On November 17, Congress passed H.R. 2112, the minibus appropriations bill that includes three spending bills: Transportation, Housing and Urban Development (T-HUD), S. 1596; Agriculture, Rural Housing, and Food and Drug Administration, H.R. 2112; and Commerce, Justice, and Science, H.R. 2596 (see Memo, 11/11). The bill underfunds HUD and Rural Housing programs, cutting many programs deeply.
The conference committee approved its report on the bill on November 14. Thirty-seven of 38 members signed, with Senator Richard Shelby (R-AL) the only dissenting vote. The House approved the conference report on November 17 by a vote of 298 to 121. Later the same day, the Senate approved the report by a vote of 70 to 30. President Barack Obama signed H.R. 2112 into law on November 18.
H.R. 2112 cuts HUD funding by $3.7 billion or 9% below FY11 funding levels, providing only a net total of $37.4 billion for HUD programs.
The bill provides $18.91 billion for the Tenant-Based Rental Assistance (TBRA) account. The bill underfunds TBRA contract renewals, providing $17.24 billion in FY12. The conference committee increased funding for this line item by $199 million over the House bill and $99 million over the Senate bill. The Center on Budget and Policy Priorities (CBPP) estimates that the bill short-funds voucher contract renewals by $93 million. The contract renewal funding falls short of HUD’s reported estimate for contract renewals by more than $130 million. This shortfall could result in the loss of between 12,000 and 24,000 vouchers, according to a November 18 report by CBPP.
Public housing agencies (PHAs) can use net restricted assets to cover voucher shortfalls. However, the bill rescinds $650 million in voucher program net restricted assets. The Senate proposed rescinding voucher funds by $750 million. HUD officials reported that a rescission of that level would have left PHAs with less reserve funding than a minimum of one month, which the Senate version of the bill set as a floor for reserve funding levels. The final bill does not include language requiring the HUD Secretary to preserve PHAs’ reserves at no less than one month.
H.R. 2112 cuts voucher administrative fees by 3% below FY11 and 1% below the President’s request. Administrative fees were also cut in FY11, and two years’ funding cuts could result in PHAs issuing turned over vouchers at a slower rate. Over time, this could result in the loss of vouchers by attrition.
While H.R. 2112 would not renew all current vouchers, consistent with the President’s request it does provide $75 million for new Veterans Affairs Supportive Housing (VASH) vouchers, or about 11,000 vouchers. This restores VASH funding to the FY10 level. In FY11, only $49 million was provided for new VASH vouchers.
Section 811 vouchers are funded at $112 million, 2% below the President’s request. In FY11, $114 million was provided for rental assistance in the Section 811 program, in part through the Section 811 account and in part through the TBRA account. In FY12, the full amount of rental assistance for the Section 811 program will be provided through TBRA vouchers.
The bill also provides $60 million for the Family Self-Sufficiency program, the amount requested by the President and level with FY11 funding. Tenant Protection vouchers are funded at $75 million, a 32% cut below FY11 but consistent with the Administration’s FY12 request. The bill provides a $10 million set-aside to provide Tenant Protection Vouchers to a wider population of tenants who would otherwise lose their affordable units (see article elsewhere in Memo). This provision was included in the Senate bill.
For the second consecutive year, the bill does not include funding for Homeless Demonstration Vouchers. The demonstration was funded in the Senate bill at $5 million but the House bill did not provide funding. The President requested $57 million for the program in FY12 and $85 million in FY11.
Project-Based Section 8
The Project-Based Rental Assistance (PBRA) program is funded at $9.34 billion, an amount lower than both the House Subcommittee and Senate-passed bills. The bill also rescinds $200 million from the Housing Certificate Fund used to supplement the PBRA contracts. HUD says that funding provided in the bill will allow it to renew all project-based contracts for 12 months.
The Public Housing Capital Fund is severely underfunded by H.R. 2112 at only $1.88 billion. This is 8% below the FY11 level and 22% below the President’s FY12 request. HUD calculates that public housing capital needs exceed $25 billion. The bill’s FY12 funding will limit PHAs’ ability to address even capital needs that will occur in the current fiscal year, which would cost $3.4 billion in FY12. Thousands of public housing residents will be at risk of living in substandard housing and tens of thousands of public housing units may be lost due to neglected capital repairs.
The bill provides $3.96 billion for the Public Housing Operating Fund but relies on HUD to offset the full amount of FY12 operating costs through PHA reserves. The bill authorizes HUD to offset no more than $750 million in reserve funding to supplement the operating fund. Although the House Subcommittee bill would have prohibited funding state public housing units that were converted to federal units with funding from the American Recovery and Reinvestment Act (ARRA), this provision was not included in the final bill. The bill also imposes new restrictions on PHA employee salaries that can be paid with funds from this bill.
The Choice Neighborhoods Initiative is funded at $120 million, 52% below the President’s requested funding level. In FY11, CNI was funded at $65 million as a set-aside within the HOPE VI account. The House subcommittee bill did not provide funding for either the HOPE VI program or CNI. The Senate bill provided $120 million for CNI and no funding for HOPE VI. The final bill includes no funding for HOPE VI but does require that at least $80 million of the $120 million of CNI funds go to PHAs.
