Biden Administration Releases Proposals to Lower Housing Costs and Increase Supply
The Biden administration recently released a fact sheet announcing new proposals to “Lower Housing Costs for Working Families.” The fact sheet was released in advance of President Biden’s State of the Union address, which committed efforts to bring housing costs down while increasing the housing supply.
The fact sheet outlines a proposal to expand the Low Income Housing Tax Credit program to build or preserve 1.2 million more affordable rental units. The fact sheet also highlights a new $20 billion competitive grant fund as part of the president’s budget to support communities across the country to build more housing and lower rents and homebuying costs. This fund would support the construction of affordable multifamily rental units; incentivize local actions to remove unnecessary barriers to housing development; pilot innovative models to increase the production of affordable and workforce rental housing; and spur the construction of new starter homes for middle-class families.
The president also proposes to increase banks’ contributions to building affordable housing. Under the proposal, each Federal Home Loan Bank would double its annual contribution to the Affordable Housing Program from 10 percent of prior year net income to 20 percent. This will raise an additional $3.79 billion for affordable housing over the next decade and assist nearly 380,000 households. These funds will support the financing, acquisition, construction, and rehabilitation of affordable rental and for-sale homes.
House Democrats respond with Housing Action Plan. Following President Biden’s call to Congress to take action on affordable housing through legislative action, members of the New Democrat Coalition Affordable Housing Task Force in the U.S. House of Representatives released their comprehensive Housing Action Plan. The group’s Housing Action Plan includes more than 20 policy recommendations to improve the nation’s housing supply, permitting and zoning laws, federal financial incentives, construction workforce, and data collection and transparency.
One of the Housing Action Plan’s recommendations is to pass the Affordable Housing Credit Improvement Act (H.R. 3238), which would restore the 12.5 percent LIHTC cap increase that expired in 2021 and increase allocations by 50 percent over two years; decrease the private activity bond (PAB) financed-by test from 50 percent to 25 percent; provide basis boosts for rural and tribal developments and properties for extremely low-income residents; and authorize states to grant a discretionary boost for specific properties.