HOME RECEIVES BOOST WHILE CDBG SECURES SOLID FUNDING FROM HOUSE VA-HUD APPROPRIATIONS SUBCOMMITTEE

On Wednesday, June 25, the House Veterans Affairs, HUD and Independent Agencies Appropriations Subcommittee, chaired by Representative Jerry Lewis (R-CA), marked up its version of the FY98 spending bill for programs under its jurisdiction.

Overall the measure contains $70.1 billion in funding for veterans, HUD and a host of independent agencies such as the Environmental Protection Agency (EPA), NASA and other programs and activities. The HUD portion of the subcommittee bill is funded at $25.1 billion, $5.6 billion more than HUD was allocated in FY97. In addition, this level includes $9.2 billion for Section 8 contract renewals as guaranteed in the recent in the budget agreement.

The Subcommittee reaffirmed its support for the Community Development Block Grant Program (CDBG) by providing $4.6 billion for the program, the same level of funding the program has been allocated since FY95. However, the program is still besieged with set- asides for a wide array of activities, many of which are not CDBG related. Although the Subcommittee's recommendation contains $7.4 million less in set-asides than last year's total of $289.6, the total number of set-asides are still more than three times more than those found in the FY95 appropriations. The set-asides recommended by the House include: $67 million for Native Americans; $60 million for Lead-based paint; $50 million for Social Service Grants for public housing; $10 million for Habit for Humanity; $2.1 million for the Housing Assistance Council; $1.5 million for Native American Indian Housing Council; $25.1 million for Section 107 Special Purpose Grants; $11.5 million for a new Community Outreach Partnerships Program; $25 million for a new neighborhood initiative demonstration; and $30 million for Youthbuild for a total of $282.2 million. The Administration recommended funding for Youthbuild as a free standing program at $40 million.

In a bold and unexpected move, the Subcommittee recommended funding for the HOME program at $1.5 billion, a $100 million increase over the current $1.4 billion funding level. As noted in the NCDA Washington Report, 6/20/97, NCDA recommended the $1.5 billion level for HOME in a letter to Representative Jerry Lewis, despite the Administration's proposal to reduce funding to $1.309 billion. This effort was highly successful, resulting in $191 million more than the Administration requested for HOME in FY98. NCDA will work hard to retain this higher number throughout the funding process. Such as in the CDBG program, the subcommittee recommended a $15 million set-aside for Housing Counseling assistance under HOME.

NCDA is working with House Appropriations Subcommittee staff to secure supporting language in the bill that will stabilize the HOME funding thresholds and prevent the funding fluctuations that occur as a result of the minimum threshold requirements currently contained in the HOME statute. As you know, current statute requires that, in order to receive HOME funding, a participating jurisdiction (PJ) must receive a minimum allocation under the formula of $335,000 when the appropriation is less than $1.5 billion (as it has been for the past several years) and $500,000 when it is at $1.5 billion and above (as is recommended for FY98). Therefore, NCDA has recommended that Congress raise the threshold to $500,000 regardless of the allocation and grandfather in all existing PJs. We do not perceive any difficulty in attaching this language to the appropriations bill.

Summary of Some of the Key Funding of other HUD programs:

Section 108 Loan Guarantee Program was recommended at $1.281 billion in guarantee authority.

Homeless Assistance Programs were funded at the President's request of $823 million.

Section 202 Elderly and Section 811 Disabled Housing — funded at $644 million, $170 million more than the President's request, but still nearly $200 million short of FY97 levels. The increased funding came from recently released HUD figures indicating billions of dollars in the Section 8 reserve account. Section 202 specifically received $450 million, while Section 811 was funded at $191 million.

Public Housing Programs — The Subcommittee provided $2.5 billion for Public Housing Capital and $2.9 billion for Operating Subsidies.

