Correction issued on 1/17: In the 1/16 special edition of Memo, NLIHC reported that the $15 million provided for the Jobs Plus Pilot would be set-aside from the Resident Opportunity and Self-Sufficiency (ROSS) program. The Jobs Plus Pilot would receive $15 million in funding from the Public Housing Capital Fund, not from the ROSS program. The ROSS program would receive $45 million, as reported, and the HUD Secretary would be allowed to set aside additional funding from the ROSS program for service provision in the Jobs Plus Pilot.
FY14 THUD and Rural Housing Appropriations Bills Released
On January 13, Congressional appropriators released the FY14 omnibus spending package. The House of Representatives passed the bill on January 15 and the Senate is expected to pass the bill before January 18 when the Continuing Resolution funding the government expires.
The omnibus includes full bills for all 12 appropriations subcommittees, including the Transportation, Housing and Urban Development, and Related Agencies (THUD) bill and the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies bill.
The THUD bill provides funding that represents a compromise between the funding levels of the House THUD Subcommittee passed bill and the Senate Appropriations Committee passed bill. It appears that appropriators attempted to restore HUD program funding to FY13 pre-sequester levels, though they were not able to achieve this for all programs. USDA rural housing funding remains relatively static aside from a substantial increase in Section 521 Rental Assistance funding.
Tenant-Based Rental Assistance (TBRA)
The Tenant-Based Section 8 account would be funded at $19.17 billion, an amount approximately half way between the Senate proposal of $19.52 billion and the House proposal of $18.61 billion. This includes $17.36 billion for voucher renewals. This funding level is likely sufficient to renew all vouchers currently in use. The Administration requested $19.98 billion, which would have funded all vouchers in use as of December 2012, preventing the loss of vouchers from sequestration, which was implemented in 2013.
The omnibus bill would increase funding for Tenant Protection Vouchers to $130 million, nearly doubling the post-sequester funding level of $71 million. The Senate had proposed $150 million for Tenant Protection Vouchers and the House had proposed funding at $75 million, level with FY13 and FY13 pre-sequestration levels. Tenant Protection Vouchers are used to protect tenants impacted by the relocation or replacement of HUD-subsidized home. The bill adds the Choice Neighborhood Initiative program to the list of programs under which tenants are eligible for Tenant Protection Vouchers. In FY12, residents impacted by redevelopment associated with the Rental Assistance Demonstration were added to the list of eligible protected tenants, contributing to the need for additional funds.
The Section 811 Mainstream Vouchers for People with Disabilities would be funded at $107 million, level with the FY13 post-sequester funding. The President, the Senate, and the House each proposed funding the program at $111 million, roughly level with FY13 pre-sequester funding.
The bill would provide $75 million for 10,000 new Veterans Affairs Supportive Housing (VASH) vouchers, level with FY13 and FY12 funding. VASH vouchers were not subject to sequestration in FY13.
Administrative fees would also be increased to $1.5 billion, $125 million more than the FY13 pre-sequester funding levels. The President and the Senate proposed increasing administrative fees to $1.68 billion but the House bill would have provided only the FY12 funding level of $1.35 billion.
The bill also would allow HUD to offset voucher funding allocations to public housing agencies (PHAs) based upon an agency’s level of net restricted assets, including reserves. The Secretary would be required to apply any offset funding, up to $200 million, to prevent termination of rental assistance because of a PHA funding shortfall. This provision continues to offer protection against voucher terminations that were included as a set aside of funds in the FY13 Continuing Resolution.
The Family Self-Sufficiency program would not be funded as part of the TBRA account and would instead be funded as a standalone account at $75 million in FY14. The bill would allow the Secretary to waive existing requirements in order to create a unified self-sufficiency program for multiple rental assistance programs.
The bill would provide $4.4 billion for the Public Housing Operating Fund, $200 billion below the President’s request and Senate proposal of $4.6 billion and more than $100 million above the House proposed funding level of $4.26. Providing $4.6 billion would have restored the Operating Fund to the FY11 funding level. The FY14 allocation is less than the amount needed to fully fund public housing operations and PHAs will receive pro-rated amounts for their operating subsidies.
The Public Housing Capital Fund would be funded at $1.87 billion, level with FY13 pre-sequestration funding and FY12 funding. The President and the Senate had proposed funding the Capital Fund at $2 billion, while the House proposed only $1.5 billion in FY14 funding.
The Resident Opportunity and Self-Sufficiency (ROSS) program would be funded at $45 million, $5 million below funding in recent fiscal years and below the Senate’s proposal. The Administration has not sought funding for the ROSS program in its last two budget requests, instead proposing other initiatives to provide services to residents. One of these initiatives, Jobs Plus Pilot, is funded by the FY14 bill.
