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May 11, 2015

NHTF at Risk in THUD Appropriations Bill

The House Committee on Appropriations will mark up the proposed FY16 Transportation, Housing and Urban Development, and Related Agencies (THUD) spending bill on May 13. The bill raids the National Housing Trust Fund (NHTF) and uses the estimated $133 million from the NHTF to make up for cuts the bill imposes on the HOME program (see Memo, 5/4).

Some Members of the Committee are considering offering an amendment that would strike all references to the NHTF from the bill and level-fund HOME at $900 million. Advocates should watch for alerts about such an amendment.

In the absence of significant and unlikely improvement to the bill, NLIHC will continue to oppose it.

 

House Appropriations Committee to Mark Up THUD Spending Bill

The proposed FY16 Transportation, Housing and Urban Development, and Related Agencies (THUD) spending bill that the House Committee on Appropriations will mark up on May 13  makes deep cuts to most of HUD’s housing and community development programs (see Memo, 5/4).  NLIHC urges all Members of the Committee to vote against the bill.

The cuts are driven by the continued imposition of the sequester caps on all domestic discretionary programs. President Barak Obama has promised to veto any bills that maintain the sequester caps.

The mark-up will be held at 10:15 am ET in room 2359 of the Rayburn House Office Building. 

 

Senate Passes Concurrent Budget Resolution

On May 5, the Senate voted 51-48 to approve the Concurrent Budget Resolution (S. Con. Res. 11) on the FY16 Budget. The vote was on straight party lines, with no Democrat voting yes.  The concurrent budget resolution is the outcome of negotiations between the Senate and House on their respective budget resolutions (see Memo 4/27). The House passed the concurrent budget resolution on April 30 (see Memo, 5/4).

The concurrent budget resolution retains the 2011 Budget Control Act’s sequester spending caps for FY16 but circumvents sequester caps on defense spending by putting nearly $40 billion in off-budget funds in the Pentagon’s Overseas Contingency Operations account. The concurrent budget resolution does not include the House budget resolution’s reconciliation instructions to the House Committee on Financial Services to identify at least $100 million in mandatory savings. It does include reconciliation instructions to the appropriate committees to repeal the Affordable Care Act.

The next step in the Senate is for the Senate Committee on Appropriations to produce spending bills that meet the newly approved framework.

Basic information about the federal budget and appropriations process is on page 2-3 of NLIHC’s 2015 Advocates’ Guide, http://nlihc.org/sites/default/files/Sec2.02_Federal-Budget-Appropriations_2015.pdf

 

Representative Maxine Waters Introduces Public Housing Bill

On May 1, Representative Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, introduced H.R. 2231, the “Public Housing Tenant Protections and Reinvestment Act of 2015.” The bill seeks to preserve public housing and transform neighborhoods by authorizing full funding for public housing and providing additional funds to address the significant backlog of capital needs.  The bill would require that, when public housing must be demolished or sold, the units affected would have to be replaced on a one-for-one basis, reinstating a provision that Congress eliminated in 1995. The bill also increases tenant protections to help ensure that residents who choose to may stay in their communities when public housing is redeveloped.

In a press statement about the bill, Ms. Waters said, “For generations, public housing has provided a critical bridge out of poverty for millions of Americans. Today, that bridge is crumbling due to chronic underfunding and neglect. Particularly in the midst of the current rental housing crisis, it is unconscionable that we have lost approximately 200,000 units of public housing since 2000, and we continue to lose more every year.”

Title I of the bill is the Public Housing One-for-One Replacement and Tenant Protection Act of 2015. It would revise Section 18 of the Housing Act of 1937 to require each public housing unit demolished or disposed of to be replaced on a one-for-one basis with a newly constructed unit, a rehabilitated unit, a unit purchased to serve as a replacement, or project-based assistance. HUD would be required to provide tenant protection vouchers for all units, subject to appropriations. Section 18 and the proposed one-for-one replacement provisions would also apply to Section 22 voluntary conversions to vouchers, Section 33 mandatory conversions to vouchers, and units taken through eminent domain. 

