President Obama's Proposed Housing Budget for 2010

President Barack Obama released an overview of his FY10 budget request on February 26.  Funding for HUD would increase from $41.1 billion, the amount the House and Senate are considering in the FY09 omnibus spending bill for HUD to $47.5 billion. Only a few details were released beyond the top-level number; specific program-level funding requests are expected in a more detailed budget to be released in April.

In addition to requesting $1 billion for the National Housing Trust Fund, the budget request includes increases for the Community Development Block Grant program and increases for the renewals of existing project-based and tenant-based contracts.

“This budget signals a refreshing and much-needed change of direction for the country’s housing policy, and offers hope for the millions of low income families who struggle to find decent homes they can afford,” NLIHC President Sheila Crowley said in a February 26 statement on the budget request.

The budget request would fund the Community Development Block Grant program at $4.5 billion, up from about $3.6 billion in FY09. According to the request, the President will also seek “a more effective formula, appropriate incentives and accountability measures.” In addition, he calls for creating within the CDBG program a new Sustainable Communities Initiative to better target CDBG funds to distressed communities and promote sustainable and economically viable communities.”

White House staff, in a February 26 budget teleconference on the FY10 request, said that the CDBG reform proposal will “hold harmless somewhat more affluent communities but create benefits for more vulnerable communities.” NLIHC’s long-standing position is that the most effective way to reform the CDBG program is to more deeply target CDBG’s resources to very- and extremely low income groups.

The President’s request will also increase funding for the Housing Choice Voucher program. While White House staff say it is unlikely the more detailed April request will seek new, incremental vouchers, the administration will introduce legislative reforms to increase the program’s efficiency, “alleviate the administrative burdens on Public Housing Authorities, and establish a funding mechanism that is transparent and predictable in order to serve more needy families.” White House staff referred to vouchers as a key tool for preventing homelessness.

The request also speaks to the President’s commitment to preserve approximately 1.3 million affordable rental units through increased funding for contacts with owners of multifamily projects, calling this a “critical investment.”

White House staff said the request will “tak[e] care of public housing” as well, although no details were available. The request also mentions increased funding for fair housing enforcement.

In addition to the Sustainable Communities Initiative, the request outlines a new Choice Neighborhoods Initiative with an unspecified amount of funds for HUD “to support a range of transformative interventions in neighborhoods of concentrated poverty.” In addition, a new Energy Innovation Fund would be created to support the creation of an energy-efficient housing market, including retrofitting older housing and instigating private-sector lending in the residential sector.

The request would zero-fund HUD’s Section 108 Loan Guarantee Program and the American Dream Downpayment Initiative. The Section 108 program, funded at $6 million in the House’s FY09 omnibus spending bill, allows a community to pledge up to five years of its CDBG funding as collateral for a larger loan. If estimated revenues from the new project fall short of expectations, the community’s future CDBG allocations must be used to repay these loans. The American Dream Downpayment Initiative began in the Bush administration as a set-aside within the HOME program to facilitate increased homeownership rates.

“From providing shelter to those displaced by Katrina to giving help to those facing the loss of a home to revitalizing our cities and communities, HUD’s role has never been more important,” HUD documents quoted President Obama as saying upon release of the budget request. “Since its founding, HUD has been dedicated to tearing down barriers in access to affordable housing -- in an effort to make America more equal and more just. Too often, these efforts have had mixed results. That is why we cannot keep doing things the old Washington way. We need to ap­proach the old challenge of affordable housing with new energy and new ideas. We need to understand that the old ways of looking at our cities just won’t do. That means promoting cities as the backbone of regional growth by not only solving the problems in our cities, but seizing the opportunities in our growing suburbs, exurbs, and metropolitan areas.”

Access the White House’s FY10 budget documents at www.omb.gov.

Link to NLIHC’s updated FY10 budget chart at http://www.nlihc.org/doc/FY10-presidents-request.pdf

Link to NLIHC’s statement on the budget request at http://www.nlihc.org/detail/article.cfm?article_id=5850&id=48