Senate Appropriators Advance FY 2013 Bill
As NAHRO previously reported, the Senate Appropriations committee approved its version of the FY 2013 Transportation, Housing and Urban Development, and Related Agencies (THUD) Appropriations Act (S. 2322) on April 19. Today’s Direct News item is intended to provide NAHRO members with a comprehensive summary of the bill’s treatment of community development and affordable housing programs, including the Community Development Block Grant and HOME Investment Partnerships programs, and HUD’s McKinney-Vento homeless assistance programs. NAHRO’s overview for Public Housing programs is also available online, and our coverage of the bill’s treatment of Section 8 programs can be accessed here. Click here for NAHRO’s chart comparing the Senate mark to FY 2011 and FY 2012 enacted levels, the President’s FY 2013 budget, and NAHRO’s funding recommendations for FY 2013, respectively.
Community Development Fund and CDBG: S. 2322 provides $3.210 billion for the Community Development Fund, with $3.1 billion provided for the Community Development Block Grant (CDBG) program, including grants to insular areas – an increase of $152 million over FY 2012. The President’s FY 2013 budget requests a total of $3.143 billion for the Community Development Fund, including $2.948 billion – level funding compared to FY 2012 - for CDBG allocations.
In a positive development, S. 2322 does not set aside any funding from the Community Development Fund for disaster CDBG assistance. By way of review, the FY 2012 funding bill’s approach to funding the CDBG program was unprecedented in that the bill specified a minimum programmatic funding level while leaving the final amount to the HUD Secretary’s discretion. The conference agreement stipulated that, of the amount provided for the Community Development Fund, “not less than” $2.948 billion was for carrying out the CDBG program. In reality, after accounting for a $60 million set-aside for the Indian CDBG program, up to $3.241 billion was available for formula allocations, after accounting for grants to insular areas. However, the FY 2012 bill also made up to $300 million under the Community Development Fund available for “necessary expenses and activities…related to disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization in the most impacted and distressed areas resulting from a major disaster declared…in 2011.”
NAHRO and its community development industry partners requested that HUD direct as much of the available funding as possible toward the regular CDBG formula program. Dedicated CDBG funding intended to address disasters has traditionally been provided in the form of off-budget emergency spending through supplemental appropriations measures. NAHRO and its partners felt strongly that providing disaster CDBG funding through the annual appropriations bill as a set-aside under the Community Development Fund set a troubling precedent. Unfortunately, the Department ultimately allocated the minimum amount of formula funding allowed under the bill, although HUD officials made clear that the Department shared NAHRO’s concerns about the approach employed by the Congress.
Sustainable Housing and Communities: The administration’s budget requests $100 million for the Sustainable Housing and Communities Initiative (formerly known as the Sustainable Communities Initiative) for FY 2013. Sustainable Communities Initiative funding for FY 2010 and FY 2011 was provided by setting aside $150 million and $100 million, respectively, from the Community Development Fund. The President’s FY 2012 budget requested stand-alone funding, but the FY 2012 appropriations act provided no funding for the initiative. S. 2322 sets aside $50 million from the Community Development Fund for the Sustainable Housing and Communities Initiative.
Indian Community Development Block Grant program: The FY 2013 budget sets aside $60 million under the Community Development Fund for the Indian Community Development Block Grant program, the same amount provided for FY 2012. S. 2322 matches the President’s request and provides level funding.
Rural Innovation Fund: The administration’s budget does not request funding for the Rural Innovation Fund for FY 2013, and S. 2322 provides no funding for the program. By way of review, the administration’s FY 2010 budget proposed that $25 million from the Community Development Fund be set aside for a new Rural Innovation Fund. This new initiative was intended to supplant the standalone Rural Housing and Economic Development (RHED) program, funding for which was proposed for elimination by the administration. Congress accepted the administration’s recommendation and the FY 2010 HUD appropriations bill set aside $25 million from the Community Development Fund for the Rural Innovation Fund and provided no funding for the RHED program. The President’s FY 2011 budget proposed no funding for either the Rural Innovation Fund or the RHED program, and no funding was provided for either program by the Congress for FY 2011. The administration’s FY 2012 budget proposed restoring funding for the Rural Innovation Fund, but the Congress again opted not to provide funding.
HOME Program: S. 2322 level funds the HOME Investment Partnerships program at $1 billion for FY 2013, the same level requested by the administration. The FY 2012 enacted level represented a reduction of approximately 38 percent compared to the FY 2011 enacted level of $1.607 billion. The program was funded at $1.825 billion for FY 2010.
