On Dec. 27, President Trump signed H.R. 133, the Consolidated Appropriations Act, 2021, which includes the $1.4 trillion fiscal year (FY) 2021 omnibus appropriations, COVID-19 relief, and a set of tax provisions addressing tax extenders and disaster tax relief.  This blog provided a summary of the tax and COVID-19 relief provisions relevant to the affordable housing, community development, and renewable energy communities. Novogradac followed up in greater detail on how the $25 billion in emergency rental assistance would work and the $12 billion for Community Development Financial Institutions (CDFIs)/Minority Depository Institutions (MDIs).

FY 2021 Omnibus Overview

This blog summarizes the FY 2021 appropriations for the U.S. Department of Housing and Urban Development (HUD) and U.S Department of the Treasury’s CDFI Fund.

For HUD appropriations, the FY 2021 omnibus provides gross appropriations of $60.4 billion, a $3.8 billion (6.8%) increase from FY 2020, a $12.4 billion (25.9%) more than the FY 2021 request, $975 million (1.6%) less than the FY 2021 House THUD bill passed before the budget agreement, and $879 million (1.5%) more than the Senate FY 2021 THUD bill. In general, the bill’s funding level rejects most of the administration’s cuts and sustains the major HUD funding increases enacted in previous spending bills, as well as providing a few programs with increases.

While Congress reached a two-year bipartisan budget deal in 2019 to provide relief from austere spending caps, appropriators had only about $5 billion more in FY 2021 than FY 2020 for all domestic discretionary programs, including affordable housing and community development. Fortunately, due to the increase in Federal Housing Administration (FHA) and Ginnie Mae receipts, congressional appropriators could increase HUD funding by $3.2 billion in FY 2021 as compared to FY 2020.  Congress also rejected a proposal from the Trump administration to rescind the Veteran Affairs healthcare funding’s exemption from spending caps – a move that would have required Congress to cut an additional $7 billion from domestic spending.

Highlights of the HUD program funding levels follow.

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Public and Assisted Rental Housing

Project-Based Rental Assistance (PBRA)

The legislation provides $13.47 billion for Project-Based Rental Assistance, which is $895 million (7.1%) more than FY 2020, $823 million (6.5%) more than the FY 2021 request, $414 million (3.2%) more than the House bill, and $62 million (0.5%) more than the Senate bill. This funding should be sufficient to renew expiring contracts. The legislation rejects the president’s budget request’s rental assistance proposals to establish minimum rents, require increased tenant contributions toward rent, among others.

Tenant-Based Rental Assistance

Tenant-based rental assistance is funded at $25.8 billion, a $1.9 billion (8%) increase from FY 2020, a $6.9 billion (36.9%) increase from the FY 2020 request, $38 million (0.1%) more than the House bill, and $261 million (1%) more than the Senate bill. Of that amount, $23.1 billion is for Section 8 Housing Choice Voucher contract renewals, which is $1.6 billion (7.3%) more from FY 2020, and should be sufficient to fund all renewals.

As noted for project-based rental assistance, the legislation does not adopt the rental assistance reforms from the budget request. For the HUD-Veteran Affairs Supportive Housing (HUD-VASH) program, the omnibus provides $40 million, but no new incremental VASH funding is reserved for Native American veterans, $1 million less than FY 2020. The legislation also provides $116 million for Tenant Protection Vouchers, $41 million more than FY 2020.

Public Housing

The legislation rejects the fairly dramatic cuts to public housing proposed in the administration’s request, as well as its proposal to create a Moving To Work (MTW) account, which would have separated out Housing Choice Voucher, public housing capital and operating funding for MTW agencies. Instead, the omnibus follows the Senate FY 2021 THUD bill by creating a consolidated public housing fund account, combining the operating, capital, and related set-aside funding. As a whole, the bill provides slightly more public housing funding than FY 2020. For capital subsidies, it provides $2.94 billion, which is $68 million (2.4%) more than FY 2020, but importantly ignores the request for no funding, which would have imperiled many Rental Assistance Demonstration (RAD) conversions. The final bill also provides $4.84 billion for public housing operating subsidies, which is $290 million (6.4%) more than FY 2020, $1.27 billion (35.5%) more than the request, $190 million (4.1%) more than the House bill, and $322 million (7.1%) more than the Senate bill.

