House of Representatives and the Senate Pass T-HUD Appropriations Bills for FY 2014
On Thursday June 27, the House Appropriations Committee passed its fiscal year 2014 appropriations bill for Transportation, Housing and Urban Development. The bill drastically cuts HUD’s budget and does not contain funding for any new, “sustainable,” “livable,” or “green” community development programs. Under this legislation, the Department would receive $28.5 billion in funding- a cut of $5 billion, or 15 percent, from the FY 2013 enacted level. In May of this year, $44.1 billion was allocated to this subcommittee through the full committee after the House adopted the budget proposal from Representative Paul Ryan (R-WI), which contained a spending cap of $967 billion for discretionary spending. This $44.1 billion amount is 15 percent less than what was allocated in FY 2013 and it had to be divided between transportation programs and HUD.
Below is a list comparing the House and Senate Appropriations Committees’ T-HUD funding levels with the funding requests found in President Obama’s FY 2014 budget and the amount appropriated in FY 2013 (after sequestration):
Project-based Section 8 Appropriation:
HOUSE – $9.45 billion
SENATE – $10.8 billion
- Obama FY 2014 Request: $10.27 billion
- FY 2013 Appropriation: $8.851 billion
Housing Choice Vouchers Appropriation:
HOUSE – $18.61 billion
SENATE – $19.6 billion
- Obama FY 2014 Request:$19.9 billion
- FY 2013 Appropriation: $17.9 billion
HOME Investment Partnership Appropriation:
HOUSE – $700 million
SENATE – $1 billion
- Obama FY 2014 Request: $950 million
- FY 2013 Appropriation: $948 million
Section 202 Appropriation:
HOUSE – $375 million
SENATE – figures unavailable
- Obama FY 2014 Request: $400 million
- FY 2013 Appropriation: $355 million
Section 811 Appropriation:
HOUSE – $126 million
SENATE – figures unavailable
- Obama FY 2014 Request: $126 million
- FY 2013 Appropriation: $262 million
The Community Development Block Grant Program (CDBG) Appropriation:
HOUSE – $1.6 billion
SENATE – $3.15 billion
- Obama FY 2014 Request: $2.8 billion
- FY 2013 Appropriation: $3.135 billion
Noteworthy Provisions from the House T-HUD Committee Report
The FY 2014 appropriations bill produced by the House T-HUD Subcommittee would severely underfund affordable housing programs. If adopted, the project-based section 8 appropriation in this bill would force HUD to short-fund contracts with affordable housing providers and the decreased funding for tenant-based rental assistance would drastically limit the number of vouchers available from state housing agencies. Overall, this bill would harm the entire industry and the residents who rely on affordable housing. However, the Obama Administration has stated that they will veto appropriations bills that follow the top-line spending limit of the Paul Ryan budget ($967 billion). Instead the Administration and the Senate are using the $1.058 trillion spending limit that was originally set in the 2011 Budget Control Act. This limit does not include sequestration.
During the full House Appropriations Committee markup for this T-HUD appropriations bill, several members of the minority party were critical of the House’s 302(b) allocations and the adoption of the Ryan budget. Both parties expressed that the $44.1 billion spending cap for the subcommittee forced difficult decisions in this T-HUD appropriations bill, but Republicans refused amendments that would have risen spending above the allocation ceiling. Pennsylvania Representative Chaka Fattah (D) proposed restoring the funding for the CDBG program to the enacted level of FY 2013. A debate began over the impacts made the program versus the cost to the federal government. While many representatives applauded the positive qualities of CDBG, the amendment failed on a party line vote.
In the Committee Report document that accompanied this bill, the Committee stated that they were receptive to any reforms that would alleviate administrative burdens in housing authorities. The Committee supported the Obama Administration’s consideration of HCV reforms and it “encourages HUD to pursue regulatory and administrative reforms that do not require new authorizations, but that relieve the administrative burdens on PHAs.” The Committee acknowledged the need and urgency for the Administration to work toward reforms. The bill did contain a few of the legislative proposals from the FY 2014 budget request such as increasing the deduction of medical and related care expenses, and the redefinition of “extremely low-income”.
