Despite the Build Back Better Act including the word disability only 39 times and accessibility just 9 times throughout its 2,486 pages, there appears to be some investment in affordable and accessible housing at a time when it is needed more than ever.
The question of how the country will address the lack of affordable and accessible housing has been persistent for years now. Countries in Europe also struggle with this issue, but there appears to be some hope in the form of a newly proposed program − the Housing Investment Fund − to be managed by the Community Development Financial Institutions Fund (CDFI Fund) − if the Build Back Better Act passes in the Senate (Build Back Better was passed in the House today).
What is the Housing Investment Fund?
The Housing Investment Fund includes 6 key provisions, which include:
- Increasing and preserving the affordability and quality of housing
- Increasing the availability of affordable and accessible housing
- Improving the energy and water efficiency and resiliency of affordable housing
- Enhancing economic opportunities for residents, by financing or supporting affordable housing located within proximity to public transportation, or centers of employment, and education, and critical community services
- Matching the creation of housing supply to existing demand and projected demand growth in the area
- Furthering fair housing purposes addressing historic disinvestment, the concentration of poverty, and housing segregation on the basis of race, color, religion, natural origin, sex, disability or familial status
Eligible grantees must be certified community development institutions, non-profit organizations dedicated to the creation, development, or preservation of affordable housing, or a consortium of certified community development financial institutions, eligible non-profit housing organizations, or a combination of both. There are currently 1,271 certified CDFIs, the bulk of which are credit unions and loan funds.
Community Development Financial Institutions Fund
The CDFI Fund was established in 1994 in a bipartisan effort via the Riegle Community Development and Regulatory Act. The Fund was created to promote economic and community investment in and assistance to Community Development Financial Institutions (CDFIs). CDFIs have origins going back to the 1960s when then-president Lyndon Johnson declared "War on Poverty" and established the first Community Development Corporations (CDCs) intended to provide credit solutions to underserved communities. CDCs laid the groundwork for today's CDFIs.
The CDFI Fund's mission is to "expand economic opportunity for underserved people and communities by supporting the growth and capacity of a national network of community development lenders, investors, and financial service providers."
The Fund provides training, technical assistance, issuance of bonds to support CDFIs, and awards grants to finance affordable housing solutions for people in underserved communities.
Since 1994, the CDFI Fund has awarded over $5 billion to CDFIs, community development organizations, and financial institutions.
What are the implications?
The (potentially) good news
Generally, CDFIs are charged with providing loan assistance and capital investment in underserved communities. Certified CDFIs must serve one or more target markets by designating at least 60 percent of financing activities to one or more low and moderate-income communities.
Eligible CDFIs have the opportunity to apply for grants, loans, and awards, specifically to provide capital to underserved communities. Given the provisions of the yet-to-be Housing Investment Fund, this would mean that nearly $10 billion in funding would be used to check several boxes, including increasing the availability of affordable and accessible housing, identifying and fostering programs that improve housing availability near-critical services such as transportation and service providers and working to match the demand for housing with supply.
While the program would function much differently than Housing and Urban Development (HUD) programs, which provide grants for the acquisition, rehabilitation, and new construction of housing, the Housing Investment Fund could move the ball forward on housing availability. Certified CDFIs will have no choice but to target areas that check the appropriate boxes, which could push developers to explore projects they may otherwise have not.
Depending on who you ask, the United States is currently in phase 2 (Expansion) or phase 3 (Hyper Supply) of the real-estate cycle (a cycle with 4 phases). If the country is still in the Expansion phase, the funding could influence developers to find new development sites that check the necessary boxes to qualify for CDFI funding − homes will be built where credit flows − in this case, down-payment assistance programs and grants. If we are in or getting close to the Hyper Supply phase, which is followed by recession, this may mean that developers will scramble to off-load new inventory in the near future, likely reducing home values and the pool of ready and willing borrowers - which could present opportunities for borrowers who qualify for Housing Investment Fund sponsored programs.
Why it may not matter (much)
Alternatively, $10 billion in funding may not move the needle enough for most to notice the difference. In August of 2021, it was estimated that new home loan originations totaled over $4 trillion in 4 quarters, which makes the $10 billion allocated here a drop in the bucket. This becomes a bit more discouraging when market size is evaluated by region, state, and city. In 2021, the entire housing market in Jacksonville, FL was estimated to be worth just under $166 billion - so $10 billion could buy a couple of neighborhoods, but not much else.
Furthermore, it's estimated that the average home price in the U.S. is now $374,900 - and yes, we know all $10 billion is not used to back loans, but if it were, it would mean around 28,000 families would qualify for a loan in this program. With NCD estimating there are still 14.4 million households with at least one person with a disability that cannot afford housing it all becomes a bit overwhelming.
Conclusion
While no program is perfect, nor should we expect overnight solutions for any issue that truly requires community input, it is refreshing to see that Congress is putting forth an effort to address the issue. If nothing else, we can look forward to the successes and lessons learned from the Housing Investment Fund to build on future programs to address the lack of affordable and accessible housing.
Multiple calls were made to the Fund for comment and clarification on the details of this program. This article will be updated as needed.
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