NALHFA Legislative Update Texas Association of Local Housing Finance Agencies 2015 Annual Conference October 21-23, 2015

Presentation Overview Update on 2015 NALHFA Policy Priorities Budget Challenge for Domestic Programs HUD Appropriations Tax Reform/Tax Extenders Fair Housing End-Game

2015 Legislative and Policy Update Budget Resolution Joint resolution adopted by Congress in May–first budget resolution jointly adopted by both chambers in more than five years. Resolution retains BCA spending caps for FY 2016 with only marginal growth for Non-Defense Discretionary (NDD) programs

2015 Legislative and Policy Update Beyond FY’16 resolution envisions cuts below BCA levels for NDD programs Key Points: Budget resolution is a non-binding agreement Senate Democrats threatening to filibuster any spending bill that holds to BCA spending caps making passage of spending bills in current form unlikely (seeking a new Ryan-Murray agreement)/White House veto threat Presidential politics complicate ability to move bills in a timely and collaborative fashion Planned Parenthood battle had threatened likelihood of moving a “clean CR”

Legislative and Policy Update HUD Appropriations House Activity: House THUD Approps. Bill approved June 9/$1 billion increase in HUD allocation to $42 billion but forced to contend with $1.1 billion decline in FHA receipts CDBG: $3 billion (level funding with FY’15)/opposes formula or programmatic revisions in President’s budget HOME Investment Partnership: $900 million (level funding)/$767 million in direct appropriations and $133 million diverted from Housing Trust Fund Does not support administration request establishing funding floor of $500,000 Housing Trust Fund: eliminated and funding directed to HOME Senate Activity: Committee approved on June 23 CDBG: $2.9 billion ($100 million reduction) HOME: $66 million ($834 million reduction)/setting up larger debate over budget caps Housing Trust Fund: Senate bill retains funding Continuing Resolution: Funding at existing levels until December 11 Budget subject to diminishing non-defense discretionary spending resources; Section 8 renewals constitute 80+ percent of HUD budget HUD programs depend on excess FHA receipts for funding; impact of FHA fee reduction (50 bps) impact FY2016 funding

Legislative and Policy Update Tax Reform and Tax Extenders Low-Income Housing Tax Credit (LIHTC): House and Senate legislation (H.R. 1142/S. 1193) to establish minimum 4% and 9% credit rates 9% minimum rate expired at the end of 2014—was extended retroactively that year Municipal Interest Tax Exemption: Administration’s budget and past House W&M tax reform draft envision capping interest earned on muni bonds at 28 percent (vs. current of 35 percent) broad bipartisan support makes elimination of exemption, unlikely New Markets Tax Credit: extended retroactively for 2014 in December and will need to be renewed prior to the end of 2015 Measures in House and Senate call for permanent reauthorization, but passage unlikely despite broad bipartisan support Tax Extenders legislative approved by Senate Finance Committee in July extends for two years: NMTC (at $3.9 B), 9% rate, and establish 4% rate for acquisitions (made before 1/1/17)

Legislative and Policy Update Fair Housing Texas Department of Housing and Community Affairs v. Inclusive Communities Project: Supreme Court rule in 5-4 decision that disparate impact under Fair Housing Act is “cognizable” (meets the basic criteria of being adjudicated) Fair Housing Act allows legal suits based on disparate impact—policy/action has discriminatory impact, even if not based on a discriminatory purpose/unintentionally discriminatory HUD finalized Affirmative Furthering Fair Housing (AFFH) rule this Summer/HUD developing Assessment tool to assist communities First Assessment of Fair Housing (AFH) due 270 days prior to program year that begins on or after 1-1-2017 House Republicans launched pre-emptive counter offensive in FY’16 Appropriations Bill in effort to prevent enforcement (next year) Rep. Paul Gosar (R-AZ) amendment prohibits funds from being used by HUD to implement, enforce, or administer HUD’s July 2013 AFFH proposed rule Rep. Scott Garrett (R-NJ) amendment prohibit funds from being used by HUD to implement or enforce the final rule entitled "Implementation of the Fair Housing Act's Discriminatory Effects Standard" published Feb. 2013 Rep. Scott Garrett sponsored a second amendment preventing DOJ from engaging in any litigation related to “disparate impact”

Legislative and Policy Update Budget and Appopriations End Game Appropriations Caps: Senate Democrats holding bills hostage unless spending caps raised Timeline for CR: clean continuing funding resolution (CR) sustaining existing funding level until December 11. Potential exists for year-long CR Revised budget agreement: still time for a budget bargain between Dems and GOPers on budget caps/but can moderate GOPers get support of Republican Presidential hopefuls and Tea Party?/Congress and Administration working on FY ‘16 and ‘17 budget deal Unfinished Work: debt ceiling, tax extenders, Highway Trust Fund Omnibus: if two year budget deal hashed out, stay tuned for large funding package with policy riders for unfinished work Presidential Politics: More than a dozen GOP presidential candidates vying for opportunity to set themselves apart from rest of field New Speaker: Boehner retirement HAD potentially deferred showdown with conservatives over debt ceiling, highway bill extensions, appropriations (long-term CR into 2016 more likely) and tax extenders/Conservatives already issued warning about revising spending caps…McCarthy withdrawal changes everything…New Speaker race to be held end of October—Ryan expected to win

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