‘Really Disappointing’: For Housing Advocates, Democrats’ New Spending Law Is a Major Letdown

President Biden and Congressional Democrats may be doing a victory dance over the enactment of the Inflation Reduction Act, which includes nearly $370 billion for environmental programs, is the largest amount of federal funding ever allocated to address climate change in the U.S. But after seeing $150 billion in funding for affordable housing and helping the homeless stripped from arguably Biden’s signature piece of domestic legislation, housing advocates are angry.

They are urging agencies to take emergency steps from pushing states and localities to spend more American Rescue Plan Act dollars to deal with rising homelessness and housing prices. 

Expressing frustration as Biden was about to sign the IRA into law last week, the National Low Income Housing Coalition and the National Housing Law Project also urged the administration to pick up the cost for local governments to house the homeless in hotels and motels.

“The bill does nothing to address skyrocketing rents and dwindling housing supply,” the groups complained in a letter to several top officials, including Treasury Secretary Janet Yellen, Housing and Urban Development Secretary Marcia Fudge and Gene Sperling, a special advisor to Biden who is leading the administration’s ARPA implementation.

“It was really disappointing that it didn’t include any resources to build affordable housing,” Sarah Saadian, senior Vice President  of public policy and field organizing for the National Low Income Housing Coalition, said of the Inflation Reduction Act in an interview with Route Fifty. 

Saadian argued the climate, health care and tax measure should have included funding for housing, especially “when housing is a driver of inflation.”

Steve Berg, the National Alliance to End Homelessness’ vice president for programs and policy, said that by addressing climate change, the bill could help prevent some of the homelessness caused by flooding and other natural disasters.

Still, he said, the IRA “didn’t have anything in it for housing. That was disappointing.”

Particularly disappointing, said Stockton Williams, executive director of the National Council of State Housing Agencies, was that the Inflation Reduction Act didn’t include expanding federal tax credits to build more affordable homes for rent and for sale, even though the idea has bipartisan support. 

“Supply is one of the underlying drivers of the lack of affordable housing and affordable rental units,” he said.

But, Williams said, housing advocates also would have liked to see more money for affordable housing in the American Rescue Plan Act and the bipartisan Infrastructure Investment and Jobs Act, as well.

Looking Ahead to Next Fiscal Year

Housing advocates hope Congress will make amends by significantly increasing funding for rental assistance and for providing shelter and services to those living on the streets in next fiscal year budget, which starts Oct.1.

But even under the best proposals being considered, Saadian said the money will not come anywhere close to what they had hoped for.

In a letter to Biden, the two housing advocacy groups also urged the administration to take a number of steps without Congress’ approval. The groups said they have tracked how much ARPA funds states and 60 localities have spent to prevent homelessness and provide affordable housing, and thus far, it’s $13.77 billion.

According to ARPA data collected by Brookings Metro, the National League of Cities and the National Association of Counties, nearly all 329 jurisdictions they are following have spent some funding on housing.

Dane County, Wisconsin, around Madison, for instance, spent its own money at the beginning of the pandemic to house the homeless in shelters where they could be better protected from the coronavirus. The county then used $13 million, or about 12% of its ARPA dollars to, among other things, give those sheltered in the hotels two years of rent and utility money, a county spokesperson said in an email.

Denver has spent $150,000 of its ARPA dollars to create areas homelessness where people sleeping in their cars have access to bathrooms, as well as help finding housing, jobs and government benefits. The city is also using $2 million in ARPA funds to provide up to $1,000 a month to women, transgender people and families in shelters.

However, only 8.6% of the ARPA dollars spent by the jurisdictions Brookings, NLC and NACo are tracking have gone for housing. 

The National Low Income Housing Coalition and the National Housing Law Project wrote in their letter “more can still be accomplished.” The groups urged the Treasury Department to encourage ARPA grantees “to target resources to the lowest-income and most impacted communities and advance racial and economic equity.” 

