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Education Washington News

AHSSIA Markup Held – Much Remains Under Discussion

Yesterday, Feb. 7, the Insurance Housing and Community Opportunity Subcommittee of the House Financial Services Committee marked up a discussion draft of the Affordable Housing and Self Sufficiency Act of 2012 (AHSSIA). While it is somewhat unorthodox to actually mark up a bill before it is formally introduced, yesterday’s effort on the part of Subcommittee Chair Judy Biggert (R-Ill.) underscores the interest in and intent to move this bill forward with all deliberate speed. In doing so, there are and will be challenges -- despite yesterday’s obvious attempt to forge bipartisan support and cooperation.

NAHRO staff has reviewed the AHSSIA discussion draft and developed a detailed section-by-section summary, which is available at http://www.nahro.org/sites/default/files/searchable/AHSSIA013112clean.pdf. A copy of the AHSSIA legislative text is available at http://www.nahro.org/sites/default/files/searchable/BILLS-112hr-PIH-AHAdd.pdf. An overview of the authors' statements about the need for reform legislation is available at http://www.nahro.org/sites/default/files/searchable/AHAOnePager.pdf.

Summary

As we have previously reported, AHSSIA is the latest iteration of long-overdue reform legislation focusing on the Section 8 tenant-based and project-based programs and public housing. Readers will remember earlier attempts at reform under different headings including the Section 8 Savings Act (SESA) and the Section 8 Voucher Reform Act (SEVRA). While some provisions found in earlier SEVRA and SESA legislation remain part of AHSSIA, there are new components in this current bill that are no less important – for example, the administration's Rental Assistance Demonstration (RAD) proposal appears for the first time in this legislation. However, their inclusion may affect the ability ultimately to move forward. The bill also includes a major overhaul and expansion of the Family Self-Sufficiency (FSS) program, and, as presently written, already contains contentious language which would increase minimum rents by slightly less than $20. A new and more extensive expansion of the Moving-to-Work (MTW) demonstration sponsored by Rep. Gary Miller (R-Calif.) now also appears in AHSSIA. The discussion draft version of MTW replaces provisions, commonly referred to as the Housing Innovation Program (HIP) and HIP Lite, that were previously supported by Subcommittee Democrats in the last Congress. As of this writing, MTW expansion, as proposed, is one of the most -- if not the most -- contentious part of AHSSIA.

Readers will recall that NAHRO has testified several times on previous iterations of this legislation. Tony Bazzie, Executive Director of the Raleigh County West Virginia Housing Authority , testified on behalf of NAHRO on SESA in 2011 (see http://www.nahro.org/nahro-testifies-house-subcommittee-voucher-reform). Larry Woods, CEO of the Housing Authority of Winston-Salem (N.C.), also recently testified on the expansion of the Moving-to-Work demonstration also in 2011 (see http://www.nahro.org/house-subcommittee-holds-second-sesa-meeting).

Account of the Hearing

Yesterday’s well-attended hearing resulted in little progress on many of the key issues and concerns in the bill. Several amendments were offered and quickly withdrawn, in order to enable staff and members the opportunity to continue to negotiate over the next several weeks prior to mark up by the full House Financial Services Committee. We do not anticipate that mark-up to occur before the end of February.

Along with several other minority members, Ranking Member Luis Gutierrez (D-Ill.) attempted to eliminate the proposed non-discretionary minimum rent increase. The increase was deemed necessary by several on the majority side and was noted to be an attempt to keep up with inflation. Rep Gary Miller (R-Calif.) noted that there had not been an increase in minimum rents since 1996. The limited use of the hardship exemption was also discussed in this context. Minority members of the Subcommittee expressed concerns that low income families in this economy will find it difficult to cover what others may view as as a modest rent increase. Rep. Mel Watt (D-N.C.) noted that, in order to avoid negative consequences such as eviction, some would pay the increase only to be e forced to limit or lose their ability to meet or address other needs. This conversation will undoubtedly continue and the eventual resolution of this debate over minimum rent levels -- if in fact a resolution can be found -- will likely be a major factor in whether there will be bipartisan support for final passage of AHSSIA in the House and, more than likely in the Senate, if we get that far this year.

