SENATE SUBCOMMITTEE HOLDS HEARING ON THE LOW-INCOME HOUSING TAX CREDIT

The Senate Subcommittee on Banking, Housing and Urban Affairs held a hearing on the Low-Income Housing Tax Credit on Wednesday, May 12, 1999. Witnesses included Senator Connie Mack (FL), Senator Bob Graham (FL), the Colorado Housing and Finance Authority, the Montgomery County (MD) Housing Opportunities Commission, Beacon Residential Management (Boston, MA), Fountainhead Companies (Ft. Worth, TX), Penn Rose Properties (Philadelphia, PA), and a resident from Dunlap Apartments, a LIHTC development in Philadelphia, PA.

All of the panelists called for an increase in the per capita allocation of the tax credit from its current level of $1.25 per capita to $1.75 per capita and to index the tax credit for inflation in future years. Senators Mack and Graham have introduced the "Affordable Housing Opportunity Act of 1999," a bill aimed at increasing the LIHTC allocation to $1.75 per capita. To date, 44 senators are co-sponsors of the bill. NCDA urges its members to support this legislation, as the LIHTC serves to provide rental housing to low- and moderate-income families across the country.

The LIHTC has not been increased since it was first established in 1986. Since inception of the tax credit, over $3 billion in tax credits has been allocated to develop nearly one million low-income rental housing units across the country. Surprisingly, the LIHTC has been used to develop up to 40% of the low-income multifamily units across the country. The credit has not increased, while demand for it has increased.

The panelists also testified that the tax credit works because it relies on a public/private partnership. The credit is administered by states and localities, which distribute the tax credits to private investors, who compete for the right to receive the credits. According to Senator Mack, "...the demand for housing tax credits currently outstrips supply by more than three to one.....in Florida, there are nearly four times as many applications by people who seek to provide low income housing than there are credits to go around."

Senator Santorum (R-PA) asked the panel if the tax credit is very often used for rehabilitation? One panelist noted that some states have a mandated set-aside for rehab under the tax credit. The state of Massachusetts set-asides 40% of its tax credit allocation for rehab. Senator Sarbanes (D-MD) asked the panelists how important other federal programs, such as HOME and CDBG, were to the credit. All panelists noted that these two programs are extremely important in providing additional resources to tax credit deals. Some panelists also noted that CRA-initiated debt (bank participation due to CRA) is also an important resource. The state of Colorado alone uses other funding sources in up to 75% of its tax credit deals. Sarbanes also asked the panelists how important the role of the nonprofit was to tax credit projects. The panelists noted that nonprofits are enormously helpful in providing the equity for these projects and that many projects are owned by nonprofit organizations.

Advocates are hopeful the per capita limit on the Low-Income Housing Tax Credit will be increased this year.

APPROPRIATIONS RUMORS

Throughout the spring season, Congress spends part of its time attempting to determine funding levels for 13 subcommittees to ensure that the federal government remains operational. Each year the District of Columbia becomes saturated with rumors about funding levels for the various subcommittees. This year is no different. NCDA staff has been vigilantly providing information on the process this year, particularly in light of the recently passed Budget Resolution. The 2000 Budget Resolution calls for a substantial cut in function line 450, $2.5 billion and continues cuts through 2009. This is significant because the CDBG program is housed in this line. If this cut is realized, the CDBG program as we know it would cease to exist. As reported in the Washington Report, the budget resolution does not have the force of law. It is a blueprint to be use to guide the appropriators in their funding decisions. Presently, the 13 subcommittees are awaiting their figures. It is anticipated that the 302b allocations will come out next week. These will give us some indication where the appropriators are on funding. The latest, reliable information we have is that the Senate will mark-up HUD's bill sometime in late June, and the House may hold up HUD's bill until later in the summer, perhaps into September. Still, we won't know until we actually see the proposed figures in writing from the subcommittees. All we have to go on at this point is rumor and conjecture.

