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  • Secretary Carson Unveils New Rent Structure Proposal

    26 Apr 2018 3:00 PM | Steve Wallace (Administrator)

    Yesterday, HUD Secretary Dr. Ben Carson unveiled legislative language for a bill designed to enact a series of sweeping changes to rent structures for individuals currently in affordable housing units. The bill the Secretary proposed is called the "Making Affordable Housing Work Act of 2018". 

    Under the proposed bill, rent would be raised from 30% to 35% of either monthly gross income or income earned from working at least 15 hours a week at the Federal minimum wage level. This amounts to an increase in rent from $50 to $150 per month. Also, medical and childcare deductions would be eliminated. Additionally, Property Owners and PHAs would be allowed to impose work requirements on tenants (either as individuals or as families, depending on the current occupants of a particular unit). Individuals with disabilities, or who are over the age of 65, would be exempt from any work requirements.

    Rent for exempted families (elderly families and disabled families) would be set at either 30% of monthly income or a minimum of $50 per month. However, the proposed bill also establishes a 6 year grace period for exempted families, delaying implementation of the new rent for them as rents increase for other tenants. Additionally, hardship exemptions from the new rent structures will be given to those families which are not elderly or disabled, and who meet certain other criteria outlined in the proposed bill.

    The proposed bill also includes a provision for the establishment of "Alternative Family Rent Structures" by the Secretary, PHAs, and Property Owners. These structures can be either tiered rents, stepped rents, or timed escrows. PHAs and Owners must meet certain requirements when establishing "Alternative Family Rent Structures", including the provision of reasonable hardship exemptions for families, appropriateness for the local housing market, and serving substantially the same number of families as the HUD rent structure. The Secretary must also meet similar requirements when establishing alternate rent structures, and the proposed bill makes clear that further standards (for all seeking to implement an alternate rent structure) are to be defined through future HUD regulation. The proposed bill also states that "Alternative Family Rent Structures", regardless of who establishes them, must be implemented in a way so as to not require an additional appropriation of Federal funds.

    It should be noted that the Secretary's proposed bill is in line with a draft made public in  February, shortly before the White House released President Trump's FY 2019 Budget Proposal. Secretary Carson has long spoken of shifting HUD's priorities towards transitioning families out of affordable housing, and today's proposed bill appears to be a step in that direction. The proposed bill's immediate future is less clear, as it includes a number of provisions which will likely prove to be unpopular with the affordable housing industry, the general public, and Members of Congress.


    Read the Proposed Bill

  • Senate Appropriations Holds FY 2019 HUD Budget Hearing

    20 Apr 2018 12:30 PM | Steve Wallace (Administrator)
    The Senate Committee on Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies held a hearing on April 19th to discuss the Trump Administration's FY 2019 HUD Budget Proposal. HUD Secretary Dr. Ben Carson provided testimony on behalf of the Trump Administration.
     
    In their opening statements, both Subcommittee Chair Senator Susan Collins (R-ME) and Ranking Member Senator Jack Reed (D-RI) expressed opposition to key parts of the Administration's FY 2019 Budget Proposal. Both Senators brought up the impact of HOME and CDBG specifically in their respective states, and expressed concern about the Administration's broader cuts to HUD funding. While Senator Collins did acknowledge her support for an increased role for the RAD program in line with what the Administration has proposed, she noted that the proposed elimination of the Public Housing Capital Fund completely negates any potential benefits seen from an increase of RAD's scope.
     
    Secretary Carson's testimony was largely unsurprising in that it fell in line with both his previous statements and stated priorities in the Trump Administration's FY 2019 Budget Proposal. The Secretary spoke of a shift in the way HUD measures program success; looking not at the number of people participating in the program, but at the number of people transitioning out of affordable housing. Secretary Carson pointed to proposed funding levels for the "EnVision Center Initiative", the Family Self-Sufficiency Program, and Jobs Plus Program as examples of HUD's refocusing. Additionally, Secretary Carson outlined the Administration's proposed expansion of the RAD program (requesting $100 million in funds and a lift on the unit cap), and spoke of the importance of allowing local PHAs more flexibility in how they use their operating funds. He indicated that both steps were designed to provide cost-effective rehabilitation for an aging affordable housing stock, in lieu of Federal funds (the Administration did not request capital funding for improvements to public housing for FY 2019). It should also be mentioned that Secretary Carson took time during his testimony to echo the President's frustration with the lack of progress of Senate votes on outstanding nominees, mentioning specifically the need for an FHA Commissioner going forward.
     
    Notably, during the Question and Answer session, Senator Collins confronted Secretary Carson directly about the Administration's continued attempts to eliminate CDBG. It should be noted that Senator Collins did take time to acknowledge that the Administration's FY 2019 Budget Proposal was released before spending caps were officially lifted by Congress, and she expressed hope that the increased spending cap might have persuaded the Administration to reexamine its proposed treatment of CDBG since then. The Secretary made clear that, despite the cap increase, the Administration will continue to advocate for the FY 2019 Budget Proposal as it currently stands. Secretary Carson defended the Administration's proposed elimination of CDBG, and other programs, as a necessary sacrifice in the fight to reduce the Federal deficit. It should be noted that Secretary Carson also took time to acknowledge the good done specifically by the CDBG program, but stated that preventing a debt crisis later down the road justifies the proposed elimination of key HUD programs.
     
