National Housing Law Project Housing Law Bulletin

On June 25, the House Appropriations Subcommittee for VA, HUD and Independent Agencies approved $70.1 billion of budget authority to fund the programs within its jurisdiction for Fiscal Year 1998. This figure is $600 million over the President's request and $5.7 billion over the FY 1997 funding level. Although $9.2 billion of budget authority was included for renewal of Section 8 contracts, the other HUD programs, for the most part, were funded at FY 1997 levels. Total funding of $25.1 billion was provided for the HUD programs for FY 1998. The Subcommittee action was confirmed when the full House Appropriations Committee reported the measure to the House on July 8, 1997.

The chart below, compiled from the Subcommittee's mark-up notes, sets out the funding for some of the principal HUD programs.¹

House Appropriations Committee FY 1998 Funding Levels
(b = billions, m = millions)
 
 

Program	FY 1997 Enacted	FY 1998 Request	FY 1998  Committee Recommendation
Public Housing:
Operating Subsidy (operating fund)	$2.9 b	$2.9 b	$2.9 b
Modernization (capital fund)	$2.5 b	$2.5 b	$2.5 b
HOPE VI	$550 m	$524 m	$524 m
Drug Elimination Grants	$290 m	$290 m	$290 m
Housing Certificate Fund (Assisted Housing):
Section 8 Contract Renewals2	$3.6 b	$9.2 b	$9.2 b
Section 8 Relocation Assistance	$190 m	$594 m	$343 m
Subsidized Housing Programs for Elderly and Disabled:
Section 202 (Elderly)	$645 m	$300 m	$644 m3
Section 811 (Disabled)	$194 m	$174 m	$194 m
Community Development Block Grants	$4.6 b	$4.6 b	$4.6 b
HOME	$1.4 b	$1.31 b	$1.5 b
Homeless Assistance Grants	$823 m	$823 m	$823 m
Fair Housing	$30 m	$39 m	$30 m

Funding Priorities

Although the mark-up notes are spare, they provide at least a cursory view of the Appropriations Committee's funding priorities.

The Public Housing Capital Fund contains a $5 million set-aside for the Tenant Opportunity Program. Report language explains a $200 million decrease in public housing capital funds as the result of a funds transfer to the Indian Housing Development program (part of the Native American housing block grant). The report also urges adoption of permanent public housing reforms. The General Accounting Office (GAO) will be requested to review the issue of PHAs' unspent capital funds, including whether PHAs' performance might be improved through private/public partnerships.

On the heels of questions regarding the source of funding for Section 8 contract renewals, HUD will be directed to identify all Section 8 contract reserves and the GAO will be asked to continue its study of that issue. Set-asides within Section 8 include the family self-sufficiency and witness relocation programs. The GAO will also be asked to study the housing needs of persons with disabilities and to collect data on such households relocated as a result of the designation of some public housing as elderly-only.

The mark-up notes observe that $3.7 billion in FY 1997 appropriations were rescinded to fund the FY 1997 Supplemental Appropriations Act which provided flood relief for North Dakota and other parts of the Midwest, as well as peacekeeping efforts in Bosnia.⁴

The Committee continues the practice of establishing a number of set-asides within the CDBG program. These include, for example, $67 million for Native American housing, $60 million for lead-based paint abatement, $50 million for social services grants, $30 million for Youthbuild, and $10 million for Habitat for Humanity.

A directive is included to require that HUD examine whether funding for other social services programs should be used in concert with the Homeless Assistance Grants.

In a departure from the recent past, the Committee severely cut back its authorizing action by including very few administrative provisions. Several of the authorizing provisions that were included have serious implications for low-income tenants. The minimum rent, first approved in the FY 1996 funding bill, was extended. The bill would continue authorizing PHAs to set minimum rents as high as $50. In addition, the measure extends the three-month delay provision in reissuance of vouchers and certificates, first adopted in the Balanced Budget Downpayment Act, I.⁵ The Committee also recommends limiting the annual adjustment factor for high-cost units, as well as cutting the annual adjustment factor by a percentage point for units that do not turn over.

