SEATTLE -- State housing leaders braced for the worst at their annual conference here this week in anticipation that the tax exemption for mortgage revenue bonds will be allowed to expire.
Some of the more than 700 housing leaders and market participants at the National Council of State Housing Agencies conference expressed optimism, but others were pessimistic that a new tax bill with extensions for the program could clear Congress before the Dec. 31 expiration date. Small-issue industrial development bonds also are scheduled to expire at the end of the year.
"I'm not terribly otpimistic," Jon Sheiner, tax counsel for Rep. Charles Rangel, D-N.Y., told housing officials during a panel discussion yesterday. "I haven't given up hope, but I'm not sure we'll get something done by the end of the year."
Over the past few years, housing agencies annually have experienced uncertainty as to whether the tax exemption for mortgage revenue bonds will be extended. The uncertainty is more intense this year, because Congress is usually about halfway through drafting a tax bill by now, and the bil usually includes extensions for the housing bonds.
This year, however, Congress has not worked on such a bill.
"The situation is fluid -- there are ongoing caucuses [to discuss mortgage revenue bonds], but the problem is the situation changes daily," said Patricia Kery, legislative director for Rep. Barbara Kennelly, D-Conn. "If a decision is made and a deal can be struck to do a small bill, that can be done in a few days."
Conference participants noted that the tax-exempt mortgage revenue bond programs are a key source of financing for low- and medium-income housing throughout the country.
"No question about it, this program is a lifeblood of the organization and housing in general," said Karney Hodge, director of the California Housing Finance Agency. Mr. Hodge said he could not predict the fate of the extensions, though he detected an upbeat mood at the conference.
But some housing officials were pessimistic.
"We have a market that's grown to depend on [mortgage revenue bond] availability," said Mary Zins, single family group director of the Wisconsin Housing and Economic Development Authority. "With the impending sunset of MRBs, the time is critical to look at new sources of funding."
She said her authority is examining lease-purchase programs and Federal Home Loan Mortgage Corp. and Federal National Mortgage Association programs.
Other officials said they were discouraged with leadership in Washington.
"If you had the people in Congress working for your business, you'd fire them," said A. Wayne Mittleider, executive director of the Idaho Housing Authority. "We've plowed this field over and over, and we haven't come up with a decent crop yet."
Yet some officials said the large turnout at the conference provides grounds for optimism. "This conference is a sign of the vitality of state housing efforts," said John T. McEvoy, executive director of the housing council.
"I didn't join NCSHA just to lose [mortgage revenue bonds], and neither did [council president] Terry Duvernay" Mr. McEvoy told conference participants Monday. "We're not going to let you down."
But while Mr. McEvoy was upbeat, he also told members of prepare for the worst.