Key Housing and Community Development Provisions in the House THUD Appropriations Subcommittee FY 2016 Bill

Published by Peter Lawrence on Thursday, April 30, 2015 - 12:00am

The House Transportation-HUD (THUD) Appropriations Subcommittee approved its$55.3 billion fiscal year 2016 appropriations bill April 29. The amount is about $1.5 billion more than the FY 2015 enacted level, but $9.7 billion less than the FY 2016 request. The Obama administration’s request depended on Congress authorizing spending more than the budget caps set in the Budget Control Act of 2011. However, the forthcoming joint FY 2016 budget resolution likely to be approved by Congress shortly maintains these budget caps.

Moreover, the Congressional Budget Office (CBO) projects about $1.1 billion less in Federal Housing Administration (FHA) loan guarantee and Ginnie Mae securitization receipts for FY 2016. Because these receipts offset the U.S. Department of Housing and Urban Development (HUD) budget, the subcommittee needs to appropriate more funding to make up for this loss. Therefore, as a result and due to a few other factors, actual overall program funding levels in the bill are about $25 million more than FY 2015, only a 0.05 percent increase, essentially level funding.

Furthermore, HUD itself (not to mention U.S Department of Transportation programs) requires about $3 billion more to maintain current services, so the bill’s overall spending allocation is about $1.5 billion short. Other than the $1.1 billion FHA-Ginnie Mae receipts shortfall mentioned above, the two other main reasons why HUD requires about $3 billion more to maintain current services are:

  1. Because HUD shifted the Section 8 Project-Based Rental Assistance (PBRA) program to a calendar-year funding cycle, the PBRA program requires about $1.1 billion more than in FY 2015 to provide full renewal funding; and
  2. As the FY 2014 and FY 2015 HUD spending bills provided funding to restore some lost vouchers due to sequestration, Section 8 Housing Choice Vouchers (HCV) Program requires $848 million more to renew expiring contracts of vouchers in use.

According to the House Appropriations Committee release, the bill provides $42 billion of net appropriated funding for HUD. This is about $1 billion (about 2 percent) more than the amount appropriated under FY 2015 funding levels, but $3 billion less than the FY 2016 HUD request.

Public and Assisted Rental Housing

Project-Based Rental Assistance (PBRA)

The bill provide $10.654 billion for Project-Based Rental Assistance, which is $924 million (or 9.5 percent) more than the FY 2015 funding level of $9.7 billion, but $106 million (or 1 percent) less than the FY 2016 request.

As mentioned above, the administration is in the process of implementing a shift to a calendar-year funding cycle for the PBRA program, as it provides for Tenant-Based Rental Assistance (TBRA). This shift makes the annual renewal funding needs more predictable, but it also means that contracts expiring in the course of FY 2016 will not receive a full 12 months of renewal funding, unless Congress provides the program a substantial increase in the FY 2016 HUD spending bill. The bill proposes to cut funding for PBRA contract administration by $65 million (31 percent). It should be noted that the Supreme Court recently declined to reconsider an appellate court decision concerning how HUD selects PBRA contract administrators, and the subcommittee believes that administrative costs will be reduced as a result. HUD, however, has determined that it will take about 18 months to implement the appellate court decision, and so it would appear that such savings, even if appropriate, wouldn’t be achieved by the end of FY 2016.

The budget request proposed a Multifamily Performance-Based Energy Conservation demonstration from FY 2016 through FY 2018, which would allow HUD to facilitate the financing of energy and water conservation improvements in up to 20,000 assisted multifamily housing units, but the subcommittee did approve such a demonstration.

Tenant-Based Rental Assistance (TBRA)

Tenant-Based Rental Assistance is proposed to be funded at $19.9 billion. Of that amount, $18.1 billion is for Section 8 Housing Choice Voucher contract renewals, which is 3.8 percent more than FY 2015. It appears this level of funding would be sufficient to renew vouchers in use, but it would not fully restore vouchers lost due to sequestration, as the administration proposed to do in its request. However, as per the request, the bill does not provide a specific set-aside for the HUD-Veteran Affairs Supportive Housing (HUD-VASH) program, as in previous annual spending bills. The bill provides $130 million for Tenant Protection Vouchers, the same as FY 2015, but $20 million less than the request.

Public Housing Capital & Operating Funds

The bill provides $1.681 billion for the Public Housing Capital Fund, a $194 million (10.3 percent) cut from FY 2015 and $289 million (14.7 percent) less than the request. The Public Housing Operating Fund would receive level funding from FY 2015: $4.44 billion.

