Congress Agrees to Record High Funding for CDFI Fund, Modest Increase for HUD

Published by Peter Lawrence on Tuesday, May 2, 2017 - 12:00am

Congressional leadership yesterday announced agreement on a $1.07 trillion fiscal year (FY) 2017 omnibus spending bill. According to the House Appropriations Committee release, the bill provides full-year appropriations legislation and funding for the 11 remaining annual appropriations bills through the end of FY 2017 in September, and includes a $25 billion increase in defense spending over current funding levels and $1.5 billion towards border security, but did not propose any reductions in nondefense spending to offset that increase.

For the U.S. Department of Housing and Urban Development (HUD), the bill provides $48.06 billion in gross discretionary spending. This is $1.08 billion (2.3 percent) more than the amount appropriated in FY 2016, and $101 million (0.2 percent) more than the House FY 2017 Transportation-HUD (THUD) bill, but $378 million (0.8 percent) less than the Senate FY 2017 THUD bill. Highlights of the bill follow.

Blog Chart Key Programs of the HUD Bdget
Click to Enlarge

 

Public and Assisted Rental Housing

Project-Based Rental Assistance (PBRA)

The bill provides $10.8 billion for Project-Based Rental Assistance, which is $196 million (1.8 percent) more than FY 2016. This funding level should be sufficient to renew all contracts. HUD still needs to conduct procurement for contact administrators, and it is unclear if HUD is planning any budget adjustments resulting from this procurement to take effect in the full FY 2018 budget request.

Tenant-Based Rental Assistance (TBRA)

Tenant-Based Rental Assistance is proposed to be funded at $20.3 billion, which is $663 million (3.4 percent) more than FY 2016. Of that amount, $18.4 billion is for Section 8 Housing Choice Voucher contract renewals, which is a $670 million (3.8 percent) increase over FY 2016. It appears this level of funding would be sufficient to renew all vouchers in use. The omnibus provides $10 million to support new incremental family unification vouchers to prevent youth from becoming after exiting foster care. For the HUD-Veteran Affairs Supportive Housing (HUD-VASH) program, the bill provides $47 million, which is $13 million less than FY 2016. Within the HUD-VASH amount, $7 million is set aside for Native American veterans.  The bill also provides $110 million for Tenant Protection Vouchers, a $20 million (15.4 percent) decrease from the FY 2016 enacted level.

Public Housing Capital and Operating Funds

The omnibus provides $1.94 billion for the Public Housing Capital Fund which is $42 million (2.2 percent) more than FY 2016, and $4.4 billion for the Public Housing Operating Fund, which is a $100 million (2.2 percent) cut from FY 2016.

Rental Assistance Demonstration

The FY 2015 CR-Omnibus bill increased the cap on the Rental Assistance Demonstration (RAD) program from 60,000 to 185,000 public housing units, enabling all pending applications as of December 2014 to go forward as well as a few others, and the administration later proposed to repeal the unit cap in the FY 2016 and FY 2017 requests. The FY 2017 omnibus bill increases authorization from 185,000 public housing units to 225,000 public housing units and extends program authorization for public housing conversions to 2020, but does not authorize RAD conversions of Section 202 properties, nor provide $4 million in incremental funding to facilitate such conversions, as proposed by the Senate bill.

Community Planning and Development (CPD) Programs

Community Development Block Grant (CDBG) formula grants are proposed to be funded at $3 billion, equal to FY 2016. President Trump requested to cut $1.5 billion from FY 2017 CDBG funding to offset an increase in defense spending, but the omnibus rejected that proposal.  After last year’s proposed near elimination in the Senate, the omnibus bill provides $950 million for the HOME Investment Partnerships Program (HOME), equal to FY 2016. HOME program funding is nearly half FY 2011 levels in 2017 dollars.

In addition to his proposed FY 2017 cut to CDBG, the president has proposed eliminating funding for both CDBG and HOME in his FY 2018 budget blueprint.