Representative Gutierrez also petitioned for agencies to have the ability to set their exception voucher payment standards up to 120% of the FMR without HUD approval where reasonable accommodations for the disabled are involved. Rep. Brad Sherman (D-Calif.) supported the use of vouchers for both rental and homeownership opportunities in connection with manufactured housing and favored the retention of language in previous bills on this subject, but his amendment was withdrawn to allow for further discussions. Former Subcommittee Chair Maxine Waters (D-Calif.) and others, including Rep. Nydia Velasquez (D-N.Y.), were vocal on the expanded MTW authority in AHSSIA and favored a return to HIP language found in earlier bills (http://www.house.gov/apps/list/speech/financialsvcs_dem/waters_074_xml.pdf). Waters specifically expressed concerns regarding what she believed to be a blanket expansion of MTW. She also expressed concerns regarding, the absence of tenant protections and underscored that the so-called “retained provisions” impacting such matters as fair housing cannot be and should not in this bill be permitted to be waived. She also expressed concerns that fewer voucher-assisted households may be served under AHSSIA’s MTW provision and noted the absence over the years of any serious analysis or study regarding the impact and or use of MTW authority to date.

Where to from Here

NAHRO continues to work with members and staff on key provisions important to our membership, including the inclusion of a responsible voucher renewal formula. We are also working hard to ensure that FSS language in the discussion draft does noted negatively impact current FSS programs administered by our members. We also hope to ensure that the RAD demonstration approved by appropriators for 2012 is not expanded in AHSSIA unless it is otherwise consistent with RAD in current law. We will keep you posted on our progress on these and other issues and on the status of negotiations on the items noted above as soon as information is available.

Please note that an archived webcast of the Subcommittee’s mark-up of AHSSIA is accessible at: http://mfile3.akamai.com/65722/wmv/sos1467-1.streamos.download.akamai.com/65726/markup020712.asx.

 

 

House Subcommittee to Mark up Section 8, Public Housing Reform Bill

Tomorrow, February 7, the House Subcommittee on Insurance Housing and Community Opportunity is scheduled to markup the Affordable Housing and Self Sufficiency Improvement Act of 2012 (AHSSIA). Notice of the markup, as well as the most current drafts of the bills, are now posted on the House Financial Services Committee website: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=277936. The proposed legislation has not been formally introduced, and has not been given a bill number.

AHSSIA, formerly the Section Eight Savings Act of 2011 (SESA) , has undergone some significant changes of late. Notable among these changes is a new section which would significantly increase MTW authority among PHAs. Additionally, the draft legislation includes an August 2011 version of the administration’s Rental Assistance Demonstration (RAD) proposal as well as language that would provide all non-troubled PHAs with full fungibility between Operating and Capital Funds. The bill would also significantly expand the Family Self-Sufficiency (FSS) program. There are also several provisions taken from earlier versions of SESA, such as the provision to eliminate the necessity of property inspections on an annual basis, which have been retained as part of AHSSIA. To view NAHRO’s most recent write up on AHSSIA, please visit http://www.nahro.org/node/403/year/2012/month/1/date/1#4076.

For several weeks, NAHRO has been working with our committees of jurisdiction to review AHSSIA relative to current association policies and positions. We have had several productive conversations with Subcommittee staff on both sides of the aisle on issues and positions of importance to the membership. At this point, NAHRO has not taken a formal position on this proposal. There are a number of provisions in the most recent AHSSIA draft that we hope can be modified and/or improved prior to final passage in the House. It is also long-standing association policy not to take formal positions on draft legislation until such time that it has been numbered and introduced. The changes we seek in the current draft language include but are not limited to: language related to a responsible and workable voucher renewal formula; the current RAD provision vis a vis the demonstration language approved in HUD’s 2012 appropriation and FSS, specifically including language concerning existing FSS programs administered by our members. We are also actively involved in broader discussions with other interested organizations and HUD regarding the bill’s Moving-to-Work (MTW) provision. Finally, we continue to fight for necessary and responsible legislation regarding voucher administrative fees.

There is no formal timetable for AHSSIA to move forward in the House after tomorrow, including full committee markup and floor consideration. Over time, a number of amendments and changes to the bill, including those advocated by NAHRO will we understand be considered. At present, there is no indication that the Senate is prepared to formally consider AHSSIA, nor do we understand that a Senate companion to AHSSIA is being developed. As 2012 is an election year, it is likely to be an even more challenging environment to get bills such as this agreed upon and passed by both Houses. But early movement in the House on necessary and overdue housing reforms is a promising step in the right direction.

