CLPHA Review of Select Housing Provisions in House Committee-Passed Build Back Better Act

On September 14, the House Financial Services Committee, led by committee Chairwoman Maxine Waters (D-CA), passed the Financial Services Committee Title of the “Build Back Better Act” on a partisan vote of 30-24, with all committee Democrats voting in favor and all Republicans voting against. Of some 23 amendments offered by committee Republicans, none were accepted. The Build Back Better Act is being prepared for reconciliation pursuant to the Budget Resolution for Fiscal Year 2022.

According to the committee, the bill will “provide $322 billion in funding for new and existing federal housing programs designed to provide a comprehensive response to address our nation’s urgent housing needs including the national eviction and homelessness crises, particularly among the lowest income families, people with disabilities, millennials, and people of color. It includes targeted funding streams for new construction and preservation of housing, rental and downpayment assistance, sustainable and resilient housing, fair housing enforcement, among other investments.”

The following is CLPHA’s review of select housing provisions in the Build Back Better Act as passed by committee.

Subtitle A – Creating and Preserving Affordable, Equitable and Accessible Housing for the 21st Century

Sec. 40001. Public Housing Investments

For FY22, appropriates $10 billion in formula grants to the Public Housing Capital Fund, and $66.5 billion for eligible activities under the Capital Fund for priority investments as determined by HUD to repair, replace or construct properties assisted under the Capital Fund. The bill also provides $2.75 billion structured similarly to the Choice Neighborhoods Program (“Section 24 Grants”) for competitive grants to transform, rehabilitate, and replace housing needs of public housing by transforming “neighborhoods of poverty into functioning, sustainable mixed-income neighborhoods.” An additional $750 million is provided to administer and oversee implementation of the programs under this section. Together, funding for the Capital Fund and Choice Neighborhoods total $80 billion.

Lead applicants for Section 24 Grants are local governments or public housing agencies, while joint applicants may be nonprofit organizations or for-profit developers jointly applying with a lead applicant. Grantees must commit to a period of affordability of not less than 20 years, but HUD may allow less than 20 years for homeownership units developed with Section 24 Grants. Grantees will be treated as a public housing agency for purposes of environmental reviews, and grantees shall create partnerships with local organizations, assisted housing owners, service agencies and resident organizations. Any available unobligated balances may be obligated by HUD until September 30, 2031.

Funds must be used for (statute-defined) low-income housing, and affordable housing defined as housing with a HUD-approved affordability use restriction for households earning up to 120 percent AMI for no less than 20 years.

Awarded grants are further restricted in that they may not be used for operating costs or rental assistance; they may not be used for Public Housing Capital or Operating Funds; they shall be used to address health, safety, and environmental hazards, including lead, fire, carbon monoxide, mold, asbestos, radon, pest infestation, and other HUD-defined hazards; they shall advance improvements to energy and water efficiency or climate and disaster resilience in housing. Grant amounts are provided to supplement and not supplant other amounts provided by other federal, state, or local sources. HUD may waive or specify alternative requirements and regulations for the use of funds “other than requirements related to tenant rights and protections, fair housing, nondiscrimination, labor standards, and the environment, upon a finding that the waiver or alternative requirement is necessary to facilitate the use of amounts made available under this section.”

Sec. 40002. Investments in Affordable and Accessible Housing Production

For FY22, appropriates $34.77 billion for the HOME Investment Partnerships Program (HOME); $36.77 billion for the Housing Trust Fund; $100,000 for new, or to increase prior technical assistance or capacity building awards with a limitation that awards may not increase by more than 10 percent over prior awards; and $360,000 for administering and implementing the HOME and Housing Trust Fund programs. HUD is required to allocate funds using the FY21 Housing Trust Fund formula allocation within 60 days of enactment. Certain funding commitment requirements, matching requirements, and set-aside requirements shall not apply to funds made available in this section.

Eligible grantees may “use not more than 15 percent of their allocations under this section for administrative and planning costs.” HUD may waive or specify alternative requirements and regulations for the use of funds “other than requirements environment, upon a finding that the waiver or alternative requirement is necessary to facilitate the use of amounts made available under this section.” HUD also has authority to issue regulations, notices, guidance, forms, instructions, and publications “as may be necessary or appropriate to carry out the programs, projects, or activities authorized under this section, including to ensure that such programs, projects, or activities are completed in a timely and effective manner.” Amounts remain available until September 30, 2031. Total funding for housing production investments equals $72 billion.