Rental Assistance Demonstration (RAD)

The FY 2015 HUD spending bill increased the cap on the RAD program from 60,000 to 185,000 public housing units, enabling pending applications to go forward. The administration requested to remove the unit cap and an additional $50 million for incremental funding to enable RAD conversions where such incremental funding is needed for financial feasibility, but the bill did not approve that request.

Community Planning and Development (CPD) Programs

The bill provides $3 billion for Community Development Block Grant (CDBG) program, representing level funding from FY 2015, but a $200 million (7.1 percent) increase from the request. The bill provides HOME Investment Partnerships Program (HOME) only $767 million in net appropriated funding, a $133 million (14.8 percent) decrease from FY 2015 and a $293 million (27.6 percent) cut from the request. The bill does not approve the administration’s request to set aside $10 million of HOME funding for the Self-Help Homeownership Opportunity Program (SHOP), but instead funds SHOP under a separate account, as under previous HUD spending bills.

The bill includes a provision to transfer Housing Trust Fund (but not Capital Magnet Fund) funding from the affordable housing allocations that Fannie Mae and Freddie Mac must set aside in calendar year 2015 to the HOME program in FY 2016, and according to the House Appropriations Committee release on the bill, it would appear that the subcommittee estimates such a transfer will provide $133 million and enable HOME to receive funding equal to its FY 2015 enacted level of $900 million. However, it appears unlikely as of the writing of this summary that the Senate will go along with this provision. At the net appropriated level of $767 million HOME program funding would be $843 million (52 percent) below nominal FY 2011 levels ($1.61 billion).

Homeless and Supportive Housing Programs

McKinney-Vento Homeless Assistance Grants are proposed to be funded at $2.185 billion, a $50 million (2.3 percent) increase from FY 2015 funding, but $295 million (12 percent) decrease from the request. This amount includes a $1.905 billion set aside for the continuum of care and rural housing stability assistance programs, which is about $300 million less than the request, and $250 million for Emergency Solutions Grants, equal to the request.

The proposal provides $414 million for the Housing for the Elderly (Section 202) program, a $6 million (1.4 percent) cut from FY 2015, and $41 million (9 percent) decrease from the request. The Housing for Persons with Disabilities (Section 811) program is funded at $152 million, a $17 million (12.6 percent) increase from FY 2015, but $25 million (14.1 percent) less than the request. The budget would provide $332 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 $2 million more than the FY 2015 enacted funding level and equal to the request.

Obama Administration Initiatives

Housing Trust Fund (HTF)

The administration is not proposing to provide a $1 billion mandatory appropriation for the Housing Trust Fund, as it has in the past. However, Federal Housing Finance Agency Director Mel Watt last December directed Fannie Mae and Freddie Mac to start setting aside contributions to the HTF through the course of 2015. On Jan. 30, HUD published interim program regulations, but funding is not expected to be available until 2016. The FY 2016 budget estimates that only $120 million will be allocated to the Housing Trust Fund in FY 2016. This estimate is notably lower than initial estimates, because $61 million will come out of the assessment to capitalize the Treasury’s HOPE Reserve account. Furthermore, HTF and Capital Magnet Fund (CMF) funding depends on Fannie Mae’s and Freddie Mac’s annual business purchases, and such purchases are trending significantly lower. Fannie Mae’s single-family loan purchases have dramatically reduced from $733 billion in 2013 to $376 billion in 2014 and Freddie Mac’s single family loan purchases from $423 billion in 2013 to $255 billion in 2014. If such lowered purchases continue into CY 2015, it would mean that the HTF and CMF would receive less funding. As noted above under the HOME program, the bill would shift HTF funding to the HOME account.

Choice Neighborhoods Initiative

The Choice Neighborhoods Initiative, which is designed to comprehensively revitalize high-poverty public and assisted-housing communities, is proposed to be funded at $20 million, which is $60 million (75 percent less) than the FY 2015 enacted level, and $230 million (92 percent) less than the request.

Upward Mobility Project

The administration requested to create a new initiative, the Upward Mobility Project, which would allow up to 10 of the following:

  • Communities;
  • States, or
  • Consortia of states and/or communities

to blend four block grant programs (two from HUD and two from HHS):

  1. HUD: Community Development Block Grants
  2. HUD: HOME Investment Partnership Program Block Grants
  3. HHS: Community Services Block Grants
  4. HHS: Social Services Block Grants

This initiative is designed to let recipients experiment with their block grants to fund targeted and concerted economic development projects to reduce poverty and make families more self-sufficient. However, the bill did not approve this request.

Local Housing Policy Grants

The administration also proposed $300 million in mandatory spending to provide grants to local governments to create policies, programs or regulatory initiatives to promote a more elastic and diverse housing supply, but the House bill did not approve this request.