|From the Executive Director, April 2011|
Public policy decisions on housing are being contemplated and discussed both in Bismarck and in Washington, D.C., as the legislative assembly and Congress continue their work in earnest.
There are several pieces of legislation at both levels which are grinding through the process as I write this.
At the beginning of March, I testified in the state House Finance and Taxation Committee on Senate Bill 2049 which would take away the ability of Low Income Housing Tax Credit properties owned by non-profit organizations to receive property tax exemptions. My take away listening to the Senate deliberations on the bill, which passed on the floor by a 33 to 13 margin, was that the program is much misunderstood. Contrary to popular belief, tax credit projects are not “get rich” schemes. Nor, given the deep income targeting requirements of the program, are they already overly subsidized projects.
The purpose of my testimony was to explain the tax credit program in an attempt to dispel these misconceptions.
In my testimony I stated, “NDHFA strives through the Tax Credit program to make sure affordable housing can and is happening in our communities. But, it is my concern that this bill could get in the way of that happening by removing the local taxing authorities’ – a local community’s – flexibility should they choose to play a role in making its housing affordable for all its community residents.”
The bill passed the House and now will go to the Governor. This bill taking effect will place additional challenges for the Tax Credit program and its participating developers beyond those they already face in making affordable housing possible.
Senate Bill 2210 proposed the creation of a Housing Incentive Fund that would be used to fill an appraisal and/or affordability gap on multi-family development projects. Since NDFHA was named the administrating agency of the fund, we worked with the bill’s sponsors and legislative leaders to provide technical assistance on the mechanics of the bill as it wound through the process. It was put forward by the Housing Alliance of North Dakota after their attempt in the last session to create a state housing trust fund.
The bill passed the Senate by unanimous decision. After receiving a Do Not Pass recommendation from the House Finance and Taxation committee, the full House defeated it once before reconsidering and passing the bill.
In its current form, the bill gives contributors to the Housing Incentive Fund a 100 percent tax credit which would be taken over a five-year span. The contributions would form a pool from which NDHFA would allocate the funds for multi-family projects. If the governor signs the bill and it goes into effect, we will be very busy in marketing the tax credits to contributors and crafting the specifics for allocating the development dollars. Just like many of our other programs, we will be seeking public comment on the allocation plan through a public hearing and will consult with our Advisory Board and Industrial Commission to make sure the new program can have the greatest impact for North Dakota families.
On the national front, the budget cutting process could have an impact on some housing programs. There are several programs, including HOME and CDBG, which are slated for cuts in the President’s 2012 budget, but there are also housing programs which could see an increase in spending including Housing Choice Vouchers, the project-based Section 8 program, and homeless assistance. The administration is also proposing to capitalize the national Housing Trust Fund at $1 billion. Congress is very early in the budgeting process and what was proposed by the President could look much different once Congress has its say.
The administration issued a white paper in February outlining plans to reform the housing finance system and wind down Fannie Mae and Freddie Mac. The intent would be to bring more private capital into the mortgage financing system and decrease those two institutions’ dominance in the housing financing market.
One of the unstated but intended missions of the reform, according to testimony from Treasury Secretary Tim Geithner, is to shift the focus from homeownership to renter opportunities for low-income families.
While North Dakota was spared the brunt of the economic woes other states felt, we do still feel the impacts here. The tight financial environment due to new and heightened regulations on lenders and a shaky national housing market have an effect all down the chain of the housing finance system. We are noticing it with our bond issues which make our homeownership programs possible.
Our hope is that NDHFA and the other state housing finance agencies will continue to be valuable partners within the system in providing responsible homeownership opportunities for families who choose that course.
Both on the home front and nationally, much is happening in the debate on housing and nothing is yet a done deal. We will continue to monitor legislation and provide our input when and where necessary to help craft the best public policy possible.
No doubt we are at a point of new horizons. These are exciting yet challenging times for all of us in the housing business. Change can be good when driven not by emotion but by facts, careful retrospect, and well informed decision making.
Mike Anderson, NDHFA executive director
North Dakota Housing Finance Agency
2624 Vermont Avenue, PO Box 1535, Bismarck, ND 58502-1535
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