NCDA has provided testimony on increases to HUD's programs, particularly CDBG and HOME. We have asked Congress to increase CDBG to $5 billion and HOME to $1.8 billion. We have provided each member of the appropriations committees with a 25^th anniversary press kit. We have also done Hill visits with members from other public interest groups to press the point for increases to CDBGF and HOME. Your mayors and councilors have written letters and made phone calls to your Congressional Delegations on the issue of HUD programs. These are the activities that NCDA, its partners and members undertake almost every year. This year is an exception due the proposed cuts in budget resolution and being that it is the 25^th anniversary of the CDBG program. We have done more than usual. As we hear credible information from subcommittee staff, we will forward it along to members.

SUPPLEMENTAL APPROPRIATIONS UPDATE

HR 1141, better known as the mid-year supplemental appropriations bill related to the military action in Kosovo is nearing completion. Also nearing completion is HR1664 which will include some defense funding and humanitarian aid at home and abroad. After a very contentious week that was highlighted by many late night bargaining sessions the tally for the two bills will most likely end up like this. There will be $11.5 billion to help finance the military action in Kosovo; $819 million for Kosovo refugees; $100 million for Jordan and $687 million for hurricane relief efforts in Central America. As part of HR 1664, the conferees approved $566 for financially strapped farmers and at the last minute added $900 million for tornado victims in Kansas and Oklahoma. Still at issue are the following: offsetting costs, tobacco settlement funds remaining at the state level in stead of returning to federal coffers; new aid programs for the steel, oil and gas industries; and setting aside stretches of the Rio Grand to protect a species of minnow.

What does all of this mean for community development programs. As you might guess, any disaster funds will probably be funneled through the CDBG program and its companion programs at FEMA. It is unclear how the language will be written in these two bills. Each year the supplemental appropriations language change from previous years. Changes in disaster assistance requires HUD and FEMA to write regulations or guidance to grantees on how these funds can be expended. This won't happen until after the President signs the bills. The conferees want to be finished by Friday, May 14.

HOUSE SUBCOMMITTEE HOLDS HEARING ON SECTION 8 OPT-OUTS

The House Subcommittee on Housing and Community Opportunity held a hearing on Section 8 opt-outs and H.R. 1336 -- "The Emergency Resident Protection Act of 1999" -- on May 4. The hearing was an opportunity to hear from HUD and other witnesses regarding their solutions to the problem of owner opt-out of expiring project-based Section 8 contracts. Michael Bodaken, President of the National Housing Trust, said that "...HUD must be required to target rent increases to those properties most at risk of leaving the Section 8 project-based program and then offer those owners a comparable market rent."

Starting in 1975, HUD signed 20-year contracts with private owners to provide project-based Section 8 subsidy to their properties. These long-term contracts are now expiring, creating widespread fear and uncertainty about whether the properties will continue as affordable housing. William Apgar, Assistant Secretary for Housing at HUD, testified that Section 8 contracts are expiring all across the country and that at least 40 states have more than 50% of their units expiring this year alone. According to Apgar, more than 17,000 subsidized units in over 300 properties left the project-based Section 8 program last year. HUD's solution to this crisis includes three strategies: (1) subsidizing only good, well-run projects; (2) offering owners a fair price in terms of subsidized rents in order to continue the projects as affordable housing; and (3) increasing the number of Section 8 vouchers in order to complement the preservation of project-based housing and provide more affordable housing opportunities for residents. Apgar also testified that the one-year renewals of the contracts are exacerbating the problem of owner opt-outs. The one-year renewals create an air of uncertainty in the minds of both owners and residents as to whether or not the projects will be receive Section 8 assistance from year to year.

SUPERFUND BILL RESURRECTED

In the April 30 issue of the Washington Report we alerted members to release of the second annual Borwnfields report by the U.S. Conference of Mayors. It seems only fitting that we now report that many key members of the House of Representatives are gearing up to revise Superfund legislation. House Transportation Water Resources and the Environment Subcommittee Chairman Sherwood Boehlert (R-NY) signaled Wednesday, May 12, that he is ready to try again. Boehlert says that he is prepared to move a "targeted, very specific" superfund measure (HR 1300) through both his panel and the full committee before the Memorial Day recess. This target date may be overly optimistic in light of a veto threat from the President and the introduction of a Democratic supported alternative bill (HR 1750) by Commerce Committee Ranking Democrat John D. Dingell from Michigan, on Tuesday. Boehlert's superfund overhaul bill introduced in the 105^th Congress passed the subcommittee, has gained bipartisan support because it steers clear of controversial issues. HR 1300 earmarks $25 million annually for state-run voluntary cleanup programs to help bolster the redevelopment of brownfields that leave large swaths of older cities vacant. It would also change liability provisions in an attempt to shield small businesses, innocent landowners, prospective purchasers of contaminated property, and municipalities from some litigation. Boehlert's measure has gained 27 Democratic co-sponsors along with organized labor groups, the U.S. Conference of Mayors and its affiliates, and various realty and development organizations. There are also many Democrats in opposition to Boehlert's bill, mainly because they have fallen in line with Dingell's bill which addresses only brownfields funding and a narrower package of liability exemptions.