NAHRO will be on hand at tomorrow’s mark up and encourages interested members to check the House Financial Service Committee website for information regarding online viewing of the mark up, which begins tomorrow at 10 am EST.

 

 

 

 

NAHRO Seeks Member Input on HOME Proposed Rule

A long-awaited overhaul of the regulations governing the HOME Investment Partnerships Program was published in the Federal Register on December 16, 2011. Although many of the changes that would be made by the proposed rule have been in development for years, HUD has also portrayed the proposal as an opportunity to improve program performance and, according to a November 4, 2011 press release announcing the rule’s impending publication, “ensure that every dollar is used smartly to help families afford their homes.” The proposed rule is available here. A detailed summary of the changes included in the proposed rule can be found here.

According to the Department’s November 4 press release “HUD has found that there are areas in the program’s underlying regulations that can improve program performance at the local level and ensure that high quality affordable housing is being provided for low-income families in a way that delivers the best value to the taxpayer.” HUD stated that the proposed rule would:

  • “Require state and local governments to adopt policies and procedures to improve their oversight of projects, develop a system for assessing the relative risk of projects, and more closely monitor their HOME-funded sub-recipients;
  • “Require state and local governments to assess a developer’s capacity and the long-term viability of the project, before they commit HOME funds to a project;
  • “Require more frequent reporting by state and local ‘participating jurisdictions’ to enable HUD to more closely track projects once they’re under way; and
  • “Set a higher ‘performance bar’ by establishing specific timeframes for taking appropriate corrective actions against participating jurisdictions who fail to complete what they started.”

The proposed rule includes a number of new and revised provisions that would, if ultimately included in a final rule, have serious implications for those NAHRO members that administer HOME funds or otherwise participate in the program at the state or local level. The comment deadline for the proposed rule is February 14, 2012. Comments may be submitted electronically through Regulations.gov.

NAHRO members are strongly encouraged to share their thoughts, concerns, and suggestions regarding the proposed rule with NAHRO staff. Your feedback will assist us in the development of NAHRO’s formal comment letter. Please send your feedback via email to Jeff Falcusan, Director of Policy and Program Development, at jfalcusan@nahro.org. If your agency chooses to submit its own formal comment letter in response to the proposed rule, please consider sharing a copy with NAHRO.

Selected Key Elements of the Proposed Rule

PHA-CHDO Relationship: The proposed rule includes new language that would, if ultimately approved by the Department, fundamentally alter the relationship between many governmental entities (including PHAs and redevelopment authorities) and Community Housing Development Organizations (CHDOs). Specifically, these new restrictions would prohibit PHAs and RAs from acting as CHDOs or “controlling” CHDOs. Although the proposed rule would continue to allow organizations created by governmental entities to qualify as CHDOs, the proposed rule includes the following new prohibition:

“The officers or employees of a governmental entity may not be officers or employees of a community housing development organization, and the community housing development organization may not use office space of a governmental entity.”

Relatedly, regarding a CHDO’s ability to successfully demonstrate capacity, the proposed rule includes the following provision:

“Has a demonstrated capacity for carrying out housing projects assisted with HOME funds. An organization satisfies this requirement by having paid employees with housing development experience. A nonprofit organization does not meet the test of demonstrated capacity based on any person who is a volunteer or whose services are donated by another organization; (emphasis added)”

Similarly, under the proposed rule nonprofit organizations would no longer be permitted to meet the capacity requirement for CHDOs through the use of consultants or through a plan for staff to be trained by consultants.

Definition of “Commitment:” The proposed rule makes several changes to the definition of a commitment under the program. According to HUD’s detailed summary of the proposed rule, “non-specific reservations of funds to CHDOs” would no longer count as commitments, with only those funds that are reserved for project-specific activities counted as CHDO commitments towards the 15 percent CHDO set-aside requirement. Furthermore, a new requirement is added establishing a 24-month project commitment deadline for CHDO set-aside funds, along with a new 5-year deadline for the expenditure of CHDO set-aside funds (measured separately from the overall 5-year deadline for the expenditure of HOME funds).

HUD is also proposing to revise the definition of a commitment to exclude agreements between a participating jurisdiction and a subrecipient that the participating jurisdiction controls, such as a PHA or RA that is part of the local government and whose officials or employees are officials or employees of the PJ. Also excluded would be an agreement between the jurisdiction that is the lead member of a HOME consortium and a local government that is a member of the consortium.

