National Housing Law Project Housing Law Bulletin

HUD Housing Programs Funded for FY 1997

Funding Decisions

In a restructuring move, the conferees approved the Senate's elimination of the Annual Contributions for Assisted Housing Account, long the repository for accounting purposes of most of the low-income housing programs. HUD programs will be reconfigured into three main accounts that focus on limited development, anti-displacement activities, and preservation of the existing housing stock. These new accounts are: (1) Development of Additional New Subsidized Housing, (2) Prevention of Resident Displacement, and (3) Preserving Existing Housing Investment.

Under the Prevention of Resident Displacement account, the conferees took a number of actions. First, $3.6 billion is appropriated for expiring Section 8 contracts, down from amounts provided in the House and Senate versions. Section 8 contract amendments are funded at $850 million. Another $190 million is provided for certificates for several categories of displacees, including non-elderly disabled families relocated as a result of designation of their housing for seniors, families moving from welfare to work programs, and households displaced due to multifamily portfolio restructuring.

Under the auspices of Preserving Existing Housing Investment, public housing operating subsidies are funded at $2.9 billion, with modernization funded as capital improvements at $2.5 billion. In an unusual step, $60 million was set aside from the Community Development Block Grant program to fund supportive services in public housing designed to help residents move toward self sufficiency.

Perhaps one of the biggest disappointments comes in funding of the Preservation Program at $350 million to provide incentives for owners who prepay their mortgages during FY 1997. Although the House included no funding for the program, a floor amendment in the Senate increased the Senate Appropriation Committee's funding by $150 million to $500 million. After subtracting funding for vouchers to assist tenants facing prepayment and for certain designated "carve out" properties, funds should be sufficient to assist only 20 or 30 properties out of the hundreds awaiting funding.

Also disappointing is the reduction in funding for the Tenant Opportunity Program (TOP) that facilitates resident management and capacity-building activities. Although zeroed out in the Senate, the program is funded at $5 million as a set-aside from the Community Development Block Grant (CDBG) program, down from current year funding of $10 million. The entire CDBG program received level funding of $4.6 billion (including the TOP grant noted above).

Another $550 million was approved to fund the HOPE VII program for Severely Distressed Public Housing. Up to one half of the funds may be used for reconstruction or replacement units. The Drug Elimination Program maintains current-year funding of $290 million, with set-asides for technical assistance and HUD's Operation Safe Home initiative.

The Section 202 program for elderly housing is funded at $645 million, while the Section 811 program for disabled persons received $194 million.

Administrative Provisions

Perhaps more important in the long term to low-income housing residents than the minor differences in funding levels between the House and Senate versions resolved by the conferees are the far-reaching administrative provisions continued or, in some instances, newly adopted. For the most part, the conferees chose to continue reforms adopted in the FY 1996 Omnibus Appropriations Act.² This action means, among other things, the continued repeal of the one-for-one replacement requirement for public housing demolitions and Section 8 reforms that eliminate good cause for eviction and the so-called endless lease. In an important departure from the FY 1996 appropriations Act, the conferees agreed to adopt a mandatory minimum rent of zero to $50 dollars to replace the $25-to-$50 minimum in existing law.

In an attempt to address the growing crisis with HUD's multifamily portfolio, the Senate adopted a reengineering plan that permits, at the owners' request, renewals of buildings with rents over 120 percent of fair market rent. For projects above that level, mortgages and subsidies may be restructured to market levels with continued project-based assistance for one year in almost all cases (up to 10 percent may be converted to vouchers).³

Outside of the HUD accounts, the conferees agreed to fund the President's favored national volunteer program, AmeriCorps, thus increasing the changes the funding measure will be approved when presented to the President. The possibility remains that a continuing resolution will be adopted to avert the partial shutdown of government operations on October 1 if the Congress fails to complete action on all 13 of its FY 1997 funding bills.

FLASH —

On September 20, 1996, the Conference Report was filed, to be considered by the full House and Senate before going to the President for signature.⁴

1. The background for this article was a congressional staff document, "Conference Notes, 1997 VA, HUD and Independent Agencies Appropriations Act, H.R. 3666." The House had passed its version of H.R. 3666 on June 27, 1996; the Senate approved its own version on September 5.
2. See Housing Authorization and FY 1997 Funding Measures Put on Hold Until After August Recess, 26 HOUS. L. BULL. 109, 110 (Aug. 1996).
3. For background on this, see Bodaken and Grow, The Housing Disaster That's Not Being Fixed: A Critique, 26 HOUS. L. BULL. 107 (Aug. 1996).
4. Conference Report to Accompany H.R. 3666, H.R. REP. 812, 104th Cong., 2d Sess. (Sept. 20, 1996).