Ending months of uncertainty and last minute threats of opposition from the right and the left, first the House and then the Senate passed the FY16 omnibus spending bill on Friday, December 18. The bill covers all 12 appropriations bills, including funding for Transportation, Housing and Urban Development, and Related Agencies (THUD). President Barack Obama signed the bill into law on the same day.
The bill passed with bipartisan support in both chambers. In the House, the vote was 316-133 (166 Democrats and 150 Republicans in favor, and 18 Democrats and 95 Republicans opposed). The spending bill was combined with the tax extender bill in the Senate (see article on tax extenders in this Memo) and passed by a vote of 65-33 (38 Democrats, 26 Republicans, and 1 Independent voting yes, and 6 Democrats, 26 Republicans, and 1 Independent voting no).
Overall HUD programs fared better than they did in the earlier House and Senate bills, but did not receive their fair share of the $33 billion in additional funds made available for non-defense discretionary programs by the “Balanced Budget Act” that lifted the cap on appropriations imposed by the sequester.
After being threatened with near elimination in the Senate Committee’s THUD bill and with a $133 million cut in the House bill, HOME was funded at $950 million in the omnibus, a $50 million increase from FY15. The omnibus includes language within the HOME account that allows community land trusts to exercise and hold purchase options, rights of first refusal, and other preemptive rights to purchase housing to preserve affordability. The bill also provides $3.06 billion for Community Development Block Grants, $6 million less than in FY15.
The omnibus bill funds the overall Housing Choice Voucher program at $19.629 billion, providing $17.681 billion for voucher renewals and $60 million for new Veterans Affairs Supportive Housing (VASH) vouchers. The voucher renewal level in the omnibus bill is less than it was in the earlier House and Senate bills. It is based on new assumptions from HUD of lower than expected program cost increases for FY16.
While the $60 million for the VASH program could result in approximately 8,000 new vouchers, the lack of funding for additional new vouchers is troubling. The President had requested sufficient funding to restore the vouchers lost due to the 2013 sequester in his FY16 proposed budget. The bill that was passed by the Senate Appropriations Committee included new Family Unification Program (FUP) vouchers, as well as vouchers to assist victims of domestic violence. But no funds were provided in the final THUD bill for new vouchers beyond the VASH program. The omnibus provides a $120 million increase for voucher program administrative fees for a total of $1.65 billion in FY16.
Funding for the public housing operating and capital funds remains woefully inadequate, but the omnibus did increase the two public housing funding accounts from FY15 levels. The operating fund went from $4.44 billion in FY15 to $4.5 billion for FY16, and the capital fund was increased from $1.875 billion in FY15 to $1.9 billion in FY16. The omnibus agreement also directs HUD to implement a single inspection protocol for public housing and voucher units in FY16.
The bill does not increase the cap on the number of public housing units that can participate in HUD’s Rental Assistance Demonstration (RAD) as HUD had requested. (RAD allows public housing agencies to shift subsidies from the two public housing funds to either project-based rental assistance or project-based vouchers.) The bill does includes $125 million for the Choice Neighborhoods Initiative and reserves at least $75 million of these funds for public housing agency (PHA) applicants.
In a major policy change, the omnibus spending bill allows the Moving to Work (MTW) demonstration to expand to another 100 high performing PHAs over seven years. The Senate Committee’s THUD bill would have increased the MTW demonstration from the current 39 PHAs to an additional 300 agencies, with almost no reforms or improvements to the controversial program.
The MTW expansion is to occur in tranches, each of which will be overseen by a research advisory committee to ensure the demonstrations are evaluated with rigorous research protocols, including quantitative analysis and comparisons to control groups. Each year’s cohort of MTW sites will be directed by the HUD Secretary to test one specific policy change; other policy changes could be implemented with the Secretary’s approval. The omnibus restricts MTW agencies’ ability to limit voucher holder portability rights to those with waivers, but such waivers must have exceptions for requests from voucher holders to move for reasons related to employment, education, health, and safety. The evaluation and portability changes are significant improvements to MTW, but the omnibus bill does not include other important reforms such as retaining extremely low income targeting standards and protecting voucher funds from being stockpiled or redirected by MTW agencies.
The 100 new MTW sites must be agencies of specific sizes with an emphasis on small and mid-size PHAs. No fewer than 50 must administer up to 1,000 combined public housing and voucher units, no fewer than 47 must administer between 1,001 and 6,000 combined units, and no more than three can administer between 6,001 and 27,000 combined units.
For the existing 39 MTW agencies, the omnibus bill requires the HUD Secretary to extend current MTW agreements until the end of each agency’s fiscal year 2028 under current agreement terms “except for any changes to such terms and conditions otherwise mutually agreed upon by the Secretary and any such agency.” This language gives current MTW agencies a very strong position in their ongoing negotiations with HUD over the extension of current agreements, which expire in 2018.