The proposed rule expands the definition of a commitment to include a written agreement with a state recipient, a subrecipient, or a contractor to use a specific amount of HOME funds to produce affordable housing, or provide downpayment assistance or tenant-based rental assistance. The existing HOME rule does not explicitly include these types of activities under the definition of “commitment.”

Project Completion: The proposed rule revises the definition of project completion to require all construction work and title transfer (if applicable) to be completed and the final draw of HOME funds to be disbursed. For homeownership projects, beneficiary data must be entered into IDIS. For rental projects, project completion would mean that units are ready for occupancy, but tenant data input in IDIS is not required for completion of rental projects. For tenant-based rental assistance projects, project completion means that all HOME funds associated with the TBRA contract have been disbursed.

In its summary of the proposed rule, HUD notes that failure to meet the definition of project completion would trigger new requirements requiring the repayment of HOME funds related to vacant rental units and/or the conversion of unsold homebuyer units to rental units. These new provisions mirror provisions included for the first time in the FY 2012 appropriations act.

HOME Funds and Public Housing: While the proposed rule clarifies that HOME funds cannot be used for Section 9 public housing and that HOME units cannot receive Operating or Capital Fund assistance, the proposed rule does clarify that HOME funds can be used 1) to develop a HOPE VI unit that will serve as public housing if no Capital Funds are used to develop the unit, and 2) in a project that also contains public housing units, provided that HOME funds are not used in the public housing and the HOME units are separately designated.

Underwriting and Subsidy Layering: New language in the proposed rule would require that subsidy layering and underwriting of allHOME-assisted projects be performed by the PJ, in order to make a determination regardinglong-term viability of the project as well as the reasonableness of the amount of return to theowner. PJs would be required to examine the sources and uses for each project and determine whether costs are reasonable, assess the market conditions of the neighborhood in which a projectwill be located, and assess the experience and financial capacity of the developer and ensure that firm financial commitments for the project are in place.

Related Resources

HUD’s January 24 HOME Proposed Rule Webinar

 

 

 

Minibus Spending Package Sent to President for Signing

On Nov. 17, the Senate voted 70-30 to approve the conference report on a Fiscal Year 2012 appropriations package, H.R. 2112, that combines the Transportation-HUD, Agriculture, and Commerce-Justice-Science spending bills; earlier that day, the House had also voted to approve the conference report by a vote of 298-121. This so-called “minibus” compromise will now be sent to the president for signing. He is expected to sign off on the agreement on Saturday. Overall the minibus would provide about $128 billion in discretionary appropriations for the fiscal year that began on Oct. 1 (not including disaster aid). It also contains a continuing resolution to keep the rest of the government running through Dec. 16. Current stopgap funding expires at midnight today, Nov. 18.

Here is a guide to full NAHRO coverage of this agreement.

NAHRO would again like to thank all members who attended a meeting, sponsored a tour, sent an e-mail, met locally with members and staff and reached out in other ways. Your collective efforts to inform and educate decision-makers did make a difference. Had NAHRO membership not spoken out, both individually and collectively, the outcomes in the bill (though not to our liking -- primarily due to underfunding) could honestly have been worse.

So the march towards responsible funding and program reform in 2012 begins today! We know that rebuilding the commitment to decent, safe and affordable housing in quality neighborhoods is a difficult thing to accomplish in these economic times. We need everyone rowing in the same direction and speaking up now. We cannot and should not wait until February, when the administration’s 2013 budget will be released, or until March, for our Legislative Conference. We are well aware this will be an uphill climb.

Your members of Congress will be home a lot over the next two months. Speak to them about how the reserve offset is impacting/will impact your agency; talk to them about staff cuts that have and will continue to diminish the voucher program; and put a face on CDBG cuts which are likely to impact you this year.

It has been a long hard, road to funding certainty in 2012. In 2013, funds will be equally hard to come by -- and they will be even harder to come by if we fail to make the case for what we do, why we do it and, most importantly, how well we do it. The time to stand up and be heard is NOW!