    Additionally, Senator Patrick Leahy (D-VT) asked the Secretary about the Trump Administration's much-discussed proposed rescission of Omnibus allocations. Secretary Carson repeated his commitment to helping society's most vulnerable, but declined to go into any detail about what funding specifically he intends to recommend that the President reduce. Secretary Carson also gave the Subcommittee an update during the Q&A session on the allocation of CDBG-DR funding to areas affected by last year's string of natural disasters; although HUD has had to deal with a lengthy review process, allocation numbers should be in the Federal Register sometime in the near future. The Secretary noted that HUD is working to shorten the review time from 90 days to 60 days, so that funds can get to where they are needed sooner.
     
    Due to heavy bipartisan opposition, it would be safe to assume that the Trump Administration's FY 2019 HUD Budget Proposal is dead on arrival. Senators on both sides of the aisle took time to note the good work being done by key HUD programs, leaving little doubt that the next spending package will keep HUD funded at acceptable levels.


  • Congress Passes FY 2018 Omnibus Package, President Signs at Press Conference

    23 Mar 2018 1:56 PM | Steve Wallace (Administrator)
    Congress has passed and President has signed the bipartisan FY 2018 Omnibus Package. In the House, the vote was 256-167 and the Senate passed the measure by a vote of 65-32. The Omnibus enjoyed bipartisan support in both Chambers. Unlike the Trump Administration's FY2019 Budget Proposal, key HUD programs are preserved, and funding for the Department as a whole is increased substantially. The Omnibus also contains provisions from the "Affordable Housing Credit Improvement Act" (S. 548/H.R. 1661).
                
    Congress has allocated $42.7 billion for HUD, substantially more than the $39.2 billion in President Trump's FY 2019 Budget Proposal. Funding for HUD in the Omnibus is an increase of $3.9 billion from FY 2017. Section 8 programs are set to receive $33.5 billion, $11.5 billion for project based and $22 for vouchers, and CDBG will receive $3.3 billion. Section 202 and Section 811 projects are funded at $907.6 million, and HOME Investment Partnerships Program at $1.4 billion. Finally, the CHOICE Neighborhoods Initiative is to be allocated $150 million, which will remain available until September 30, 2020.

    Changes to the Rental Assistance Demonstration Program (RAD) includes a cap increase to 445,000 units for RAD 1 and a new sunset date of September 30, 2024. An important change to RAD 2 is providing comparable market rents for RAP/Rent Supp properties located in "high cost areas" which is not defined. Also, Section 202 PRAC properties are now eligible for RAD 2. 
                
    Also included in the Omnibus Package are provisions from the "Affordable Housing Credit Improvement Act" (S. 548/H.R. 1661), better known as "Cantwell-Hatch". Housing Credit allocation is to be increased by 12.5% for four years (the rest of 2018 through 2021). Income averaging is also modified (on a permanent basis), with the 60% AMI Ceiling applying to all units in a project rather than individual Housing Credit units. It should be noted that properties will be able to rent at incomes up to 80% AMI so long as the entire property averages 60% total.
                
    In a bizarre turn of events, President Trump tweeted this morning that he is considering vetoing the Omnibus Package, due to lack of funding specifically for a border wall (it allocates funds for various other border protection initiatives, but not specifically for a massive wall along our Southern Border), and the absence of a provision designed to protect the former recipients of the Deferred Action for Childhood Arrivals (DACA) Program. President Trump ended the program in September 2017 (although he gave a 6-month deferment of the action shortly afterwards), in keeping with a key campaign promise. He has since signed the Omnibus during a press conference this afternoon.


    Omnibus   (HUD Appropriations on pages 1649-1734 and Cantwell-Hatch on pages 2049-2055)



  • Trump Administration Releases FY 2019 Budget Proposal

    22 Feb 2018 11:31 AM | Steve Wallace (Administrator)
    Trump Administration Releases FY 2019 Budget Proposal

    Last week, the Trump Administration released its Budget Proposal for FY 2019, and much like the previous year's Budget Proposal, it contains a number of surprises. Below are a few highlights.
    • Elimination of key HUD programs, including HOME, the Choice Neighborhoods Initiative, the Public Housing Capital Fund, and CDBG. The Budget Proposal also states that state and local governments are to fill the gap left behind by the elimination of these programs (it should be noted that the previous Budget Proposal discussed state and local governments partnering with private entities to fill the gap left behind by the elimination of key HUD programs, but talk of such private-public partnerships is noticeably absent from the FY 2019 Budget Proposal). 

    • Maintaining 2017 enacted level ($145 million) to combat childhood exposure to lead-based paint.