RAD

The final bill does not include the request to eliminate the cap on the RAD program. The FY 2018 omnibus increased authorization from 225,000 public housing units to 455,000 public housing units. Subsequent legislation extended program authorization for public housing conversions to 2024. The final FY 2021 bill also 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. However, the bill does extend eligibility of RAD conversions to Section 811 Supportive Housing for People with Disabilities properties.

Community Planning and Development Programs

The final legislation does not eliminate Community Development Block Grant (CDBG) formula grants and the HOME Investment Partnerships Program (HOME), as proposed by the request. Furthermore, it provides $3.5 billion for CDBG (which is $50 million or 1.5% more than FY 2020, $50 million or 1.4% less than the House bill and $20 million or 0.6% more than the Senate bill) and $1.35 billion for HOME (which is the same as FY 2020, $350 million or 20.6% less than the House bill, and $25 million or 1.8% less than the Senate bill but).

Homeless and Supportive Housing Programs

McKinney-Vento Homeless Assistance Grants are funded at $3 billion, $223 million (8%) more than FY 2020, $227 million (8.2%) more than the request, $415 million (12.2%) less than the House bill, and $49 million (1.7%) more than the Senate bill. This amount includes a $2.57 billion set-aside for the continuum of care and rural housing stability assistance programs, and $290 million for Emergency Solutions Grants.

The final bill provides $855 million for the Housing for the Elderly (Section 202) program, $62million (7.8%) more than FY 2020, $2 million (0.2%) more than the request and Senate bill, and $38 million (4.3%) less than the House bill. The bill also provides $52 million for new capital advances or rental assistance contracts (SPRACs), which is $38 million less than FY 2020.

The Housing for Persons with Disabilities (Section 811) program is funded at $227 million, equal to the House bill, $25 million (12.4%) more than FY 2020, $25 million (9.9%) less than the request, $10 million (4.2%) less than Senate bill.

The final legislation would provide $430 million for the Housing Opportunities for Persons with AIDS program to provide housing and supportive services, equal to House bill, $20 million (4.9%) more than FY 2020 and the Senate bill, and $100 million (30.3%) more than the request.

Choice Neighborhoods Initiative

The final 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 $200 million, $25 million (14.3%) more than FY 2020, $100 million (100%) more than the Senate bill, but $50 million (20%) less than the House bill.

Housing Trust and the Capital Magnet Funds

The final bill does not include the administration budget’s proposal to eliminate the Housing Trust and Capital Magnet Funds, and the Fannie Mae and Freddie Mac assessments that fund them. HUD announced April 17 $322.6 million for the 2020 Housing Trust Fund allocations. The U.S. Treasury’s Community Development Financial Institutions (CDFI) Fund is expected to announce about $173.8 million in awards for the 2020 round of the Capital Magnet Fund in the first quarter of 2021. 

One-Time Affordable Housing “Infrastructure” Investments

The omnibus bill does not include one-time affordable housing “infrastructure” investments, as the House provided $75 billion in its FY 2021 THUD bill. That $75 billion would have provided $49 billion for housing, including $24 billion for public housing capital repairs, $4 billion for CDBG, $17.5 billion for HOME, and $1 billion for Native American housing, $300 million for Choice Neighborhoods, among other investments.

U.S. Treasury’s CDFI Fund

The final appropriations bill includes $270 million for the CDFI Fund, $8 million (3.1%) more than FY 2020 and the Senate bill, $3.5 million (1.3%) less than the House bill, and $ a $256 million increase from the FY 2021 request. Congress rejected the administration’s proposals to eliminate all grant funding and only provide $14 million in administrative funding for the NMTC and CDFI Bond Guarantee programs.  Within this amount, the bill provides $167 million for financial awards and technical assistance.  The omnibus also provided $500 million in guarantee authorization level for the CDFI Bond Guarantee program level with FY 2020.