The bill would create a Jobs Plus Pilot initiative modeled after the Jobs Plus Demonstration funded at $15 million from the Public Housing Capital Fund. The Secretary would be allowed to set-aside ROSS funding to be used in the pilot as well. Jobs Plus would offer competitive grants to groups of organizations including PHAs, workforce investment boards, and other agencies involved in employment and increasing earnings of PHA residents. As part of the pilot, the Secretary may allow PHAs to request exemptions from current rent and income limitation requirements. There is no evaluation component to this pilot.
Project-Based Rental Assistance (PBRA)
Project-Based Rental Assistance would be funded at $9.91 billion, an increase over FY13 pre-sequester funding but not at a high enough level for the Administration to end the practice of short funding contracts. In FY13, HUD ended its practice of providing full year contract renewals to property owners providing affordable units through PBRA and instead began offering short-term contracts for less than one year. This practice may cause property owners to lose faith in HUD’s ability to provide sustained funding and opt out of their contracts, causing a loss of affordable units.
The Administration requested $10.27 billion for PBRA in FY14 and later indicated that in order to end the practice of short funding, $11.3 billion was actually needed for FY14. The House proposed funding the account at only $9.4 billion while the Senate provided $10.72, an amount higher than the Administration’s original request.
A new provision would require surplus project funds to be deposited into an interest bearing residual receipts account that can be applied to PBRA program expenses. The bill would also apply receipts from the Housing Certificate Fund to supplement the PBRA account as in FY13; in FY12 these funds were used as general funding for HUD programs despite having been directed to the PBRA account in prior fiscal years.
HOME Investment Partnerships Program
The HOME program would be funded at $1 billion, level with FY13 pre-sequester and FY12 funding levels. The President proposed funding this program at only $950 million, the House proposed only $700 million, but the Senate requested $1 billion. The HOME program was cut significantly in FY12, when funding went from $1.6 billion in FY11 to $1 billion in FY12. In the FY12 Continuing Resolution, Congress included several provisions that required monitoring and adjustments to HOME program practices; these provisions would be replaced for projects with funding commitments after 2013, which would instead be subject to the final HOME rule.
Housing for Special Populations
McKinney-Vento Homeless Assistance Grants funding would be increased to $2.1 billion, more than $80 million above the FY13 pre-sequester level of $2.03 billion. The President proposed funding the program at $2.38 billion, the Senate proposed $2.26 billion, and the House proposed only $2.08 billion. This funding level would fully fund the Emergency Shelter Grants and could make up for some of the funding cut in FY13 by the sequester. However, the funding is not expected to be sufficient to cover the cost of renewals for the Continuum of Care program that would be underfunded due to sequestration cuts. The bill includes several provisions regarding the Continua of Care, including one that requires CoCs to meet performance requirements as determined by the Secretary, one that allows permanent housing to be administered by private nonprofit agencies, and a third that requires a report on the authority needed, effectiveness, and advantages or disadvantages of private nonprofits administering permanent housing.
Section 202 Housing for the Elderly would be funded at $384 million, an amount higher than the FY13 pre-sequester level and the House proposal of $375 but lower than the other proposals and FY11 funding. The President requested and the Senate proposed $400 million for Section 202 in FY14. The bill includes language that would allow the HUD Secretary to apply residual receipts from the Section 202 account to demonstration programs to test models that provide services to elders in housing in order to delay or reduce the need for nursing home care. Additional provisions would amend the Housing Act of 1959 by changing references to the Section 202 capital advances, which are no longer provided under the new structure. A provision would specify that funding could be provided for projects that identify a funded health and supportive services program and meet certain criteria.
The bill would reduce funding for the Section 811 Housing for Persons with Disabilities program to $126 million, an amount nearly $40 million below FY13 pre-sequester funding. The President, the House and the Senate each sought only $126 million in FY14 funding. The bill would allow the HUD Secretary to apply residual receipts from the Section 811 program to current program operations. The bill would also allow funds to be applied to project rental assistance for State housing finance agencies; in the FY12 Continuing Resolution, the Secretary was allowed to apply funds for a demonstration regarding project rental assistance and state housing finance agencies.
The Housing Opportunities for Persons With AIDS program would be funded at $330 million, $2 million below the President’s request and the Senate proposed funding level but $27 million above the House proposed funding level. HOPWA was funded at $332 million in FY13 pre-sequestration.
Community Development Fund
The omnibus would provide $3.1 billion for the Community Development Fund (CDF), with $3.03 billion for the Community Development Block Grants (CDBG). Funding for CDBG would be higher than the FY13 appropriation excluding disaster funding, the FY12 funding level, and the President’s FY14 request of $2.79 billion. In an effort to call attention to the insufficient FY14 THUD 302(b) allocation, the House THUD Subcommittee proposed cutting CDBG funding to $1.63 billion in FY14. The Senate proposed $3.15 billion. The omnibus funding level is roughly between the President’s funding request and the Senate proposal. The bill would not provide funding for Sustainable Communities Planning Grants; the Senate proposed funding these Grants at $75 million within the CDF account but the House and President did not include any FY14 funding for the program. The provisions in the FY12 omnibus that required oversight and reporting of CDBG are not included in the FY14 bill. A provision from prior appropriations bills that requires quarterly reporting to Congress on the CDF is amended to require only an annual report.
