HUD Budget Offers Opportunities for New Initiatives

President Obama’s proposed 2011 budget could single a shift in the way future housing assistance is provided to low-income families as it seeks to encourage a regional approach to providing tenant-based rental assistance. This approach could portend how the Department of Housing and Urban Development (HUD) will fund future initiatives to local communities.

The budget proposes a new initiative which seeks to implement the first phase of a multi-year effort to increase tenant mobility and access to assistance. The Transforming Rental Assistance (TRA) Initiative will allow a limited number of housing authorities adjacent to one another to combine the administrative functions of serving vouchers to eligible families. The intent is to create a “regional entity” designed to allow for increased mobility in the use of the voucher and access to greater housing options for the family receiving assistance. The administration expects to introduce legislation in the spring to give it the legislative authority to carry out this initiative. The administration is promising to enter into long-term property-based rental contracts with the authorities if the “mobility” or regional approach is part of the agreement. In the accompanying HUD documents, the department contends this will eventually result in “a uniform funding stream, governed by a single set of rules and regulations.”

Housing authorities can currently seek approval from HUD to convert public housing units to vouchers without the mobility component. HUD has been very hesitant to grant the conversion. There are stricter rules governing the public housing program. The voucher program is easier to administer, generates fees for the PHA and can be used as an incentive for public housing residents to pursue self-sufficiency initiatives.

This approach has been advocated by low-income housing advocates for years. This approach is centered on the notion that a regional approach eases the burden on the administrative agency and the family seeking housing. There isn’t enough evidence to suggest a regional authority increases housing opportunities for voucher holders. However, jurisdictional issues and the cost implications for an agency when a voucher leaves its inventory do warrant additional review and adjustments.

It is early and more details about the initiative need to be reviewed; however, given the current political and economic climate, this could gain the necessary support to be enacted into law. There will probably also be a few housing authorities which will reach agreement with HUD to test this initiative. Our guess is HUD will be very accommodating to these agencies.

The budget also includes $1 billion for the Housing Trust Fund although the accompanying documents do not include a source of funding for the initiative. According to the budget documents, HUD will propose a source of funds from outside of the appropriations process. The Trust Fund was enacted as part of the Housing and Economic Recovery Act of 2008.

Overall, the balance of the president’s submission is fairly straightforward:

1. The budget proposes $41.6 billion for HUD which is approximately $2 billion below the FY 2010 level. It does assume an additional $7 billion will eventually be available to the department from the receipts earned by the Federal Housing Administration (FHA) and Ginnie Mae.

2. The public housing capital fund will receive slightly more than $2 billion in the 2011 budget submission which is approximately % billion below the FY 2010 level. The administration sights the distribution of $4 billion in stimulus funding to justify the reduction.

3. The administration is proposing $4.8 billion for the public housing operating fund which it claims will meet 100 percent of the costs of running a housing authority.

4. The administration decided not to fund the HOPE VI program instead opting to ask for $250 million for the Choice Neighborhoods Initiative. This is significant because housing authorities must compete for funding under the Choice initiative with local governments, non-profits and for-profit entities. Under the HOPE VI program, housing authorities competed with other housing authorities for funds.

5. The proposed budget includes $17.3 billion for Section 8 tenant-based assistance. The budget does include an increase in administrative fees, calling for $1.7 billion, an approximate $200 million increase over last year’s budget.

6. The budget includes $9.3 billion for project-based assistance, $400 million of which will be available in FY 2012.

7. The budget includes $4.45 billion for the Community Development Block Grant (CDBG) program which includes $3.99 billion for the formula and the balance in set-asides.

8. Included as a set-aside within CDBG is $150 million for the Sustainable Communities Initiative which are grants help regional panning efforts to integrate transportation and housing initiatives.

9. Another set-aside is a new program called the Catalytic Investment Competition Grants which will be designed to provide gap financing for a variety of local economic development activities. The grants are expected to ignite economic activities in distressed communities.

10. The budget also proposes $25 million to fund the University Community Fund. These are grants which are designed to spur economic development activities in communities near universities.

11. The budget proposes $1.65 billion for the HOME program.

12. The budget proposes $2 billion for Homeless Assistance Grants.

13. The budget eliminates funding for the Brownfields Economic Development Initiative and the Section 108 Community Development Loan Guarantee Program.

14. In a surprise, the department also proposed suspending funding the Sections 202 and 811 programs. The purpose is to restructure the programs to make them more efficient.

Former HUD Secretary to Run for Governor of New York

Former HUD Secretary Andrew Cuomo, currently the Attorney General for the State of New York, is expected to run for governor and challenge the incumbent, David Patterson, in the Democratic primary according to several news reports. Several reports state he has more than $12 million for a campaign versus $600,000 for the incumbent David Patterson. Cuomo is heavily favored to defeat Patterson in the primary. For Congressman, Rick Lazio, who chaired a housing subcommittee during his tenure in the House of Representatives, is running to seek the Republican nomination for governor. Lazio is the principle author of a 1998 public housing reform bill. Assuming Cuomo wins the Democratic nomination, observers expect him to easily defeat his Republican opponent.


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