Rural Development Testifies Before Congress
On Wednesday, March 18, the administrators for the various agencies under the U.S. Department of Agriculture’s Rural Development (RD) testified before the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies regarding the Obama Administration’s fiscal year 2016 budget request. Tony Hernandez, the administrator for the Rural Housing Service (RHS), was present and answered questions regarding affordable rural housing in the president’s budget.
While much of the subcommittee member’s questions focused on RD priorities unrelated to housing programs, the Chairman of the subcommittee, Representative Robert Aderholt (R-AL), requested a summary and justifications for the prosed changes to the Section 521 Rental Assistance (RA) program. In the Obama Administration’s budget request for FY 2016, the Department of Agriculture requested new authorities in an effort to “improve the management of the rental assistance program.” The authorities included in the request are:
- The ability to renew contracts “at the discretion of the Secretary”;
- Rental assistance agreements entered into or renewed during the current fiscal shall be funded up to one year and will not be renewed within the 12 month contract period;
- A $50 rent for tenants unless they qualify for a “hardship exemption”; and
- The ability to verify income through IRS and HHS databases.
Administrator Hernandez responded that the proposed changes are intended to work together as a package that will allow for better oversight of RA.
First, he stated that the proposal to renew contracts at the discretion of the secretary (or “strategic priority renewals” as he phrased it) is intended to allow RHS to target the neediest properties in areas which require the most assistance. He expressed that the “first come-first serve” arrangement for contract renewals is not the best way to assist some properties. Next he commented on the proposal to prevent contract renewals within 12-month window of time. Hernandez stated that this will provide greater flexibility and management tools during continuing resolutions or government shutdowns. For the minimum rent proposal, Administrator Hernandez stated that everyone contributes to the success and sustainability of the program, and that is why they have requested a minimum rent. Lastly, Hernandez commented on the proposal to use the new-hire database for the agency’s eligibility reviews of tenants. He stated that this will help RHS identify the individuals who do not qualify for RA and target those that need it the most.
Aderholt highlighted the minimum rent proposal and asked for clarifications on the RHS’s specific proposal as it relates to tenants contributing towards rent. Hernandez replied that while the budget requests a $50 minimum rent, RHS intends to charge half of that. He clarified that approximately 36,000 residents would be able to afford the $25 rent but that the $50 requested maximum level would allow the agency to collect higher rents from some able tenants. He concluded by saying HUD has many of these provisions at its disposal and that RHS could mirror these abilities to provide better service.
While NAHMA supports greater flexibility for RHS to better manage the RA program, we remain concerned that the proposal to prevent contract renewals within a 12 month period will cause unintended harm to properties and will result in contract short-funding. Instead, NAHMA has consistently suggested that an advanced appropriation from Congress could elevate issues during continuing resolutions or other funding impasses. We will again relay this suggestion and other items to appropriators in our forthcoming testimony to this subcommittee.
To view an archived webcast of this hearing, please
click here
To view Administrator Tony Hernandez’s written testimony, please
click here
House and Senate Budget Committees Pass a Budget for FY 2016
On Thursday, March 19, the House and Senate Budget Committees passed budget resolutions for fiscal year 2016. These budgets do not contain specific funding numbers for federal departments and programs like the president’s budget. Instead they outline efficiency reforms, political party policy priorities, and deficit reduction targets for the next decade.
With the recent party majority shift in the Senate, and the Republicans’ continued control of the House of Representatives, the Budget Committees have more Republican members, which has resulted in budgets that are geared toward their priorities. Both budgets propose to eliminate the Affordable Care Act, a proposal which is a non-starter for the White House and Democrats in Congress. They both also propose increases to military spending, alterations to Medicare/Medicaid and Social Security allocations, general tax reform priorities, and federal spending limits following the caps set by the Budget Control Act of 2011.
The Senate’s budget does not discuss affordable housing programs, but the House budget outlines its intentions for these programs:
“Our budget makes responsible reforms to housing-assistance programs that will make them sustainable and focused. Despite dramatic funding increases, the Department of Housing and Urban Development’s (HUD) Worst Case Housing Needs Report to Congress suggests the number of families who are severely rent burdened or live in substandard conditions continues to grow. Reforms are needed to ensure assistance is available to those most in need and is structured in a way that best enables upward mobility. One reform could include the gradual expansion of the Moving to Work program to high-performing public housing authorities. Moving to Work gives public housing authorities more flexibility in how they spend funds so that they can serve families more efficiently and effectively.”
The House budget continues that it intends to privatize the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. While it does not promote a specific strategy to reform the housing finance market, it expands on this statement by envisioning “the eventual elimination of Fannie Mae and Freddie Mac and ending their taxpayer guarantee.”
The House and Senate are expected to hold floor votes on their separate budget resolutions by the end of next week. If they both pass each chamber, the Chairman for the Senate Budget Committee, Mike Enzi (R-WY) has said he hopes to reach a conference agreement by April 15. This conference agreement will involve a consolidation between the two budgets for a final budget for FY 2016.
To view the House budget, including a summary and key facts sheet, please
click here
To view the Senate budget, please
click here
