January 17, 2014

Fiscal Year 2014 Omnibus Bill to Fund the Federal Government

On Monday, January 13, the House Appropriations Committee Chairman Hal Rogers (R-KY) unveiled the Omnibus Appropriations bill for fiscal year 2014. This Omnibus contains all 12 of the regular appropriations bills that are necessary to fund the federal government each fiscal year. Since its introduction, the bill has progressed quickly, passing the House on January 15 with a recorded vote of 359 to 67, and also passing the Senate on the 16th with a recorded vote of 72 to 26. It will now head to President Obama, who is expected to sign the bill.

The Omnibus follows the terms set in the Bipartisan Budget Act by providing $520.5 billion for the defense and $491.7 billion for the non-defense budget caps. Of the amount allotted for non-defense programs, the Omnibus includes a total of $32.8 billion for HUD, a decrease of $687 million below the fiscal year 2013 enacted level. A combined $63 billion in sequester relief for FY 2014 and 2015 was provided under the Bipartisan Budget Act. However, the sequester has not been eliminated, and will it take effect again in FY 2016.

Funding for Housing Programs

With the decrease of $687million from FY 2013’s enacted level, some HUD programs received less than desired funding. This is especially apparent in the Project-based Section 8 appropriation, which is pegged at $9.9 billion for FY 2014 (this amount includes $400 million in advanced appropriations). NAHMA and its industry partners advocated heavily for full-funding for PBS8 in order to prevent short-funding of contracts. The industry cited $11.5 billion as the number to fully-fund contracts for a 12-month cycle. However, with the $9.9 billion in funding, contract short-funding will occur again in FY 2014.

Below is a chart comparing the appropriations provided within the Omnibus to previous appropriation/budget language seen in the following legislation:

• S. 1243, the original Senate T-HUD appropriations bill for FY 2014 (failed to pass)
• H.R. 2610, the original House T-HUD appropriations bill for FY 2014 (failed to pass)
• HUD’s budget request for FY 2014 (released in April of 2013)
• The FY 2013 post-sequestration enacted level
• The FY 2013 pre-sequestration enacted level

*Includes $400 million in advanced appropriations for FY 2015 and $265 million for PBCAs ** Includes $4 billion in advanced appropriations for FY 2015 and $17.36 for renewals *** Includes $72 million for Service Coordiantors

The omnibus bill also includes $30 billion in loan commitment authority for the General and Special Risk Insurance Funds (FHA Multifamily Mortgage Fund) and $300,000 for Limited English Proficiency activities. As the chart shows, the funding provided through the Omnibus show a compromise between the Senate and House numbers in their separate appropriations bills. NAHMA has used the Senate figures as minimum level for funding and advocated to members of both Appropriations Committees that FY 2014 funding should not fall below these numbers.

General Provisions

The General Provisions section for T-HUD contains several program changes. First, Section 220 in the Omnibus will change the annual inspection cycle in the Housing Choice Voucher program to a biennial inspection cycle. Each PHA that provides assistance under the program will be required to make inspections not less often than biennially during the term of the housing assistance payments contract for the unit to determine whether it is maintained in accordance with the latest requirements. The Omnibus allows for inspection requirements to be completed through use of alternative inspection methods, a similar provision allowed in the Affordable Housing and Self-Sufficiency Improvement Act of 2011 (AHSSIA). These alternative inspections include methods used currently in HOME or LIHTC inspections.

Section 238 alters the definition of extremely low-income for families in the Housing Act of 1937, and modifies requirements for low-income targeting to better target rental assistance to the working poor. The term extremely low-income will now mean whose incomes do not exceed the higher of the poverty guidelines or 30 percent of the median family income.

The Omnibus uses language which is consistent with HUD’s ongoing Civil Money Penalties (CMP) Pilot Program. In Section 230, the legislation directs HUD to take certain actions against owners receiving rental subsidies that do not maintain safe properties (i.e. do not meet minimum REAC standards). The penalties can be issued if the property has a REAC score of 30 or less, receives a REAC score between 31 and 59, or if the property receives consecutive scores of less than 60 on REAC inspections. Actions can also be taken if owners fails to certify in writing to HUD within 60 days that all identified deficiencies have been corrected.

Section 241 expands the authority to facilitate section 202 operating assistance-only contracts to fund supportive housing units for the elderly aligned with State healthcare priorities. NAHMA is reviewing this language in consultation with HUD, industry partners, and members of our own Senior Housing Committee in order to identify the exact purpose of this language and its effect on HUD’s future ability to fund capital advances for new construction.

Other provisions in the Omnibus bill places a salary limit on PHA officials and employees, and modify the Rental Assistance Demonstration program to extend current authority through December 31, 2014.

Funding for Rural Development

After the alarming shortfalls in Section 521 Rural Rental Assistance caused by the sequester, NAHMA and industry partners advocated for better program funding that would assure current contracts receive full funding for renewals. In the Omnibus, Section 521 RA is slated to receive $1.1 billion in appropriations, a strong funding level that is $237 million higher than the 2013 post-sequestration enacted level. According to RD staff, it is the agency’s goal to renew all expiring contracts in FY 2014, but RA usage is variable, and staff will have to monitor the status of renewals throughout the year. The specific funding levels may be found in the chart below.  

The funding levels for USDA-Rural Development programs are all much closer to amount requested by USDA in April and the amount targeted by the Senate in their previous appropriations bill. However, retroactive payments for properties that did not receive RA in September 2013 were not included in the Omnibus.

Along with retroactive payments, NAHMA had pursued report language from the Senate bill (S.1243) which would have directed RD to identify: the total number of households served by RA, the average per unit RA cost per state, the number of RA contracts expiring in FY 2013 that were not renewed, and provide a revised estimate of RA needs in FY 2014, to cover the original estimate of expiring units and those not renewed in FY 2013. Though this exact language was not provided, the FY 2014 Omnibus did contain similar requirements for RD:

“The agreement directs the Secretary to develop proposals to make short and long-term program adjustments to ensure the long-term stability and sustainability of the rental assistance program. In developing these proposals, the Secretary shall consider the management mechanisms and authorities that the Housing Acts governing other federal multi-family housing programs provide that USDA currently does not have, mechanisms that would enable the Department to proactively and strategically manage any future funding shortfalls, and the long-term viability of the program. The Secretary is directed to expeditiously report to the Committees on these proposals.”

Between the updated report language, which will pressure RD to better manage the RA program, and the $237 million increase, NAHMA is pleased to see that our message was heard by members of Congress. It was our goal to inform lawmakers of the substantial risk that this oversight in RA could have caused, not only in Rural Development but in the overall public-private partnership that is built through affordable housing. We would like to thank all of the NAHMA members who called their Members of Congress and participated in our grassroots activities to resolve this issue.

Overall, the Omnibus puts Congress back on track to fund the government through regular appropriations rather than a continuing resolution. Although NAHMA is happy to see lawmakers cooperate over spending, we are still concerned about the funding levels provided to Project-Based Section 8. Short-funding does not work or save money for the government. Also, it unnecessarily complicates management of the properties for O/As, as well as program administration for HUD staff.

In February, the president must deliver his budget for FY 2015 to Congress. NAHMA will continue to advocate for full-funding in PBS8 for FY 2015.

To view the entire text of the Omnibus bill: click here.

To view a summary (57 pages) from the Senate: click here.

To read the Committee Report that followed the bill: click here.