May 19, 2024

Housing Finance Development

It's Your Housing Finance Development

118th Congress Begins with New Committee Membership on House and Senate Committees That Focus on Affordable Housing, Community Development

The 118th Congress got off to a slow start Jan. 3, 2022. After a lengthy confirmation process for speaker of the House of Representatives, with more than a week and 15 rounds of voting, Rep. Kevin McCarthy, R-California-20th, elected. That delay in the speaker vote subsequently delayed the adoption of House Rules, selection of committee leaders and member assignments and House operations in general. Meanwhile, while there was no change in Senate Leadership, the Senate also had a slow start for the 118th Congress with delayed committee assignments.

118th Congress Leadership

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As was the case in the 117th Congress, Sens. Chuck Schumer, D-New York, will continue to serve as the Senate Majority Leader, Dick Durbin, D-Illinois, as the Senate Majority Whip. Sens. Mitch McConnell, R-Kentucky, will similarly continue to serve as the Senate Minority Leader, John Thune, R-South Dakota, as the Senate Minority Whip. In the House, as mentioned above McCarthy will serve as the Speaker, Reps. Steve Scalise, R-Louisiana-1st, as the Majority Leader and Tom Emmer, R-Minnesota-6th, as the Majority Whip. Reps. Hakeem Jeffries, D-New York-8th, will serve as the Minority Leader, and Katherine Clark, D-Massachusetts-5th, as the Minority Whip.

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Significant House Committees for Affordable Housing, Community Development

As the chief tax writing committees, the composition of the House Ways and Means and Senate Finance Committees will have implications for the housing and community development tax incentives such as the low-income housing credit (LIHTC), proposed neighborhood homes tax credit (NHTC), new market tax credit (NMTC), historic tax credit (HTC) and the opportunity zones (OZ) incentive. There are several tax bills from the 117th Congress that Novogradac expects to be reintroduced soon. These bills are the New Markets Tax Credit Extension Act of 2021 (H.R. 1321/S. 456), The Neighborhood Homes Investment Act H.R. 2143/S. 98), The Affordable Housing Credit Improvement Act of 2021 (H.R. 2573/S. 1136), the Historic Tax Credit Growth and Opportunity Act of 2021 (H.R. 2294/S. 2266) and the Opportunity Zones Transparency, Extension and Improvement Act of 2021 (H.R. 7467/S. 4065). On Feb. 2, S. 234, S. 234, New Markets Tax Credit Extension Act of 2023 was introduced by Sens. Ben Cardin, D-Maryland; Steve Daines, R-Montana; Maria Cantwell, D-Washington; Tim Scott, R-South Carolina; Chuck Schumer, D-New York; Bill Cassidy, R-Louisiana; Bob Menendez, D-New Jersey; and Marsha Blackburn, R-Tennessee, which would make the NMTC permanent.  The House Financial Services and Senate Banking Committees oversee banking and HUD programs, which sets the rules for many housing and community development spending programs. The House and Senate Appropriations Committees are responsible for allocating discretionary funding for housing and community development spending programs.

House Ways and Means Committee

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With Republicans taking control of the House, the House Ways and Means Committee underwent significant changes in membership, and those changes happened later than usual. Instead of in November or December 2022, Jason Smith, R-Missouri-8th, prevailed in his race to become the new committee chair over Vern Buchanan, R-Florida-16th, and Adrian Smith, R-Nebraska-3rd. Former Chair Richard Neal, D-Massachusetts-1st, became the ranking member. The committee partisan ratio flipped from 25 Democrats and 18 Republicans in the 117th to 25 Republicans and 18 Democrats in the 118th. As a result, Republicans added 10 new members, and some Democrats from the 117th Congress needed to leave the committee.

