Despite Decline in FHA Receipts, House Appropriations THUD Subcommittee Proposes Robust FY 2020 HUD Funding

Published by Peter Lawrence on Thursday, May 23, 2019 - 12:00am

The House Appropriations Transportation-HUD (THUD) Subcommittee released its $75.8 billion fiscal year (FY) 2020 spending bill May 22, which was approved by the subcommittee earlier today. According to the committee release, the proposed funding level for the full bill represents $4.7 billion (6.6 percent) more than FY 2019 and $17.3 billion (30 percent) more than the FY 2020 request by the Trump administration. For the U.S. Department of Housing and Urban Development (HUD), the bill provides gross appropriations of $57.5 billion, a $3.7 billion (6.9 percent) increase from FY 2019, but a $13.4 billion (30.4 percent) more than the FY 2020 request. Receipts from the Federal Housing Administration and Ginnie Mae are projected to be $7.4 billion, $2.1 billion less than in FY 2019, so Congress had less funding available to allocate to HUD programs, leading to net appropriations of $50.1 billion, 5.9 billion (13.3 percent) more than FY 2019 and $13.4 billion more than the FY 2020 request.

The funding allocation in the bill was made possible by the House “deeming” an overall discretionary budget allocation of nearly $1.3 trillion, which enabled the House Appropriations Committee to proceed with FY 2020 spending bills. The Senate will likely proceed using different budget allocation levels for its FY 2020 spending bills. However, unless and until Congress passes a new budget/spending cap deal for FY 2020, nondefense spending, including HUD, would need to be cut by $55 billion from FY 2019 levels under the currently authorized spending caps as mandated by the Budget Control Act of 2011.

The bill would prohibit HUD from implementing its proposed regulations to evict undocumented and unauthorized immigrants in mixed status households from HUD assisted housing. It would also provide for a new $300 million cybersecurity and information technology fund to update and protect HUD’s aging and obsolete information technology.

Highlights of the HUD program funding levels follow.

 

Blog Chart Key Programs of the HUD Budget
Click to Enlarge

 

Public and Assisted Rental Housing

Project-Based Rental Assistance (PBRA)

The House bill provides $12.6 billion for Project-Based Rental Assistance, which is $843 million (7.2 percent) more than FY 2019 and $569 million (4.7 percent) more than the FY 2020 request. The proposed amount appears sufficient to renew expiring contracts with a full 12 months of funding. The bill rejects the budget request’s proposals to change minimum rents, require increased tenant contributions toward rent–from 30 percent of adjusted family income to 35 percent of gross family income–and institute other proposals to achieve savings from HUD’s rental assistance programs.

Tenant-Based Rental Assistance (TBRA)

Tenant-Based Rental Assistance is proposed to be funded at $23.8 billion, a $1.2 billion (5.4 percent) increase from FY 2019 and a $1.6 billion (7.0 percent) increase from the FY 2020 request. Of that amount, $21.4 billion is for Section 8 Housing Choice Voucher contract renewals, which is $1.1 billion (5.4 percent) more from FY 2019 and $1.3 billion (6.4 percent) more than the request. The bill continues a housing voucher mobility demonstration for up to 2,000 families with children to move into neighborhoods with quality schools and other opportunities.

As noted for project-based rental assistance, the bill does not adopt the rental assistance reforms from the budget request. For the HUD-Veteran Affairs Supportive Housing (HUD-VASH) program, the bill provides $45 million, equal to FY 2019, and $5 million of such funding is reserved for Native American veterans, the same amount as in FY 2019. The request also provides $150 million for Tenant Protection Vouchers, $65 million (76.5 percent) more than FY 2019 and $20 million (15.4 percent) more than the request.

Public Housing Capital and Operating Funds

As it did in the previously Republican-controlled House, the bill rejects the fairly dramatic cuts to public housing proposed in the request. It provides $2.86 billion for the Public Housing Capital Fund, which is $80 million (2.9 percent) more than FY 2019, but importantly ignores the request for no funding, which would have imperiled many Rental Assistance Demonstration conversions. It also provides $4.75 billion for the Public Housing Operating Fund, $100 million more than FY 2019 and $1.9 billion (66.9 percent) more than the request.

Rental Assistance Demonstration

As have previous House THUD annual spending bills, the bill does not include the request to eliminate the cap on the Rental Assistance Demonstration (RAD) program, nor does it authorize it as a permanent program. The FY 2018 omnibus bill increased authorization from 225,000 public housing units to 455,000 public housing units and extended program authorization for public housing conversions. The bill does not provide incremental funding to facilitate such conversions, as proposed by the request ($100 million) or the Senate ($4 million) in its FY 2018 HUD spending bill.