    • Establishment of so-called "EnVision Centers" which would guide tenants in affordable housing towards what the Administration describes as "self-sufficiency". These centers would have a nexus of resources from non-profit, corporate, HUD, and state/local governments in order to achieve the goal of "self-sufficiency" for tenants. The Budget also requests a program evaluation be conducted as these centers begin operation. The first of 10 planned "EnVision Centers" would be located in Detroit, MI.
    • In keeping with the theme of "self-sufficiency", the Administration proposes the allocation of $75 million for HUD's Family Self-Sufficiency Program and $10 million for the Jobs-Plus Initiative.
    • Allocation of $100 million for RAD to help the redevelopment of public housing units to PBV and PBRA units.
    • The Budget Proposal requests $33.8 billion to be allocated for all rental assistance programs- a decrease of 11.2% from 2017 enacted levels. Additionally, the Public Housing Capital Fund would not receive any additional funds (the Administration believes the provision of affordable housing should be shifted more towards state and local governments).
    • There is a total of $39.2 billion allocated for HUD in the Budget Proposal- a decrease of $8.8 billion/18.3% from 2017 enacted levels.
     
    There was also an Addendum published alongside the Budget Proposal this year to account for the Bipartisan Budget Act of 2018, which raised spending caps for the remainder of FY 2018 and FY 2019-
    • Additional $2 billion for HUD is requested, half of which would be used to protect elderly and disabled residents from rent increases (the $1 billion would be spread out among the Public Housing Operating Fund, Housing Choice Vouchers, PBRA, Housing for the Elderly, and Housing for Persons with Disabilities).
    • $700 million of the requested additional funds would go to Section 8 Tenant-Based Rental Assistance. 
     
    On a final note, it is important in the coming weeks that IRHP's members make clear to their representatives in Congress the value of the programs the Trump Administration wishes to defund and/or eliminate as the next omnibus is negotiated. As a reminder, Congress has until March 23rd to pass a new spending package.

    FY 2019 Budget Proposal (HUD appropriations on pages 63-65)- https://www.whitehouse.gov/wp-content/uploads/2018/02/budget-fy2019.pdf 

    Addendum (HUD appropriations on page 10)- https://www.whitehouse.gov/wp-content/uploads/2018/02/Addendum-to-the-FY-2019-Budget.pdf 

    Budget Appendix (for HUD appropriations)- https://www.whitehouse.gov/wp-content/uploads/2018/02/hud-fy2019.pdf

  • Proposed Trump Infrastructure Plan Modifies PABs, Does Not Address Housing

    20 Feb 2018 11:32 AM | Steve Wallace (Administrator)
    Proposed Trump Infrastructure Plan Modifies PABs, 
    Does Not Address Housing

    The Trump Administration's FY 2019 Budget Proposal, while still important, has diverted coverage away from another important proposal released the same day - the Trump Administration's proposal for a comprehensive infrastructure package. It should be noted that no actual legislative language was released alongside the 55-page proposal; President Trump has repeatedly stated that it is up to Congress to come up with the actual legislative language that would fit within the parameters set forth by the White House.

    One major takeaway from the infrastructure proposal is that the Trump Administration wants to see the following changes made to Private Activity Bonds:
    • Requiring new public attributes for infrastructure projects:
    • Either state/local government ownership or private ownership with rates for services set by state/local governments (either through regulations or contractual control/approval).
    • Projects will either be made available for public use (i.e. the creation of a new road) or will provision services to the general public (i.e. water services).
    • When a government leases a project to a private entity, the following conditions are included so as to still meet public attributes requirement (and also to still be treated as "government-owned")
    • Term of lease is to be no longer than 95% (instead of the current 80%) of the reasonably expected economic life of the project.
    • Private lessee agrees not to take depreciation or investment tax credit with respect to the project
    • Project cannot be purchased by lessee at any rate other than fair market value.
    • Broadening the eligibility of which projects can utilize PABs (the proposal specifically mentions including rural broadband services and qualified surface transportation facilities (i.e. roads and bridges)).
    • Elimination of Alternative Minimum Tax preference so as to encourage utilization through lower borrowing costs.
    • Removal of state and transportation volume caps for public purpose infrastructure projects (the proposal cites clean drinking water projects and high-speed intercity rail infrastructure as specific examples of how PABs can be used; housing projects are not mentioned).
    • Expansion of eligibility specifically to ports and airports.
    • Providing change-of-use provisions to protect tax exempt status of PABs, and change-of-use "cures" to preserve tax exemption for infrastructure projects.
    While the Administration recognizes the Federal government has a role to play in infrastructure development, the White House also proposes that the infrastructure package place the most burden on state and local governments. In addition to approving projects, state and local governments must come up with the majority of funding for projects under the Trump Administration's proposal. It should be noted that many states and local governments would likely find themselves in a bind trying to come up with the funds necessary to move projects forward, which in turn could negatively impact the entire effort to rebuild our nation's infrastructure.

    Finally, concerning current housing needs, the proposal does not discuss them at all. The Trump Administration, while discussing other very important areas of infrastructure development, has neglected to include any proposed solution to addressing our nation's growing housing crisis. A key element of infrastructure has been neglected in this proposal by the Trump Administration, and that in turn casts further doubts about the overall viability of the Administration's proposal.

    Infrastructure Proposal- 
    https://www.whitehouse.gov/wp-content/uploads/2018/02/INFRASTRUCTURE-211.pdf
     

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