Disproportionate cuts to HUD in conference appropriations bill

by Clare Duncan, National Housing Conference

Yesterday, the conference committee released the final conference report for the so-called minibus, which combines FY2012 Appropriations for Agriculture, Commerce/Justice/Science (CJS) and Transportation/Housing and Urban Development (THUD). The report was approved with bipartisan support, with all but one of the 38 conferees supporting the legislation. The bill would provide $128 billion for the included programs, with $55.6 billion for the THUD portion of the package, which is actually an increase of $183 million from FY11 levels. HUD, however, was cut by $3.8 billion relative to FY 2011, for a total of $37.3 billion for 2012.

The cuts show up in many places (see chart below for details):

• No funding for the Sustainable Communities Initiative, which has been targeted for elimination in the House.
• Section 8 tenant-based vouchers would receive $18.9 billion, above both the House and Senate version, which the summary describes as “sufficient funding to renew every individual and family that received assistance through Section 8 tenant-based vouchers”. Veterans Affairs Supportive Housing vouchers would receive $75 million.
• Project-based Section 8 (not mentioned in the summary), would receive $9.3 billion. Since this is below the amounts in both the House and Senate versions, it does not appear to fully fund renewals.
• HOME would receive only $1 billion, a severe cut from FY 2011 levels. The summary reiterates criticism of the program from the House committee report, and the bill includes new oversight requirements for community development program funds, including a requirement that homeownership units unsold after six months must be rented and that funds for projects uncompleted after four years must be repaid, with a one-year discretionary extension.
• CDBG would be cut by $192.9 million from FY11 levels, to a total $3.3 billion of which $400 million can be used for eligible disaster recovery activities.
• Public housing would receive $1.85 billion for the capital fund and $3.96 billion for the operating fund, but the operating figure includes $750 million against PHA reserves.
• Section 202 Housing for the Elderly, which would drop to $375 million from $399 million in FY 2011.
• In the Agriculture budget, several major housing programs would be cut relative to FY 2011, including the Section 502 Single Family Direct Loan Program, Section 515 Rental Housing Direct Loan Program, and Section 521 Rental Assistance Program.

There are a few bright spots, however (taking the liberty of counting level funding as good):

• Choice Neighborhoods would receive $120 million to revitalize distressed communities
• Section 811 Housing for the Disabled would receive $165 million, a slight increase from FY 2011 though below historical levels for the program.
• HUD’s housing counseling program, which was zeroed out in FY 2011, would receive $45 million, still far below the $87.5 million it received in FY 2010. The NFMC program received $80 million.
• The Rental Assistance Demonstration program would be authorized for conversion of 60,000 units of public housing to project-based Section 8, although without specific funding attached.
• Homeless assistance grants would receive level funding at $1.9 billion.
• In the Agriculture budget, the Section 502 Single Family Guarantee program would be level-funded at $24 billion, and the 538 Rental Housing Guarantee program would see a substantial increase (bringing it closer to historical levels) to $130 million.

Other key provisions in the minibus:

• Raise FHA’s loan limits back to the levels passed in HERA, a maximum of $729,650. However, the loan limits for Fannie Mae and Freddie Mac would be left at their current level of $625,000. Although the FHA increase will be helpful in providing stability in high-cost markets, the differential between FHA and the GSEs (which together are still providing over 90% of new home mortgages) will further drive mortgage origination to the fully-guaranteed FHA channel that is already handling a much greater share of the market than usual.
• Continuing resolution through December 16 for parts of government for which Congress has not yet passed appropriations bills. Since the current CR expires November 18, this becomes must-pass legislation.

For more information, please visit the House Appropriations Committee website or view the full conference report here. NHC’s member Enterprise Community Partners also has a detailed budget chart here.