Sec. 40003. Housing Investment Fund

For FY22, appropriates $10 billion to establish a Housing Investment Fund (HIF) in the Department of Treasury within the Community Development Financial Institutions Fund (CDFI Fund) to: “(1)increase and preserve the affordability and quality of housing; (2) increase the availability of affordable, accessible housing; (3) improve the energy and water efficiency and resiliency of affordable housing; (4) enhance economic opportunities for residents, by financing or supporting affordable housing located within proximity to public transportation,…or centers of employment, and education, and critical community services; (5) match the creation of housing supply to existing demand and projected demand growth in the area, to the benefit of existing residents and with attention to preventing displacement of residents; and (6) further fair housing purposes addressing historic disinvestment, the concentration of poverty, and housing segregation on the basis of race, color, religion, natural origin, sex, disability, or familial status.” Of the amounts appropriated, $9.64 billion is for the Housing Investment Fund, and $360 million for costs to the CDFI Fund to administer and oversee implementation of the HIF. Amounts appropriated remain available until September 30, 2031. Total funding equals $10 billion.

The CDFI Fund shall use amounts in the HIF for grants to increase investment in the development, preservation, rehabilitation, financing, or purchase of housing primarily for low-, very low-, and extremely low-income families, and for homeowners with incomes up to 120 percent of AMI. Additionally, the CDFI Fund “may impose such conditions as it deems necessary to achieve the program goals, including coordinating with the Secretary of Housing and Urban Development…” to achieve the fair housing objectives noted above.

Eligible entities include a CDFI Fund certified community development financial institution; a nonprofit organization with one of its principal purposes the creation, development, or preservation of affordable housing, including a subsidiary of a public housing authority; or a consortium of certified community development financial institutions, eligible nonprofit organizations, or a combination of both.

Grant amounts may be used to provide loan loss reserves; to capitalize an acquisition fund for residential, industrial, or commercial property and land to preserve, develop or rehabilitate affordable, accessible housing, including resident-owned manufactured housing communities; to capitalize an affordable housing fund for certain activities; to capitalize an affordable mortgage fund, to facilitate the origination of mortgages to buyers that may experience significant barriers to accessing affordable mortgage credit, including mortgages having low original principal obligations; for risk-sharing loans; to provide loan guarantees; and, to fund rental housing operations.

Sec. 40004. Section 811 Supportive Housing for People with Disabilities

For FY22, appropriates $898 million for capital advances; $15 million for technical assistance; and, $87 million for administrative costs. Amounts remain available until September 30, 2031. Total funding equals $1 billion.

Sec. 40005. Section 202 Supportive Housing for Elderly Program

For FY22, appropriates $2.36 billion for capital advance awards, section 8 project based rental assistance contracts, and service coordinators; $15 million for technical assistance; and, $125 million for administrative costs. Amounts remain available until September 30, 2031. Total funding equals $2.5 billion.

Sec. 40006. Improving Energy Efficiency or Water Efficiency or Climate Resilience of Affordable Housing

For FY22, appropriates $5.314 billion ”for providing direct loans, which may be forgivable, and grants, subject to terms and conditions, including affordability requirements, determined by the Secretary, to fund projects that improve the energy or water efficiency, implement low-emission technologies, materials, or processes, including zero-emission electricity generation, energy storage, or building electrification, electric car charging station installations, or address climate resilience of multifamily properties.” Appropriates $76 million for administrative costs and implementation; $360 million for contract expenses, including property climate risk, energy, or water assessments, due diligence, and underwriting functions; and, $250 million for energy and water benchmarking of properties eligible to receive grants or loans, data analysis and evaluation at the property and portfolio level, including development of necessary information technology systems. Amounts remain available until September 30, 2031. Total funding equals $6 billion.

Eligible recipients include public housing agencies, project-based assistance Section 202 properties, and Section 811 properties with amounts made available for direct loans, grants, and direct loans that can be converted to grants. HUD may waive or specify alternative requirements for any provision of Section 202, Section 811, or Section 8, or “any regulation applicable to such statutes other than requirements related to tenant rights and protections, rent setting, fair housing, nondiscrimination, labor standards, and the environment, upon a finding that the waiver or alternative requirement is necessary to facilitate the use of such amounts.”

Sec. 40007. Revitalization of Distressed Multifamily Properties

For FY22, appropriates $3.87 billion for forgivable direct loans to owners of distressed properties to make necessary physical improvements; and, $130 million for administrative costs and implementation. Amounts remain available until September 30, 2031. Total funding equals $4 billion.

Loans shall bear interest at 1 percent with loan repayment amounts, frequency and requirements determined by HUD, including waiver of any due on sale or due on refinancing restrictions, loan subordination terms, loan extension, or loan forgiveness in whole or in part. Loan assistance recipients must agree to an affordability use agreement period of 30 years or extending any existing use agreements for an additional 30 years. Recipients must secure at least 20 percent of the total cost of physical improvements in matching funds from non-federal sources, except HUD may determine exceptions on a case-by-case basis. “Multifamily housing project” is defined as four or more units assisted, insured, or with a loan held by HUD, a State or State agency, in whole or in part by Section 8, Section 202, Section 811, or Section 236.