 

FY 2012 T-HUD Conference Agreement: Community Development and Affordable Housing

As NAHRO previously reported, Senate and House conferees on November 14 released a compromise FY 2012 ”minibus” appropriations measure (H.R. 2112) that includes funding for HUD programs. Today’s Direct News item is intended to provide NAHRO members with a comprehensive summary of the conference report’s treatment of community development and affordable housing programs, including but not limited to Community Development Block Grants, the HOME Investment Partnerships Program, and Homeless Assistance Grants. This update also includes information on final funding levels for housing and community development programs administered by the Department of Agriculture.

NAHRO’s earlier coverage of public housing programs under H.R. 2112 is available here, and our Direct News item covering Section 8 programs under the conference report can be found here. An updated funding chart comparing the conference bill’s funding levels to the administration’s request as well as the House’s and Senate’s proposed funding levels is available at: http://www.nahro.org/status-appropriations-111511.

Community Development Block Grant (CDBG) Program

The conference report provides a total of $3.308 billion for the Community Development Fund, which is the larger account that includes the CDBG formula program. The Senate-passed version of the FY 2012 T-HUD funding bill (S. 1596) provided $3.001 billion for the Community Development Fund. The Community Development Fund received $3.501 billion in FY 2011, the same amount provided for under the House T-HUD Appropriations Subcommittee’s version of the FY 2012 THUD spending bill. (The House subcommittee mark was never taken up by the full House Appropriations Committee.)

The President’s FY 2012 budget requested $3.804 billion for the Community Development Fund, with $3.684 billion proposed for the CDBG program (including formula grants as well as grants to insular areas). S. 1596 included just $2.851 billion for the CDBG program, while the House subcommittee mark included approximately $3.465 billion for the CDBG formula program for FY 2012. The CDBG program was funded at $3.343 for FY 2011.

The conference report’s approach to funding the CDBG program is unprecedented in that the bill specifies a minimum program funding level while leaving the final amount to the HUD Secretary’s discretion. The conference agreement stipulates that, of the amount provided for the Community Development Fund, “not less than” $2.948 billion is for carrying out the CDBG program, meaning not less than $2.941 billion will be available for CDBG formula allocations. In reality, after accounting for a $60 million set-aside for the Indian CDBG program, up to $3.241 billion is available for formula allocations, after accounting for grants to insular areas. However, as described below, the conference report makes up to $300 million under the Community Development Fund available for “necessary expenses and activities…related to disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization in the most impacted and distressed areas resulting from a major disaster declared…in 2011.”

NAHRO and its community development industry partners plan to request that HUD direct as much of the available funding as possible toward the regular CDBG formula program. Dedicated CDBG funding intended to address disasters has traditionally been provided in the form of off-budget emergency spending through supplemental appropriations measures. Providing disaster CDBG funding through the annual appropriations bill as a set-aside under the Community Development Fund sets a troubling precedent, in NAHRO’s opinion.

Set-asides under the Community Development Fund:

CDBG Disaster Funding: S. 1596 provided $400 million in stand-alone funding for disaster relief, long-term recovery, and restoration of infrastructure, housing, and economic revitalization resulting from a major disaster designation in 2011. The House subcommittee bill did not include CDBG disaster funding, which, as mentioned above, has traditionally been provided in the form of off-budget emergency spending through supplemental appropriations bills.

As previously mentioned, the final conference report makes up to $300 million of the funding provided under the Community Development Fund available for disaster relief and long-term recovery. The conference report also makes available an additional $100 million in off-budget funding available for the same purposes and under the same terms. Funds shall be awarded directly to the state or unit of general local government at the discretion of the Secretary. Funds cannot be used for activities reimbursable by, or for which fund are made available by, the Federal Emergency Management Agency or the Army Corps of Engineers. The administrative allowance for these funds is set at five percent of each state’s or local government’s grant.

Indian Community Development Block Grant (CDBG) program: The President’s FY 2012 budget proposed to set aside $65 million under the Community Development Fund for the Indian CDBG program, the same amount provided for FY 2011. As has been the practice in recent appropriations acts, the President’s budget proposed that this funding be provided,notwithstanding section 106(a)(1) of the Housing and Community Development Act of 1974. Section 106(a)(1) specifies that one percent of the appropriation for the CDBG program be set aside for grants to Indian tribes “on the basis of a competition conducted pursuant to specific criteria for the selection of Indian tribes to receive such amounts.”

