|FOR IMMEDIATE RELEASE
Home Builders Call For Congressional Action To Stem Growing Housing Affordability Crisis
WASHINGTON, May 3 - Citing a dramatic shortage of affordable rental housing
across the country, the National Association of Home Builders (NAHB) today
called on Congress to take immediate action to help stem the growing housing
crisis faced by millions of America's working families.
Testifying on behalf of NAHB, multifamily builder Bob Nielsen, president of
Reno-based Shelter Properties, made several recommendations to the House
Financial Services Committee that would increase the nation's supply of
affordable apartments, especially in high cost metropolitan areas where
rents have been increasing twice as fast as inflation. These recommendations
- Increasing the loan limits for FHA multifamily mortgage insurance.
- Appropriating sufficient credit subsidy to operate the FHA multifamily mortgage insurance programs.
- Creating a new multifamily production program that would be targeted at America's "working poor."
- Removing regulatory barriers that negatively affect housing affordability.
- Safeguarding the Low-Income Housing Tax Credit program by clarifying "eligible basis" to include development costs.
"The unprecedented economic expansion that our country has enjoyed for the
better part of this decade has done little to solve America's affordable
housing crisis," said Nielsen, who noted that an estimated three million
moderate-income working families continue to pay more than half their
incomes for housing or live in severely deteriorated housing.
"Because of current dollar limits on loans insured by the Federal Housing
Administration, FHA insurance cannot be used to finance apartments in a
number of high-cost urban areas," Nielsen said, noting that FHA's
multifamily mortgage limits have not been increased since 1992. During that
same period, Nielsen said, the cost of construction, land and related items
increased by as much as 25 percent. NAHB has urged Congress to support H.R.
1629, introduced last month, which would increase the current FHA mortgage
limits by 25 percent. NAHB also urged that the limits be indexed to
inflation so that the programs can meet demand without interruptions.
An even more immediate concern, Nielsen said, is the inadequate funding for
FHA multifamily insurance programs, which are operated with budget
appropriations in the form of credit subsidies in the Department of Housing
and Urban Development's (HUD) budget. This year's appropriation of $101
million in credit subsidy ran out last month, jeopardizing the production of
50,000 affordable apartment units. No credit subsidy funding at all was
included in the President's FY 2002 budget proposal for HUD. NAHB estimates
that a supplementary appropriation of $155 million of credit subsidy is
needed for this year's program and $255 million is needed in FY 2002 if the
program is going to keep pace with demand.
"HUD's latest update on worst-case housing needs shows that millions of
families cannot find affordable rental housing," Nielsen said. "There is a
critical need for a new multifamily housing production program that would
meet the needs of households with incomes between 60 percent and 100 percent
of median income." NAHB estimates that between 60,000 and 70,000 apartment
units are needed annually for America to begin to meet the housing needs of
working families. The new program, Nielsen said, should be targeted at
moderate-income households not currently served by federal or other publicly
supported housing programs.
Nielsen also testified that removing regulatory barriers is essential to
ensuring housing affordability. "Layers of excessive and unnecessary
regulation imposed by all levels of government-federal, state, and local-can
add between 20 percent and 35 percent to the cost of a home, which
translates into thousands of dollars, making it difficult, or even
impossible for families to own their home or find affordable rental
NAHB also strongly urged Congress to support legislation that would allow
certain development costs, which have been included in tax credit eligible
basis as generally accepted industry practice, to continue being included.
The need for such legislation, Nielsen said, became clear after the Internal
Revenue Service issued five Technical Advice Memoranda (TAMs) that are
creating a program-wide disruption in the allocations of low-income housing
tax credits and the development of affordable housing.
The low-income housing tax credit has provided a key part of the financing
for nearly all the affordable rental housing built in the last decade.
Nielsen said that the economic impact of the IRS memorandum has already been
felt, creating uncertainty among investors and making a number of affordable
housing properties financially infeasible. "This loss of efficiency hurts
both low-income residents and the federal taxpayers," Nielsen said.
About NAHB: The National Association of Home Builders is a Washington-based
trade association representing more than 203,000 member firms and
professionals involved in home building, remodeling, multifamily
construction, property management, subcontracting, design, housing finance,
building product manufacturing and other aspects of residential and light
commercial construction. Known as "the voice of the housing industry," NAHB
is affiliated with more than 800 state and local home builders associations
around the country. NAHB's builder members will construct about 80 percent
of the more than 1.5 million new housing units projected for 2001. During a
typical year, residential construction accounts for about five cents of
every dollar spent in the U.S. economy, making home building one of the
largest and most influential industries in the country.