Several of the Administrations "special programs" were not funded at all in the subcommittee's recommendation. These include: Empowerment Zones/Enterprise Communities for which the Administration requested $100 million; the Brownfields Development Initiative requested at $25 million; and CDBG set-asides such as the National Community Development Initiative ($10 million), the Economic Development Initiative (EDI) ($50 million), Homeownership Zones ($50 million) and the Bridges-to-Work program ($10 million).

Considering the ever tightening budget climate and the parameters framed in the balanced budget agreement, HUD fared relatively well in FY98. However, funding for the "out" years may still be in jeopardy as we move closer to the year 2002.

The Subcommittee also recommended a reduction in funding for the President's Americorp program, slashing $146.5 million from the President's request.

No date has been set for action by the Full Appropriations Committee, but there is hope that markup will begin immediately after the July 4th recess, during the week of July 8. The Senate, is tentatively scheduled to begin discussion of the VA, HUD and Independent Agencies funding the week of July 14, however much of that activity depends upon the actions of the House and the overall success of the reconciliation process.

NOTE: We have provided a quick reference of funding levels for HUD programs in the enclosed chart.

HOUSE AND SENATE SLATED TO COMPLETE ACTIVITY ON FY98 BUDGET RECONCILIATION BY CLOSE TODAY

Both houses of Congress tackled their respective reconciliation bills this week, parting from tradition by splitting the spending measures from the tax packages, thereby creating four reconciliation bills, versus the usual two. The respective reconciliation packages are both based upon the five year balanced budget agreement that includes a $137 billion reduction in spending over the next five years, as well as $85 billion in tax cuts during the same time period.

The House passed H.R. 2015, its deficit reduction measure on Wednesday, June 25 with a vote of 270-162, while H.R. 2014 required more debate between the Democrats and the Republicans over tax policy before finally coming to a close late last night. Meanwhile, the Senate completed action earlier this week on S. 947, its spending bill, but is still tied up on the floor over S. 949, the tax- cut legislation. Senate Majority Leader Trent Lott (R-MS) has pledged that he will not dismiss the Senate until the reconciliation process is complete. Therefore, it is assured that the budget activity will be completed before the July 4th congressional recess, enabling Congress to return for a House-Senate conference on the bills immediately upon their return, the week of July 8.

Significant differences between the House and Senate versions of the both the tax and spending packages and the Administration's claims that a number of provisions violate the agreement hammered out between Congress and the White House indicate that conference will be heated and perhaps lengthy. Specifically, many of the tax measures contained in H.R. 2014, are opposed by the White House and will be at the heart of the discussion. In addition, House Democrats have crafted a separate tax bill, which provides a "more equitable" distribution of tax breaks to the middle class and will be peddling these concepts during conference.

ADMINISTRATION PROPOSES PLAN TO CONSOLIDATE PROGRAMS FOR THE HOMELESS

On June 20 HUD Secretary Andrew Cuomo introduced a plan to consolidate seven homeless programs established by the McKinney Act into a single, formula-based performance fund. The plan, dubbed the "Homelessness Assistance and Management Reform Act of 1997," is the Administration's response to H.R. 217, a similar measure introduced in the House on January 7, 1997 by U.S. Representative Rick Lazio (R-NY), Chairman of the House Subcommittee on Housing and Community Development (see NCDA Washington Report, 3/10/97).

The Administration's plan would consolidate the Emergency Shelter Grants (ESG), Supportive Housing, Shelter Plus Care, Section 8 Moderate Rehabilitation (SRO), Safe Havens, Rural Assistance and Innovative Homeless Initiatives Demonstration programs into the Homeless Assistance Performance Fund (HAPF). Under the proposal, funds would generally be provided to localities through a formula very similar to the current ESG formula, except that 75 percent of the funds would be allocated to metropolitan cities and urban counties and 25 percent would be reserved for states for use in areas outside of such cities and counties receiving direct formula allocations. Eligible activities include: Emergency Assistance — Includes homelessness prevention, outreach, and emergency shelter.