HUD would be allowed to waive the one-for-one replacement requirement for up to 10% of the total number of units owned by a public housing agency (PHA) in any 10-year period under two conditions. First would be when there is a court order or judgment limiting a PHA’s ability to comply. Second would be when the PHA demonstrates that there is an excess supply of affordable rental housing in areas of low poverty, that in areas surrounding a project at least 90% of the vouchers issued during the last two years were leased within 120 days, and that existing voucher holders are widely disbursed in areas of low poverty with public transportation, quality education, and other amenities.

Replacement units would be required to be of comparable size and have the number of bedrooms needed to serve displaced households. Replacement units would also have to have the same requirements as public housing regarding income eligibility, affordability restrictions, tenant contribution toward rent, and eviction protections and procedures. Tenants would have a right to return to replacement housing. A PHA or other manager of replacement housing could not impose additional eligibility requirements, rescreen tenants, or otherwise erect barriers to return. Tenants occupying replacement housing would have all of the rights they had under public housing, including grievance procedures and Section 964 tenant participation provisions.

When public housing is demolished, at least one-third of all replacement units must be public housing units built on the original public housing site. The PHA must ensure that sufficient units will be provided on the original site or in the same neighborhood to accommodate all tenants who want to remain at that site or in the neighborhood.

No later than 90 days before submitting an application to HUD for demolition, disposition, or conversion, a PHA would have to meet with and inform all residents in writing of the PHA’s intent to apply, plans for replacement housing, and their right to return along with their relocation options. The PHA would also have to determine if a resident wants to return to replacement housing constructed on the original site or same neighborhood, to move to another neighborhood or community, or to receive a housing voucher.

HUD would be prohibited from approving an application for demolition or disposition if the PHA did not provide for the active involvement of residents, resident advisory boards, and resident councils during the preparation and implementation of the plan for demolition, relocation, and replacement of units. HUD would be prohibited from approving a plan to demolish, dispose of, or convert units that does not affirmatively further fair housing.

If residents are temporarily relocated off-site, the temporary housing would have to be in areas generally not less desirable and must include at least one unit in an area of low-poverty and one unit within the neighborhood of the original public housing site.

PHAs would be required to fully inform displaced residents of all relocation options, including relocation to housing in a neighborhood with a lower concentration of poverty, relocation to a neighborhood where relocation will not increase racial segregation, or remaining in their current neighborhood. PHAs would be required to obtain and analyze data regarding the potential impact of a proposed demolition or disposition on tenants that had to relocate, occupants of the surrounding neighborhood, residents of neighborhoods into which tenants are likely to be relocated, and people on the PHA’s waiting list. The PHA would have to describe actions that it has taken or will take to mitigate adverse impacts, and certify that that the demolition, disposition, relocation, or replacement housing will affirmatively further fair housing.

The bill would prohibit PHAs from relocating residents before securing HUD approval to demolish or dispose of public housing. It would also prohibit a PHA from beginning demolition or completing disposition until all residents are relocated.

Title II is the Public Housing Preservation and Rehabilitation Act of 2015. It would authorize funds for the Public Housing Capital Fund for FY16 through FY25 in “such sums as may be necessary to fully fund…the estimated need of public housing agencies…” In addition, the bill would authorize $5 billion each year to address the capital fund backlog. In 2010 a HUD-sponsored study identified a $26 billion capital needs backlog, which would become $3.4 billion deeper each year for 20 years (see Memo, 6/24/11). Title II would authorize funding for the Public Housing Operating Fund in amounts needed to fully fund the estimated need for each fiscal year from FY16 through FY25.

The bill would allow HUD to establish a Capital Fund Loan Guarantee up to $500 million each year to enable PHAs to attract private investment to rehabilitate public housing, make energy efficiency improvements, or to construct, rehabilitate, purchase, or convert units in order to replace units demolished, disposed of, or converted. The loan guarantee would be backed by the full faith and credit of the United States, have a term not to exceed 20 years, and guarantee repayment of 95% of the unpaid principal and interest.

