthy households.
Chair Bachus, Representative Moore and Representative Maxine Waters (D-CA) discussed the distinctions between NHTF and HOME and debated the value the mortgage interest deduction. Chair Bachus agreed that the amount spent by the federal government on this subsidy is very large but said that homeownership has benefits. The challenge of spending significant funding on homeownership is one that the committee will continue to debate, said Chair Bachus.
Chair Bachus continued, saying it is good to recognize that the NHTF focuses on rental housing and that Congress has made a mistake assuming that all Americans can afford homeownership. “The greatest need for poorest Americans and the most practical way to deliver effective support in attempts to become independent and self sufficient is affordable rental shelter; hopefully as we go forward we will give priorities to these types of programs,” said Chair Bachus.
Representative Moore’s amendment failed by a vote of 30 to 22 and the Committee passed the Views and Estimates by a vote of 29 to 24 along party lines.
Access information related to the March 15 Senate hearing at http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=482a3e7b-b029-4711-8881-b2dad0b2f1b3
View the Views and Estimates: http://financialservices.house.gov/media/pdf/FY2012ViewsandEstimates.pdf
View Representative Moore’s amendment: http://financialservices.house.gov/media/pdf/031511MooreAm.pdf
View the NHTF Campaign’s March 11 letter: http://www.nlihc.org/doc/Bachus_Biggert_Letter.pdf