On March 7, HUD released its Congressional Justifications (CJ) that provide details on President Barack Obama’s FY15 HUD budget request sent to Capitol Hill on March 4 (see Memo, 3/7).
Tenant-Based Rental Assistance
HUD’s budget request of $20.05 billion for tenant-based rental assistance (TBRA) relies in part on policy changes proposed in the FY15 request, which HUD expects to produce immediate savings. For example, HUD proposes changing the threshold for deducting medical expenses from 3% of income to 10% of income but does not propose a concurrent increase in the standard deduction for persons with disabilities or for those who are elderly. This change, without the standard deduction increase, is expected to save $30 million in the TBRA account.
NLIHC opposes this increase unless it is imposed concurrently with an increase to the standard deduction for elderly and disabled households. Otherwise, rent increases could be burdensome for households with medical or related care costs of more than 3%, but less than 10% of family income.
On the proposed increase for Administrative Fees, HUD says the $1.7 billion requested represents an 83% proration, i.e., it provides for 83% of funds needed to operate the program, an increase over the FY14 proration of 75%. HUD expects to release the results from its administrative fee study in late 2014.
HUD also proposes allowing “high capacity Indian tribes and tribally designated housing entities (TDHEs)” to administer Veterans Affairs Supportive Housing vouchers to address veteran homelessness on Indian lands. HUD reports that while Native Americans are .07% of the veteran population, they are 2.5% of the homeless veteran population. This proposal requires a legislative change because TDHEs are prohibited from receiving housing vouchers.
Public Housing Operating Fund
The CJ for the public housing operating subsidy, which provides the operating funding for the nation’s 1.1 million public housing units, reports that the Administration's request of $4.6 billion would provide an 87% proration. The request reflects an anticipated $63 million in FY15 savings from changes made to HUD's flat rent policy in the FY14 appropriations bill, as well as $23 million in savings in FY15 from HUD's proposed increase of medical and related care expense exclusion threshold from 3% to 10%.
Again, HUD requests full fungibility between the public housing operating and capital funds in its budget request. Currently, only PHAs with fewer than 250 public housing units have this ability. For larger agencies, there is a firewall between the two accounts except to use up to 20% of capital subsidies for operating needs.
The CJ also discusses HUD's efforts to better understand how many formerly homeless people are able to obtain housing from PHAs and efforts to reduce energy waste in public housing properties. The CJ contains a detailed breakdown of the costs that total the $4.6 billion request, including the $25.3 million in operating funds that are to go to resident participation activities.
Public Housing Capital Fund
The CJ for the public housing capital fund provides background information on the Administration's request of $1.92 billion, $50 million more than the FY14 enacted level.
The Jobs Plus proposal set-aside within the capital fund would target $25 million to increase employment opportunities and earnings. This would expand the Family Self Sufficiency program, provide additional funds for public housing agencies to partner with local Workforce Investment Boards, and implement a possible earned income disregard for more tenants. HUD’s FY14 appropriations bill included a $15 million Jobs Plus demonstration.
The CJ also describes the $5 billion HUD seeks this year to manage its judicial and administrative receiverships of public housing agencies. HUD expects to end receiverships of the Detroit Housing Commission, the Housing Authority of New Orleans, the Virgin Islands Housing Authority, and the East Saint Louis housing authority in 2014.
The CJ touts HUD’s focus on increasing the number of occupied public housing units, even with a $26 billion capital needs backlog. HUD reports that between FY12 and FY13 the total number of occupied public housing units increased by approximately 10,000 through the development of new units and the rehabilitation of previously unoccupied units. HUD notes that this number may be “partially offset” by the removal of units from the public housing inventory. In the CJ on the Rental Assistance Demonstration program, HUD states that the public housing program continues to lose more than 10,000 annually units through demolitions and dispositions.
On the Choice Neighborhoods Initiative (CNI), HUD reports that the $120 million request CNI in FY15 could fund ten CNI planning grants and three to four implementation grants. HUD also reports that it has contracted with the Urban Institute to evaluate the first five implementation grants, made from the first round of CNI grants in FY10. HUD wants CNI to be fully authorized and requests the ability to re-purpose recaptured HOPE VI funds for the CNI program.