S. 1596 set aside $60 million for Indian CDBG program notwithstanding section 106(a)(1) of the 1974 Act. Meanwhile, the House subcommittee’s mark departed from recent practice by providing that $35 million (one percent) of the funding provided for the CDBG program “shall be for grants to Indian tribes pursuant to section 106(a)(1).” This means that while Indian CDBG funding was not technically a set-aside under the House subcommittee’s bill, the application of section 106(a)(1) would have reduced the amount of CDBG program funding available for CDBG formula allocations by $35 million. The conference report reflects the Senate’s preferred approach to funding Indian CDBG. Accordingly, $60 million is provided for Indian CDBG for FY 2012.

Sustainable Communities Initiative: S. 1596 set aside $90 million from the Community Development Fund for the Sustainable Communities Initiative. The House subcommittee’s bill provided no funding for this program. Whereas Sustainable Communities Initiative funding for FY 2010 and FY 2011 was provided by setting aside $150 million and $100 million, respectively, from the Community Development Fund, the President’s FY 2012 budget requested $150 million in stand-alone funding for the program.

The final conference report includes no new funding for the Sustainable Communities Initiativefor FY 2012. In the Joint Explanatory Statement accompanying the conference report, the conferees “remind the Secretary and CDBG formula fund recipients that sustainable activities are an eligible use of formula funds” and state that the Secretary “may use the Office of Sustainable Housing and Communities and the technical assistance resources of the Transformation Initiative to identify opportunities for communities to work together to integrate transportation and housing and to assist local grantees in performing these activities.”

Rural Innovation Fund: The administration’s budget requested $25 million in set-aside funding for the Rural Innovation Fund for FY 2012, but neither S. 1596 nor the House subcommittee mark provided funding for this program. Accordingly, the final conference report includes no funding for the Rural Innovation Fund, which was not funded for FY 2011.

Administration and Planning: The House subcommittee’s bill included language reducing the CDBG administration and planning cap from 20 percent to 10 percent for FY 2012, while S. 1596 left the traditional 20 percent cap in place. This cap is not embedded in permanent statute but is instead determined each year by the annual appropriations bill. NAHRO strongly opposed the House subcommittee’s bill proposed reduction to the cap, and, in a positive development, the conference agreement maintains the CDBG administrative and planning cap at 20 percent for FY 2012. The Joint Explanatory Statement directs the Government Accountability Office to issue a report on how CDBG grantees use administrative and planning funds.

Matching Funds:The Joint Explanatory Statement also includes language directing HUD to “provide an analysis of how much CDBG funding is used by grantees as matching dollars for other federal programs” and “to gather data on the use of fiscal year 2012 CDBG funds to match other federal programs, including which programs are being matched, in what amounts, for what purposes, whether other funds are leveraged, and any other relevant data.”

HOME Investment Partnerships (HOME) Program

The conference report provides only $1 billion for the HOME program for FY 2012, a reduction of $607 million below the FY 2011 enacted level and $200 million less than the House subcommittee mark. S. 1596 also provided just $1 billion for HOME. The administration’s budget requested $1.650 billion for the HOME program account for FY 2012.

The conference report bill includes the following provisions from S. 1596 that are intended to ensure the timely completion of HOME-funded projects:

  • Funds used for projects not completed within four years of the commitment date, as determined by a signature of each party to the agreement, shall be repaid. The Secretary may extend the deadline for one year if the Secretary determines that the failure to complete the project is beyond the control of the Participating Jurisdiction (PJ).
  • No funds may be committed to any project unless each PJ certifies that it has conducted an underwriting review, assessed developer capacity and fiscal soundness, and examined neighborhood market conditions to ensure adequate need for each project.
  • Any homeownership units which cannot be sold to an eligible homeowner within six months of project completion must be rented to an eligible tenant.
  • No funds may be awarded for development activities to a community housing development organization (CHDO) that cannot demonstrate that it is has staff with demonstrated development experience.

The conference report includes an administrative provision (Section 232 of the T-HUD title – see below for more information) requiring HUD to produce a report on actions taken, progress achieved, and future actions planned (including improvements to information technology) with respect to improving data quality, data management, and grantee oversight and accountability under programs and activities administered by the Office of Community Planning and Development. In their Joint Explanatory Statement accompanying the conferenced bill, the conferees direct HUD to include in this report an explanation of how the Department is monitoring and evaluating grantee performance under the HOME program, “including how participating jurisdictions get approval to restart a stalled or cancelled project.”