Homeless and Supportive Housing Programs

McKinney-Vento Homeless Assistance Grants are proposed to be funded at $2.38 billion, a $133 million (5.9 percent) increase over FY 2016 funding. This amount includes a $2.02 billion set-aside for the continuum of care and rural housing stability assistance programs, and $310 million for Emergency Solutions Grants.

The bill provides $502 million for the Housing for the Elderly (Section 202) program, a $69.7 million (16.1 percent) increase over FY 2016 levels. Within that amount, the bill provides $10 million for new construction or new senior projection rental assistance contracts (PRACs), at HUD’s discretion, the first potential new construction increase since 2011.  The Housing for Persons with Disabilities (Section 811) program is funded at $146 million, a $3.8 million (2.5 percent) cut from FY 2016 funding levels. The budget would provide $356 million for the Housing Opportunities for Persons with AIDS (HOPWA) program to provide housing and supportive services to persons living with HIV and AIDS, which is a $21 million (6.3 percent) increase from FY 2016.

Choice Neighborhoods Initiative

The bill provides $138 million for the Choice Neighborhoods Initiative, which is designed to comprehensively revitalize high-poverty public and assisted housing communities, which is $13 million (10 percent) more than FY 2016.  The FY 2018 budget blueprint proposes to eliminate funding for this program.

U.S. Treasury’s Community Development Financial Institutions (CDFI) Fund

The FY 2017 omnibus bill includes a record funding level for the CDFI Fund:  $248 million, a $15 million (6.2 percent) increase from FY 2016.  Within this amount, the bill provides $162 million for financial awards and technical assistance, an $8 million (5.3 percent) increase from FY 2016 and an increase of $3 million for administrative expenses to help the CDFI Fund manage its growing portfolio of programs, including the $7 billion combined new markets tax credit round award in 2016.  The omnibus also provided $500 million in guarantee authorization level for the CDFI Bond Guarantee program, a cut of $250 million (33 percent) from FY2016, but equal to the Senate bill and $500 million more than the House bill.  The FY 2018 budget blueprint proposes to eliminate all grant funding for the CDFI Fund.

Next Steps

The House is expected to consider the FY 2017 omnibus bill May 3 and the Senate shortly thereafter.  The current continuing resolution (CR) expires May 5, and the omnibus bill is expected to pass both chambers and signed by the president before the CR expires.

Meanwhile, as the budget and appropriations process for FY 2017 approaches its conclusion, the process for FY 2018 has already begun.  On March 16, the Trump administration released its FY 2018 budget blueprint, and the full, program-by-program, detailed FY 2018 budget request is expected later in May.  According the FY 2018 budget blueprint, the administration is proposing $40.7 billion in gross appropriations, a $7.4 billion (15.3 percent) cut from the FY 2017 omnibus spending level for HUD, and only $23.5 million for the CDFI Fund, a $224 million (91 percent) cut from the FY 2017 omnibus bill.

Normally the next step in the budget and appropriations process after the full budget request is submitted would be for Congress to consider a FY 2018 budget resolution, but that is unlikely to proceed until House advances or abandons legislation to repeal and replace the Affordable Care Act (ACA), as the FY 2017 budget resolution contains reconciliation instructions on repealing and replacing the ACA, and passage of a FY 2018 budget resolution would supersede the FY 2017 resolution.  While it is uncertain when Congress might consider the FY 2018 budget resolution, when it does, the resolution is expected to include reconciliation instructions to facilitate passage of tax reform in the Senate.

Given the sharp funding requests in the FY 2018 budget blueprint and the return of sequestration under tight overall discretionary spending caps, it will be very difficult for Congress to draft and pass all 12 annual spending bills, including those providing funding for HUD and Treasury.  Many policy insiders expect Congress to consider a CR to fund the government past Sept. 30, and possibly for the entire fiscal year.  The prospect for a full-year CR in FY 2018 places extra importance in getting a full-year omnibus appropriations bill passed for FY 2017.