PHAs using Low Income Housing Tax Credits in conjunction with public housing would have to ensure that all significant tenant and applicant rights are continued and enforced; that the PHA retains interest in the property to the maximum extent possible, including through ground leases; that the PHA maintains an active role in property management decisions and operations; and that long-term affordability protections apply in the event of a default or foreclosure.  

Finally, Title II would remove the restriction on the construction of new public housing units.

Title III is the Choice Neighborhoods Initiative Act of 2015. It would formally authorize the Choice Neighborhoods Initiative (CNI), which HUD has been administering since FY10 based solely on Congressional appropriations. Title III proposes a $1billion authorization (up from recent an appropriation of $80 million in FY15), requiring at least 80% to be used to revitalize severely distressed public housing units. To be eligible for a CNI grant, an application would have to have an affordability period of 50 years or longer.

The summary of the bill acknowledges that Title III intends to correct for the problems of the HOPE VI program. For instance, CNI would require one-for-one replacement of units demolished or otherwise removed from the public housing stock. Many displaced residents of HOPE VI projects who wanted to return to the revitalized properties and their neighborhoods were rescreened using new admissions criteria, resulting in residents being denied the right to return. In addition, while waiting many years for redevelopment to take place, PHAs with HOPE VI projects lost contact with many residents, who consequently could not benefit from revitalization. Title III would require significant resident involvement and tenant protections mirroring those in Title I, while adding monitoring of displaced households.

Title IV is the Together We Care Act of 2015. It would authorize $2.5 million for FY16-FY18 to provide grants to a range of eligible entities to train public housing residents to provide in-home health care for elderly and disabled residents of public and federally assisted housing.

The bill was referred to the Financial Services Committee. It has no cosponsors.

The text of the bill is at http://democrats.financialservices.house.gov/uploadedfiles/waters_035_xml.pdf 

A section-by-section summary is at http://democrats.financialservices.house.gov/uploadedfiles/public_housing_tenant_protection_and_reinvestment_act_of_2015_section_by_section.pdf

Ms. Waters’s media release is at http://democrats.financialservices.house.gov/news/documentsingle.aspx?DocumentID=399027

Basic information about public housing is on page 4-9 of NLIHC’s 2015 Advocates’ Guide, http://nlihc.org/sites/default/files/Sec4.04_Public-Housing-ARC_2015.pdf

Basic Information about the Choice Neighborhoods Initiative is on page 4-14 of NLIHC’s 2015 Advocates’ Guide, http://nlihc.org/sites/default/files/Sec4.05_Public-Housing-Choice-Neighborhoods_2015.pdf

Basic information about Section 22 voluntary conversions and Section 33 mandatory conversions is on pages 24 and 25 of NLIHC’s Preservation Guide, http://nlihc.org/sites/default/files/Preservation-Guide2010.pdf

 

Senate Bill Introduced to Establish Fixed Tax Credit Rates for LIHTC Program

On May 5, Senators Maria Cantwell (D-WA) and Pat Roberts (R-KS) introduced the “Improving the Low-Income Housing Tax Credit Act” (S. 1193). The bill would make the Low Income Housing Tax Credit (LIHTC) 9% fixed floor rate permanent for new construction and substantial rehabilitation projects, and establish a 4% fixed floor rate for acquisition projects. S.1193 is a companion bill the H.R 1142, introduced by Representatives Pat Tiberi (R-OH) and Richard Neal (D-MA) on February 26 (see Memo, 3/16). 

In a media release, Senator Cantwell said, “The Low-Income Housing Tax Credit supports more than 90,000 jobs each year nationwide and has helped leverage nearly $100 billion in private investment in these critically needed affordable housing units. That’s why we must permanently extend this critical provision without delay and give states the certainty they need to help address the affordable housing crisis in this country.”

A minimum 9% tax credit rate was included in the Housing and Economic Recovery Act of 2008, but it expired for rental units placed in service after December 31, 2013. The American Taxpayer Relief Act of 2012 allowed any project receiving a LIHTC allocation before January 1, 2014 to qualify for the fixed 9% credit. The Tax Increase Prevention Act of 2014 provided a fixed 9% minimum, but it only extended the rate through December 31, 2014.