Section 108 Community Development Loan Guarantees

For the third year in a row, the administration’s budget had requested no direct appropriation for the credit subsidy costs of the Section 108 program. As an alternative to the appropriation, HUD has proposed legislative language that would authorize HUD to collect fees from Section 108 borrowers in amounts that would result in a credit subsidy cost of zero. NAHRO has continued to support direct appropriations for the program.

The House subcommittee mark provided $6.8 million to subsidize total loan principal not to exceed $275 million, while S. 1596 included $4.96 million to subsidize no more than $200 million in loan principal. The conference report provides $5.95 million to subsidize no more than $240 million in loan principal under the Section 108 program for FY 2012.

Brownfields Economic Development Initiative

Neither S. 1596 nor the House subcommittee’s bill provided funding for the Brownfields Economic Development Initiative (BEDI), and the conference report includes no funding for BEDI for FY 2012. The administration has called for the termination of the program in its last three budget proposals. The program has not been funded since FY 2010.

McKinney-Vento Homeless Assistance Grants

The conference report provides $1.901 billion for HUD’s McKinney-Vento Homeless Assistance Grants for FY 2012, the same amount proposed under both S. 1596 and the House subcommittee’s bill, and a funding level identical to FY 2011. The President’s FY 2012 budget proposal requested $2.372 billion.

HUD has still not fully implemented the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act – signed into law by President Obama two and a half years ago – which restructured HUD’s homeless assistance programs. HEARTH combined HUD's three competitive grant programs—Shelter Plus Care, Supportive Housing, and Section 8 Moderate Rehabilitation Single Room Occupancy—into a single competitive Continuum of Care program. HEARTH also renamed the Emergency Shelter Grants program the Emergency Solutions Grant program and amended the program to provide grantees with more flexibility to prevent homelessness and rapidly re-house families and individuals who become homeless. HEARTH also created a new Rural Housing Stability Assistance program, which would provide funding to combat homelessness in rural areas.

Whereas the House subcommittee’s bill specified that no less than $225 million must be available for the Emergency Solutions Grant (ESG) program for FY 2012, S. 1596 set the minimum ESG funding level at $286 million. The final conference report requires that “not less than $250 million” be available for the reformed ESG program.

The House Subcommittee’s bill effectively barred HUD from providing funding through the Rural Housing Stability Assistance program, while the final conference report includes no such prohibition. However, NAHRO has learned that HUD, after meeting renewal needs under the reformed Continuum of Care program, is unlikely to have sufficient funding available to implement the new rural program.

HUD Posts ESG Interim Rule, Announces Remainder of FY 2011 Allocations: Although President Obama signed the HEARTH Act into law in May 2009, HUD failed to issue any of the long-promised regulations implementing the reformed programs until earlier this week, when the Department finally posted the text of an interim rule for the reformed ESG program. This delay was in spite of statutory language included in HEARTH requiring HUD to promulgate such regulations no later than 12 months from the date of enactment. (HUD has still not issued regulations for the new Continuum of Care program or for the Rural Housing Stability Assistance program.)

HEARTH included self-implementing language requiring that the changes to the reformed programs (including ESG) go into effect 18 months after the date of enactment, a deadline reached last November 20. The year-long FY 2011 Continuing Resolution provided “at least” $225 million specifically for the Emergency Solutions Grant program. Despite HEARTH’s self-implementing language and apparent Congressional intent, HUD in May announced that it would allocate FY 2011 ESG funds in a two-stage process. In the first stage, $160 million was immediately allocated under the existing Emergency Shelter Grant program regulations. HUD pledged to allocate at least an additional $65 million under the new ESG program “once HUD publishes the new Emergency Solutions Grant regulations.” Along with the ESG interim rule, HUD has now posted the second set of FY 2011 allocations.

Housing Opportunities for Persons with AIDS

S. 1596 provided $330 million for the Housing Opportunities for Persons with AIDS (HOPWA) program, while the House subcommittee’s bill included $334 million, the same funding level provided for FY 2011 and $1 million below the President’s FY 2012 budget request. The conference report splits the difference between the Senate and the House by providing $332 million for HOPWA for FY 2012.