Rental Assistance Demonstration
HUD’s Rental Assistance Demonstration (RAD), authorized in the FY12 HUD appropriations bill, allows public housing and certain other HUD-assisted units to convert to Section 8 project-based or tenant-based assistance contracts to facilitate preservation of these units. The FY12 authorization capped the number of public housing units that can convert to 60,000. In its FY15 request, HUD is seeking to remove the cap to allow more public housing agencies to convert subsidy types. HUD has received applications to convert another 115,000 units under RAD, exceeding the statutory 60,000 unit cap. The request also seeks $10 million to specifically expand RAD to public housing properties in high-poverty neighborhoods in which the Administration is supporting comprehensive revitalization. While there is no funding for the RAD program, the $10 million would be dedicated to public housing units for which conversion to a Section 8 contract is infeasible without additional subsidy. The request also seeks authorization to allow Section 8 Mod Rehab Single Room Occupancy projects to convert to RAD, potentially impacting 400 projects with 13,000 units.
Project-Based Rental Assistance
The CJ makes the case for HUD to move project-based rental assistance (PBRA) contracts, which serve 1.2 million households, to calendar-year cycles in FY15. This approach mirrors the shift to calendar year funding for housing choice voucher renewals and public housing funding, and should result “in more predictable funding cycles in future years.” There would be no change in contract terms, only a shift in the timing for funding the contract. The Administration's FY15 proposal would shift from prior practice and provide funding only to January 2016, and create a one-year decrease in PBRA funding needs that would free up over $1 billion in budget authority that can be used for other HUD priorities in FY15. However, this also creates a need to boost PBRA funding by approximately an additional $1.5 billion in FY16.
Unless new resources are provided for this jump, HUD would need to reduce funding for other programs or reduce PBRA program expenses by short-funding or terminating contracts. Advocates supporting the calendar year funding proposal should also be educating Congress about the anticipated jump in funding needed in FY16 to sustain existing contracts.
The FY15 request would also expand the Family Self-Sufficiency program to PBRA properties, and extend the Mark to Market program into 2018.
The CJ also describes the “spillover” benefits that project-based rental assistance contracts have on local communities and economies, specifically noting the $460 million in property taxes paid by project-based owners to municipalities, and the 55,000 jobs the program will provide annually.
There is a short description of the policy proposals requested by HUD for the project-based Section 8 program in FY15. HUD is requesting a “pay for success” demonstration to allow HUD to enter multi-year agreements to repay private investors who provide upfront funding for energy efficiency retrofits of HUD-assisted housing. HUD is also seeking a policy change that would facilitate the refinance and recapitalization of projects that have use agreements imposed by the Low Income Housing Preservation and Resident Homeownership Act (LIHPRHA). The proposal, would “align owner distribution and prepayment policies in LIHPRHA-governed properties with other PBRA-assisted properties in order to facilitate preservation transactions.”
HOME Investment Partnerships Program
HUD proposes policy changes to the HOME program, including allowing funds that are recaptured from Community Housing Development Organizations (CHDOs) to be reallocated by formula, and allowing state-wide nonprofits to be designated as CHDOs.
HUD proposes to eliminate the $335,000 qualification threshold for years when the HOME appropriation is below $1.5 billion and instead maintain $500,000 as a single qualification threshold for jurisdictions regardless of the amount appropriated for HOME. HUD also proposes to change the current “grandfathering” allowance that allows jurisdictions that fall below this threshold three out of five years to remain eligible for direct HOME formula funds and would instead grandfather jurisdictions for “5-year periods running concurrently with their consolidated plan period.” HUD says this would “ensure a degree of funding stability” for jurisdictions.
The Administration also proposes an exception to the requirement to provide 30 day notice of eviction if there are extreme safety concerns.
Homeless Assistance Grants
The President requested $2.4064 billion for Homeless Assistance Grants, including $2.184 billion for the Continuum of Care Program, $215 billion for Emergency Solutions Grants, and $7 million for Homeless Management Information System Technical Assistance. The overall request is any increase of $301.4 million over the level enacted in FY14.