Also present in the Committee Report document that accompanied the House T-HUD bill, the Appropriations Committee agreed with a 2012 Government Accountability Office (GAO)
report that a HAP contract payment by HUD to a property owner cannot be considered as the transfer of a “thing of value” to a PHA. The Committee also agreed that any administrative fees paid to PHAs in combination with Section 8 housing assistance payment (HAP) contract administration is compensation for the provision of a service that would otherwise be performed by HUD. It is explicitly stated that “the Committee expects HUD to take responsibility for the administration of its contracts and either administer the contracts itself or outsource the provision of this service through procurement processes that are truly competitive and comply with Federal law”. The Committee directs HUD to administer contracts funded under Project-Based Section 8 through the Office of Housing and to carry out the GAO’s recommendation to solicit the provision of HAP contract administration services for the Project-Based Section 8 Rental Assistance Program through a procurement instrument that will result in the award of contracts.
The report document supports HUD’s efforts to reorganize the Office of Housing through consolidation. The Committee directs HUD to deliver a progress report on its reorganization plans that details by quarter (through fiscal year 2019) HUD’s estimated cost savings:
“The Committee supports efforts at HUD to deliver more effective program oversight at lower cost through a reorganization of how the Office of Housing does business. The Committee directs HUD to deliver a progress report on its reorganization plans within 60 days of enactment that details by quarter through fiscal year 2019 HUD’s estimated cost savings including both personnel and non-personnel cost reductions, severance and other early separation costs, recruitment and retraining costs, office space alteration and closure costs, and any other material costs or savings identified by HUD. The report should also include an analysis of potential risks associated with the reorganization, including loss of experienced and skilled staff, increased risk to FHA insurance funds, and an explanation of what steps HUD is taking to monitor and mitigate such risks. The report should also include an analysis of obstacles to a successful reorganization and how HUD plans to navigate these obstacles”. –Committee Report, pg 69
The Committee includes language to make clear that any future office, program, or activity reorganization will require advance approval from the Committee. – pg. 74
To view the House FY 2014 Appropriations Bill,
please click here.
To read the Committee Report from the House Appropriations Committee,
please click here.
Senate Appropriations and the 302(b) Allocations
On June 20, the full Senate Appropriations Committee issued the 302(b) spending allocations for its 12 subcommittees. As mention in a previous Washington Update, the 302(b) allocations function like a spending cap for each subcommittee. Every fiscal year, the Appropriations Committee receives a single 302(a) allocation for all of its programs; it then decides how to divide this funding among its 12 subcommittees by creating the 302(b) allocations. For FY 2014 the T-HUD Subcommittee is allocated $54 billion for housing and transportation programs, an increase of $2.3 billion from the FY 2013 level. For Agriculture and Rural Development appropriations, $20.93 billion has been allocated to the Agriculture Subcommittee. This is a slight increase ($420 million) from the FY 2013 enacted level. These allocations do not include sequestration cuts. The Senate and the Obama Administration are using a top line, 302(a) discretionary spending allocation of $1.058 trillion, as opposed to the House of Representatives, which is budgeting with a $967 billion limit. The Budget Control Act of 2011 and the budget resolution adopted by the Senate both peg $1.058 trillion as the discretionary spending limit for FY 2014.
Senate’s T-HUD and Agriculture Appropriations Bills
On June 25, the Senate T-HUD Appropriations Subcommittee reported its FY 2014 appropriations bill through voice votes. The Senate has yet to release the full bill text for T-HUD and Agriculture appropriations, but a press release issued on June 25 detailed some elements of the forthcoming legislation (in list above).
On June 27, the full Senate Appropriations Committee approved the FY 2014 T-HUD Appropriations bill. In a press release, T-HUD Appropriations Subcommittee Chairman Patty Murray (D-WA) praised the Senate bill for “maintaining our commitment to protecting the elderly, disabled, and homeless by ensuring adequate funding for housing assistance, such as section 8 contracts, vouchers and public housing”. She also mentioned that the forthcoming bill includes reforms in these programs to reduce costs and ensure oversight and accountability of housing authorities and property owners. She also criticized the House bill for “short-funding public housing and section 8, creating conditions that would lead to their ultimate demise.”