The Clinton Administration has a critical problem with HR 1300, which is that is goes too far in limiting liability. EPA Administrator Carol Browner said at a recent hearing that it "fixes problems that perhaps don't exist and breaks things that are actually working." Further the Administration believes that the measure exempts all parties that disposed of garbage at superfund sites, regardless of volume, and makes changes in the 18-year old law's groundwater provisions and responsible party allocation process-- adjustments that Browner says would balloon litigation, delay cleanups and pollute ground water. Governors and mayors complain that while capital is available to redevelop brownfields sites, potential buyers shy away from such properties because of fears that they will be responsible for cleaning them up.

FREDDIE MAC WILL HOLD PURCHASE/REHAB FORUMS THIS YEAR

Freddie Mac is scheduled to provide three purchase/rehab forums across the country this year. The first forum will be held on Thursday, June 10, 1999, in New Orleans in conjunction with the U.S. Conference of Mayor's Annual Conference. This one-day forum will explore the latest techniques in developing home purchase-and-rehabilitation and in-fill construction programs to stabilize and revitalize neighborhoods. Participants will learn about the best practices in home financing that make mortgages available to more borrowers. Key topics that will be explored include: Financing Approaches that Work, Keys to Neighborhood Revitalization Success, Working with Lenders, In-fill Housing, Marketing and Motivating the Homebuyer, and Rehab/Construction Management.

These forums are intended for local government housing agencies, non-profit housing organizations, community development agencies, state housing agencies, public housing authorities, and other housing providers. REGISTRATION IS FREE, but participation is limited to two hundred registrants. For more information, contact Gloria Yates at Freddie Mac at 703-918-5087. A brochure on the forum has been enclosed with this newsletter.

CELEBRATE NATIONAL HOMEOWNERSHIP WEEK

National Homeowership Week will be celebrated from June 5- June 12 this year. The week is intended to emphasize local and national efforts to promote homeownership. During this week, communities across the country are encouraged to sponsor events aimed at promoting homeownership. Homeownership Week 1998 featured more than 1,200 events in over 600 communities. These events included homebuyer fairs, seminars and workshops, official proclamations and open houses. To assist communities in planning their events, HUD has developed a Homeownership Planning Guide. Please use the enclosed guide to assist you in designing your National Homeownership Week activities.

HUD NEWS

IDIS Information

According to HUD field office staff, HUD has gotten calls from grantees asking why HUD will not load their Con Plan disks to IDIS and that they have to key the information into both C2020 and IDIS. This is not true. It is also not true that only four items are moved from C2020 to IDIS. There are more than 20 items moved from the C2020

PROJECT record to the IDIS PROJECTrecord. It makes sense to load the disk to save the keying. Now, something that is true is that, when an activity record is created under a project, there are four, and only four, items of data from the project record that are copied down to the activity record. It does not matter whether the project record was created by keying it in or by loading it from C2020 disks. Note: Disks will also be used to upload data to the C2020 database (CDRom)

More IDIS Information

HUD is moving along with the "fixes" to IDIS that the IDIS Working Group (a group of grantees and representatives from public interest groups that have been working with HUD to solve the problems of IDIS) has suggested. It is the goal of the IDIS folks to complete all the agreed upon fixes to make the system function reasonable well. Bob Meehan will be conducting a session at the NCDA Annual Conference to bring members up-to-date on the fixes, and when and how IDIS will be incorporated into the HUD-wide Department Grants Manage-ment System (DGMS). NCDA and its members have been a part of the IDIS Working Group since its inception. It appears that our testimony has helped HUD address many of our members concerns with IDIS. Funds have been made available to continue to provide training and technical support to IDIS until and including such time as IDIS becomes a part of DGMS.

