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CONFEREES ACT ON HUD FY98 FUNDING BILL - CDBG SET ASIDES SKYROCKET
As reported in NCDA Washington Report, 9/26/97, Conferees on H.R. 2158, which funds the Department of Veterans Affairs, Housing and Urban Development, NASA, EPA and 15 other agencies began meeting on September 26, but failed to reach an agreement on funding levels for all of the programs under their jurisdiction. Disagreement over the Section 8 program was key in the failure to reach censuses on the bill. Negotiators resumed discussions on Sep 30 and hammered out the final version of the spending measure. Several funding levels were changed from the initial meeting.
At the conclusion of the September 26 meeting, funding for the Community Development Block Grant, (CDBG) set at $4.7 billion. However, CDBG was reduced to $4.675 billion when the dust settled on the bill. The level of set asides within the CDBG program is a whopping $499.8 million. This level of set asides, which is more than what was included in either the House passed or Senate passed versions of the spending measure represents a hidden decline in the amount of funds which are allocated to entitlement communities and urban counties. The set-asides for FY97 were set at $289.6 million, the $499.9 million represents a significant increase over the current year. The CDBG set asides include:
The total funding available for allocation to grantees is $4.18 billion, down from $4.31 billion in FY97.
The Home Investment Partnership (HOME) Program was funded at $1.5 billion, with set asides of $20 million for Housing Counseling and $10 million for a new competitive grant home ownership demonstration project designed to create and expand opportunities through the creation of a secondary market for non-conforming loans. In addition, as in the FY97 $7.5 million was allocated from HOME to fund HUD's management information system.
Between the September 26 and 30 meeting, intense White House lobbying occurred to ensure that Administration programs were funded. In a letter to the appropriators, Office and Management and Budget (OMB) Director Frank Raines, raised concern regarding the Administrations priority programs which were either not included in the spending bill or funded below the Administrations request. Those programs included Community Development Financial Institutions (CDFI) which was funded at $80 million, and AmeriCorps which was funded at $205.5 million, up $5 million from the House bill but down by $218 million from the Senate. Several of the Administration's projects were funded through CDBG set-asides.
Conferees also funded Brownfields Redevelopment at $25 million, taking the funding directly from the original $4.7 billion allocated to CDBG in the September 26 meeting to fund this new competitive program. They provided $5 million for Empowerment Zones and Enterprise Communities for planing grants, technical assistance in connection with EZ\EC's. No monies were provided to fund an additional round of EZ\EC's. See the FY98 Appropriations Comparison Chart for specific funding levels.
Conferees retained the Senate version of "fix" that would "re-engineer" project based, FHA-insured Section 8 mortgages. The provision includes reducing the federal payment to landlords who rent to low income person and charge above market rents as the Section 8 rent subsidies contracts will expire over the next five years. Resolution of the issues took direct intervention by House Speaker Newt Gingrich (R-GA) who was credited with brokering a deal between Senator and House authorizing committee chairman, Connie Mack (R-FL) and Rick Lazio (R-NY), respectively. Lazio objected to including authorizing language in the appropriations bills- a move he stated violated his committee's jurisdiction. Lazio wanted the provisions of his own restructuring bill, which differed from the one enacted in the appropriations bill to be the basis for the "fix". The compromise agreement calls for the Senate included measure giving priority for state and local agencies to serve as restructuring agents and Lazio to get his separate office to oversee the restructuring process.
The provisions contained in the funding bill include a modified version of S.513, the Multifamily Assisted housing Reform and Accountability Act of 1998. It was vital that some version to "re-structure" the Section 8 rents was needed to save an estimated $500 million, which was used to fund other non-housing programs and projects in the subcommittee's jurisdiction. The savings resulted in relieving the pressure to cut programs more significantly.
The portfolio restructuring provisions would give local and state housing finance agencies, where qualified, priority to be restructuring agents to perform mortgage restructuring. The measure creates an Office of Multi-Family Asset Restructuring (OMHAR) in HUD designed to oversee the multifamily housing restructuring process performed by participating administrative entities and, when necessary to restructure the mortgage.
