Republican and Democratic leaders in Congress announced late in the evening Sunday, April 30 that they reached a deal on a final FY17 spending package to fund the federal government through September and avert a government shutdown. The spending package is expected to be voted on in the House and Senate later this week before the current Continuing Resolution ends on May 5, a full seven months after the start of the fiscal year last October.
At more than $1.07 trillion, the final budget agreement upholds the bipartisan deal made in late 2015 to lift the spending caps required by Budget Control Act for defense and non-defense programs. The deal does not include any of the $18 billion in cuts requested by the Trump administration for non-defense programs, which include affordable housing and community development. While an additional $15 billion for defense and $1.5 billion for border security were included in the final package, these resources are allocated through a separate account for war operations that does not count against the spending caps.
Many of the “poison pill” riders that threatened to prevent a spending deal and to shut down the federal government were omitted. The deal provides no funding to begin construction of a wall with Mexico, does not restrict funding for sanctuary cities, preserves funding for Planned Parenthood and subsidies for the Affordable Care Act, and includes $2 billion in disaster relief for California, West Virginia, Louisiana, and North Carolina and a permanent fix to provide healthcare to retired coal miners.
Housing and Urban Development
The FY17 spending bill funds most HUD programs at or above FY16 levels, but below the high-water marks provided in the draft versions. This is true for Tenant-Based Rental Assistance, Family Self-Sufficiency, Native American Block Grants, Native Hawaiian Block Grants, Community Development Block Grants, HOME Investment Partnerships programs, Self-Help Homeownership Opportunity Program (SHOP), Homeless Assistance Grants, Project-Based Rental Assistance, Section 202 Housing for the Elderly, Housing Counseling, Policy Development and Research, and Fair Housing and Equal Opportunity.
For some programs, the FY17 bill provides more funding than the levels proposed under the House and Senate draft bills. These include the Public Housing Capital Fund, Choice Neighborhoods Grants, Housing for Persons with AIDS, and Healthy Homes & Lead Hazard Control.
The only programs to see funding cuts compared to FY16 were the Public Housing Operating Fund ($4.4 billion in FY17 compared to $4.5 billion in FY16) and Section 811 Housing for People with Disabilities ($146 million in FY17 compared to $151 million in FY16).
Tenant-Based Rental Assistance:
The spending package provides $20.292 billion for tenant-based rental assistance, $18.355 billion of which is to renew previous contracts. The bill allocates $47 million for Veterans Affairs Supportive Housing (VASH), $7 million of which is to serve Native American veterans. The bill also provides $10 million to support new Family Unification Program (FUP) vouchers and $120 million for Section 811 mainstream vouchers.
Project-Based Rental Housing:
The bill provides $10.816 billion to renew project-based rental assistance contracts for calendar year 2017, an increase of $186 million from the FY16 funding level.
While the public housing capital fund saw a small increase, the operating fund received a $100 million cut. The operating fund allocation fell from $4.5 billion in FY16 to $4.4 billion, while the capital fund allocation increased from $1.9 billion to $1.942 billion to help address lead-based paint hazards in public housing. The bill directs $35 million of the capital fund to be used for supportive services and service coordinators.
Rental Assistance Demonstration
The bill increases the number of public housing units that can convert under the Rental Assistance Demonstration (RAD) program from 185,000 to 225,000 and extends the program’s sunset date to 2020. Under RAD, public housing agencies are able to leverage public and private debt and equity, largely through the Low Income Housing Tax Credit, in order to rehabilitate public housing stock and make capital improvements. NLIHC will continue to work to ensure that tenants are fully engaged in and protected during RAD conversions.
The bill increases funding for homeless assistance programs to $2.383 billion from $2.25 billion in FY16. The bill targets $43 million to address youth homelessness and waives the requirement that youth 24 years of age and under provide third-party documentation to receive housing and supportive services within the Continuums of Care. The bill extends the authorization for the U.S. Interagency Council on Homelessness (USICH), which is set to expire this year, by one additional year.