New committee Republicans include Reps. Blake Moore, R-Utah-1st; Randy Feenstra, R-Iowa-4th; Brian Fitzpatrick, R-Pennsylvania-1st; Mike Carey, R-Ohio-15th; Claudia Tenney, R-New York-24th; Michelle Fischbach, R-Minnesota-7th; Michelle Steel, R-California-45th; Nicole Malliotakis, R-New York-11th; Greg Steube, R-Florida-17th; and Beth Van Duyne, R-Texas-24th.

One Republican, Rep. Tom Rice, R-South Carolina-7th, who lost his Republican primary election in 2022, left the committee.

Democrats leaving the committee include Reps. Ron Kind, D-Wisconsin-3rd (who retired), Tom Suozzi, D-New York-3rd (who was unsuccessful in his race for governor), Rep. Stephanie Murphy, D-Florida-7th (who retired), Rep. Jimmy Gomez, D-California-34th, Rep. Steven Horsford, D-Nevada-4th, Del. Stacey Plaskett, D-U.S. Virgin Islands, and Rep. Brendan Boyle, D-Pennsylvania-2nd (who is taking a temporary leave from the committee in exchange for being named the ranking member of the Budget Committee).

House Financial Services Committee

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The leadership of the House Financial Services Committee flipped with former ranking member Patrick McHenry, R-North Carolina-10th, becoming the Chair, and former chair Maxine Waters, D-California-43rd, becoming the ranking member. The committee partisan ratio changed from 30 Democrats and 24 Republicans in the 117th Congress to 29 Republicans and 23 Democrats for the 118th Congress.

The new Republican additions to the committee include Reps. Young Kim, R-California-40th; Andrew Garbarino, R-New York-2nd; Byron Donalds, R-Florida-19th; Monica De La Cruz, R-Texas-15th; Scott L. Fitzgerald, R-Wisconsin-5th; Mike Flood, R-Nebraska-1st; Rep. Erin Houchin, R-Indiana-9th; Mike Lawler, R-New York-17th; Dan Meuser, R-Pennsylvania-9th; Zach Nunn, R-Iowa-3rd, and Andy Ogles, R-Tennessee-5th.

Republicans leaving the committee include Reps. Lee Zeldin, R-New York-1st (who was unsuccessful in his race for governor); Ted Budd, R-North Carolina-13th (who was elected to the Senate); David Kustoff, R-Tennessee-8th (who moved to the Ways and Means Committee); Trey Hollingsworth, R-Indiana-9th (who retired), and Anthony Gonzalez, R-Ohio-16th (who retired).

Democrats leaving the committee include Reps. Carolyn Maloney, D-New York-12th (who lost her primary election); Jake Auchincloss, D-Massachusetts-4th; Rep. Ed Perlmutter, D-Colorado-7th (who retired); Jesus “Chuy” Garcia, D-Illinois-4th; Al Lawson, D-Florida-5th (whose district was changed considerably and lost his reelection); Del. Michael San Nicolas, D-Guam; Cindy Axne, D-Iowa-3rd (who lost her reelection); Alma Adams, D-North Carolina-12th; Madeleine Dean, D -Pennsylvania-4th, and Alexandria Ocasio Cortez, D-New York-14th.

Despite the departure of committee Democrats from the 117th Congress, three new Democrats joined the committee, including Reps. Steven Horsford, D-Nevada-4th (who was on the Ways and Means Committee); Wiley Nickel, D-North Carolina-13th (newly elected), and Brittany Pettersen, D-Colorado-7th (newly elected).

House Appropriations Committee

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Similar to the Financial Services Committee, leadership of the House Appropriations Committee flipped with the change in power. Rep. Kay Granger, R-Texas-12th, became the chair after being ranking member in the 117th, while Rep. Rosa DeLauro, D-Connecticut-3rd, became the ranking member after being chair in the 117th. The committee partisan ratio changed from 33 Democrats and 26 Republicans in the 117th Congress to 34 Republicans and 27 Democrats for the 118th Congress.