The report also expresses the Committee's alarm over learning -- at least in part through the GAO's review of HUD's FY 1998 budget request -- of "billions of dollars of unspent Section 8 reserves" previously unaccounted for. The Committee instructs HUD, in the future, to provide better information on Section 8 housing needs, noting that shorter contract terms reduce the need for extensive reserves. It directs HUD to "specify the total amount of program reserves . . . [and] clearly document and support its policy positions on using reserves. . . ." The Committee bluntly notes that, were the Section 8 program not so critical to families, the elderly and disabled persons, it "would have recommended an appropriation of $0, pending a full report from HUD and the GAO and an accurate accounting of excess reserve funds."⁶ In a similar frame of mind, the Committee did zero out the low-income housing preservation program that had been meagerly funded at $350 million in FY 1997. The Committee notes its unwillingness to fund the preservation program because of its high costs, and remarks that cost-reducing reforms are within the purview of the authorizing committees. In noting the funding of public housing operating subsidies at the level of the President's request, the Committee indicates that it has not included reforms, expecting action by the authorizing committee. It also makes a disturbing observation about the absence of hard evidence of the likely effect of welfare reform on housing "despite grave predictions." It directs HUD's Office of Policy Development and Research, along with the GAO, to provide the Committee by February 1, 1998, with estimates of the likely effect on PHA operating costs and the income levels of residents.

As in recent years, the CDBG program continues to have a number of set-asides. These include $25 million for a neighborhood revitalization demonstration linking housing to welfare reform, with a view to helping bring back to life neighborhoods and communities with heavy concentrations of public and assisted housing and properties in foreclosure. The Committee decries the splintered administration of the federal low-income housing programs, noting that, logically, housing programs could be the nexus for transition from welfare to work activities, job creation, training and childcare. Beyond the welfare link, the Committee report supports planning within the demonstration that looks to new, more efficient "architectural approaches." Interestingly, the Committee declined to fund two measures that were part of the President's recently announced urban agenda: the Brownfields initiative for redevelopment of contaminated, abandoned sites in economically distressed areas, and Empowerment Zones/Enterprise Communities. Funding for Empowerment Zones/Enterprise Communities was rejected nominally due to the absence of authorizing legislation. Funding for the Brownfields initiative was rejected for the same reason, but the Committee urged HUD to craft authorizing legislation that would coordinate the Department's Brownfields efforts with those of the Environmental Protection Agency.

Late Developments

The full House passed the appropriations bill on July 16.

The Senate Appropriations Subcommittee mark-up occurred July 15. The numbers are very close to those approved by the House. However, the Senate Subcommittee did include many of the administrative provisions from past appropriations bills, including suspending one-for-one replacement of public housing units and the "take one, take all" and endless lease provisions for the Section 8 program. Federal preferences continue to be suspended. The full Senate Committee is scheduled to act shortly.

Rural Housing

On June 26, the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies reported higher FY 1998 spending levels over FY 1997. As with the HUD programs, the Subcommittee's action was endorsed by the full Appropriations Committee on July 9. Briefly, the Section 502 single-family direct loan program was recommended for funding at approximately $950 million, an increase of $336 million over FY 1997 program levels. Similarly, funding for the Section 502 guaranteed loan program was recommended at $3 billion, an increase of $300 million over FY 1997 levels. Funding for Section 515 rural rental loans increased from $59 million in FY 1997 to $128 million for FY 1998. Rural rental assistance experienced level funding, at $493 million.

1. House Appropriations Subcommittee for VA, HUD and Independent Agencies, Fiscal Year 1998 Mark-up Table, on file at National Housing Law Project's Washington, DC office. See also unnumbered Full Committee Print, H.R. REP. NO. 75, Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Bill, 1998, 105th Cong., 1st Sess. (July 8, 1997), to accompany H.R. 2158, Making Appropriations for the Departments of Veterans Affairs, Housing and Urban Development, and for Sundry Independent Agencies, Commissions, Corporations and Offices for the Fiscal Year Ending September 30, 1998, and for Other Purposes.
2. These are for one-year renewals of current certificate/voucher holders. No new monies were appropriated to add to the number of families currently assisted.
3. An amendment during the Subcommittee mark-up raised funding for the Section 202 program from $450 million to $644 million.
4. Pub. L. No. 105-18, 1997 Emergency Supplemental Appropriations Act for Recovery from Natural Disasters and for Overseas Peacekeeping Efforts Including Those in Bosnia (June 12, 1997).
5. Pub. L. No. 104-99, § 403(c), 110 Stat. 26 (Jan. 26, 1996).
6. See H.R. REP. NO. 75, supra note 1, at 26.