Safe Haven Housing — Providing housing and low-demand services and referrals for homeless individuals with serious mental illness

Transitional Housing — Providing housing and appropriate services that are designed to facilitate the movement of homeless individuals to permanent housing

Permanent Housing and Permanent Supportive Housing — Providing housing and supportive services for homeless persons with disabilities and appropriate permanent housing options for all homeless families and individuals

Single Room Occupancy Housing — Providing a single unit for occupancy for one person, which may include services such as mental health services, substance abuse treatment, job training, and employment programs

Recipients could also undertake other projects determined by the Secretary to further the purposes of the proposal.

On June 26 Chairman Lazio held a second hearing on H.R. 217. At the hearing, Jacquie Lawing, General Deputy Assistant Secretary of Housing and Urban Development, briefly outlined the Administration's plan, which differs from H.R. 217 in several ways:

• H.R. 217 creates two funding sources: the competitive-based Permanent Housing Development program and the formula-based Flexible Block Grant program, while the Administration's proposal consolidates all the programs into a single formula-based block grant.
  
• H.R. 217 is more prescriptive in limiting activities such as emergency shelter assistance and supportive housing activities to a certain percentage of the funds. For instance, H.R. 217 invokes a 30 percent cap on supportive services — which ultimately decreases to 15 percent after 4 years — and limits emergency shelter assistance to 10 percent of the total grant. The Administration's plan does not contain such limitations.
  
• Unlike H.R. 217, the Administration's proposal contains a provision allowing the Secretary to transfer excess HAPF funds to a recipient's CDBG or HOME allocations should the unit of general local government make substantial progress in reducing the number of homeless individuals.
  
• Both measures require a 50 percent match, but under H.R. 217, no match is required if the grant is below $100,000. In the Administration's proposal, match dollars can be derived from any source other than from assistance under this program, including the value of any lease on a building as well as any salary paid to staff or any volunteer labor contributed to carry out the program. H.R. 217 contains similar match provisions but does not include volunteer labor. Both allow a waiver of match for fiscal distress.
  
• Both measures require that 50 percent of the grant amount be made available to private non-profit organizations. Unlike H.R. 217, however, the Administration's proposal allows a waiver of this provision if the recipient demonstrates that the requirement interferes with its ability to provide assistance under this program.
  
• The Administration's proposal allows 10 percent of any grant amounts to be used for administration, 5 percent for a state that chooses not to administer its own programs and, instead, only distributes HUD funds. H.R. 217 allows 5 percent administration across the board.

For more details regarding H.R. 217, see NCDA Washington Report, 1/24/97.

Both H.R. 217 and the Administration's proposal are attempts to address several key problems that hamper communities as they work to combat homelessness. The McKinney grant programs currently require providers of housing and services to apply within limited funding categories for particular needs. Each program has its own funding cycle, application process, set of rules, criteria and reporting requirements, which increases process and paperwork and hampers project development and implementation. Further, the applicants design programs that are more in line with program needs rather than actual needs. In consolidating programs and creating a flexible fund (or funds in H.R. 217), the measures allow communities to design continuum of care approaches that reflect local conditions and opportunities while streamlining the process.

Chairman Lazio continues his push for passage of H.R. 217. Hearings have been held on March 5 and June 26, and mark up is scheduled for July. Although Chairman Lazio intends to bring the measure to the House floor in September, it is doubtful that the measure will become law this year, as homeless issues are not at the forefront of the Banking Committee's agenda. Further, the Senate has yet to draft a similar measure, despite reports that such a measure is forthcoming.

Nonetheless, the NCDA supports the consolidation of these varied programs and the flexibility that would be given to localities under either proposal. It is mindful, however, that any consolidation of programs may result in a reduction of funding for communities ("block and cut"). The Administration's measure contains provisions which protect communities from dramatic losses in funds through the use of grandfathering and funding floors, but the protections may not be sufficient. NCDA will continue to monitor both initiatives closely and will submit testimony outlining its concerns to the Banking Committee in the upcoming week.