The Tax Reform Act of 1986 established a formula that uses the federal cost of borrowing to determine the actual credit rate for LIHTCs awarded to development projects. As the cost of federal borrowing declines, the value of LIHTCs also declines. For example, now “9%” credits have a 7.44% applicable percentage. By establishing a fixed minimum credit, S. 1193 would protect prospective LIHTC developments from reductions in investor equity used to finance affordable housing.

S. 1193 was referred to the Senate Committee on Finance and currently has 22 cosponsors.

The text of the bill will be at https://www.congress.gov/bill/114th-congress/senate-bill/1193

The media release from Senator Cantwell’s is at http://www.cantwell.senate.gov/public/index.cfm/press-releases?ID=ce35c971-ea12-43a4-9547-588f8332e1c3

More information about the LIHTC program is on page 5-32 of NLIHC’s 2015 Advocates’ Guide, http://nlihc.org/sites/default/files/Sec5.10_LIHTC_2015.pdf

 

 


HAC NEWS

HOUSE ACTS ON HUD FUNDING. The House Appropriations Transportation-HUD Subcommittee on April 29 approved a bill to fund HUD and other programs in fiscal year 2016, beginning October 1. The bill would reduce appropriations for HOME from $900 million in 2015 to $767 million in 2016, but would make up the difference by channeling receipts from Fannie Mae and Freddie Mac to HOME rather than to the National Housing Trust Fund, where current law requires them to go. The bill has level funding for CDBG, Native American housing, public housing operating funds, fair housing, and housing counseling. Some other reductions and increases would also occur, as the table below indicates. A full committee mark-up is the next step in the process and will probably occur soon. The Senate committee has not yet scheduled its action on a T-HUD bill. Also not yet clear is when a final appropriations act will pass and what the impact of a required budget sequester could be. 


HUD Program
(dollars in millions)

FY13
Approp.a

 

FY14
Approp.

 

FY15
Approp.

FY16 Admin. Budget
Proposal

FY16
House Subcmte. Bill

Cmty. Devel. Fund
CDBG

3,308
2,948

3,100
3,030

3,066
3,000

2,880
2,800

3,060
3,000

HOME 
SHOP setaside

1,000
b

1,000
b

900
b

1,060
10

767
-

Self-Help Homeownshp. (SHOP)

13.5

10

10

b

10

Tenant-Based Rental Assistance
VASH setaside

18,939.4
75

19,177.2
75

19,304
75

21,123
c

19,919
-

Project-Based Rental Asstnce.

9,339.7

9,516.6

9,330

10,360

10,254

Public Hsg. Capital Fund

1,886

1,875

1,875

1,970

1,681

Public Hsg. Operating Fund

4,262

4,400

4,440

4,600

4,440

Choice Neighbrhd. Initiative

120

90

80

250

20

Native Amer. Hsg. Block Grant

650

650

650

660

650

Homeless Assistance Grantsd

2,033

2,105

2,135

2,480

2,185

Hsg. Opps. for Persons w/ AIDS

334

330

330

332

332

202 Hsg. for Elderly

377

385.3

436

455

414

811 Hsg. for Disabled

165

126

135

177

152

Fair Housing

70.8

66

65.3

71

65.3

Healthy Homes & Lead Haz. Cntl.

120

110

110

120

75

Housing Counseling

45

45

47

60

47

Local Housing Policy Grants

-

-

-

300

-

a. Figures shown do not include 5% sequester.
b. Recent Obama budgets have proposed making the SHOP program a setaside in HOME. Congress has rejected that proposal.
c. VASH vouchers for homeless veterans are not funded.  The President’s budget proposed making VASH part of a new account of incremental rental vouchers for families, veterans, and tribal families experiencing homelessness and for victims of domestic violence.
d. Includes the Rural Housing Stability Program, which is not yet operational.