Other rumors floating about concern the Electronic Data Interchange, or EDI. The rumor is that DGMS will not be capable of using the EDI or something like EDI. Currently, most grantees undertake double data entry, once for the own records and once through IDIS for HUD's purposes. EDI is a method that would allow grantees to use their own accounting and recordkeeping systems and simply upload the information to HUD and then HUD would select the data it needed. Grantees would purchase a software package that would allow them to conduct data entry once. It may be expensive depending on the grantee, but it does save a lot of time and depending on the software package produce great reports. This rumor is also untrue. DGMS will have an EDI-like capability which, according to HUD, and will be much simpler and less expensive than what is currently being used as EDI with IDIS. All of these acronyms and their functionality will be explained at our Annual Conference. We hope to see you there.

HUD ANNOUNCES PUBLIC HOUSING FORUMS

HUD will conduct public forums on its Public Housing Agency Plan interim rule that was published on February 18, 1999, and on its Section certificate and voucher merger interim rule that will be published in the next several weeks.

May 19, 1999 (This forum will address both rules)

Creighton University
Criss Building, Room 452
2500 California Plaza
Omaha, NE

Please contact HUD at 202-708-0713 with any questions pertaining to the forums. HUD is in the process of setting-up two additional forums. The dates for these forums have not been set yet, but will be posted on the following web site: http://www.hud.gov/pih/legis/titlev.html.

NCDA NOTES

PUBLICATIONS ON THE INTERNET

At the Winter Meeting in January, based on recommendations by the Technology Committee, the NCDA Board of Directors agreed to charge higher dues for those members who wish to obtain the Washington Report and other newsletter publications through regular mail instead of through NCDAonline.org. Publishing the news letter on the internet will save countless hours of staff time and make it easier for staff to do a better job of tracking legislation, meeting with Congressional staff, consulting with vendors, technical assistance providers and planning productive meetings. As our dues notices go out, we will inform the membership of the higher dues for those who still wish to get the Washington Report and other publications via regular mail. Obviously there will continue to be some publications that require regular mail, however, these will be few and far between.

NCDA ANNUAL CONFERENCE NOTES

This year's Annual Conference is promising to be an outstanding event. Our goal is to have register 200 members. The 25^th anniversary celebration of the CDBG program at the gala will be exceptional and a once in a career event. We must continue to tell the CDBG story, to bring attention of NCDA's members and their outstanding contribution to strengthening America's communities. There is still time to register for the conference. We look forward to seeing you there!!!!

WEDNESDAY, JUNE 2

10:00 a.m. - 5:00 p.m.
Registration and Information

10:30 a.m. - 1:30 p.m.
CDBG: Nuts and Bolts

2:00 p.m. - 5:00 p.m.
HOME Refresher Course

6:00 p.m. - 8:00 p.m.
Opening Reception

8:00 p.m. - 10:00 p.m.
Hospitality Suite

THURSDAY, JUNE 3

8:00 a.m. - 5:00 p.m.
Registration and Information

8:30 a.m. - 10:00 a.m.
Opening General Session/Welcoming Breakfast

10:00 a.m. - 11:30 a.m.
Community Development Committee Meeting

11:30 a.m. - 1:00 p.m.
Housing Committee Meeting

1:00 p.m. - 2:30 p.m.
Economic Development Committee Meeting

2:30 p.m. - 3:30 p.m.
Technology Committee Meeting

3:30 p.m. - 4:30 p.m.
Membership Committee Meeting

4:30 p.m. - 5:30 p.m.
Professional & Program Development Committee Meeting

6:00 p.m. - 10:00 p.m.
Hospitality Suite

FRIDAY, JUNE 4

8:00 a.m.
Registration & Information

9:00 a.m. - 10:00 a.m.
HUD Briefings

10:00 a.m. - 11:00 a.m.
Concurrent Sessions Mark-to-Market Section 108

11:00 a.m. - 12:00 noon
Concurrent Session Consolidated Plan

12:00 noon - 4:00 p.m.
Workforce Task Force Meeting (By Invitation Only)