The lack of a public housing authorizing bill, for the third year in a row, mandated that the provisions enacted in the Emergency Supplemental Appropriations Act of FY95, be retained in FY98 appropriations bill and continue to be in effect for an additional year. Those provisions include repeal of one for one replacement for demolition /disposition units public housing, repeal of federal preference, establishment of ceiling rents and authorization of minimum rents up to $50. Two provisions continued in the FY95 Supplemental were not extended, the ability of PHA to use 10% of their modernization funds for operating subsidies and the mixed income provisions. Conferees made up to $10 million available through recaptured funds for the Preservation Program to be used at the discretion of the Secretary.
Action by each chamber on the conference report is expected the week of October 6, although no date has been scheduled. To date, there has been no objections raised by the White House that would signal a veto of any of the HUD provisions.
CR ADOPTED QUICKLY TO KEEP GOVERNMENT OPERATING
Because Congress had not passed appropriations bills by the end of the current fiscal year, a Continuing Resolution (CR) was signed by President Clinton on September 30. H J Res 94, allowing government to continuing operating until Oct 23, was passed by House, September 29, 355-57. On September 30, the Senate cleared the measure, 99-0 and forwarded it to President Clinton for his signature that evening. The CR extends the time for Congress to act on the nine remaining appropriations bills for three weeks. The CR funds agencies not covered by already enacted funding bills at the FY97 levels, except in those cases where the Administration and Congress already worked out cuts to particular programs.
SENATE MOVES ON PUBLIC HOUSING REFORM MEASURE
On Friday, September 26, the Senate approved S. 462, "The Public Housing Reform and Responsibility Act." The bill was passed more than four months after the House approved its own version of the reform measure, H.R. 2, "The Housing Opportunity and Responsibility Act."
The two measures now move on to conference.
S. 462 was passed unanimously as a "manager's amendment," which is a substitute for the original measure. Although the substitute is similar to the original measure, it makes several changes to S. 462, such as:
According to sources in the Senate and House, the time line for the conference process is as yet uncertain. Some foresee the conferee selections completed before Congress adjourns later this year, with the conference completed sometime in February of next year. Others do not see the selection process for conferees beginning until next year. Whenever the conferees meet, targetng is expected to be a contentious issue.
Regardless of the time line, the conferees will have their hands full, as several key differences separate the House and Senate versions:
For more details regarding H.R. 2, see the NCDA Washington Report, May 16, 1997.
HOUSE RESTRICTS CENSUS SAMPLING
Concluding intense partisan debate on HR 2267, the House FY98 Commerce,
Justice and State Appropriations Committee voted not to allow statistical
sampling in the 2000 census until the Supreme Court ruled on its constructionally.
The amendment offered by Representative Mollohan (D-W-VA) and Representative
Shays (R-CT) that would have allowed sampling as long as no "irreversible
plans" were made by the Census Bureau was defeated 197-228.
Sampling, mathematical calculations to estimate how many people were
missed in a head count, is being proposed in conjunction with the head
count, to make up for the historical undercounting of minorities and low
income families. Opponents of the sampling method claim that sampling validated
the constitutional requirement that the census be "enumerated"
(counting every person) and fear the sampling would increase the number
of Democratic congressional districts..
Supporters of sampling indicate that with its use, the 2000 census would
miss millions of Americans. They point out that the 1990 census, which
attempted to count everyone without using sampling undercounted millions
of citizens, many who were minorities and poor.
Senate version of the spending bill contains language of the Mollohan/Shays, amendment, allowing the census bureau to plan for the use of sampling to augment the 2000 census.
President Clinton has already stated that he will veto the bill if it
does not contains the sampling provision when it reaches his desk. Conference
meet to hash out the difference in each chambers version.
COMMUNITIES 2020 -- FORMERLY KNOWN AS CPS+ SOFTWARE UPDATE
| Schedule of Training for "Communities 2020": |
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| October 15-16 Buffalo, NY October 21-22 October 23-24 October 28-29 |
October 30-31 New York, NY November 4-5 November 13-14 November 24-25 |
IDIS UPDATE
As mentioned in the September 26, Washington Report, HUD will continue to conduct training on IDIS. The training scheduled for Boston has been rescheduled for Arlington, Virginia at the Hyatt Regency, on 2799 Jefferson Davis Highway, (703) 418-1234, on October 20-23, 1997. Please contact Tonya, Inc. for registration information at 202-289-8100.