Among other things, the groups also called on the Federal Emergency Management Agency to resume paying 100% of the cost of housing the homeless in private places like hotel and motel rooms. Biden had signed an executive order increasing the federal share to 75% but stopped paying the entire cost in June 2021.

The White House did not return requests for comment as of publication. But Saadian said the administration has reached out with the two groups to set up meetings to discuss their requests.

A HUD spokesperson said in an email the agency is“committed to doing everything we can to help people obtain and maintain access to quality, affordable housing.” The agency, for instance, has given out $40 million in grants to nonprofits and governmental entities to provide legal assistance to low-income tenants at risk of eviction. The agency called on Congress to approve more housing funding. 

The U.S. Conference of Mayors, the National League of Cities and the National Association of Counties declined to weigh in on the absence of housing funding in the Inflation Reduction Act.

NACo spokesman Brian Namey, though, said counties are best able to decide how to spend ARPA dollars. “A cornerstone of the American Rescue Plan is the flexibility for counties to deploy resources where the greatest pandemic-related needs exist,” he said.

He noted, though, that counties were able to push the Treasury Department to give states and local governments more flexibility to use ARPA  funds for expanding affordable housing. 

Mayors Want More Money

Meanwhile, New York City Mayor Eric Adams and Denver Mayor Michael Hancock told Route Fifty that in addition to ARPA dollars, they need more federal help.

“Our federal partners must continue making these investments so that more residents in our community and across the country can get the relief they need from rising housing costs,'' Hancock said in a statement. “When affordability is out of reach for far too many, that’s not justice.” 

That help would have come under the $1.7 trillion Build Back Better proposal approved by the House last November. The measure had $150 billion for affordable housing, which would have been the “largest investment in America’s housing infrastructure in history,” Rep. Maxine Waters, a California Democrat who chairs the House Financial Services Committee, said at the time. 

Among other things, Build Back Better would have provided $24 billion in rental assistance through  Housing Choice Vouchers over the next year. That would have represented the largest single-year increase since the program was created in 1974, and could have helped more than 260,000 families over the eight years, said the Financial Service Committee, which has jurisdiction over housing policy.

It would have also provided $10 billion to create more affordable housing over the next five years through the Housing and Urban Development Department’s HOME Investment Partnerships Program. The money would have created or preserved 173,000 homes for low-income renters and homebuyers, the committee said.

The bill also contained $10 billion over five years for states to provide down payment  assistance for 273,000 low-income first-time homebuyers. 

However, the bill was blocked by Sen. Joe Manchin, a centrist West Virginia Democrat. And none of the housing funding was included in the act Manchin negotiated with Democratic Senate Majority Leader Chuck Schumer of New York.

Spokespeople for Manchin and Schumer did not respond to inquiries by the time of publication about the disappointment of housing advocates. But Manchin has said that he was concerned that the cost of Build Back Better was too large.

With that opportunity lost, the advocates are hoping Congress will increase housing funding in the next budget. They are applauding a $405 billion spending bill the House approved in July for the next fiscal year, which would increase funding for HUD by $9 billion.

Smaller Proposals Being Considered

However, the advocates acknowledged the proposal does not approach the historic levels of funding in Build Back Better. And the House’s proposal is still subject to budget negotiations later this year in the Senate, which is proposing a smaller $4.3 billion Housing and Urban Development Department funding increase.

The Senate is also considering spending less than the House to provide rental assistance, according to a National Low Income Housing Coalition analysis of a draft spending bill the Senate Appropriations Subcommittee on Transportation, Housing and Urban Development released last month. Rather than increasing the number of rental assistance vouchers by 140,000 households as the House is proposing, the draft Senate proposal would expand the program by 5,000 vouchers.

However, the Senate’s proposal would mean more money for the HOME Investment Partnerships Program, the largest federal affordable housing block grant program. The House is proposing a $175 million hike, which the National Council of State Housing Agencies said would be the highest level of funding in a decade. The Senate would increase the program even more—by $225 million.