With the conclusion of the August Congressional recess (a.k.a. “District Work Period”), Washington Update returns! Happy reading and enjoy your weekend!
Appropriations
In response to the devastation in Florida caused by recent hurricanes, Congress sent the President legislation providing $2 billion in emergency supplemental appropriations for disaster relief. However, press reports indicate an additional request for emergency funds could come next week.
The House FY 2005 VA-HUD appropriations bill (HR 5041) is now available for public viewing. Interested members will find a link to the Library of Congress website on our NAHMA’s Legislative News webpage, accessible thorough
https://www.nahma.org/content/news.html. A vote on the bill by the full House of Representatives has not yet been scheduled.
The Senate Agriculture Appropriations Subcommittee has reported its FY 2005 Agriculture Appropriations bill to the full Committee. Although the text of the bill has not yet been released, Subcommittee staff has informed NAHMA that the bill’s funding levels for Section 515 and Rural Rental Assistance are comparable to the House levels (which were $116 million and $592 million, respectively). Unlike the House bill, the Senate version does allow the use of Section 515 funds for new construction. Staff also mentioned that the Senate bill includes a new revolving loan for preservation of rural multifamily housing. The program will be funded at not less than $6 million. The program will provide a 1 percent loan with the ability to defer interest and principal. The Senate Appropriations Committee is scheduled to consider the bill on September 14.
Section 8 Recapture Dilemma
NAHMA has been actively working this issue, and there is news to report.
Contrary to years of actual practice, HUD’s lawyers have recently instructed the Office of Multifamily Housing that they may not use recaptured Section 8 funds from Fiscal Year (FY) 2004 to cover funding shortfalls on other Section 8 contracts. HUD has interpreted language in the 2004 VA-HUD appropriations bill to require the rescission of recaptured funds. Because of this language, the HUD attorneys do not believe the Department has the legal authority to use recaptured Section 8 funds as it has done in the past. Historically, the Department has used recaptured funds to cover temporary shortfalls in funding as the fiscal year ends and the programs are funded through continuing resolutions.
Based on their funding projections, HUD staff recently cautioned affordable housing operators that until HUD’s 2005 budget is resolved, project-based Section 8 rental subsidy Housing Assistance Payment (HAP) contracts are likely to be only partially funded. Furthermore, HUD officials have reportedly said that funding for these programs may even be exhausted.
NAHMA is very concerned that HUD will be unable to fully fund Section 8 contracts for the duration of FY 2004 (which ends on September 30) and any period for which HUD is operating under a continuing resolution (which is undetermined, but could conceivably run into January depending on the outcome of the November elections and the will of Congress to finish this year’s legislative business). Based on HUD’s interpretation of the 2004 appropriations language, the Department has one less option to address funding shortfalls. It appears a legislative solution is necessary to ensure HUD will be able to fully fund rental subsidy contracts until the 2005 budget is in place.
Based on conversations NAHMA has had with HUD’s Office of the Chief Financial Officer (where the appropriations attorneys work), HUD’s lawyers believe this problem is corrected in the House version of the FY 2005 VA-HUD bill, HR 5041. NAHMA is actively seeking confirmation of HUD’s assessment from key Appropriations Committee staff, as well as HUD’s Office of Congressional and Intergovernmental Affairs.
Please know that we are taking this issue very seriously. For your convenience, NAHMA has provided a draft text on our grassroots advocacy center which members can use to alert their senators and representatives about this problem. Please contact House VA-HUD Appropriations Subcommittee Chairman Jim Walsh (if writing to a Senator, substitute Kit Bond for Jim Walsh) and Ranking Member Alan Mollohan (if writing to a Senator, substitute Barbara Mikulski for Alan Mollohan) and urge them to ensure HUD will have sufficient appropriations and the necessary statutory authority to fully fund all Section 8 contracts for the remainder of FY 2004, any period funded through a continuing resolution, and throughout FY 2005. The text is available at
NAHMA Grassroots Action Center.
GAO Late HAPs Study
The General Accounting Office (GAO), the investigative arm of Congress, has agreed to study the late HAPs issue, per the request of Representatives Oxley, Frank, Ney and Waters. Committee staff has informed NAHMA they will be meeting with GAO next week to determine the scope of the study. This is standard operating procedure.
Community Reinvestment Act (CRA) Meeting with the FDIC
This week, NAHMA participated in an industry meeting with the Director of the Federal Deposit Insurance Corporation (FDIC). The purpose of the meeting was to discuss the impact of the FDIC’s proposed rule, which would quadruple the asset threshold that makes banks subject to the CRA from $250 million to $1 billion.
This proposal is worrisome because CRA has provided valuable gap-financing for affordable housing development. In some states, there will be only one or no bank at all subject to the CRA if the proposed rule is adopted. Rural areas are especially likely to be hard-hit. With the uncertainly of federal funding for affordable housing development and the possibility of very real cuts to popular housing programs for FY 2005, this proposal comes at a critical time. This rule reduces incentives for private lenders to provide funds for affordable housing.
NAHMA will be filing comments registering our opposition to the proposed rule. Interested members may also file comments on their own behalf with the information provided on the grassroots advocacy center.