Additional HUD Programs
Congress would provide $90 million for the Choice Neighborhoods Initiative (CNI), a key component of the Administration’s Promise Zones Initiative, an effort to alleviate poverty through comprehensive community supports targeted to select low income neighborhoods. The Administration proposed funding CNI at $400 million, the Senate proposed $250 in funding, and the House did not include CNI funding in its FY14 proposal. The program was funded at $120 million in FY13, pre-sequestration cuts. At least $55 million must be awarded to PHAs.
Congress would provide FY13 pre-sequestration funding for several programs. The Native American Housing Block Grants would be funded at $650 million, level with the Administration’s request, the FY13 pre-sequester, and FY12 funding levels. The Senate proposed increasing funding to $675 million and the House proposed decreasing funding to $600 million in FY13. The omnibus would require that grants to Native Alaskan recipients be allocated to the same recipients as in 2005.
The omnibus would provide FY13 pre-sequester funding of $45 million for the Housing Counseling program. The President and the Senate sought $55 million for the program while the House proposed only $35 million in funding. The Housing Counseling program was funded at $87 million in FY10, was not funded in FY11, and was funded at $45 million in subsequent fiscal years.
HUD’s Office of Policy Development and Research would be funded at the FY13 pre-sequester level of $46 million. The President requested $50 million for the program, the Senate proposed $48 million, and the House proposed cutting funding to $21 million in FY14. Funds in the bill are not allowed to be applied to the doctoral dissertation grant program.
The omnibus would cut funding slightly for several programs. Fair Housing and Equal Opportunity (FHEO) would be funded at $66 million, below the FY13 pre-sequester and FY12 funding levels of $71 million. The President had requested $71 million for FHEO, the Senate proposed $70 million, and the House proposed cutting funding to $56 million in FY14. The Fair Housing Initiatives Program (FHIP) would be funded at $40 million, level with FY13 post-sequester funding.
The Healthy Homes program would be funded at $110 million, $10 million below the FY13 pre-sequester funding level, the President’s request, and the Senate proposal of $120 million. The House proposed cutting the program funding to $50 million for FY14.
The Self-Help Home Ownership (SHOP) program would be funded at $10 million, a cut of $4 million below the FY13 and FY12 funding levels. The House proposed $10 in funding while the Senate proposed level funding of $14 million. The President has not requested funding for the SHOP program in his last two budget requests, citing SHOP activities as an eligible use of HOME funding. The omnibus bill would require that a portion of funds be made available for capacity building by national rural housing organizations, instead of national organizations with rural expertise as was allowable in previous fiscal years.
The Native Hawaiian Housing Block Grants (NHHBG) would be funded at $10 million, $3 million below the President’s request, the Senate proposal, and funding in recent fiscal years. The House did not request funding for the NHHBG in FY14.
The Rental Housing Assistance account would provide an extension for expiring contracts of up to one year. Funds are rescinded from the Rent Supplement account to support other costs in the bill.
The Rental Assistance Demonstration would be extended by the bill until through calendar year 2014 for Rental Supplement/Rental Assistance Program projects but the bill does not increase the number of public housing units eligible for the demonstration, as HUD had requested.
The omnibus includes several general provisions that will impact program administration and costs, some of which have long been sought by advocates. In lieu of Congress passing authorizing legislation, appropriators incorporated select authorizing provisions in the FY14 bill.
The bill includes a new provision creating a flat rent floor, of 80% of fair market rent, for higher income public housing residents. The rent floor would be phased in. No family’s rent could increase by more than 35% annually. The policy must be implemented by June 1, 2014. A similar provision had been included in drafts of the Affordable Housing and Self Sufficiency Improvement Act in 2012.
Another new provision includes consortia of public housing agencies within HUD’s definition of a public housing agency, allowing HUD to encourage the creation of public housing consortia.
The bill would also include new language in a long-standing provision governing the transfer of project-based assistance. The new language would require that any transfer not increase the cost of Federal Housing Administration insured mortgages. The bill would also extend the definition of a multi-family housing project subject to the transfer language to Section 811 units, and to housing or vacant land that is subject to a use agreement. The omnibus would require HUD to publish the terms and conditions, including the criteria for HUD approval, of transfers in the Federal Register. Another new provision would require HUD to conduct an evaluation of the transfer authority.