Homeless Assistance Grants are level-funded at the FY11 level of $1.9 billion, 20% below the President’s FY12 request. Funding at this level will not allow HUD to fully enact HEARTH, for which HUD has just issued new rules (see article elsewhere in Memo). By not funding Homeless Assistance Grants at the level the President requested, at least 492,000 households experiencing homelessness will not receive housing assistance. On November 14, before the Conference report was issued, 47 members of the House of Representatives sent a letter to the T-HUD Appropriations Subcommittee Chair Tom Latham (R-IA) and Ranking Member John Olver (D-MA) urging them to increase funding for Homeless Assistance Grants in the conference report.
The most severe cut was to the HOME Investments Partnership program, the subject of investigation by the Washington Post and hearings in the House Financial Services Committee (see Memo, 5/20, 6/3, 11/4). HOME was cut to $1 billion from $1.6 billion in FY11, a 38% cut. Based on HUD’s latest public data on affordable housing units constructed from FY10, this cut will result in 31,000 fewer affordable homes, which could include over 9,000 affordable rental units and nearly 8,000 fewer rental subsidies.
The bill includes new oversight and monitoring requirements for the HOME program. One requires that homeownership units that are not sold within six months of a project’s completion be turned into rental units. Another provision sets a four-year limit on the length of time between commitment of funds and project completion. If a project is not completes within four years, the funds are to be repaid, although HUD would have flexibility to approve a one-year extension.
The bill cuts the Section 202 Housing for the Elderly program by 51% below the President’s funding level, funding Section 202 at $374 million. While this is only 6% below the FY11 funding level, the program was cut last year and the FY12 funding level is 55% below the FY10 level. The bill does not provide enough funding for new construction, which could mean 2,500 to 3,000 new units for elderly households will not be developed.
The Section 811 Housing for Persons with Disabilities program is increased by 10% over FY11 funding to $165 million, partially restoring cuts made in FY11. The final bill directs the HUD Secretary to conduct the Project Rental Assistance Demonstration as authorized by 2010’s Frank Melville Supportive Housing Investment Act. Under the demonstration, developers can combine rental assistance from Section 811 and other capital subsidy programs, making it easier to provide supportive housing within developments and increase the number of units provided through Section 811.
The Housing Opportunities for Persons with AIDS (HOPWA) program is cut to $332 million, slightly below both the FY11 funding level of $334 million and the President’s request of $335 million.
Community Development Fund
The bill cuts the Community Development Fund to $3.3 billion, 6% below FY11 and 13% below the President’s request. The Community Development Block Grant (CDBG) formula grants are cut to $2.95 billion, 12% below FY11 funding and 20% below the President’s request. The Senate bill would have provided funding for a Sustainable Communities Initiative, Regional Integrated Planning Grants and Community Challenge Grants, but the final bill drops these provisions. It does include provisions from House bill that prohibits CDF funding for the Economic Development Initiative and the Rural Innovation Fund. The bill allows 20% of CDBG funding to be used for administrative, planning and management purposes, consistent with prior years and with the Senate bill. The House bill would have reduced administrative funding to 10%. The House bill also would have provided $7 million for use in insular areas but this provision was dropped from the final bill.
The bill also provides $400 million for emergency disaster grants. This funding was added to the Senate bill through an amendment offered in the Appropriations Committee mark up and was originally was not funded from within the HUD bill. The Conference Committee, however, decided to offset $300 million of this funding from within the T-HUD bill in the CDBG account.
Other HUD Programs
Funding for the Housing Counseling program is partially restored to $45 million, 49% below the President’s request. All funding for counseling was cut in FY11.
The Self-Help Homeownership Opportunity Program (SHOP) is funded at $13 million, 50% below FY11. The President’s budget did not include funding for the program in FY12. The Native American Housing Block Grant was level funded at $650 million, 7% below the President’s request. The Native Hawaiian Housing Block Grant was level funded at $13 million, a 30% increase over the President’s request.
The Healthy Housing and Lead Hazard account is funded at $120 million, slightly above FY11 funding but 14% below the President’s request of $140 million. The Healthy Homes Initiatives grants are funded at $10 million, 50% below the FY11 level. The bill includes language requiring that grant applicants for areas with the highest lead paint abatement needs certify they have adequate capacity to carry out grant activities.
The Fair Housing and Equal Opportunity program is funded at $70.8 million, 1% below FY11 funding and 2% below the President’s request. The Fair Housing Initiatives Program grants are funded at $42.5 million, consistent with FY11 funding and the President’s request. The bill also includes funding for Fair Housing limited English proficiency activities, a provision that was not included in the House bill.
HUD’s Policy and Research Development funding is cut by 4% below FY11 funding levels and 19% below the President’s request. The bill also newly requires a minimum 50% match for any cooperative agreements for policy and research activities funded with non-HUD funds.
Rural Housing Services
H.R. 2112 reduces Rural Housing funding for rental programs below the FY11 funding level. Section 521 Rural Rental Assistance is funded at $904 million, slightly below the President’s FY12 requested funding level, but a cut of 5% below FY11. The Section 515 Rural Rental Housing program is funded at $64.5 million, 32% below the President’s FY12 request and a 7% cut below FY11 funding.
H.R. 2112 does include several positive HUD policy provisions including a Rental Assistance Demonstration, expanded use of tenant protection vouchers and preservation provisions (see next article in Memo).
View the H.R. 2112 Conference Report: http://www.gpo.gov/fdsys/pkg/CREC-2011-11-14/pdf/CREC-2011-11-14-pt1-PgH7433-3.pdf#page=1
View CBPP’s report: http://www.cbpp.org/files/11-18-11-IPmemoHUDapprops.pdf
View the Homeless Assistance Letter: http://nlihc.org/doc/House_Homeless_Assistance_Ltr_11-14-11.pdf