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Secret Santa Gifts for the White House Affordable Housing Council

5 min read

In late June, to absolutely no press coverage, a Presidential executive order established the “White House Council on Eliminating Regulatory Barriers to Affordable Housing” with a pointed observation:

Many of the markets with the most severe shortages in affordable housing contend with the most restrictive state and local regulatory barriers to development.

In addition to HUD Secretary Ben Carson as chair, his path lit and his steps guided by three lantern-bearing White House aides, the President dragooned one elf each from six other cabinet departments (Treasury, Interior, Agriculture, Labor, Transportation, Energy) and three executive agencies Environmental Protection Agency, Office of Management and Budget and Council of Economic Advisors. If the history of previous similar commissions is any guide, their report, due by purest coincidence amid the 2020 election season, will be a compendium of desirable goals loosely connected to the mission “grow the economy, add good jobs,” anodyne passive-voice statements “discrimination against affordable housing should be ended” and unfunded hortatory advice to others “enact statewide mandatory inclusionary zoning” that might conceivably make Tweet-fodder.

That would be boring.

Instead, how about we reimagine the commission as a Secret Santa party? We’ll use the commissioners’ appointment power to add Health and Human Services and Department of Justice elves, and require every commissioner-elf to bring at least one nearly wrapped present we might actually want, so long as it is within that elf’s power to manufacture and doesn’t cost the Administration any ready money.

Shall we unwrap them?

  • Treasury. Give double Community Reinvestment Act investment-test credit for Opportunity Zone investments that include at least 25 percent affordable housing, and zero for those with less.
  • Interior. Establish a safe harbor historic-rehab renovation standard that invokes federal pre-emption to enable developers to bypass the National Park Service and override State Housing Preservation Officers.
  • Agriculture. (1) Issue a blanket subordination (the financial but not tax equivalent of forgiveness) of all existing §515 and §518 loans to any such properties going through a preservation transaction; (2) Make a finding that, because the U.S. Department of Agriculture has never adequately funded the preservation loans mandated under Franconia and Grass Valley, owners of such §515 properties may now prepay (including the subordination gift just opened) in favor of any other preservation transaction; and (3) Sign an inter-agency agreement with Housing and Urban Development to launch RAD-RD administered by HUD, similar to RAD for PRAC.
  • Labor. (1) Treat affordable multifamily housing under Davis-Bacon as residential property, not commercial; and (2) Issue either new regulations or a legal opinion that using project-based vouchers or project-based rental assistance does not ipso facto trigger Davis-Bacon.
  • Transportation. Graciously crediting California Governor Gavin Newsom for the idea, cut highway funding for any jurisdiction (state or metropolitan statistical area) that has less than ten percent affordable housing, directly proportional to its shortfall. Redistribute the cut funding to states that have more than ten percent affordable housing in similar proportionality.
  • Energy. (1) Working with HUD, develop a leasehold interest in energy conservation measures that HUD opines does not impair the first mortgagee’s collateral; and (2) Develop, make available to HUD, and publish energy performance data that enables HUD lenders to underwrite projected energy savings, or benefits from Power Purchase Agreements, into HUD financing.
  • EPA. (1) Modify regulations covering Habitat Conservation Plans under the Endangered Species Act to give full weight to the loss of affordable housing; (2) Require those suing to block affordable housing on environmental grounds to show standing and post bond equal to the potential increased costs resulting from delays based on ultimately unsuccessful challenges; and (3) In concert with Justice, issue regulations using the foregoing to pre-empt California Environmental Quality Act in California when it has discriminatory effect.
  • OMB. Require a Housing Impact Analysis of any new federal agency’s proposed rulemaking or rule revision.
  • HHS. (1) Delegate to HUD broad authority to approve ‘safe harbor’ §1115 Medicare/Medicaid waivers for service or construction elements that show an HHS cost-aversion simple payback of ten years or fewer; (2) Construct an authority to pledge such savings actually acquired as a funding source for Pay-For-Success programs.
  • Justice. (1) Work with HUD to establish national standards for (a) specific types of housing where impact fees are permissible and others where they are not, and (b) determining fair amounts of impact fee exaction; (2) Adopt the previous administration’s strategic use of the Fair Housing Act by bringing high-profile anti-discrimination litigation in several areas. (a) Prosecute impact fee exactions above these as discriminatory under the Fair Housing Act. (b) Bring a test case, with the intention of litigating to the Supreme Court, that finds excessive single-family, large-lot-size or parking-requirement zoning is discriminatory under Fair Housing. (c) Challenge Davis-Bacon as racially discriminatory, citing its legislative history and current impacts both on minority employment and on minority housing; and (3) Work with HUD to develop a model inclusionary zoning enabling act with fair-share component that, if enacted at the state level, will exempt states from further anti-discrimination zoning litigation.
  • HUD. (1) Via risk-sharing approach like Fannie Mae’s Delegated Underwriting and Servicing program, contract out all mortgage underwriting (not just MAP) to private companies or HFAs, just as HUD contracted out mark-to-market underwriting to private Participating Administrative Entities and Section 8 contract administration; (2) Offer all public housing residents an individual, voluntary, five-year exemption from income certification in exchange for flat rents at 100, 125, 150, 175 and 200 percent of current household tenant payments. At the end of five years, allow the households either to make the flat rents permanent (subject to Consumer Price Index increases) or to revert to income certification and 30 percent; (3) Working with Justice, pursue a national strategy of allowing Accessory Dwelling Units and Detached Accessory Dwelling Units within single-family zoning and without additional parking; and (4) Establish an Office of Anti-Discriminatory Zoning to coordinate with Justice on prosecuting zoning that violates Fair Housing.

Finally, as a stocking stuffer, on their first day issue all the commissioners a new digitally searchable copy of Not In My Back Yard: Removing Barriers to Affordable Housing, the 1991 study produced by the previous presidential commission on affordable housing.

David A. Smith is founder and CEO of the Affordable Housing Institute, a Boston-based global nonprofit consultancy that works around the world (60 countries so far) accelerating affordable housing impact via program design, entity development and financial product innovations. Write him at dsmith@affordablehousinginstitute.org.