NCDA BIDS FAREWELL TO HUD'S GORDON McKAY
On September 30, 1997, some 900 HUD employees took advantage of the Department's buyout opportunity and moved into a well-deserved retirement. Unfortunately for NCDA, Gordon McKay, the Director of the Office of Affordable Housing Programs, was among those 900.
During his three year tenure as Director, Mr. McKay steadily administered the HOME program and the HOPE 3 program for first-time homebuyers. Mr. McKay was a strong advocate of these important programs and always made sure NCDA's voice was heard when proposals impacting the programs were under consideration. Mr. McKay reached out to NCDA by opening his doors to NCDA staff to discuss what was important to our membership and by participating in a number of NCDA events, including last summer's Annual Conference.
Although NCDA will miss Mr. McKay's steady hand, we extend him our deepest gratitude for his superior service and wish him a fun-filled retirement with his wife and grandchildren.
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Reminder:
The NCDA Washington Report is now available on the internet!
Just point your browser to http://www.ncdaonline.org
and go to the Members Only section. |
HUD DETAILS REFORM PLANS for CPD
When HUD Secretary Andrew Cuomo announced the institution of HUD 2020 -- the Department's management reform plan -- back in July, it called for reform in every division -- including the Office of Community Planning and Development (CPD). The plans for CPD are now taking shape, and NCDA continues its watch over the proposed changes.
The plans for CPD were developed out of an extensive self-analysis. The problems identified included: limited resources for managing competitive grants; limited staff for on-site monitoring; fragmented approaches to solving community problems; and an inability to completely track and respond to market trends.
According to HUD, CPD approves over 1,300 competitive grants a year, but staff reductions of 23 percent since 1992 have prevented adequate monitoring of thousands of competitive grants.
The primary elements of the "new" management reform are activities that have been underway for the past several years such as: combining planning and application reports into a single plan; use of new mapping software; implementing IDIS; and, instituting the Grants Management System and best practices format.
In addition, CPD is assessing the following structural changes, which will continue to take shape over the ensuing months:
HOMEWORKS
THE COMMUNITY'S STAKE IN SECTION 8 RESTRUCTURING
by Paul S. Grogan, President, Local Initiative Support Corporation
Low-income communities have much at stake in the restructuring of the FHA-insured Section 8 multi-family housing portfolio.
The first policy imperative of the restructuring should be to do no harm. Many HUD multifamily projects are located in low-income communities. In many cases, these projects are in relatively good condition and are a community asset. If multifamily portfolio restructuring is mishandled, it will destabilize these projects and, even more important, undermine the surrounding neighborhoods.
In other cases, troubled multifamily projects are already corroding low-income communities. Portfolio restructuring should provide an opportunity to address these troubled properties.
Over the years the Section 8 projects have become increasingly occupied
by the very poor tenants. The median tenant income is roughly the same
as for public housing. Such intense poverty concentration within inner
city projects tends to isolate the poor from the economic mainstream and
exacerbates inner city community problems. Portfolio restructuring offers
a real opportunity to address the problem without forcing the displacement
of poor tenants.
We believe that legislation should--and can--have the following elements:
Mr. Grogan can be reached at: Local Initiatives Support Corporation,
733 Third Avenue New York, NY 10017 at 212.455.9800.
RESEARCHING SECTION 8 DEVELOPMENTS IN YOUR COMMUNITY
HUD has developed a useful web site with information on specific Section 8 developments and demographic information of Section 8 residents by project or by jurisdiction. HUD's main web site is http://www.hud.gov and its inventory of all Section 8 project-based contracts is at http://www.hud.gov/fha/mfh/mfhsec8.html The site contains key data such as the mix of bedroom types, current rent levels, the loan balance and contact information for the property manager. Those not connected to the internet can request documents from their HUD field office.
ANN ARBOR COMBATS HOMELESSNESS THROUGH COOPERATION
by Larry Friedman
Housing Services Manager, Community Development Department
Ann Arbor, Michigan
Ann Arbor, Michigan has a somewhat different housing pattern than is generally exhibited in southeastern Michigan. Unlike other communities in the area, Ann Arbor has more rental units than owner-occupied units and, unlike other area communities that have seen a change of tenure status from owner to renter, most of the city's rental units were designed that way. A total of 35 percent of all units were constructed before World War II and since the city is home to over 45,000 University of Michigan students, the landlords can get two to four times the normal rate for rental units. Thus, property values are high. The chief housing problem facing the city, therefore, is maintaining affordability for lower- and very-low income. This situation has created a high percentage of homeless and potentially homeless persons.