Community Planning and Development (CPD) Programs

The bill does not eliminate Community Development Block Grant (CDBG) formula grants and the HOME Investment Partnerships Program (HOME), as proposed by the request. Indeed, it provides $1.75 billion for HOME, increase of $500 million (40 percent) from FY 2019, and $3.6 billion for CDBG, an increase of $300 million (9.1 percent). Because funding for these programs isn’t directly tied to specific families, but rather represents funding for future housing and community development activities, it is much more vulnerable than rental assistance funding.

Homeless and Supportive Housing Programs

McKinney-Vento Homeless Assistance Grants are proposed to be funded at $2.8 billion, $164 million (6.2 percent) more than FY 2019 and $201 million (7.7 percent) more than the request. This amount includes a $2.344 billion set-aside for the continuum of care and rural housing stability assistance programs, and $290 million for Emergency Solutions Grants.

The bill provides $803 million for the Housing for the Elderly (Section 202) program, a $125 million (18.4 percent) increase from FY 2019 and $159 million (24.7 percent) more than the request. Within this account, the bill provides $140 million for new capital advances or new senior preservation rental assistance contracts (SPRACs), the largest amount for new Section 202 homes since 2010. The bill also provides $95 million in funding for service coordinators, $5 million more than FY 2019, which will be available for new service coordinator grants. The Housing for Persons with Disabilities (Section 811) program is funded at $259 million, a $74 million (40.4 percent) increase from FY 2019, and a $101 million (64.7 percent) increase from the request. The budget would provide $410 million for the Housing Opportunities for Persons with AIDS (HOPWA) program to provide housing and supportive services, $17 million more than FY 2019 and $80 million (24.2 percent) more than the request.

Choice Neighborhoods Initiative

The bill does not agree to eliminate the Choice Neighborhoods Initiative, which is designed to comprehensively revitalize high-poverty public and assisted housing communities, as proposed by the administration’s request. Instead, the bill provides $300 million, $150 million more than FY 2019. $150 million of this funding would go to public housing authorities (PHAs).

Housing Trust and the Capital Magnet Funds

The bill does not include the budget’s request to eliminate the Housing Trust and Capital Magnet funds, and the Fannie Mae and Freddie Mac assessments that fund them. HUD announced earlier this month $247.7 million for the 2019 Housing Trust Fund allocations. The U.S. Treasury’s Community Development Financial Institutions (CDFI) Fund has not released a notice of funding authority (NOFA) for the 2019 round of the Capital Magnet Fund, but $130 million is expected to be available when it does. Housing government sponsored enterprises (GSEs)—Fannie Mae and Freddie Mac—assessments to fund both programs are not discretionary appropriations, and housing finance reform legislation is expected to address whether Congress wants to continue them. Given the strong support of the House and Senate Democrats for both funds, it is unlikely Congress will eliminate them. Furthermore, newly confirmed Federal Housing Finance Agency (FHFA) Director Mark Calabria confirmed he will continue to authorize the GSE assessments unless they are financially distressed.

Next Steps

The full House Appropriations Committee is expected to consider the FY 2019 THUD bill shortly after next week’s Memorial Day recess, but it has not yet scheduled such consideration, and the goal remains for the full House to consider it before the August recess. It is unclear when the Senate Transportation-HUD Subcommittee to markup its FY 2020 bill, but it and the full Senate Appropriations Committee are also likely to do so before the August recess.

As mentioned earlier, it is highly unlikely Congress will pass a final FY 2019 THUD spending bill—not to mention the other 11 annual spending bills—unless and until Congress agrees to a new budget deal to raise the defense and nondefense spending caps for FY 2020 (and likely FY 2021). Congress has started negotiations on a budget deal, but it is uncertain when a deal might be struck.

Also looming on the agenda is a need to raise the debt limit before Treasury exhausts its “extraordinary measures” to avoid breaching the limit sometime in September or October. While the White House and Congressional Republicans would prefer the budget and spending caps to be considered separately from the debt limit, Democrats want to combine them. Either bill or both could serve as vehicles for tax legislation, such as low-income housing or new markets tax credit legislation, tax corrections and/or tax extender legislation.

Given the need to address the spending caps and limited time in September to pass final spending bills, most policy insiders expect Congress to consider a short-term continuing resolution to fund the government starting at the beginning of FY 2020 on October 1 and lasting through November or December. Presumably before the end of the 2019 calendar year, Congress would pass a FY 2020 omnibus spending bill. Such a bill could also serve as a vehicle for tax legislation.