House Committee Tees Up Historic Housing Investments

Guest blog written by Sam Whillans

The House Financial Services (HFS) committee has advanced a bill proposing historic investments in the federal government’s affordable housing programs. The proposed law makes critically necessary investments to preserve the nation’s affordable housing stock and will provide tangible relief to millions of renters and aspiring homeowners currently struggling to secure safe and affordable housing. The bill is a key component of the Build Back Better Act, the Biden-Harris administration’s cross-government plan to invest in the economy and provide relief to American families.

Promoting Safe, Affordable, and Energy-Efficient Rental Housing

The Covid-19 pandemic has hit renters especially hard. Even before the pandemic, however, many renters struggled to find safe and affordable housing. According to one report, before the pandemic hit about one in four rental households were paying more than half their income in rent. For the lowest-income households, this figure rises to nearly three in four.

The federal government supports millions of low-income renters through the Department of Housing and Urban Development’s (HUD) Housing Choice Voucher Program. Despite the overwhelming need, this program has been chronically underfunded. The HFS bill would offer relief by providing $75 billion for the voucher program. Of those funds, $24 billion is earmarked for vulnerable households, including those at risk of homelessness and survivors of domestic violence.

The federal government also supports over 1.2 million low-income households who live in privately-owned rental housing through HUD’s Project-Based Rental Assistance program. Under this program, HUD enters into contracts with private owners to ensure the long-term affordability of their properties. For many years, Congress has only provided the necessary funds to renew existing annual contracts. For the first time in decades, the HFS bill would provide $15 billion in new funding to expand project-based assistance, with priority given to multifamily projects in priority areas that serve people experiencing homelessness or include accessible units to people with disabilities.

The HFS bill also invests in the long-term affordability and climate resilience of federally-assisted private rental housing by providing $6 billion to fund a range of efficiency- and climate-related upgrades. Eligible activities include improvements to energy and water efficiency; the installation of zero-emission electricity generation, energy storage, or electric vehicle charging stations; and building electrification projects. Beyond their climate advantages, these projects will bring a range of benefits for residents including more affordable utility bills and better indoor air quality and health outcomes due to electrification.

Revitalizing Public Housing for the Climate Era

The U.S. public housing system is a vital resource. Beyond providing a stable source of over a million units of affordable housing, public housing projects are home to some of the most vibrant and diverse communities anywhere in the country. Unfortunately, years of disinvestment have contributed to a massive capital needs backlog and significant habitability issues within the system.

The HFS bill makes a historic and long-overdue investment in the nation’s public housing stock by investing $80 billion into HUD’s Capital Fund, which is used to fund rehabilitation and modernization of public housing units. This sum will allow HUD to fully address its current capital needs, including remediation of immediate health hazards such as lead, mold, and asbestos. The bill also instructs HUD to consider energy and water efficiency and climate resilience when spending the funds, an important step to ensure the public housing system is prepared to weather a climate-impacted future.

Reducing Barriers to Homeownership

Federally-assisted renters aren’t the only ones to benefit under the proposed law. The HFS bill includes several measures to expand access to homeownership, including:

• $72 billion for HUD’s HOME Investment Partnerships Program, a grant program aimed at providing a range of housing options accessible to lower-income households;
• $10 billion for the Treasury Department’s Capital Magnet Fund, which provides grants to community development organizations and non-profits to create new affordable homes; and
• The creation of a $10 billion First Generation Down Payment Fund and a new HUD-administered initiative aimed at increasing access to federally insured mortgage loans.

The Down Payment Fund and the mortgage loan program are specifically targeted at first-generation homebuyers, defined as someone whose parents or spouse do not currently own a home (or haven’t owned one in the recent past).

The bill’s focus on supporting first-generation homebuyers is especially laudable given the history of racial exclusion in federal housing policy. Up until the 1970s, federal officials refused to insure mortgages in predominantly Black neighborhoods in a racist practice known as “redlining.” Redlining excluded prospective Black homebuyers from the government’s otherwise successful New Deal-era homeownership programs, contributing to a persistent gap in homeownership rates between white households and households of color. The ongoing use of discriminatory lending practices by banks—such as targeting borrowers of color with predatory loans—has only deepened the divide. By targeting first-generation homebuyers, the HFS bill takes a small but necessary step towards redressing the systemic exclusion of families of color from homeownership opportunities.

Other Investments to Promote Resilient and Inclusive Communities

Beyond targeted investments in housing affordability, the HFS bill provides funding for several additional programs to promote climate-resilient and inclusive communities. The bill boosts funding for the Federal Emergency Management Agency’s flood insurance program, including $3 billion for flood mapping and risk analysis—a vital measure to ensure that vulnerable property owners are prepared to respond to the heightened flood risks presenting by rising ocean levels and increasingly extreme weather.

Other measures in the HFS bill focus on neighborhood revitalization, including a $7.5 billion Community Restoration and Revitalization Fund to support community-led projects such as community land trusts. The bill also more than doubles existing funding for HUD’s Community Development Block Grant Program, which funds a wide range of economic development activities and infrastructure projects such as community centers, street repair, and water and sewer facilities.

A Historic Opportunity

The HFS bill presents an opportunity to reverse the long trend of federal neglect of housing policy and to invest in American families at a time when the need has never been greater. Congress should pass the HFS bill as part of the Build Back Better Act to deliver investments that ensure every U.S. resident has a safe, healthy, and affordable home.

Sam Whillans is the 2021 NRDC-Yale Legal Fellow. He works with NRDC’s Energy Efficiency For All team on a range of climate and housing justice issues, including energy efficiency, utility affordability, and renter protection.