Tuesday, February 3, 2015

The Obama administration’s vision for housing: A look at the FY 2016 budget request

by Rebekah King, National Housing Conference

Under the president’s budget, HUD would receive $49.3 billion, a four billion or eight percent increase over current levels, the largest HUD budget requested since the beginning of the Obama administration. The budget proposal for HUD shows strong support for rental assistance, homeless and HOME programs. Project-based rental assistance (PBRA) renewals are fully funded as is tenant-based assistance, including a restoration of vouchers lost to sequestration. President Obama restores HOME funding, putting it above a $1 billion allocation, which is a welcome show of support for this important program. The budget also includes a wide range of policy proposals from eliminating the Rental Assistance Demonstration (RAD) cap to expanding Moving to Work (MTW) authority to a number of administrative and statutory program reforms to CDBG, HOME, homeless and rental assistance programs. The importance placed on housing counseling is clear through its proposed funding increase, though the proposal does not include any language supporting the Homeowners Armed with Knowledge initiative. The budget includes the Federal Housing Administration (FHA) premium reduction, as previously announced, and also shows a continued reduction in FHA receipts. View HUD’s budget announcement, summary and congressional justifications. The detailed HUD budget is available here.

Important funding and policy proposals for rural housing under the US Department of Agriculture (USDA) are also included in President Obama’s budget request. Rural multifamily rental programs see funding increases under the president’s request, which would support more preservation and potentially even new construction. The budget also proposes a $50 minimum rent in rural rental assistance programs, and proposes to provide vouchers not just when Section 515 mortgages are prepaid but also when properties leave the program for any reason. This provision would provide important housing security for rural low-income tenants.

The president’s request also provides support for community development programs within the Treasury Department budget. It would permanently reauthorize the New Markets Tax Credit (NMTC) program and request $5 billion of allocation authority for 2016. The budget provides $233.5 million for the Community Development Financial Institutions (CDFI) Fund to promote economic development, including $35 million for the Healthy Food Financing Initiative to provide better food options for Americans living in food deserts.

Below, I provide highlights from the president’s budget, and a chart showing funding for selected HUD programs.

Highlights of funding proposals:
  • Restoration of the 67,000 vouchers lost through sequestration; 22,500 of these new vouchers would assist homeless families and homeless veterans, regardless of discharge status.
  • Additional homeless grants to support 15,000 rapid rehousing interventions and 25,500 permanent housing units. 
  • $50 million to support public housing conversions to PBRA through RAD. 
  • $10 million for the Section 202 demonstration program. 
  • No additional funding for Veterans Affairs Supportive Housing (VASH) vouchers. 
  • Increases the public housing agency (PHA) administrative fee. 
  • Request for additional HUD staff to implement the Affirmatively Furthering Fair Housing rule and expansion of RAD. 
  • $100 million for the Jobs Plus program and $85 million for the Family Self-Sufficiency program. 
  • 0.5 percent annual premium reduction to FHA mortgages.
  • Anticipated FHA receipts of $6.5 billion.
In addition, the budget includes a number of policy proposals:
  • Permanently extend Component 2 for Rent Supp, RAP, and Mod Rehab properties.
  • Update HOPWA’s funding formula to better align resources and need and provide more flexibility for grantees. 
  • A utilities conservation pilot to encourage PHAs to undertake energy conservation measures. 
  • Allow HUD to enter multi-year agreements to repay private investors who provide upfront funding for energy efficiency retrofits of HUD-assisted housing. 
  • Amend the Low-Income Housing Preservation and Resident Homeownership Act (LIHPRHA) to align prepayment and owner distribution policies with other PBRA-assisted properties. 
  • Increase set-aside for colonias in CDBG from 10 to 15 percent.
The budget also proposes new initiatives:
  • Upward Mobility Project: Up to ten states or localities could blend funding from the Department of Health and Human Services Social Services Block Grant and Community Services Block Grant and HUD’s HOME and CDBG programs. Participating communities would implement evidence-based or innovative strategies to improve economic mobility and children’s outcomes.
  • Local Housing Policy Grants: This $300 million program would provide grants to localities and regional coalitions to support new policies or initiatives, such as design options, process changes and land use regulations, to support a diverse housing stock. 

Red numbers indicate decreases compared to FY15 enacted levels, green numbers indicate increases, and black numbers indicate flat funding.

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