December 22, 2022

Senate Passes FY23 Omnibus Funding Bill

This week, the Senate passed an omnibus funding bill, providing $1.7 trillion for federal government operation for fiscal year 2023 (FY23). The omnibus bill also includes over $44 billion in emergency assistance for Ukraine and over $40 billion to assist communities across the country in disaster recovery. The bill is expected to be passed by the House of Representatives before President Biden signs it into law. Overall, the funding levels for both HUD and USDA are positive and maintain funding increases from FY22. For HUD, the FY23 bill provides $58.2 billion, a $4.5 billion increase from last fiscal year. For USDA Rural Development, the FY23 bill provides over $2 billion in increases to preserve rural housing and support rental assistance.

The FY23 omnibus provides increased funding levels for nearly all of HUD’s affordable housing and community development programs, NAHMA welcomes the much-needed funding for Project-based Rental Assistance (PBRA) and other programs outlined in the following sections:

• Project-Based Rental Assistance (PBRA) – The omnibus bill provides $13,938 billion for project-based rental assistance (PBRA), with $13,594.5 billion to renew contacts. This amount is sufficient to renew all contracts. The bill provides $343 million for PBCA oversight.
• Section 202 (Housing for the Elderly) – The bill provides $1,075 billion, a slight increase over FY22 enacted levels. The bill provides $110 million for new capital advances and project-based rental assistance contracts, up to $120 million for service coordinators, $25 million for intergenerational dwelling units, and $6 million to support preservation transactions of housing for the elderly originally developed by a capital advance and assisted by a project rental assistance contract (PRAC).
• Section 811(Housing for Persons with Disabilities) – The omnibus bill provides $148 million in new capital advance funding. Overall, the program funding is increased to $360 million for FY23.
• Mark-to-market (M2M) – The bill includes the budget request to extend the M2M program under section 579 of the Multifamily Assisted Housing Reform and Affordability Act of 1997 to October 1, 2027. The bill also provides HUD the authority to make budget-based rent adjustments for PBRA contracts that have been renewed through the M2M program and are distressed or at risk of becoming distressed. The agreement directs HUD to use existing data sources, including PBCA/HUD management and occupancy reviews, as well as REAC inspections, to assess the physical property and operational needs amongst post-M2M properties and other PBRA properties with health and safety deficiencies to better understand the scope of the budget-based rent adjustment needs for PBRA properties. HUD is directed to provide the results of this assessment to the House and Senate Committees on Appropriations within 180 days of enactment of this act.
• HOME Investment Partnerships Program (HOME) and the Community Development Block Grant Programs (CDBG) – HOME and CDBG programs received flat funding levels under the omnibus spending bill: Funding for HOME remains at $1.5 billion, and the funding for the Community Development Fund remains at $3.300 billion, both similar to last year’s levels.

In the FY23 omnibus, some of USDA’s rural housing programs also received an increase over FY22 enacted levels. The funding levels are sufficient to renew existing affordable housing contracts. This includes:

• Section 521 Rental Assistance (RA) – The omnibus bill provides $1,488 billion for the Section 521 Rental Assistance (RA) program, which represents a slight increase from the previous year.
• Section 515 Rental Housing Direct Loans – Lawmakers continue to pay more attention to the impending number of Section 515 properties that are reaching their mortgage maturity dates. The omnibus provides $70 million, a slight increase in the funding level from last year’s enacted level.
• Multifamily Revitalization and Rural Housing Vouchers – The omnibus bill provides a slight increase to the Multifamily Revitalization Program. A funding level of $36 million was provided for the Preservation Demonstration. The Rural Housing Vouchers program is increased to $48 million.
• The Section 538 Loan Guarantee – The bill provides $400 million, which is a significant increase from previous years.
• Smoke Detectors in Rental Housing – The bill does mandate smoke detectors in rental housing that is constructed, rehabilitated, or repaired with Section 515 or Section 514/516 funds, or funding from any of several HUD rental programs. The requirement will take effect in December 2024.

Public and Federally Assisted Housing Fire Safety Act – The FY23 omnibus bill also includes the Public and Federally Assisted Housing Fire Safety Act (H.R.7981). This bill requires each unit of federally assisted housing to contain hardwired or tamper-resistant battery-powered smoke alarms. The bill also requires HUD to complete a national campaign to educate the general public about health and safety requirements and how to properly use safety features in housing. The bill applies to all federally assisted programs. Specifically, the bill states: “Each public housing agency (or owner) shall ensure that a qualifying smoke alarm is installed in accordance with applicable codes and standards published by the International Code Council or the National Fire Protection Association and the requirements of the National Fire Protection Association Standard 72, or any successor standard, in each level and in or near each sleeping area in any dwelling unit in public housing owned or operated by the public housing agency, including in basements but excepting crawl spaces and unfinished attics, and in each common area in a project containing such a dwelling unit.” In communication to Congressional committees, NAHMA and many of our industry partners expressed concerns with the limitations of 10-year sealed battery smoke detectors and their inability to comply with NFPA 72 standard. However, our concerns were not addressed and we will continue our advocacy with the future Congress in 2023.

NAHMA has strongly advocated for program funding included in this bill. However, NAHMA is disappointed that the Biden Administration and Congress did not include a boost for LIHTC. We look forward to continuing our advocacy efforts in the new Congress next year.

To view a summary of FY23 funding for HUD, click here.

To view a summary of FY23 funding for USDA, click here.