Terner Center Releases Federal Housing Policy Framework, Calls for Universal Housing Assistance

The Terner Center for Housing Innovation at the University of California at Berkeley released a report outlining a new framework for federal housing policy, “Building a Better Ladder of Housing Opportunity in the United States.” The report provides recommendations for how the administration can expand and better target demand-side housing subsidies. These include Housing Choice Vouchers (HCVs), expanding and coordinating supply subsidies for affordable housing construction, and strengthening incentives and accountability to meet housing production goals, further fair housing and lending objectives, and promote sustainable development. Several of the framework’s proposals, such as expanding rental assistance to all extremely low-income and very low-income renter households that need such assistance, align with the HoUSed campaign priorities.

In the near term, the report recommends augmenting emergency rental assistance and strengthening eviction protections in response to COVID-19. Recommendations also include protecting homeowners from foreclosure through increased investments in the Hardest Hit Fund created during the Great Recession and providing post-forbearance loan modifications, homeownership counseling, and legal aid services.

Beyond the pandemic, the report advocates expansion of rental assistance for all extremely low-income and very low-income renter households that need such assistance, either in the form of current HCVs or through a modernized voucher program. The report outlines a proposal for a renter’s tax credit targeted to low- and moderate-income renter households. Such a tax credit would allow extremely and very low-income households to phase out of the voucher program without facing a sudden benefit “cliff.” A renter’s tax credit could provide low- and moderate-income renters the opportunity to invest savings from rent in assets such as education or homeownership. The report also recommends reforming the mortgage interest deduction by converting it to a credit or replacing it with a credit specifically for low- and moderate-income first-time homebuyers.

Supply subsidies are also addressed in the report. According to the report, over 160 federal housing programs and activities are administered by 20 different entities. These programs are implemented across broad combination of state and local governments, institutions, and even at the individual level. The report advocates not only expanding funding for supply subsidy programs, but also consolidating programs and administering them at the regional level. According to the authors, this would address the highly fragmented nature of federal housing policy and allow for more intentional planning at a scale that better reflects actual housing and labor markets, as well as facilitating more coordinated housing planning across jurisdictions. The report advocates revising the current LIHTC state allocation formula to better align allocations with actual production needs and policy objectives such as fair housing and sustainability. LIHTC is currently allocated to states based on population.

The report outlines strategies to strengthen incentives and accountability to ensure localities and private market entities meet their fair housing and lending obligations. For example, new funding for housing production could be tied to whether a region meets housing production and fair housing goals. Production and fair housing goals could also be tied to highly valued funding streams like the Surface Transportation Block Grant Program. These financial incentives, in addition to robust enforcement of existing fair housing laws, could be used to incentivize the termination of local exclusionary housing policies and the implementation of pro-housing development policies.

“Building a Better Ladder of Housing Opportunity in the United States” is at: https://bit.ly/3aWfXDg