EXPANSION OF THE CDBG SECTION 108 PROGRAM PROPOSED IN H.R. 1555

Earlier this spring, Representative Chaka Fattah (D-PA) introduced, H.R. 1555, the "American Cities Investment Act of 1997", a bill designed to "help transform America's cities -- neighborhood by neighborhood -- into vibrant world-class cultural and economic centers."

The American Cities Investment Act will do two things: 1) it will expand the borrowing capacity of the Community Development Block Grant (CDBG's) Section 108 loan guarantee program; and, 2) it will establish the Federal Home Loan Bank as a more active player in the community development industry's financial structure. With the American Cities Investment Act, cities can, in essence, borrow or "mortgage" up to 20 years worth of their current CDBG allocation (not to exceed an amount equal to 80 percent of the current grant per year) through the Section 108 loan guarantee program, using their annual appropriated CDBG entitlement as collateral. These "mortgages" could then be securitized and sold to private investors on the open market, through, for instance, the Federal Home Loan Bank ( the same process used by the housing industry to create "mortgage-backed securities"). According to Congressman Fattah this broadening of the role of the Federal Home Loan Bank will insure a continual flow of capital into community development activities.

The American Cities Investment Act, was first introduced in the 104th Congress as H.R. 3349, but did not move forward before the session closed. Representative Fattah, has been working diligently to garner broad-based support for this measure this year, meeting with numerous mayors and national organizations representing local governments. The bill has been referred to the House Committee on Banking and Financial Services for consideration, however, due to the schedule of the Committee, the priorities that presently exist and the lack of bi-partisan support for the bill, it is unlikely that it will move forward this year.

The NCDA Economic Development Committee held discussions at the NCDA Annual Conference, regarding the bill and its viability, particularly considering the more conservative direction OMB and HUD are taking the Section 108 program and will be fashioning a position on the legislation within the next month. At that time, NCDA will report back to the membership on the status of the bill and the Association's position on it.

HUD UNVEILS "HUD 2020 MANAGEMENT REFORM PLAN"

On June 26, Secretary Andrew Cuomo announced the HUD's latest management reforms to facilitate the Department in "stamping out waste, fraud and abuse." The management reform plan -- called "HUD 2020" -- says it aims to transform HUD from "the poster child of inept government," that "has been plagued for years by scandal and mismanagement" into a "new HUD that works."

HUD has been criticized by Congress and its Inspector General since 1980 for failing to modernize operations and fight waste, fraud and abuse. The General Accounting Office designates HUD as the only "high risk" agency in the federal government.

The key reforms in HUD 2020 include:

• Creating a new Enforcement Division, which will monitor, document and prosecute, when necessary, housing authorities that get a failing grade on their annual assessments, HUD- assisted housing on the market that fails physical and financial audit inspections, and crack down on the improper use of grants from CPD and FHEO;
  
• Retraining some HUD employees as Community Builders to serve as HUD's service representatives for the public and retraining other employees as Public Trust Officers to monitor recipients of HUD funding;
  
• Consolidating over 300 HUD programs and activities into 71;
  
• Consolidating routine paperwork by HUD field offices in more efficient "back office" processing centers, such as is done in many banks around the country;
  
• Conducting the first comprehensive evaluation involving physical inspections and financial audits of HUD's housing portfolio;
  
• Establishing a new "cross-agency" financial information management system by replacing its 89 outdated computer systems with a new integrated system by mid 1999, to include IDIS and the CPS+ or latest mapping software;
  
• Reducing the size of HUD's staff from the current 10,500 to 7,500 by the end of the year 2000; and,
  
• Establishing new performance-based evaluation systems as required under the Government Performance Results Act (GPRA).
  
• Some of these reforms are already underway at the Department while others will require Congressional approval.
  