Republican additions to the committee include Reps. Stephanie Bice, R-Oklahoma-5th; Jerry Carl, R-Alabama-1st; Juan Ciscomani, R-Arizona-6th; Michael Cloud, R-Texas-27th; Andrew Clyde, R-Georgia-9th; Jake Ellzey, R-Texas-6th;Scott Franklin, R-Florida-18th; Michael Guest, R-Mississippi-3rd; Jake LaTurner, R-Kansas-2nd, and Ryan Zinke, R-Montana-1st.

One Republican left the committee: Rep. Steven Palazzo, R-Mississippi-4th (who lost his primary election).

Democrats leaving the committee include Reps. Charlie Crist, D-Florida-13th (who lost his race for governor); Cheri Bustos, D-Illinois-17th (who retired); Brenda Lawrence, D-Michigan-14th (who retired); Ann Kirkpatrick, D-Arizona-2nd (who retired); Katherine Clark, R-Massachusetts-5th (who became Minority Whip); Lucille Roybal-Allard, D-California-40th (who retired); Tim Ryan, D-Ohio-13th (who lost his race for the Senate), and David Price, D-North Carolina-4th (who retired).

Democrats added two new members to the committee: Reps. Steny Hoyer, D-Maryland-5th (who returned to the committee after many years in House leadership) and Joe Morelle, D-New York-25th.

Significant Senate Committees for Affordable Housing, Community Development

With Democrats having secured a 51-49 majority in the 118th Congress, committee partisan ratios were also changed from even partisan splits in the 117th Congress to one-seat advantages for Democrats in the 118th.

Blog Graphic: 118th Senate Committee Leadership

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Senate Finance Committee

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The Senate Finance Committee will continue to be chaired by Sen. Ron Wyden, D-Oregon, with Sen. Mike Crapo, R-Idaho, remaining as the ranking member. The committee partisan ratio was changed from 14 Democrats and 14 Republicans in the 117th Congress to one less Republican: 14 Democrats and 13 Republicans.

While there were no changes in the Democratic membership of the committee, four Republican Senators left the committee: Sens. Richard Burr, R-North Carolina (who retired); Rob Portman, D-Ohio (who retired); Patrick Toomey, R-Pennsylvania (who retired), and Ben Sasse, R-Nebraska (who resigned Jan. 8 to become the president of the University of Florida). New additions to this committee include Sens. Ron Johnson, R-Wisconsin; Thom Tillis, R-North Carolina, and Marsha Blackburn, R-Tennessee.

Off the committee members, Sens. Maria Cantwell, D-Washington; Bob Menendez, D-New Jersey; Tom Carper, D-Delaware; Ben Cardin, D-Maryland; Sherrod Brown, D-Ohio; Bob Casey, D-Pennsylvania; Sheldon Whitehouse, D-Rhode Island; Elizabeth Warren, D-Massachusetts; John Barrasso, R-Wyoming; and Blackburn are all up for reelection in 2024. Sen. Debbie Stabenow, R-Michigan, has already announced she will retire in 2024.

Senate Banking, Housing and Urban Affairs Committee

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The Senate Banking, Housing and Urban Affairs Committee will continue to be chaired by Sen. Sherrod Brown, D-Ohio, and with the retirement of Toomey, Sen. Tim Scott, R-South Carolina, became the ranking member. The committee partisan ratio was changed from 12 Democrats and 12 Republicans in the 117th Congress to one more Democrat: 13 Democrats and 12 Republicans.

All of the committee Democrats have returned, and one Democrat was added: Sen. John Fetterman, D-Pennsylvania (newly elected). Two Republicans left the committee: Toomey (who as mentioned above retired) and Sen. Richard Shelby, R-Alabama (who retired). The new Republicans added to this committee are Sen. JD Vance, R-Ohio (newly elected), and Sen. Katie Britt, R-Alabama (newly elected).

