Affordable Housing Becomes Flashpoint in DC’s Spending Showdown
WASHINGTON – The fate of affordable housing funding and other homeowner assistance programs has become a key battleground as lawmakers debate the Biden administration’s $ 3.5 trillion social policy agenda.
House and Senate lawmakers are weighing a number of measures that, taken together, would amount to a historic expansion in affordable housing. They include billions of dollars for two federal housing funds, up to $ 100 billion for down payment assistance, and even a proposal to allow mortgage borrowers to build capital faster.
But many proposals could face the chopping block as Democrats seek to cut the Build Better Back Act by $ 2 trillion to satisfy centrists whose support is crucial for the passage.
âI hope for the best, but we have to assume the worst and we have to organize and plan for it, as housing is a natural target for budget cuts,â Rep. Ritchie Torres, DN.Y., said. voicing Tuesday during a weekly call. organized by the National Low Income Housing Coalition.
The House version of the Build Back Better Act would provide more than $ 330 billion in affordable housing. This includes $ 37 billion for the National Housing Trust Fund – in addition to what Fannie Mae and Freddie Mac are contributing – to support the construction of housing for low-income people, and $ 35 billion dollars for the HOME Investment Partnerships Program, which provides grants for home buying assistance and affordable housing. .
The bill also allocates $ 10 billion to a Department of Housing and Urban Development program offering grants to provide down payment assistance to first generation homebuyers up to $ 20,000 or 10% of the price of the bill. ‘purchase. A competing plan backed by Senate Democrats would allocate $ 100 billion in down payment assistance for first-generation borrowers.
But given the refusal of Sens. Joe Manchin, DW.V., and Kyrsten Sinema, D-Ariz., To support the $ 3.5 trillion reconciliation bill, citing concerns about the dollar amount Democrats scramble to shrink the package and rethink their priorities. Many fear that housing funds will be among the first to be cut.
“All of this funding is now at risk of being removed entirely from the budget reconciliation,” House Financial Services Committee chair Maxine Waters, D-Calif., Said Tuesday at a press conference outside the House of Commons on Tuesday. United States Capitol. âThis is our unique opportunity to finally invest in our housing programs, our communities and our future – an investment that is long overdue. “
To accompany calls to cut the package while preserving housing-related funding, Waters says she plans to cut each housing provision in the bill by an equal percentage instead of cutting some programs from the bill entirely. . She also indicated on Tuesday that she could rally to the reduction in the duration of certain housing programs.
“I’m not for eliminating people, but I’m for fairness, and fairness to me is that everyone has to take a hit and it should be the same percentage,” she said. stated in an interview.
But some are already preparing for the worst if this strategy does not materialize.
House leaders reportedly consider scaling back the entire housing program to make room for other elements of the reconciliation bill, such as climate change policies. But Waters takes a hard line against this approach.
âThere are competing priorities and we have to make sure housing is front and center,â Torres said.
For many, a historic investment in affordable housing couldn’t be better. House prices are skyrocketing in part because of a lack of supply, which has excluded many first-time buyers and minorities from the market. On top of that, the disparity between black and white home ownership is greater today than it was in 1960, before the passage of the Civil Rights Act.
“Failure to address the problem now guarantees that we will make it worse,” said David Dworkin, president and CEO of the National Housing Conference. âEither way, I think if we don’t see significant money for down payment assistance and the redevelopment of communities that have been left behind, then we will have failed and missed a historic opportunity. “
Even if housing programs are preserved, any substantial cuts would be disappointing, said Scott Olson, executive director of the Community Home Lenders Association.
âWe haven’t really, on any scale, built new affordable housing for 40 or 50 years, and so if that is drastically reduced in this bill, it’s really unfortunate, because it’s an opportunity to really starting to breach this, “he said.
Olson hopes investments for the Housing Trust Fund and the HOME Investment Partnership Program, as well as a proposed increase in housing tax credits for low-income people, will be prioritized and not cut as much as others. bill programs.
âI think this is a once in a lifetime opportunity,â he said. âWhatever happens, a rigorous new construction component, housing tax credits and [Housing] Trust fund, plus extra help from section 8 to reach homelessness, these particular areas, I hope they are protected and do not suffer larger cuts as they are essential to to resolve. “
Waters said at Tuesday’s press conference that she had two conversations with President Joe Biden about preserving funds for housing in the final version of the Build Back Better Act. He has pledged to include funding, she said.
âWe’re going to hold him to this,â she said.
Waters also led all Democrats on the House Financial Services Committee in a letter sent to Biden and congressional leaders last week, in which they said housing investments “must be included at solid levels” in the project. of reconciliation law.
Analysts said Waters appears to be arguing that the housing arrangements are supported by all Democrats.
“In a house so evenly divided, [House] Speaker [Nancy] Pelosi needs every vote. We see this as Waters telling executives that the best way to get those votes is to include housing programs, âsaid Jaret Seiberg, analyst at the Cowen Washington Research Group, in a research note.
Democrats want down payment assistance for first-generation homebuyers, in particular, to stay in the bill.
âI think thinking has evolved this way – with both Senate and House Democrats – that we should support people who work every day, can afford a mortgage. [but] can’t afford to save their down payment, âWaters said. âWe think it makes sense to help this first generation of potential buyers, and that includes millennials, [whom] we think we need to pay a lot more attention to it.
A down payment assistance program for borrowers who do not have the same generational wealth as those whose parents own could help boost minority homeownership, Dworkin added.
âWe have a black homeownership crisis in this country. All racial and ethnic groups have homeownership gaps, but none are as bad as what we’ve seen in the black community, âhe said. âIf we don’t have significant financial support for first-generation homebuyers, then we just haven’t been able to factor racial fairness into a multi-billion dollar bill.
Waters agreed that the first generation down payment assistance program would go a long way in reducing racial disparities in homeownership rates.
“We know that first generation down payment assistance, that minorities will benefit, because discrimination and predatory lending has been very high in minority communities,” she said.
Additionally, Senator Mark Warner, D-Va., Has a plan that would offer 20-year mortgages to first-generation homebuyers with roughly the same monthly payment rate as a 30-year mortgage, which he said would allow borrowers to build equity. at home twice as fast. And Senator Ron Wyden, D-Ore., Has put forward a proposal to offer a down payment tax credit of $ 15,000 to all first-time home buyers.
Torres said the racial equity component could be a major selling point for Democrats who may be on the verge of including housing money in the Build Back Better Act over other priorities.
âPresident Biden has made racial equity the centerpiece of his presidency, and in my opinion, you cannot tackle systemic racism without addressing the affordability crisis,â he said. “This is a message that is going to be persuasive, not only for the Congressional Black Caucus and the Congressional Hispanic Caucus and the Congressional Progressive Caucus, but also for the Democratic Party at large, which has become much more committed to racial equity. . “