• HUD has spent that past six months working with inside and outside experts to devise a plan that will address both the management concerns voiced by Congress, as well as the comments of HUD's "customers". This process is on-going and NCDA will continue to keep you updated as the details are revealed and the implications become evident.
  

PRESIDENT CLINTON NAMES SAUL RAMIREZ, JR AS ASSISTANT SECRETARY FOR COMMUNITY PLANNING AND DEVELOPMENT

During his remarks at the Annual Conference of the U.S. Conference of Mayors in San Francisco earlier this week, President Clinton announced the nomination of Saul Ramirez, Jr., Mayor of Laredo, Texas to serve as the Assistant Secretary for Community Planning and Development at HUD.

Mr. Ramirez has served as Mayor of Laredo for seven years and has been actively involved in the advancement of affordable housing and related community development issues in his community. Mr. Ramirez still needs to make his way through the confirmation process, but he is likely to take up his position before the end of the summer. In the meantime Jacqueline Lawing, formerly a Deputy Assistant Secretary for CPD is the Acting Assistant Secretary.

ADDITIONAL STAFF CHANGES AT HUD

In the on-going transition from the administration of former HUD Secretary Henry Cisneros to current Secretary Andrew Cuomo, several personnel changes have occurred at the Department. They include:

Kevin Marchman, Acting Assistant Secretary for Public and Indian Affairs is leaving HUD headquarters to become Executive Secretary of the HUD-held San Francisco Housing Authority.

Assistant Secretary for Policy Development and Research and Acting Chief of Staff, Michael Stegman is leaving his post to return to his teaching position at the University of North Carolina.

Replacements have not been named for either position, although rumors do abound.

NCDA AND CDTI BEGIN PREPARATIONS FOR EXECUTIVE SYMPOSIUM

The 1997 NCDA Executive Symposium will be held this year on September 4-7, 1997 in Newport, RI. This year the focus will be on public housing and community development welfare reform and family self-sufficiency. All are welcome to attend this thought provoking, exciting and fun meeting. However, please remember to reserve you hotel rooms NOW, as the reservation block deadline is July 31, 1997. We cannot guarantee space beyond this date!! Please see enclosed flyer for further details.

FEDERAL REGISTER

Announcement of Funding Awards for FY96 for the Family Unification, Rental Voucher and Rental Certificate Programs -- FR 62 33891-33902, 6/23/97 -- A total of more than $635 million for rental vouchers and certificates (32,671 units) was awarded.

Notice of Funding Availability (NOFA) for FY97: Section 8 Rental Certificates and Voucher Programs -- FR 62, 33952-33957 6/23/97 - This NOFA explains the application process for public housing agencies to undertake for these funds in FY97. For a copy of the notice call NCDA.

Final Streamlining Rule: Homeownership of Single Family Homes Program (HOPE 3) -- FR 62 34144- 34145, 6/24/97 -- Streamlines several technical provisions of the HOPE 3 program, that were originally published as a proposed rule, on October 10, 1996 in the Federal Register. These provisions are effective July 24, 1997.

Notice of Funding Availability (NOFA) for FY97: Fair Housing Initiatives Program -- FR 62, 34562- 34571 6/26/97 -- $15 million available in FY97 funding for the Fair Housing Initiatives Program (FHIP) designed to assist projects and activities designed to enforce and enhance compliance with the Fair Housing Act and substantially equivalent state and local laws. HUD will fund projects undertaken through the Private Enforcement Initiative (PEI), Education and Outreach Initiative (EOI), and the Fair Housing Organizations Initiative (FHOI). $1.350 million is reserved from the FHOI for organizations that assist persons with disabilities to build capacity. Additionally, $500,000 is reserved from the EOI for projects that propose to address community tensions that arise as persons expand their housing options and $150,000 from EOI for a fair housing site on the Internet. Applications are due August 25, 1997. For an application packet, write the Fair Housing Information Clearinghouse, P.O. Box 9146, McLean, VA 22102 or call (800) 343-3442.

Back to the Archives

Back to Front Page