Other Housing Programs:
The bill provides $502 million to the Section 202 Housing for the Elderly program, enough to renew all existing contracts and provide $10 million to build new units or provide rental assistance. The bill also reduces funding for the Section 811 Housing for People with Disabilities program to $146 million, $5 million less than the FY16 level.
The bill does not include language allowing Section 202 Project Rental Assistance Contract (PRAC) properties to convert under RAD.
The bill would level-fund the HOME Investments Partnerships program (HOME) at $950 million and the Community Development Block Grant program at $3 billion. The bill also provides a four-year suspension of the 24-month funding commitment deadline under the HOME program. This language is identical to an amendment offered by Senators Dianne Feinstein (D-CA) and Rob Portman (R-OH) that was accepted onto the Senate bill by voice vote. Because of the additional requirements on project selection, underwriting standards, and developer capacity under the HOME program, many communities have struggled to meet the two-year commitment deadline, which led to funding being lost. This language removes this barrier while keeping in place other, more meaningful deadlines.
Funding for the Housing Opportunities for People with AIDS (HOPWA) program was increased to $356 million to account for changes made to how the program funds are awarded by the Housing Opportunities Through Modernization Act.
The Choice Neighborhoods Initiative received an increase over last year’s funding level, from $125 million to $138 million. Jurisdictions that receive Choice grants must ensure that at least $50 million be made available to public housing authorities.
The bill provides a $4 million increase to the Native American Housing Block Grant program, which is funded at $654 million, while the Native Hawaiian Housing Block Grant program, which received no funding in FY16, received $2 million in FY17.
The bill provides $145 million to the Office of Lead Hazard Control and Healthy Homes’ grants, a $35 million increase over FY16, and proposes initiatives to address lead-based paint hazards in affordable housing. The bill directs HUD to establish a process to improve data on how PHAs are complying with lead-based paint regulations in properties that use Section 8 vouchers.
The bill also takes steps to address the physical conditions of HUD-assisted housing to ensure residents are living in decent and safe homes. It requires HUD to take action against property owners receiving rental subsidies that do not maintain safe properties. The language authorizes the HUD secretary to replace the property’s management agent with one approved by HUD, impose civil monetary penalties, change HUD’s contract with the property owner until the program is resolved, transfer the property or contract to a new owner, and relocate tenants, among other actions. This language is similar to previous amendments and legislation introduced by Senator Marco Rubio (R-FL) after his year-long investigation of Global Ministries Foundation and the unsafe conditions at its properties.
The bill flat funds the HUD’s office of Fair Housing and Equal Opportunity. The bill also prohibits HUD from directing local governments to change their zoning laws under the agency’s Affirmatively Furthering Fair Housing (AFFH) rule or with the AFFH assessment tool. This language essentially continues an amendment approved by the Senate in their version of the FY17 spending bill. The amendment was offered originally by Senators Susan Collins (R-ME), Jack Reed (D-RI) and Thad Cochran (R-MS) as a compromise with more conservative Senators who sought to prevent HUD from moving forward with its AFFH rule. Instead, this amendment is far more circumscribed and seeks to protect local decision making.
USDA Rural Housing
The FY17 spending bill includes $2.94 billion for rural development programs, which is $166 million above the FY16 enacted level.
The bill fully funds USDA’s Section 521 Rural Rental Assistance program. It also provides a modest increase to USDA’s Section 515 Rural Rental Housing Loan program and the Multifamily Preservation and Revitalization demonstration – two programs that are necessary for preserving rental homes in the agency’s portfolio.
The bill also directs the USDA secretary to incentivize nonprofit organizations and public housing authorities (PHAs) to take over ownership of rental housing properties and to ensure that they remain affordable by allowing these entities to receive a return on investment and asset management fee up to $7,500 per property. Last year, a record number of USDA rental homes were lost due to prepayment or maturity of their USDA Section 515 loan. When that occurs, tenants are no longer eligible for USDA’s rental assistance program and may be subject to rent increases. These incentives are aimed at making it more financially feasible for nonprofit organizations and PHAs to maintain these properties as affordable for the long term.
NLIHC’s updated budget chart is available here: http://bit.ly/2qlk19i
The budget text is available here: http://bit.ly/2qoVGg3