HUD notes that the Federal Emergency Management Agency (FEMA) at the Department of Homeland Security has requested that the Emergency Food and Shelter (EFS) program, currently housed at FEMA, be moved to HUD’s Office of Special Needs Assistance Programs. FEMA is requesting $100 million for EFS for FY15.
HUD also requests legislative language, first included in the FY14 THUD appropriations bill, to authorize nonprofit organizations to administer rental assistance programs under the Continuum of Care program.
Section 811 Housing for Persons with Disabilities
The FY15 request for the Section 811 program is $160 million, an increase of $34 million over the FY14 enacted level; $135 million is requested for Project Rental Assistance Contracts (PRAC) and Project Assistance Contract (PAC) renewals and amendments to support all units that are currently assisted.
The request includes $25 million for new PRA awards that would support almost 900 integrated supportive housing units. HUD is designing an evaluation of the Section 811 Project Rental Assistance (PRA) demonstration program, which was implemented for the first time in 2012 following the passage of the Frank Melville Supportive Housing Investment Act of 2010. HUD notes that with past appropriations, HUD could only fund thirteen states, despite competitive applications from many other states and great demand.
The Administration notes that the 811 program helps states comply with the Supreme Court’s Olmstead decision that requires that people with disabilities live in the most integrated setting appropriate to their needs.
Section 202 Housing for the Elderly
The Administration requested $440 million for the Section 202 program, an increase of $56.5 million over the FY14 enacted level. The request includes $20 million for new Elderly Project Rental Assistance (PRA) Awards, $70 million for Service Coordinator agreement renewals, and $350 million for project rental assistance contract (PRAC) renewals.
The Administration has asked to renew the authority granted in the FY14 THUD appropriations bill “to allow HUD to make more funds available for expansion activities through residual receipts collections, recaptures, and other unobligated balances, and to fund demonstration programs that test housing with services models that fund supportive housing units aligned with health care priorities.”
Within the $20 million for the Elderly PRA awards, HUD intends to incorporate language from the FY14 THUD bill that would allow awarding of funds through state housing agencies.
Housing Opportunities for Persons with AIDS (HOPWA)
The Administration requested $332 million for the HOPWA program, an increase of $2 million over FY14. In keeping with President’s National HIV/AIDS strategy, the President proposes updating the HOPWA funding formula to better reflect current needs. HUD anticipates sharing the proposed revised formula in Spring 2014. The revised formula will:
- be based “CDC data on persons living with HIV rather than cumulative AIDS cases,”
- incorporate “local housing costs and poverty rates,”
- expand “eligible activities to include new short and medium-term housing interventions as cost-effective options for meeting the diverse stabilization needs of vulnerable households, including individuals and families living with HIV/AIDS,” and
- align the “percentage of HOPWA grant amounts that may be used for administrative expenses with homeless assistance grant programs (10% of project sponsors’ awarded amount and 6% for grantees).”
The President proposes that grantees eligible for HOPWA formula funds prior to the change in formula would remain eligible. The changes would be phased in over three years, and over the phase in period “grantees will not lose more than 10% of project sponsors’ awarded amount and 6% for grantees.”
The request also “carries forward HUD’s authority to honor agreements between cities that are initially designated to be HOPWA formula grant recipients and their state, giving the state the right to assume the grant responsibility and make other allocation adjustments.”
Community Development Block Grant (CDBG)
The Administration requests $230 million less funding in FY15 for the CDBG program than the FY14 level of $3.03 billion, and outlines a number of policy provisions, which the Administration will include in a legislative proposal. The proposed changes would help grantees target funding resources to areas of greatest need, enhance accountability, synchronize program cycles with the Consolidated Plan cycle, reduce the number of small grantees, and increase options for regional coordination, administration, and planning to achieve cost savings. HUD reports that through a series of listening sessions on CDBG, nine areas for reform were identified: OneCPD, grantee participation thresholds, synchronizing plans and cycles, eligible activities, economic development, non-financial performance incentives, incentive fund/performance set-aside, performance and compliance sanctions, and green building standards.