To reverse this trend the city used CDBG and HOME funds to support the preservation of its low-income rental housing. The city developed a strategy to use its HOME funds to leverage private and other federal funds to acquire and rehabilitate several seven-to-25 unit buildings.
The unique element to this strategy is the cooperation between Ann Arbor Community Development Department staff, the city policymakers and the Community Housing Development Organizations (CHDOs). All of these players joined forces to identify the problem, choose a proposed course of action, identify and pursue non-city funding, allocate city funds and execute the plan. Without the cooperation of all of these players, this strategy would never have been implemented.
Ann Arbor has committed and expended all HOME funds received for program years 1992 through 1995 and is currently reviewing a project that will commit the balance of its 1996 allocation. All of these funds have been spent by CHDOs in the area of rental housing. These dollars have been primarily used for the acquisition component of acquisition/rehabilitation projects and have ranged from 38 percent to 71 percent of total project funding. Of the total $4,882,178 expended for 12 different projects which total 124 units, $2,653,259 was from other sources. This amounts to $1.19 leveraged for every HOME dollar contributed.
Ann Arbor's decision makers, including its City Council, appointed a Housing Policy Board to follow criteria which emphasizes project afford-ability for those most in need. On the national level, 97 percent of the rental activity dollars have gone to assist those with incomes of 0 to 60 percent of median. In Ann Arbor, however, almost 75 percent of the HOME funds have benefitted those with incomes between 0 and 30 percent of median. Projects submitted by the two active Ann Arbor CHDOs, Avalon Housing and Washtenaw Affordable Housing Corp., were analyzed to determine the amount of "up-front" subsidy needed to result in rent levels as affordable as possible. These funds enable the HOME-assisted rental units to have rents set at 43 to 47 percent of the fair market rents in the community, significantly below the "high HOME" and "low HOME" rents defined by the program regulations.
Projects have ranged in size from a two-unit duplex building to a twenty-four unit multi-family complex. The non-profits have been successful in leveraging tax credit dollars, Federal Home Loan Bank Affordable Housing Program funds, private funds, nonprofit below-market interest loans, Local Initiatives Support Corporation funds, Community Development Block Grant funds and local General Funds. The City established a local Housing Trust Fund in 1991 for affordable housing projects and provides an annual General Fund allocation. The non-profits work with city staff to determine the best mix of project financing in developing project proforma. Most importantly, Ann Arbor's program has fostered an increased, continuing spirit of cooperation among the various housing interests.
For more information about the program, please contact Mr. Friedman at (313) 994-2589.
IRS ISSUES TWO SETS OF REGULATIONS ON THE LIHTC
On September 26, the IRS issued two directives regarding to the low-income housing tax credit (LIHTC). Directive number 97-25493 contains final regulations regarding the treatment of low- income housing units where the income of the tenants exceed 140 percent of the income cap. Directive 97-25490 contains final and temporary regulations regarding the application of §42(d)(5) to certain rental assistance programs. It clarifies that certain federal rental assistance payments made to the owners of a low-income housing unit do not result in a reduction in the eligible basis of the building for purposes of computing the low-income housing tax credit.
For copies of these directives, please contact NCDA staff at 202.293.7587.
FEDERAL REGISTER NOTICES
Lead-based Paint Hazard Control in Privately-Owned Housing: Announcement of Funding Awards--FY 1996. [Docket No. FR-4049-N-04]
The purpose of the competition was to award grant funding for approximately $55,000,000 for the grant program for lead-based paint hazard control in privately owned housing. Approximately $4,000,000 of the total was awarded for controlling lead-based paint hazards at or near Superfund sites, or brownfields, where Superfund or brownfield dollars will be spent to address lead contaminated soil. This announcement of awards is based on the May 14, 1996 publication of a NOFA (61 FR 24408). Please check the Federal Register the complete list of awardees.