A similar press release for Agriculture programs was issued on June 18. In this document, the funding proposal for Rural Development’s Section 521 Rental Assistance program is $1.015 billion. This amount is $135 million above the FY 2013 pre-sequestration enacted level and, according to the press release, will fund 30,000 additional rental assistance agreements that will expire in FY 2014. The House Agriculture appropriations bill sets Section 521 at $1.01 billion. The Senate press release did not include additional information about other rural multifamily programs.
To view the Senate T-HUD Appropriations press release,
please click here.
House Financial Services Committee Hearing on Moving to Work Programs
On Wednesday, June 26, the Housing and Insurance Subcommittee of the House Financial Services full Committee held a hearing on “Evaluating How HUD’s Moving-to-Work Program Benefits Public and Assisted Housing Residents.” The hearing assessed the effectiveness of HUD’s Moving-To-Work (MTW) program and whether the Program is meeting its statutory objectives. The hearing also considered whether the MTW Program should be expanded and whether a more robust MTW program can better serve low-and moderate-income families and communities. The panel consisted of five witnesses, four of whom are the executive directors of city-wide or county-wide housing authorities. The other witness was Matthew Scire, the Director of Financial Markets and Community Investment for the GAO. The four housing authority witnesses each gave convincing arguments for the program, and they asked for the program to either be made permanent or expanded to assist more individuals. It is their experience that the MTW program has had positive effects on the lives of assisted residents and the PHAs that serve them.
Matthew Scire’s testimony was more critical than the other witnesses. He began by criticizing HUD for not initially having specific performance indicators for the MTW program, and that the performance data to analyze the program’s effectiveness was not properly gathered or analyzed. “The shortage of standard performance data and performance indicators had hindered comprehensive evaluation efforts, which are key to determining the success of any demonstration program” he said. His testimony reflected back to another GAO report from 2012 in which HUD was found to have had poor oversight of the program. Scire stated the Department was lacking key program terms, such as the statutory purposes and requirements MTW agencies must meet, it did not have policies or procedures in place to verify the accuracy of key information that agencies self-report, and that HUD had not annually assessed program risks.
Scire did say that the expansion of MTW programs could assist PHAs by giving them flexibility in developing supportive service programs, such as job training or educational programs, which help move families toward self sufficiency. However, he concluded that “Until more complete information on the program’s effectiveness and the extent to which agencies adhered to program requirements is available, it will be difficult for Congress to know whether an expanded MTW would benefit additional agencies and the residents they serve”.
To read the testimony delivered at the hearing, and to watch a video recording,
please click here.
Barbara Mikulski Announces New Appropriations Subcommittee Assignments
Senate Appropriations Chair Barbara Mikulski (D-MD) announced that Mark Udall (D-CO) would join the T-HUD Subcommittee and that he would also serve as the new chairman for the Financial Services Subcommittee in the Senate. Chris Coons (D-DE) joined the Senate Financial Services Subcommittee as well.
Senate Bill Would Dismantle Fannie Mae and Freddie Mac
On Tuesday June 18, Senators Bob Corker (R-TN) and Mark Warner (D-VA) introduced S. 1217, a bill that would close the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. This bill, entitled the Housing Finance Reform and Taxpayer Protection Act of 2013, would replace the GSEs with a new federal company designed to provide catastrophic reinsurance for mortgage-backed securities. Essentially, S. 1217 seeks to reduce the government’s role in the secondary housing finance market while maintaining a safety net to prevent a future housing market collapse as seen in 2008.
The new federal company would be called the Federal Mortgage Insurance Company (FMIC), and it would retain the catastrophic coverage through guarantee fees. The FMIC would be responsible for providing all banks with equal access to mortgage insurance regardless of their size. All proceeds from the closer of Fannie and Freddie would first be given to the Treasury Department because the federal government is the senior shareholder. Remaining proceeds would be distributed to preferred shareholders and then common shareholders.
While most of this effort would involve the single-family market, the Housing Trust Fund would be supported through additional security guarantee fees. The Housing Trust Fund would be mandated to support the research and development of programs designed to help lower-income families attain homeownership status. The FMIC would still have the authority to guarantee multifamily loans.
To read the bill text of S. 1217,
please click here.
