Community Development Legislative News

From the National Low Income Housing Coalition

President Submits HUD’s FY2000 Request

The Clinton administration submitted its FY2000 budget request to Congress on February 1. The FY2000 HUD budget emphasizes community development programs, getting more capital into underserved communities through increases in current programs, and the creation of a handful of small programs. Of the portion of new housing created by the $2.5 billion overall increase in the president’s HUD budget request, almost half of the new housing is in elderly construction dollars and the balance is mostly in the form of 85,000 new rental assistance vouchers, increases to homeless assistance grants, housing for persons with AIDS, and the HOME program. The request also includes $10.64 billion to renew all expiring Section 8 contracts (up from $9.599 billion in FY99). The increase in this critical line item obviously contributed greatly to the overall increase.

The administration’s request includes funds for 42,000 new Section 8 rental assistance vouchers for families with worst case housing needs, 18,000 new vouchers for people who are currently homeless, and 25,000 new vouchers for families moving from welfare to work. The president’s request also increases homeless assistance grants from $975 million to $1.02 billion; decreases the public housing capital fund by $445 million while increasing the public housing operating fund by $185 million to a little more than $3 billion; seeks again a rural housing and economic development office at $20 million (an allocation was sought in FY99 but no funds were appropriated); seeks $50 million for a new abandoned building program (which would provide funds to raze properties but not for subsequent rebuilding); and increases funds for HOME by $10 million and CDBG by $25 million. The request includes $625 million for HOPE VI.

The president has requested no funds for affordable housing preservation. Today, thousands of units are at risk of leaving the affordable housing inventory, and too many already have, as owners seek to prepay their mortgages (thus severing their ties to HUD and affordability standards) or to opt out of their contracts when they come up for renewal. Advocates will continue to seek preservation funding. During negotiations with the president’s Office of Management and Budget, HUD had been seeking $100 million for preservation. Advocates look forward to working with HUD on securing adequate funds to address the loss of this affordable housing stock during the appropriations process.

The request seeks an increase in the Regional Opportunity Program, which helps housing authorities market the Section 8 tenant-based program to landlords. The budget request briefing materials do not indicate, however, that HUD will seek to increase the worth of vouchers in local markets to increase their viability.

The president will also seek to increase the Low Income Housing Tax Credit (LIHTC) cap from $1.25 to $1.75 per person (by state). However, the administration’s proposal does not include indexing the cap for inflation – important in ensuring that the LIHTC’s value is not lost over the coming years as it has been since its inception in 1986.

The budget request includes $125 million to create the Community Empowerment Fund (CEF), which would combine $125 million in economic development initiative grants with $625 million in Section 108 loan guarantees to provide $750 million in increased capital for business investment and job creation in underserved inner-city and rural areas. These funds include $75 million in a Welfare-to-Work Targeted Job Creation Initiative, which will support the expansion of businesses that hire individuals making the transition from welfare to work. Also funded under CEF is the $25 million City-Suburb Business Connections program, to help metropolitan areas look at housing, transportation, and economic issues in a regional context.

Also proposed, as a joint project between HUD and the Small Business Administration, the America’s Private Investment Companies (APIC) program would provide $37 million to subsidize up to $1 billion in loan guarantees to expand investment capital for distressed urban and rural areas.

FY99 Income Limits

Fiscal year 1999 income limits are now available from HUD’s Office of Policy Development and Research. HUD is required to set these income limits, which determine eligibility of applicants for its assisted housing programs (public housing, Section 8, Section 202 elderly and Section 811 disabled, Indian housing, HOME, etc.). Income limits start by developing estimates of median family income for the 357 metropolitan and 2,326 nonmetropolitan fair market rent (FMR)/income limit areas using Census and Bureau of Labor Statistics data. (The national median family income for FY99 is $47,800.) Then the income limits are calculated for 30 percent of area median income, 60 percent of area median income, etc., taking into account a variety of factors.

The data are most easily accessible at www.huduser.org. The site provides income limits and FMRs for metropolitan and nonmetropolitan areas. The site also explains the methodology used to develop income limits.

Local Funding Data

The newly redesigned HUD website now includes tables that list major state and local funding for FY1999 and FY2000-proposed. See www.hud.gov/bdfy2000/majrfund/majrfund.html.

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