Of the committee members, Sens. Menendez, Jon Tester, D-Montana; Warren, and Kevin Cramer, R-North Dakota, are all up for reelection in 2024.

Senate Appropriations Committee

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With the retirements of the committee leadership in the 117th Congress–Sens. Patrick Leahy, D-Vermont and Shelby–the Senate Appropriations Committee has entirely new leadership with Sens. Patty Murray, D-Washington, as chair, and Susan Collins, R-Maine, as the vice chair. The committee partisan ratio was changed from 15 Democrats and 15 Republicans in the 117th to one less Republican: 15 Democrats and 14 Republicans.

In addition to the departures of Leahy and Shelby, Sen. Mike Braun, R-Indiana, left the committee, although he remains in the Senate. Braun recently announced that he will not seek reelection to the Senate in 2024, but rather seek the Republican nomination for governor.

New committee members include Sens. Gary Peters, D-Michigan; Britt, and Deb Fischer, R-Nebraska.

Of the committee members, Sens. Tester; Tammy Baldwin, D-Wisconsin; Christopher Murphy, D-Connecticut; Joe Manchin, D-West Virginia, and Fisher are up for reelection in 2024. Sen. Dianne Feinstein, D-California, has already announced she will retire in 2024.

What To Expect for the Congressional Agenda in 2023

As there was no significant tax title in fiscal year (FY) 2023 omnibus spending bill enacted late last year, there will likely be an attempt to address key tax proposals and expired/expiring tax provisions in tax legislation some point in the 118th Congress. Membership in these key committees will prove important for any proposed enhancements and well as renewal or permanence of various tax incentives, such as LIHTC, NMTC, HTC and OZs. There are, however, several other issues that will require Congress’ attention over the next few months.

The main priority for the new Congress will be addressing the national debt limit. On Jan. 19, according to Treasury Secretary Yellen, the nation’s borrowing reached the debt limit of $31.4 trillion. On Jan. 13, Yellen sent a letter to Congressional Leadership, notifying them of the extraordinary measures that the Treasury planned to implement to protect the full faith and credit of the United States to prevent a breach of the debt limit starting Jan. 19. Once Treasury has exhausted its extraordinary measures, the debt limit will need to be raised or suspended or the United States will face a potential default. Yellen expressed confidence that Treasury will be able to use extraordinary measures until at least early June, but outside debt limit experts estimate the so-called “X-date” to be in mid-July. Some House Republicans have floated a proposal for a short-term suspension of the debt to Sept. 30, which is also when fiscal year (FY) 2023 ends and the deadline to reauthorize the Farm Bill and Federal Aviation Administration programs, including the need to extend aviation-related taxes.

By lining up multiple deadlines, it sets the stage for legislation to address both the debt and federal government spending together. The large policy differences between a Republican-led House and Democrat-led Senate on spending, make it unlikely that all 12 annual spending bills will be enacted by Sept. 30. Instead, as was the case last year and most past years, we expect a continuing resolution to keep the federal government operating into November or December will be considered to give Congress time to negotiate a deal. One thing that is not expected is another omnibus spending bill, given the House Republicans’ desire to avoid such bills. Instead, House Republicans are more likely to consider “minibuses” of various combinations of the 12 annual spending bills.  One such “minibus” could be considered as a legislative vehicle for tax legislation.

Several tax incentives have expired or will expire and the tax legislation addressing them are expected to be reintroduced in the coming weeks. On Dec. 31, 2021, the 12.5% increase in 9% LIHTC allocations expired and remains a key priority for tax legislation for the 118th Congress.

Looking forward, the NMTC, the $2,000 level of the Child Tax Credit and many other tax provisions of the Tax Cuts and Jobs Act of 2017 will expire Dec. 31, 2025, that will likely prompt significant tax legislation in 2025. Furthermore, the gain recognition deadline for OZ funds is Dec. 31, 2026, but because of the perishing nature of the OZ incentive, Congress could address this deadline prior to 2026.

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