FY 2015 HUD Budget Released
The Obama administration earlier today released its proposed budget for the 2015 federal fiscal year. In a document summarizing the budget proposal for the U.S. Department of Housing and Urban Development, the administration states that "funding is prioritized to protect vulnerable families and to revitalize neighborhoods with distressed HUD-assisted housing and concentrated poverty." While the proposal would provide a total of $46.7 billion in direct appropriations and other resources for HUD programs ($1.2 billion above the FY 2014 enacted level), the document also notes that "the budget includes tough choices required by the constrained fiscal environment, including funding reductions to project-based rental assistance and community development, and some curtailment of the expansion of new construction of affordable housing."
Today's Direct News item is intended to provide NAHRO members with a high-level overview of the FY 2015 budget proposal as it relates to key housing and community development programs administered by NAHRO members. Starting tomorrow, NAHRO will begin rolling out comprehensive summaries of the FY 2015 budget proposal's treatment of Public Housing, Section 8 programs, and Community Planning and Development programs, respectively.
Moving to Work: In a potentially major development, the administration has announced that it intends to transmit a legislative proposal this spring that would, among other reforms, expand the Moving to Work demonstration "to high capacity PHAs." Details were scarce as this Direct News item went to press, but NAHRO will provide additional information as it becomes available. In 2015 NAHRO is committed to pushing for the reauthorization and broad-based expansion of the MTW demonstration in a manner that protects existing MTW agreements while providing a significant number of new MTW agencies with financial flexibility and the freedom to pursue innovative policies.
Public Housing Operating Fund: The administration's budget requests $4.6 billion for the Operating Fund for 2015. Congress appropriated $4.4 billion for the Operating Fund for 2014. HUD's estimate of the funding proration its request would produce is currently not available since the Department, as of this writing, had not posted its FY 2015 Congressional Justifications and Estimates.
The budget also states the administration's intention to submit a legislative proposal this spring to establish a utilities conservation pilot aimed at encouraging PHAs "to undertake energy conversation measures and reduce federal costs."
Public Housing Capital Fund: The President's FY 2015 budget requests a total of $1.925 billion for the Capital Fund account, with at least $1.867 billion to be applied toward formula grants, barely half of what is required to keep pace with annually accruing needs according to HUD's most recent Capital Needs Assessment. The Capital Fund account is funded at $1.867 billion for FY 2014.
Self-Sufficiency: The administration once again proposes eliminating funding for the Resident Opportunities and Self-Sufficiency (ROSS) program. The FY 2015 budget proposes $25 million in Capital Fund set-aside funding for incentives as part of the Jobs-Plus Pilot, which would provide competitive grants to partnerships between PHAs and other entities to help public housing residents obtain employment and increase earnings.
The administration proposes $75 million for the newly consolidated Public Housing and Section 8 Family Self-Sufficiency (FSS) program, which was funded as a stand-alone program for FY 2014. The budget proposes to expand eligibility for the program to include residents of Section 8 Project-Based Rental Assistance properties.
Public Housing Funding Flexibility: The President's budget again proposes to provide all PHAs, regardless of their size, with the flexibility to use Operating and Capital Funds interchangeably. The budget seeks to permanently embed this flexibility within the 1937 Housing Act.
Choice Neighborhoods Initiative: The President's FY 2015 budget requests $120 million in direct appropriations for the Choice Neighborhoods Initiative (CNI), up from the FY 2014 enacted level of $90 million. Additionally, a supplement to the budget called the Opportunity, Growth and Security Initiative (see below for additional information) includes an additional $280 million in proposed funding for CNI, providing a total of $400 million and equaling the President's FY 2014 recommendation. Authorizing legislation for the CNI has yet to be enacted. The administration's budget proposal does not include language enacted in previous years that requires a certain percentage or amount of CNI funding to go to applications for which a PHA is the lead applicant or co-applicant.
Rental Assistance Demonstration (RAD): The budget proposes major revisions to RAD. Rather than raise the unit cap (currently 60,000) on the number of Public Housing and Section 8 Moderate Rehabilitation conversions, the budget instead proposes to simply eliminate it and extend the application deadline for conversions to September 30, 2018. The budget also proposes to 1) make Section 8 Moderate Rehabilitation Single Room Occupancy properties eligible for RAD; (2) extend the sunset date on conversions of Rent Supplement, Rental Assistance Payment and Moderate Rehabilitation properties under the second component of RAD to September 30, 2016; and (3) authorize the conversion of Rent Supplement and Rental Assistance Payment properties to Project-Based Rental Assistance (PBRA) contracts.
The FY 2015 budget also includes $10 million in incremental funding to facilitate the conversion of approximately 5,000 units of public housing "that cannot feasibly convert at existing funding levels and are located in high-poverty neighborhoods, including designated Promise Zones, where the Administration is supporting comprehensive revitalization efforts."
PHA Compensation:The FY 2015 budget includes the administration's proposal, first unveiled by HUD on June 5, 2012 and included in last year's budget proposal, to peg federal contributions to PHA employees' compensation to the federal General Schedule (GS), including a locality adjustment. The proposal would amend the US Housing Act of 1937, making the new compensation restrictions permanent rather than a feature of an annual appropriations act. The Congress rejected the administration's proposal for FY 2014, leaving in place the more straightforward prohibition barring PHAs from using any Tenant-Based Voucher, Operating Fund, or Capital Fund dollars to pay any amount of salary above the base rate of pay for level IV of the Executive Schedule ($157,100 for FY 2014).