The historically low level of HOME funding would be exacerbated by the administration’s recommendation – also issued last year but ultimately rejected by the Congress – that the Self-Help Homeownership Opportunity Program (SHOP) be terminated. The administration continues to argue that SHOP-funded activities are eligible under the HOME program, rendering the program duplicative. Self-help housing providers that would have previously applied for funding through the national SHOP competition would instead have to approach the HOME Participating Jurisdiction (PJ) where the proposed housing is located for funding. S. 2322 rejects the administration’s recommendation, instead providing $53.5 million in standalone funding for SHOP.
S. 2322 carries forward a number of new programmatic requirements first introduced as part of the FY 2012 HUD funding bill and intended to ensure the timely completion of HOME-funded projects:
- Funds used for projects not completed within four years of the commitment date, as determined by a signature of each party to the agreement, shall be repaid. The Secretary may extend the deadline for one year if the Secretary determines that the failure to complete the project is beyond the control of the Participating Jurisdiction (PJ).
- No funds may be committed to any project unless each PJ certifies that it has conducted an underwriting review, assessed developer capacity and fiscal soundness, and examined neighborhood market conditions to ensure adequate need for each project.
- Any homeownership units which cannot be sold to an eligible homeowner within six months of project completion must be rented to an eligible tenant.
- No funds may be awarded for development activities to a community housing development organization (CHDO) that cannot demonstrate that it is has staff with demonstrated development experience.
Variations of these requirements are included in the Department’s proposed rule for the HOME program. Comments in response to the proposed rule were due February 14, and a final rule is expected later this year. NAHRO’s comment letter in response to the proposed rule is available online.
S. 2322 includes language to amend the Cranston-Gonzalez National Affordable Housing Act in order to allow PJs and subgrantees to waive the required 30 day waiting period when terminating or refusing to renew HOME-funded housing assistance due to a ‘‘a direct threat to the safety of the tenants or employees of the housing, or an imminent and serious threat to the property,” so long as the termination or refusal to renew is in accordance with the requirements of State or local law. NAHRO has long been on the record in favor of this change.
Section 108: S. 2322 adopts the administration’s proposal to raise the loan guarantee limit to $500 million and collect fees from Section 108 borrowers in amounts that would result in a credit subsidy cost of zero. Accordingly, no direct appropriations are provided. The Section 108 program was funded at approximately $6 million for FY 2012, with the program’s total maximum level of guaranteed loan principal set at $240 million. NAHRO supports direct appropriations for Section 108 credit subsidies but supports the increase to the loan guarantee limit.
Homeless Assistance Grants and HOPWA: S. 2322 provides $2.146 billion for HUD’s Homeless Assistance Grant programs for FY 2013, up from the enacted level of $1.901 billion for FY 2012. The President’s budget proposes a total of $2.231 billion in funding.
HUD has still not fully implemented the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act – signed into law by President Obama two and a half years ago – which restructured HUD’s homeless assistance programs. HEARTH combined HUD's three competitive grant programs—Shelter Plus Care, Supportive Housing, and Section 8 Moderate Rehabilitation Single Room Occupancy—into a single competitive Continuum of Care program. HEARTH also renamed the Emergency Shelter Grants program the Emergency Solutions Grant program and amended the program to provide grantees with more flexibility to prevent homelessness and rapidly re-house families and individuals who become homeless. HEARTH also created a new Rural Housing Stability Assistance program, which would provide funding to combat homelessness in rural areas.
The FY 2012 funding bill required that “not less than $250 million” be available for the reformed ESG program. S. 2322 provides for not less than $286 million for ESG for FY 2013, the same amount requested by the administration.
The Senate mark matches the President’s proposed funding level of $330 million for Housing Opportunities for Persons with AIDS (HOPWA), a slight reduction compared to the $332 million provided for FY 2012.
Other Provisions
Timely Notification of Grantees: Like the FY 2012 bill, S. 2322 requires HUD to notify Community Planning and Development (CPD) grantees of their formula allocations within 60 days of enactment. This requirement, which was originated and first proposed by NAHRO in 2010, will apply to the CDBG, HOME, ESG, and HOPWA programs.
Eminent Domain: The conference report carries forward language from recent appropriations acts prohibiting the use of HUD funding for federal, state, or local projects that use eminent domain for any purpose other than a public use. Economic development that primarily benefits private entities is not considered a public use for the purposes of the provision. The use of funds for mass transit, railroad, airport, seaport, and highway projects; certain utility projects; structures designated for use by the general public; projects for the removal of an immediate threat to public health and safety; and projects involving brownfields would remain eligible for federal funds.
Related Resources:
Please direct questions regarding this Direct News item to Jeff Falcusan, Director of Policy and Program Development.