1:00 p.m. - 5:00 p.m.
IDIS Session

1:00 p.m. - 5:00 p.m.
Congressional Agency Visits (Off-site)

6:00 p.m. - 8:00 p.m.
Board of Directors Meeting/Dinner (By Invitation Only)

6:00 p.m. - 10:00 p.m.
Hospitality Suite

SATURDAY, JUNE 5

10:30 a.m. - 1:00 p.m.
Closing Brunch/Business Meeting

1:00 p.m. - 3:00 p.m.
Professional Development Session

7:00 p.m. - 11:00 p.m.
CDBG 25^th Anniversary Gala

Registration Information

To register, please complete the attached form and send it to the National Community Development Association, 522 21^st Street, N.W., Suite 120, Washington, D.C. 20006. Should you need to cancel, please mail or fax your cancellation to NCDA by May 10, 1999. A cancellation fee of $50 will be assessed if cancellation notification is not received by the above date.

Fees

The Conference fee is:

$400 before May 17, 1999 for NCDA and HOMEWORKS members
$425 after May 17, 1999 for NCDA and HOMEWORKS members
$450 before May 17, 1999 for Non-members
$475 after May 17, 1999 for Non-members

Special Conference Event

CDBG 25^th Anniversary Gala
(Metro Center Marriott Ballroom)

Hotel Information

NCDA has secured a block of rooms at the Marriott at Metro Center. The address is 775 12^th Street, N.W., Washington, D.C. 20005, telephone (202) 737-2200. The hotel will hold this room block exclusively for conference registrants through May 12, 1999 at a group rate of $139, plus tax, per night. Reservations received after this date will be subject to room availability. To ensure your room reservation at the group rate, you must contact the hotel directly and mention that you are registering with the NCDA Annual Conference.

REGISTER ONLINE

CDBG 25^th ANNIVERSARY/NATIONAL CD WEEK PRODUCTS INFORMATION

Attached to the Washington Report is an updated flyer on the products available to assist communities with their celebrations of the 25^th anniversary of the CDBG program. Please note that 25^TH ANNIVERSARY LOGO STICKERS ARE STILL AVAILABLE for purchase at $100 per roll of 1,000 stickers.

NCDA has depleted its supply of CDBG postcards and have very few posters available. If you are still considering posters, please get your orders in soon. T-shirts, hats, mugs, sweat-shirts, tote-bags and puzzles are still available. It will take approximately 14 days to receive products.

FEDERAL REGISTER NOTICES

May 4, 1999. Publication of OIG Program Fraud Alert: Fraud and Abuse in Multifamily Mortgage Insurance Programs. This notice sets forth an Office of the Inspector General (OIG) Program Fraud Alert concerning fraud and abuse practices involving the misuse of funds intended to support the operation of multifamily rental housing projects with HUD insured mortgages.

May 4, 1999. Community Reinvestment Act; Interagency Questions and Answers. The Consumer Compliance Task Force of the Federal Financial Institutions Examination Council is supplementing, amending, and republishing its Interagency Questions and Answers regarding Community Reinvestment, as well as proposing for comment three new or revised questions and answers. These Interagency Questions and Answers contain informal staff guidance for agency personnel, financial institutions, and the public. The Task Force is seeking public comment on the proposed questions and answers. In addition, they invite public comment on any of the new and revised questions and answers, as well as other community reinvestment issues that are not addressed in these Questions and Answers.

May 5, 1999. Notice of Designation of Urban Empowerment Zones. On April 16, 1998, HUD published a notice inviting applications for designation of Empowerment Zones, which receive special tax benefits for area businesses. This notice announces the fifteen urban areas designated as Empowerment Zones in response to the applications submitted. The fifteen new urban Empowerment Zones are: Santa Ana, CA; New Haven, CT; Miami, FL; Gary/E. Chicago, IN; Boston, MA; Minneapolis, MN; St. Louis/E. St. Louis, MO; Cumberland Co, NJ; Cincinnati, OH; Columbus, OH; Columbia/Sumter, SC; Knoxville, TN; El Paso, TX; Norfolk/Portsmouth, VA; Huntington, WVA.

Job Opportunities

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