Section 8 Tenant-Based Rental Assistance: For the Tenant-Based Rental Assistance account (which includes funding for both the Housing Choice Voucher and Project-Based Voucher programs), the administration's FY 2015 budget proposes $20.045 billion, compared to the FY 2014 enacted level of $19.177 billion.
For Housing Assistance Payment (HAP) contract renewals, HUD's FY 2015 budget would make available $18.007 billion in directfunding, compared to the FY 2014 enacted level of $17.366 billion. The FY 2015 request includes both direct appropriations and offsets of PHAs' net restricted HAP assets (NRA), if needed to reach a 100 percent proration for HAP renewals.
The FY 2015 budget proposes to increase funding for ongoing administrative fees to $1.695 billion, a significant increase compared to the $1.485 billion for ongoing administrative fees provided for FY 2014. The budget includes an additional $10 million for administrative fees for PHAs that need additional funds to administer their Section 8 programs, an unusually low figure for this sub-account. HUD's estimate of the administrative fee proration its request would produce is currently not available since the Department, as of this writing, had not posted its FY 2015 Congressional Justifications and Estimates.
Section 8 Project-Based Rental Assistance Programs: HUD's FY 2015 budget requests a total of $9.746 billion (a reduction compared to the FY 2014 enacted level) for the Section 8 PBRA program, with up to $210 million for the Section 8 Project-Based Contract Administrators (PBCA) program (compared to the FY 2014 enacted amount of $265 million). The administration's request for the PBRA program is inadequate to fully fund existing contracts for 12 months, a problem the budget attempts to address by shifting funding for PBRA contacts to a calendar year cycle.
Community Development Fund and CDBG: The budget requests a total of $2.870 billion for the Community Development Fund for FY 2015, a reduction of 7 percent compared to the FY 2014 enacted level. The budget proposes just $2.800 billion for the Community Development Block Grant (CDBG) program, a proposed reduction of $230 million compared to the FY 2014 enacted level. Unlike in recent years, the budget does not propose any set-asides under the Community Development Fund beyond the traditional funding for the Indian Community Development Block Grant program.
The budget indicates that the administration will transmit CDBG reform legislation this spring, and that this package of proposed reforms will "help grantees target funding resources to areas of greatest need; enhance program accountability; [and] synchronize critical program cycles with the consolidated plan cycle." Notably, the reform proposal will also seek to "reduce the number of small grantees" in favor of "regional coordination, administration, and planning."
HOME Program: The President's budget requests only $950 billion in formula funding for the HOME Investment Partnerships program for FY 2015, $50 million below the FY 2014 enacted level.
Housing Trust Fund and Project Rebuild: The administration is once again proposing $1 billion in mandatory funding for the Housing Trust Fund enacted through the Housing and Economic Recovery Act of 2008. The funding would be identified outside of the appropriations process. The President's budget includes no details on how such funding would be generated. Similarly, the budget includes a placeholder for $15 billion in mandatory, off-budget funding for Project Rebuild to help the "hardest hit communities address blight and rehabilitate homes in struggling neighborhoods."
Section 108: The FY 2015 budget continues the administration's years-long effort to eliminate the direct appropriation to cover the credit subsidy costs of the Section 108 Community Development Loan Guarantee Program. The administration again offers legislative language authorizing HUD to collect fees from Section 108 borrowers in amounts that would result in a credit subsidy cost of zero. The FY 2014 omnibus appropriations act provided $3 million in direct funding for Section 108 credit subsidy costs while simultaneously authorizing HUD to collect fees from borrowers. The bill specifies that the funds provided and any amounts collected from fees are available to subsidize a total loan principle of no more than $150 million for FY 2014. HUD's FY 2014 budget proposes to raise the loan guarantee limit to $500 million.
Homeless Assistance Grants and HOPWA: The budget proposes a total of $2.40 billion in funding for HUD's Homeless Assistance Grant programs for FY 2015, an increase compared to the FY 2014 enacted level of $2.105 billion. The budget also proposes $332 million in funding for Housing Opportunities for Persons with AIDS (HOPWA), which is funded at $330 million for FY 2014.
Section 202 and Section 811: The budget proposes $440 million for the Section 202 Supportive Housing Program for the Elderly for FY 2015, an increase over the enacted FY 2014 level of $384 million. For the Section 811 Supportive Housing Program for Persons with Disabilities, the administration requests $160 million, up from the FY 2014 enacted level of $126 million.
Opportunity, Growth, and Security Initiative: In addition to the traditional requests for appropriated funding, the FY 2015 budget includes what the administration describes as "a separate, fully paid for $56 billion Opportunity, Growth, and Security Initiative." This initiative, proposed to be paid for through spending reforms on the mandatory side as well as "tax loophole closers," would pour additional funding into a handful of existing and previously proposed HUD programs, including Choice Neighborhoods (an additional $280 million), Jobs-Plus (an additional $125 million), and Integrated Planning and Investment Grants, previously known as the Sustainable Communities Initiative ($75 million).
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