Taking a Deep Breath: Rhetoric vs. Reality
We live in an evolving world that longs for certainty. And we always hope that any profound change that occurs is positive and beneficial to each of us at home and at work.
The Affordable Housing Industry has been stable and productive since its inception and through the financial crisis of 2008. Over the past five years or so, interest rates have remained low, and lenders and equity providers have had an ample supply of products for Housing Credit sponsors to choose from. Our industry advocates have fully recognized the growing rental housing crisis and have pushed for a 50% increase in the Housing Credit and a fixed 4% rate for bond-financed deals via the Cantwell/Hatch increase bill. On the House Ways and Means Committee, we have a super majority of Republicans that support the 9% Housing Credit. All of this is very good for our industry. And despite his lack of experience with housing policy, Ben Carson’s nomination as HUD secretary could prove positive as well. Carson is a very skilled speaker, maybe one of the best we’ll see in this role, and if he hits on the right direction and takes the message around the country, he could help make the case for affordable housing.
It is with that lens that we should look ahead. When viewing the newspaper headlines and media outlets, one might think that by March the Administration and Congress (with their new majority) will have fully funded every new airport, highway, and bridge construction project across the country. We will have built a wall on the Mexican border and reformed our tax code. You would think that there is a speeding train of change coming to Wall Street and a new healthcare plan for all of us. The reports can take your breath away – if you believe them.
Yes, tax reform is a highly anticipated priority for the new administration. And that’s what has our industry holding its breath. As it has been described, there is a clear impact on the financing of affordable housing developments and even risk to the Housing Credit itself. But let’s take a deep breath and get realistic and get active.
The rubber meets the road when “mandates” confront Congressional reality and when the short shelf life of election fever and campaigning meets the monumental task of governing as laid out in our constitution. This is where we have to stop and look at what is on the plate for Congress in 2017, what will consume their time, and which matters could bring the train of change to a screeching halt.
The first issue up, this month, is government spending and the debt ceiling, which will most likely be extended short-term until March of next year. (In March, it is possible that Senate Democrats could filibuster the deal and the stand-off could lead to a government shutdown). After a few fixes to much-needed disaster areas and water quality issues, Congress will be off for the holidays. January will be consumed by "Trumpsition" (some call it Celebrity Cabinet) and then the inauguration. Then, Senate confirmations begin for the Cabinet if the nominees are in place by then.
Wait, there is more. Two small tasks: the Supreme Court nominee battle and confirmation, and the Obamacare/Medicare repeal, which could pass using the legislative tactic of reconciliation. Any repeal may not be effectively transitioned in for many years. The calendar must also find time for immigration reform and Dodd-Frank repeal and the many hearings that take place in the process.
And of course there is tax reform; comprehensive reform by the House Republicans, selective reform by the Senate Republicans. You read and hear about the saber rattling about lower corporate rates from one of these bodies, but not the other. That’s because they are not on the same page and I doubt they will be in the future. The reality is, there is no hard right turn taking place right now for the Housing Credit. It has incredible support from the key tax-writing committees to the extent that Senate Finance Chairman Hatch told me, “I see more people from your industry on the Hill than any other group.” The message here is that there is time, however, that window will close at some point, so we need to act now to expand our support in Congress. So, what can you do? Meet at home with your congressional representatives or your senators and use your constituent power to let them know what you do to make affordable housing possible – whether you use the Housing Credit or appropriated programs.
People ask me all the time for talking points when they go to see their representative, or “What do I say?”. My answer is simply, “Tell them how you help people.” That is reality, not rhetoric.
Bob Moss is a CohnReznick Principal and National Director of Governmental Affairs. Bob leads the Firm’s federal and state government relations efforts, particularly in the area of affordable housing.
At this juncture the legislative atmosphere is very fluid and Bob will continue to provide updates from Capitol Hill on issues that impact the industry.