Senate Appropriations Committee FY 2016 THUD Bill Slashes HOME Funding, Mostly Shores Up Other Housing and Community Development Programs

Published by Peter Lawrence on Wednesday, July 1, 2015 - 12:00am

On June 25, the Senate Appropriations Committee approved its $55.7 billion fiscal year (FY) 2016 Transportation-HUD (THUD) spending bill and committee report, on a vote of 20-10, with all Committee Republicans and four Democrats—Sens. Mikulski, D-Md.; Feinstein, D-Calif.; Baldwin, D-Wis.; and Schatz, D-Hawaii. The amount is about $1.9 billion more than the fiscal year (FY) 2015 enacted level, but $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 (BCA) of 2011. However, the Republican FY 2016 budget resolution maintains these budget caps, and the Senate Appropriations Committee drafted the bill to comply with the cap.

According to the Senate Appropriations Committee release, the bill provides $37.6 billion of net appropriated funding for HUD. This is about $2 billion (about 5 percent) more than the amount appropriated under FY 2015 funding levels, but $3 billion less than the FY 2016 HUD request and $184 million less than the House FY 2016 THUD bill.

Senate THUD Appropriations Subcommittee Chairwoman Susan Collins, R-Maine, noted the difficulty in writing the FY 2016 THUD bill under the budget caps, and emphasized the priority of renewing rental and homeless assistance over other HUD programs in the bill. And because 84 percent of HUD’s budget goes to those priorities, the rest of the HUD’s budget got squeezed.

Most notably, the bill cuts the HOME Investment Partnerships Program from $900 million in FY 2015 to just $66 million, an $834 million (93 percent) cut. Given that HOME funding is allocated to about 650 participating jurisdictions—state and local governments—such a cut, if enacted, would render the program essentially unworkable. The House FY 2016 THUD bill provides $767 million in net appropriated funding and would also direct an estimated $133 million in funding from the Housing Trust Fund to the HOME account. The Senate bill does not direct HTF funding to HOME or any other HUD account. The president’s FY 2016 request for HOME was $1.06 billion, including a $10 million set-aside for the Self-Help Homeownership Opportunities Program (SHOP).

Highlights of the rest of the bill follow.

Public and Assisted Rental Housing

Project-Based Rental Assistance (PBRA)

The bill provides $10.83 billion for Project-Based Rental Assistance, which is $1.1 billion (11.3 percent) more than the FY 2015 funding level of $9.7 billion, and $66 million (1.6 percent) more than the FY 2016 request. The House bill provides $10.65 billion.

The bill approves a Multifamily Performance-Based Energy Conservation demonstration requested by the administration from FY 2016 through FY 2018, which would allow HUD to facilitate the financing of energy and water conservation improvements in up to 150,000 assisted multifamily housing units. The House bill did not approve the demonstration.

Tenant-Based Rental Assistance (TBRA)

Tenant-Based Rental Assistance is proposed to be funded at $19.9 billion. Of that amount, $17.98 billion is for Section 8 Housing Choice Voucher contract renewals, which is 2.8 percent more than FY 2015. As with the House bill’s funding level of $18.1 billion, 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. Unlike the request and the House bill, the Senate bill provides a $75 million specific set-aside for the HUD-Veteran Affairs Supportive Housing (HUD-VASH) program, as in previous annual spending bills. The Senate Appropriations Committee bill, like the House bill, provides $130 million for Tenant Protection Vouchers, the same as FY 2015, but $20 million less than the request.

Public Housing Capital and Operating Funds

The bill provides $1.743 billion for the Public Housing Capital Fund, a $132 million (7 percent) cut from FY 2015 and $227 million (11.5 percent) less than the request, but $62 million more than the House bill. The Public Housing Operating Fund would receive $4.5 billion, $60 million more than FY 2015 and the House bill, but $100 million less than the request.

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. The Senate FY 2016 THUD bill increases the cap to 200,000 units, but didn’t provide any incremental funding. The House bill neither increased the cap nor provided any incremental funding.

Moving To Work (MTW) Demonstration

The bill permits up to 300 public housing agencies (PHAs) to participate in the Moving To Work (MTW) Demonstration Program, a dramatic increase from the current limit of 39. The MTW Demonstration allows PHAs to comingle their operating and capital subsidies and provides a wide range of waivers to HUD regulations. Such waivers are controversial among some housing advocates, which has led Congress not increase MTW participation in the past. The MTW increase was not included in the House bill, and request limits the expansion to 15 PHAs with no more than 150,000 aggregate public housing units and vouchers.

Community Planning and Development (CPD) Programs

The bill provides $2.9 billion for Community Development Block Grant (CDBG) program, $100 million (3.3 percent) less than FY 2015 and the House bill, and a $100 million increase from the request.

Homeless and Supportive Housing Programs

The Senate Appropriations Committee proposes funding McKinney-Vento Homeless Assistance Grants at $2.235 billion, a $100 million (4.7 percent) increase from FY 2015 funding, but $245 million (10 percent) decrease from the request. The House bill provides $2.185 billion. The Senate bill includes a $1.918 billion set aside for the continuum of care and rural housing stability assistance programs, which is about $277 million less than the request, and at least $250 million for Emergency Solutions Grants, equal to the request and the House bill.

The proposal provides $420 million for the Housing for the Elderly (Section 202) program, equal to FY 2015, and $6 million more than the House bill, but $41 million (9 percent) decrease from the request. The Housing for Persons with Disabilities (Section 811) program is funded at $137 million, a $2 million (1.56 percent) increase from FY 2015, but $15 million (10 percent) less than the House bill and $40 million (23 percent) less than the request. The budget would provide $330 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 equal to FY 2015 enacted funding level, but $5 million less than the House bill and $2 million less than 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 25 percent will come out of the assessment for one-time capitalization of 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. Projecting out from the last four quarters of Fannie Mae’s and Freddie Mac’s loan purchases, we estimate that the HTF will receive $156 million and the Capital Magnet Fund will receive $84 million. $156 million coincidentally happens to be the minimum amount necessary for each state, DC and Puerto Rico to receive the statutory minimum allocation of $3 million. If Housing Trust Fund receives less than $156 million, HUD will need to release an alternative allocation formula, which could delay allocation of funding to the states.

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 $65 million, which is $15 million (7.7 percent) less than the FY 2015 enacted level, and $185 million (75 percent) less than the request, but $45 million more than the House bill.

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 neither the Senate bill nor the House bill approved 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 neither the Senate nor the House bill approved this request.

Next Steps

It is unclear if or when the full Senate will consider the FY 2016 THUD bill. Senate Democrats have threatened to filibuster the FY 2016 bills because they adhere to the Republican FY 2016 budget resolution and the BCA nondefense discretionary spending caps. Many Senate Democrats have urged the Republican leadership to consider legislation to increase the spending caps, similar to a deal that former House Budget Committee Chairman Paul Ryan, R-Wis., and former Senate Budget Committee Chairwoman Patty Murray, D-Wash., negotiated in 2013.

Absent a deal to increase the budget caps, it appears very likely that the Congress will consider a stop-gap funding bill, a continuing resolution to funding the government at FY 2015 levels after the fiscal year ends on Sept. 30. Final FY 2016 spending bills could also be combined with legislation to increase the federal debt ceiling, which the federal government is currently projected to meet sometime in November or December.