The House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies (THUD) held its second hearing on HUD’s FY15 budget request on April 10 (see Memo, 4/4). HUD Secretary Shaun Donovan was the sole witness.
Subcommittee Chair Tom Latham (R-IA) opened the hearing by asking Secretary Donovan to address the “whopping $2.8 billion” difference between HUD’s FY15 estimate of receipts for the Federal Housing Administration (FHA) and the Congressional Budget Office’s (CBO) estimate of FHA receipts. FHA receipts are used to offset some of HUD’s annual expenses. The accuracy of the estimate is crucial as it dictates how much general revenue the subcommittee has to appropriate to cover the rest of HUD’s programs.
Secretary Donovan explained that HUD “made two very significant changes in premiums” for FHA products in the last year that CBO did not incorporate in its estimate. Despite anticipating lower FHA activity volume, HUD’s changes will result in higher premiums.
Mr. Latham urged the Secretary to address these differences with CBO, saying that a $2.8 billion difference in estimates “will have dire consequences.” Secretary Donovan replied that he believes CBO will score HUD’s FY15 budget request using HUD’s FHA premium changes. CBO is expected to release its score of HUD’s FY15 budget request during the week of April 14.
Ranking Member Ed Pastor (D-AZ) and Representative Charlie Dent (R-PA) questioned the Secretary about HUD’s proposed changes to the Community Development Block Grant (CDBG) program. Mr. Pastor criticized HUD’s proposal to fund CDBG at the “lowest level since 1976.”
Secretary Donovan said that HUD strongly supports reauthorization of CDBG. He reported that in the last year HUD launched the “Moving CDBG Forward” initiative to gather feedback on the program and develop recommendations to improve the program. HUD will seek three priority changes for CDBG: targeting funds to reach areas most in need, streamlining the program, and increasing accountability. Secretary Donovan said that HUD is preparing proposed legislative changes that will be submitted to Congress in six to eight weeks, as well as regulatory changes that HUD can make without Congressional authorization.
Representative Jaime Herrera-Beutler (R-WA) asked Secretary Donovan if HUD’s proposal to align the Project-Based Rental Assistance (PBRA) contract renewal cycle with the calendar year would “help end the uncertainty felt by the owners and managers of these properties?” The Secretary responded, “Absolutely,” and that HUD would not have proposed the shift if that goal could not be achieved.
Ranking Member on the House Appropriations Committee Nita Lowey (D-NY), asked the Secretary to discuss the Rental Assistance Demonstration (RAD). She said New York public housing agencies (PHAs) are using RAD with great success. Secretary Donovan reiterated what he said at the last House Subcommittee hearing that expanding the RAD cap would allow an additional 180,000 units of public housing to be converted and would leverage $6 billion in funding. RAD projects that HUD has already approved will create 34,000 jobs, primarily in construction. He also noted that to HUD’s surprise, RAD is being used disproportionately by smaller PHAs.
Representatives Mike Quigley (D-IL) and David Price (D-NC) asked about the Housing Opportunities for Persons with AIDS (HOPWA) program. Mr. Quigley wanted to know if HUD would be proposing any further changes to HOPWA. Secretary Donovan said that HUD will not propose changes beyond those in the FY15 budget request. HUD proposes to change the HOPWA formula to focus on areas with the greatest need. The proposed formula would be based on the number of people living with HIV (rather than cumulative AIDS cases), Fair Market Rents (FMRs), and the poverty rate in a community.
Mr. Price praised HUD for proposing to replace a formula that “simply doesn’t match the right amount of funding to the real need today around the country.” Mr. Price said he would urge the Subcommittee to include report language updating the formula in the HUD appropriations bill. The Secretary added that HUD also is trying to “create an alignment” between the offices that administer HOPWA and homeless assistance funding to help HUD better address the “increasing overlap between those populations.”
View Secretary Donovan’s testimony: http://appropriations.house.gov/calendar/eventsingle.aspx?EventID=374562