USDA RD ISSUES FINAL 502 PACKAGING RULE.
Revisions to the rule proposed on August 23, 2013 (see HAC News, 8/28/13) will strengthen qualification requirements for intermediaries, require all loans to go through intermediaries unless a packaging organization gets a USDA waiver, cap fees at $1,500 initially, exempt self-help loans from packaging, and make other changes. The final rule is effective July 28. Contact Brooke Baumann, RD, 202-690-4250.


RD REVISES UL ON TENANT NOTIFICATIONS FOR LOAN PAYOFFS.
An Unnumbered Letter dated April 28, 2015 supersedes one issued on January 15, 2015 (see HAC News, 2/4/15) and includes sample notifications for borrowers and tenants. Contact a USDA RD state office.


HUD OFFERS ICDBG FUNDS TO ADDRESS MOLD.
Tribes and tribal organizations can apply by June 22 for Mold Remediation and Prevention grants to be used for housing units owned or operated by tribes and TDHEs or previously assisted with HUD funding. Contact Roberta Youmans, HUD, 202-402-3316.


HUD HAS TENANT PROTECTION VOUCHERS FOR LOW-VACANCY AREAS.
Property owners can apply on a rolling basis for either enhanced vouchers or project-based vouchers for tenants in listed low-vacancy counties whose rents rise when a HUD-insured, HUD-held or Section 202 loan matures; a rental assistance contract expires; or HUD affordability restrictions expire. Contact HUD’s Housing Voucher Management and Operations Division, 202-708-0477.


CONTINUUM OF CARE REGISTRATION OPENS.
CoC Collaborative Applicants (not project applicants) must register by May 18 in order to compete for FY15 funds. Contact a HUD CPD field office.


VA REQUESTS COMMENTS ON VETERANS CHOICE PROGRAM.
Comments are due May 26 for the Veterans Choice Program interim final rule, which uses driving distance rather than straight lines to measure the distance from a veteran’s residence to the nearest VA medical facility. Contact Kristin Cunningham, VA, 202-382-2508.


HUD CHANGES DISTRESSED ASSET STABILIZATION PROGRAM.
Loan servicers must now delay foreclosure for a year and evaluate borrowers for loss mitigation programs. Other changes are intended to increase HUD’s first 2015 sale is planned for June.


BROADBAND COMMENTS REQUESTED.
The Rural Utilities Service and National Telecommunications and Information Administration seek input by June 10 about federal actions to promote broadband deployment, adoption, and competition, including by identifying and removing regulatory barriers. Contact Denise Scott, RUS, 202-720-1910.


HUD REVISING TRIBAL CONSULTATION POLICY.
Comments are due June 8 on changes to HUD’s government-to-government policy, which intended to enhance communication and coordination between HUD and federally recognized Indian tribes, and to outline guiding principles and procedures under which all HUD employees are to operate with regard to federally recognized tribes. Contact Rodger Boyd, HUD, 202-401-7914.


HUD REQUIRED TO USE PROCUREMENT CONTRACTS FOR SECTION 8 FUNDING.
On April 20 the Supreme Court denied an appeal petition, leaving standing a lower court’s ruling that HUD cannot continue to use cooperative agreements with states and PHAs to run the Project-Based Rental Assistance (voucher) program. HUD must now use the federal procurement process, and has said it will need 18-24 months to implement the decision.


ADMINISTRATION ADDS NEW PROMISE ZONES.
As PZs, the Pine Ridge Indian Reservation in South Dakota and the South Carolina Low Country, along with six cities, will receive technical assistance and some funding preferences.


GAO RECOMMENDS CHANGES IN HOPWA FUNDING FORMULA.
Persons with HIV: Funding Formula for Housing Assistance Could Be Better Targeted, and Performance Data Could Be Improved recommends revising the funding formula to letter reflect the number of living persons with HIV.


HUD RELEASES RENTAL MARKET DYNAMICS 2009-2011 REPORT.
The report finds that while the number of afford-able units increased nationally, their percentage of the overall rental stock decreased.

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