Sec. 40008. Investments in Rural Rental Housing

For FY22, appropriates $4.36 billion for new construction, improvements to energy and water efficiency or climate resilience, removal of health and safety hazards, and the preservation and revitalization of rural housing. Appropriates $200 million for grants under Section 521; and $240 million for administrative costs and implementation. Total funding equals $4.8 billion.

Sec. 40009. Housing Vouchers

For FY22, appropriates $48.46 billion for incremental tenant based rental assistance, renewals, administrative fees and other eligible expenses such as security deposit assistance and costs to retain and support participating owners; $24 billion for incremental tenant based rental assistance for households or at risk of homelessness, survivors of domestic violence, dating violence, sexual assault, stalking, and survivors of trafficking families, renewals of assistance, administrative fees; $500 million for tenant protection vouchers, administrative fees and renewals; $750 million for Competitive grants to public housing agencies for mobility-related services; $500 million for property owner outreach and retention, primarily owners in census tracts with a poverty rate of less than 20 percent; $750 million for administrative fees and implementation of the Housing Choice Voucher program generally; and $40 million for new awards or increasing prior awards for technical assistance or capacity building, with a limitation of no more than 10 percent for increasing prior awards. Together, funding for Housing Vouchers totals $75 billion.

Allocations would commence in FY22 and end in FY26 with a formula that “includes measures of severe housing need among extremely low-income renters and public housing agency capacity, and ensures geographic diversity among public housing agencies administering the Housing Choice Voucher program.” HUD will establish a procedure for public housing agencies to accept or decline the incremental vouchers, and if a housing authority fails to lease its vouchers within a reasonable time, HUD may “offset the agency’s voucher renewal allocations or revoke and redistribute any unleased vouchers and associated funds, including administrative fees and other expenses” to other public housing agencies.

Public housing agencies designated as Moving to Work agencies shall be eligible for an allocation but may only use funds for the activities listed in this section of the legislation for which the funds were provided to the agency.

A public housing agency may request of HUD that a number of its vouchers be “excepted units” that do not count against the percentage limitation on the number of authorized units a public housing agency may project-base.

Sec. 40010. Project-Based Rental Assistance

For FY 22, appropriates $14.76 billion for the project based rental assistance program; $40 million for technical assistance; $200 million for administrative costs and implementation of the program. Amounts remain available until September 30, 2031. Total funding equals $15 billion.

Provides HUD the authority to “use amounts made available under this section to provide assistance payments with respect to newly constructed housing, existing housing, or substantially rehabilitated non-housing structures for use as new multifamily housing in accordance with this section and the provisions of section 8 of the Act. In addition, the Secretary may use amounts made available under this section for performance-based contract administrators for section 8 project-based assistance, for carrying out this section and section 8 of the Act.” In awarding contracts, requires HUD to give priority to owners or prospective owners of multifamily housing projects in areas of high opportunity, in areas experiencing economic growth or rising housing prices “to prevent displacement or secure affordable housing for low-income households, or that serve people at risk of homelessness or that integrate additional units that are accessible for persons with mobility impairments and persons with hearing or visual impairments beyond those required by applicable Federal accessibility standards.”

HUD may use various mechanisms to award grants, including using a competitive process, selecting proposals submitted through the FHA loan application process, delegating contract awards to states and territories, and using any other means HUD determines to be reasonable. HUD is also able to set the terms of the contract, such as duration, rent setting and rent adjustments. HUD may waive or specify alternative requirements for any provision of Section 8 or regulation “that is applicable to such statute other than requirements related to tenant rights and protections, rent setting, fair housing, nondiscrimination, labor standards, and the environment, upon a finding that the waiver or alternative requirement is necessary to expedite or facilitate the use of amounts made available under this section.”

Subtitle B – 21st Century Sustainable and Equitable Communities

Sec. 40101. Community Development Block Grant Funding for Affordable Housing and Infrastructure

For FY22, appropriates $6.6 billion to grantees under the Community Development Block Grant program; $1 billion to Community Development Block Grant colonias grantees based on a formula that includes number of persons in poverty; $500 million for manufactured housing infrastructure improvements in eligible manufactured home communities; $300 million to administer and oversee implementation of the CDBG program and the manufactured home construction and safety standards program generally, and other costs; $100 million for technical assistance to applicants and recipients of grants. New construction of manufactured housing shall be an eligible expense for ineligible recipients of funds under the Cranston Gonzalez National Affordable Housing Act. Amounts remain available until September 30, 2031. Total funding equals $8.5 billion.