The bill includes a new section on the inspection of Housing Choice Voucher units. Currently, units must be inspected annually. The bill would allow biennial inspections, or every two years. The bill would also permit “alternate inspection methods,” which would allow inspections conducted pursuant to a federal, state, or local housing program (including HOME and the low income housing tax credit programs) to be used in lieu of inspections carried out under the voucher program. The bill also provides for interim inspections. A voucher-assisted family or a government official can notify a PHA that a dwelling unit does not comply with housing quality standards and the PHA must, if it is a condition that is life-threatening, inspect the unit within 24 hours, or, for other conditions, inspect the unit within a reasonable amount of time. These changes were in earlier drafts of the Section 8 Voucher Reform Act and Affordable Housing and Self-Sufficiency Improvement Act, but had been coupled with other changes that were beneficial to tenants, such as abatement of rent for unit deficiencies and use of abated funds to make needed repairs, and speeding up the time frame to move a family into a unit, even if there are issues to be addressed that would not threaten a family’s health and safety.
The bill includes a broad new section on actions the HUD Secretary must take when HUD Section 8 project-based multifamily properties receive scores from HUD’s Real Estate Assessment Center (REAC) that are less than 30, or are between 31 and 59, and that fail to certify in writing to HUD within 60 days that all deficiencies have been corrected. Properties with consecutive REAC inspection scores less than 60 will also fall under these new protocols. The bill directs the HUD Secretary to provide the property owner with 60 days to offer a Compliance, Disposition and Enforcement Plan, with a specified timetable for correcting all deficiencies. HUD would provide the Plan to the owner, tenants, local government, any mortgagees, and any contract administrator. The bill provides the HUD Secretary with various enforcement tools should the owner fail to comply with the Plan, including civil money penalties, abatement or partial abatement of the Section 8 contract, transferring the contract to another owner, or seeking judicial receivership. During these Plan and compliance periods, the contract would remain in effect and the Secretary must take appropriate steps to protect tenants from imminent major threats to their health and safety.
The bill includes another provision from earlier Section 8 Voucher Reform Act bills, the revising of the definition of “extremely low income.” The bill creates a new statutory definition of ELI, to mean having an income that is the higher of either 30% of area median, or the federal poverty line, adjusted for family size.
The bill would also make changes to utility allowances for Housing Choice Voucher households. The bill caps the amount allowed for tenant-paid utility allowances to the amount appropriate for the family unit size, regardless of the size of the dwelling unit currently leased by the family. Only upon request by a family that includes a person with disabilities must a PHA approve a higher utility allowance as a reasonable accommodation to make the program accessible to and usable by the family member with a disability.
For the flat rent, constortia, ELI definition, and utility allowance provisions, the bill directs the HUD Secretary to establish these new policies by notice, and then directs the Secretary to commence rulemaking based on the initial notice no later than six months after the initial notice is issued. The rulemaking must allow for public comment.
Rural Housing Programs
Section 521 Rental Assistance
The Agriculture, Rural Development, Food and Drug Administration, and Related Agencies bill would provide an increase to Rural Development, including an increase of over $225 million to the Section 521 Rental Assistance program, which would be funded at $1.11 billion. In FY13, the Section 521 program was funded at $884 million pre-sequester. At the end of FY13, due to sequestration cuts, USDA was forced to notify owners of properties with Section 521 contracts that it would not make payments for the month of September 2013 and that owners were responsible for absorbing the unpaid operating expenses. USDA worked with property owners to manage loan payments and other challenges during this time. Even prior to this payment crisis, the Administration requested an increase for Rental Assistance in FY14 of $1.015 billion. This level was supported by the Senate and the House also proposed increasing funding for Section 521 to $1.012 billion in FY14.
Section 515 Rental Housing
The Section 515 Rental Housing Direct program would be funded at $28 million, level with FY13 post-sequester funding, the President’s budget request, and both the House and Senate proposed funding levels.
Section 514 and 516 Farm Labor Housing
The omnibus would provide slight funding increases above FY13 pre-sequester funding levels for the Section 514 and 516 Farm Labor housing programs. The Section 514 program would be funded at $24 million, $2 million above the FY13 level but still below the FY11 and FY10 funding levels. The Section 516 program would be funded at $8 million, above the FY13 and FY12 funding level of $7 million but below the FY11 and FY10 level of $10 million.
The omnibus includes a provision that would continue to allow areas currently eligible for rural housing funding to remain eligible in FY14.
For More Information
View the House Amendment H.R. 3547: http://1.usa.gov/1ePDf7O
View NLIHC’s budget chart: http://bit.ly/1bZHyjb
View the Senate omnibus summary: http://1.usa.gov/19sbYdH
House summary of the THUD bill: http://1.usa.gov/1mbtFBn
House summary of the Agriculture bill: http://1.usa.gov/1eEXPJT