Nominations
The Senate confirmed Orlando J. Cabrera, of Florida, as HUD’s Assistant Secretary of Public and Indian Housing.
Appropriations
Both the House and Senate passed the FY 2006 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act conference bill (H.R. 2744), clearing the measure for the President. It is worth noting the appropriators have given USDA-RHS a green light to begin a loan restructuring preservation program for Section 515 properties. Highlights of the bill include:
- $100 million for section 515 rental housing, for repair, rehab, or new construction;
- $100 million for section 538 guaranteed multi-family housing loans;
- $653.1 million for Section 521 rental assistance
- $9 million for a Section 515 preservation demonstration program “to restructure existing section 515 loans”
- Funds can be used for: reducing or eliminating interest; deferring loan payments, subordinating, reducing or reamortizing loan debt; and other financial assistance including advances and incentives required by the Secretary.”
- Conferees intend that RHS revitalize and preserve the portfolio “consistent with recommendations provided in the Comprehensive Property Assessment report released by the Department in 2004” and “owners assisted under this demonstration program shall be required to maintain the housing assisted under this demonstration as affordable… for the remaining term of the original loan or the term of a restructured loan, whichever is longer.”
- $16 million for the rural housing voucher program
- Available to any low-income household (including those not receiving rental assistance) residing in a property financed with a section 515 loan which has been prepaid after September 30, 2005
- Amount of the voucher shall be the difference between comparable market rent for the section 515 unit and the tenant paid rent for such unit
- Funds are subject to appropriations
- USDA is directed “to the maximum extent practicable, administer such vouchers with current regulations and administrative guidance applicable for section 8 housing vouchers administered by the Secretary of the Department of Housing and Urban Development (including the ability to pay administrative costs related to delivery of the voucher funds).”
Budget Reconciliation
By a vote of 52 yeas to 47 nays, the Senate passed Deficit Reduction Omnibus Reconciliation Act (S. 1932). This legislation is a “budget reconciliation bill” which includes roughly $39 billion in spending cuts to entitlement and mandatory accounts identified by eight Senate authorizing committees. “Budget reconciliation” procedures provide a legislative fast-track process for tax, spending, and debt limit bills. Debate time is limited (making the bills filibuster-proof in the Senate), and amendments are restricted (for example, they must be germane).
Noteworthy housing-related cost savings switches funding for the FHA Upfront Grant and Below Market Sales Programs from mandatory funds (through the FHA General Insurance fund) to annual appropriations. These programs are intended to help local governments purchase FHA foreclosed multifamily properties in order to preserve and rehabilitate these units into affordable housing. According to Banking Committee Chairman Richard Shelby, these changes will save $270 million. Senator Jack Reed, Ranking Member of the Housing Subcommittee, offered an amendment to strike these provisions from the bill. Unfortunately, the Reed amendment was rejected 48-51.
GSE Reform
The House approved the Federal Housing Finance Reform Act (H.R.1461) by a vote of 331-90.
The inclusion of an Affordable Housing Fund (AFH) financed by a portion of after-tax profits from the GSEs to support new production of affordable housing should have been excellent news. The AHF could yield between $450 to $650 million annually. Unfortunately, the manager’s amendment changed this part of the bill to prohibit nonprofit grantees from engaging in lobbying, election-related activity or affiliating with organizations that conduct such activities. This prohibition is arguably retroactive, since the grantee must not have engaged in or affiliated with an organization involved in political activity or lobbying for 12 months prior to submitting an application for funding. Although a carve-out is provided for 501c3 nonprofits, there is no similar exemption for 501c6 trade associations. The definition of “affiliation” is disturbingly vague. The bill specifies a grant recipient is “affiliated” with another entity “if such recipient entity controls, is controlled by, or is under common control with such other entity.” “Control” is defined by the existence of any of the following relationships between a recipient and another entity: overlapping board membership, shared resources, recipient entity receives more than 20% of funding from or provides more than 20% of funding to the other entity, or other “indicia of substantial overlap or common control as may be set forth in regulation by the Director.” And just for good measure, the amendment lists among the prohibited uses of the AFH: political activities; advocacy; and lobbying,
whether directly or through other parties (emphasis added).
During debate on this amendment, Rep. Deborah Pryce received an assurance from House Financial Services Committee Chairman Mike Oxley to work on two concerns she identified as the bill moves toward conference. Specifically, Rep. Pryce is seeking clarifying language in the amendment so it does not disqualify nonprofits from participating in the Affordable Housing Fund if they transport their own senior housing residents to the polls. Likewise, she wants to clarify that the intention of the prohibition on “overlapping board membership” was not to disallow single individuals from serving on the board of two organizations, but instead, to disqualify affiliated organizations from participating in the fund where clear control of one organization is maintained by another which is participating in election activities.
The manager’s amendment was narrowly adopted by the House by 5 votes (210 – 205). A less offensive part of this amendment would have prioritized AHF for hurricane-affected areas in the Gulf Coast for the first 2 years.