Establishes a Manufactured Housing Community Improvement Grant Program with project funding for “construction, reconstruction, repair, or clearance of housing, facilities and improvements in or serving a manufactured housing community” having specific criteria requirements. Awards are prioritized to the extent a project will assist low-income communities and preserve long-term affordability in eligible manufactured home communities. HUD may waive or specify alternative requirements for any provision of CDBG statute or regulation “other than requirements related to fair housing, nondiscrimination, labor standards, and the environment, upon a finding that the waiver or alternative requirement is necessary to expedite or facilitate the use of amounts made available under this section.”

Sec. 40102. Lead-Based Paint Hazard and Housing-Related Health and Safety Hazard Mitigation in Housing of Families with Lower Incomes

For FY22 appropriates 6.43 billion for grants to states, units of local government, Indian tribes or tribally designated entities, and nonprofit organizations for residents not in public housing, or certain federally-assisted housing; $500 million for grants to states or local governments or nonprofit entities for units assisted under the federal Weatherization Assistance Program that are not public housing, Section 8 project based rental assistance projects, or Section 202 and Section 811 projects; $2 billion for grants to project-based rental assistance projects meeting the definition of “target housing” that has not received a grant for similar purposes; $810 million for training and technical assistance to support identification and mitigation of lead and housing-related health and safety hazards, research and hazards; $260 million for HUD to administer and implement this, and other lead hazard reduction and related programs generally. HUD is authorized to determine income eligibility for grants. Amounts remain available until September 30, 2031. Total funding equals $10 billion.

Owners of rental property may give priority of lead-abated units of not less than 3-years to families with a child under 6 years of age. Recipients may use up to 10 percent of the grant for administrative expenses. Eligible activities, include: “(1) abatement of lead-based paint in target housing; (2) interim controls of lead-based paint hazards in target housing; (3) lead-based paint inspections; (4) lead risk assessments; (5) lead hazard control clearance examinations; (6) testing for housing-related health and safety hazards; (7) mitigation of housing-related health and safety hazards, including lead faucets, fixtures, and interior lines; (8) technical assistance; (9) providing work practices training to local residents; (10) outreach and engagement with community stakeholders, including stakeholders in disadvantaged communities; (11) capacity building; (12) program evaluation and research; (13) environmental reviews; or (14) activities that directly or indirectly support the work under this section, as applicable, that without which such activities could not be conducted.”

Sec. 40103. Unlocking Possibilities Program

For FY22, appropriates $4.26 billion for planning grant awards to develop and evaluate housing policy plans and substantially improve housing strategies; $20 million for research and evaluation; $70 million for technical assistance; and $150 million for HUD to administer and implement the program. Amounts remain available until September 30, 2031. Total funding equals $4.5 billion.

Establishes a new competitive grant program at HUD to develop and evaluate housing policy plans and substantially improve housing strategies, to streamline regulatory requirements and shorten process, reform housing codes, or other initiatives that reduce barriers to supply elasticity and affordability; to develop and evaluate local or regional plans for urban development to substantially improve urban development strategies related to sustainability, fair housing, and location efficiency; and, research and evaluation.

Creates at HUD new, competitive Implementation and Livable Community Investment Grants to eligible entities for the purpose of implementing completed housing strategies and housing policy plans, and planning to affirmatively further fair housing, and other objectives. Requires HUD, to the extent practicable, to coordinate with the Federal Transit Administration. Eligible entities are states, insular areas, metropolitan cities or urban counties, and a regional planning agency or consortia.

Sec. 40105. Community Restoration and Revitalization Fund

For FY22, appropriates $5.7 billion to the Community Restoration and Revitalization Fund for awards of planning and implementation grants to eligible recipients “to stabilize neighborhoods and increase access to economic opportunity for residents by creating equitable civic infrastructure and creating or preserving affordable, accessible housing; $500,000,000 for awards of grants to eligible recipients to create, expand, and maintain community land trusts and shared equity homeownership, including through the acquisition, rehabilitation, and new construction of affordable, accessible housing; $1,000,000,000 for the Secretary to provide technical assistance, capacity building, program support to applicants, potential applicants, and recipients of amounts appropriated for grants under this section; and $300,000,000 for the costs of administering and overseeing the implementation of this section.” Amounts remain available until September 30, 2031. Total funding equals $7.5 billion.

Subtitle D – HUD and Community Capacity Building

Sec. 40301. Program Administration, Training, Technical Assistance, and Capacity Building, and USICH

For FY22, appropriates $1.985 billion to HUD for administering and overseeing implementation of this title and HUD’s programs generally, including “information technology, inspections of housing units, research and evaluation, financial reporting, and other costs; and (B) new awards or increasing prior awards to provide training, technical assistance, and capacity building related to the Department’s programs, including direct program support to program recipients throughout the country, including insular areas, that require such assistance with daily operations;” $5 million for United States Interagency Council on Homelessness; $10 million for HUD Inspector General salaries and expenses. Amounts remain available until September 30, 2031. Total funding equals $2.1 billion.

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