The bill maintains level funding for the Family Self-Sufficiency (FSS) program at $75 million. The bill notes that these funds are to support service coordinators for public housing and voucher households, but clarifies that project-based rental assistance residents may also participate in FSS programs.
The omnibus provides $10.62 billion for the renewal of Project-Based Rental Assistance contracts, compared to the $9.73 billion in the FY15 appropriation. This increase was required because of a shift to calendar year funding in FY15 that resulted in a sizeable savings for FY15, but an increased need for FY16. The $10.62 billion in the omnibus appears to be about $200 million lower than the amount needed for the latest renewals, but both HUD and Hill offices assert that this level of funding is expected to be sufficient to renew all contracts for calendar year 2016 because some funds are expected to be carried over from 2015.
The omnibus continues to include critical provisions for the preservation of project-based Section 8 properties and the protection of tenants in these properties. The provisions include authority to transfer a project-based contract to another property and to maintain project-based assistance when managing a troubled property. The bill includes protocols for dealing with project-based properties that have low Real Estate Assessment Center (REAC) scores.
The omnibus bill funds HUD’s Homeless Assistance Grant program at $2.25 billion, $115 million more than in FY15. The President’s budget request sought $2.48 billion in FY16 to support efforts to end veteran homelessness in 2015, end chronic homelessness by 2017, and end homelessness for families, youth, and children by 2020. According to the National Alliance to End Homelessness, the omnibus funding level is sufficient to maintain existing capacity “in the face of rent increases and a small number of expiring multi-year grants, as well as provide approximately $65 million in increased Continuum of Care capacity to end homelessness.”
The bill funds the Fair Housing Initiatives Program at $39.2 million, compared to $40 million in FY15, and provides level funding for the Fair Housing Assistance program at $24 million. The bill also provides a $4 million increase for salaries and expenses of the Office of Fair Housing and Equal Opportunity “for compliance and implementation efforts associated with the new affirmatively furthering fair housing rule.”
The final bill does not include any of the three anti-fair housing provisions that were in the House-passed THUD bill. The House bill would have prohibited HUD from implementing, enforcing, or administering the Affirmatively Furthering Fair Housing rule or its related Affirmatively Furthering Fair Housing Assessment Tool; prohibited HUD from implementing or enforcing the disparate impact standard of the Fair Housing Act; and prohibited any Fair Housing Initiative Program (FHIP) funds be used for the Private Enforcement Initiative testing and investigation grants.
The omnibus includes a $16 million increase to $151 million for the Section 811 Housing for Persons with Disabilities program to maintain existing Section 811 units. Together with $1.4 million in residual receipts, recaptures and unobligated balances, this funding is expected to fully support all project-based renewals and amendments. The bill explicitly prohibits the use of these funds for any new development. The omnibus continues to contain a provision allowing the HUD Secretary to authorize the transfer of some or all project-based assistance, tenant-based assistance, capital advances, debt, and statutorily required use restrictions from housing assisted under the Section 811 program to other new or existing housing.
The omnibus bill provides $433 million for Section 202 Housing for the Elderly, almost $13 million more than in FY15. When coupled with the program’s $20.3 million in carryover funds, this amount is expected to be sufficient to fund contract renewals and amendments and a $77 million service coordinator program, but not for any new Section 202 units.
The bill includes a $5 million increase to the Housing Opportunities for Persons with AIDS program to $335 million, and level funding of HUD’s Office of Healthy Homes and Lead Hazard Control at $110 million, which the House bill would have cut to $75 million.
The omnibus provides much needed increases for USDA Rural Development rental programs. The bill allocates $1.38 billion for Section 521 Rental Assistance, compared to $1.167 billion in FY15, which was insufficient to meet renewal needs. The bill allows USDA to use FY16 funds to make up for any renewal funding shortfalls from FY15. The omnibus also increases funding for the rural housing voucher program from $7 million to $15 million and for USDA’s multifamily preservation demonstration from $17 million to $22 million. The bill allows for moving resources between these two accounts in order to promote tenant protections and preservation. Funding for the Section 523 Self-Help program remains level at $27.5 million. The funding increases in the omnibus are important victories for rural multifamily residents and were championed by the National Housing Law Project and the National Housing Trust, as well as members of the Preservation Working Group, which NHT coordinates.
See the NLIHC budget chart at: http://nlihc.org/sites/default/files/FY16HUD-USDA_Budget-Chart.pdf
Read the Omnibus spending bill at: http://docs.house.gov/billsthisweek/20151214/CPRT-114-HPRT-RU00-SAHR2029-AMNT1final.pdf