Other Provisions

Timely Notification of Grantees: The conference report reflects the House subcommittee’s bill by requiring HUD to notify Community Planning and Development (CPD) grantees of their formula allocations within 60 days of enactment. This requirement, which was originated and first proposed by NAHRO in 2010, will apply to the CDBG, HOME, ESG, and HOPWA programs. S. 1596 did not include these requirements.

Eminent Domain: The conference report carries forward language from recent appropriations acts prohibiting the use of HUD funding for federal, state, or local projects that use eminent domain for any purpose other than a public use. Economic development that primarily benefits private entities is not considered a public use for the purposes of the provision. The use of funds for mass transit, railroad, airport, seaport, and highway projects; certain utility projects; structures designated for use by the general public; projects for the removal of an immediate threat to public health and safety; and projects involving brownfields would remain eligible for federal funds.

Report on Block Grant Programs: The conference report instructs the Comptroller General of the United States to study the effectiveness of the block grant programs administered by CPD, “including an examination of best practices utilized by program grantees and performance metrics utilized by the Department.” The Comptroller General’s findings must be reported to the Congress not later than 180 days from the date of the bill’s enactment.

Grantee Oversight and Accountability:The conference report also directs the HUD Secretary to “take actions necessary to improve data quality, data management, and grantee oversight and accountability with respect to programs and activities administered” by CPD. HUD is directed to “address the problems identified by the Inspector General…in audits and audit reports since 2006, including ongoing audits, with respect to such programs and activities.” The Department is required to submit a report to Congress not later than 120 days after enactment of the bill “on progress achieved by the Department with respect to addressing such problems and identifying further improvements that can be made (including improvements relating to information technology) and proposed actions and timelines to carry out such improvements.”

USDA Programs

The H.R.2112 conference report also includes FY 2012 appropriations for the Department of Agriculture (USDA). Housing and community development highlights from the USDA title of the bill include the following:

  • Section 521 rental assistance: The conference report provides $904.7 million for FY 2012 compared to $955.6 million for FY 2011.
  • Section 538 guaranteed multi-family housing loans: The conference report provides $130 million for FY 2012, up from $30.9 million for FY 2011.
  • Section 515 rental housing: The conference report provides $64.5 million for FY 2012 compared to $69.5 million for FY 2011.
  • Section 542 rural housing vouchers: The conference report provides $11 million for FY 2012, compared to $14 million for FY 2011.
  • Rural Community Development Initiative: The conference report provides $3.6 million for FY 2012, compared to $5 million for FY 2011.

Please direct questions regarding this Direct News item to Jeff Falcusan, Director of Policy and Program Development (ext. 7212).

 

FY 2012 T-HUD Conference Agreement Released: Section 8

As NAHRO previously reported, Senate and House conferees on November 14 released a compromise FY 2012 ”minibus” appropriations measure (H.R. 2112) that includes funding for HUD programs. Today’s Direct News item is intended to provide NAHRO members with a comprehensive summary of the conference report’s treatment of Section 8 tenant-based and project-based programs, including but not limited to: Housing Assistance Payments, Net Restricted Assets, Ongoing Administrative Fees, Family Self-Sufficiency, Moving-to-Work, HUD-VASH, Tenant-Protection Vouchers, Cash Management of Voucher Programs, Limited English Proficiency, the student rule, Section 811, Project-Based Rental Assistance and HUD’s Transformation Initiative.

NAHRO’s earlier coverage of public housing programs under H.R. 2112 is available here. NAHRO will issue a similar piece covering Community Planning and Development programs in the coming days. An updated funding chart with the conference bill’s funding levels compared to the House’s and Senate’s proposed funding levels is available at: http://www.nahro.org/status-appropriations-111511.

For all provisions described in the conference agreement relating to Section 8 tenant-based programs, the effective date is January 1, 2012.

Section 8 Tenant-Based Programs

Base Voucher Housing Assistance Payment Funds: The conference agreement provides $17.242 billion for Housing Choice Voucher (HCV) Housing Assistance Payments (HAP), compared with “no less than” $17.143 billion in HUD’s FY 2012 budget request and in the House’s and Senate’s versions of the bill. The conference agreement provides $543 million more (3.3 percent) than the FY 2011 enacted level. After subtracting $103 million for HAP set-aside adjustments (described below), it remains to be seen what the base voucher HAP pro-ration will be for FY 2012 using the remaining $17.139 billion in directly appropriated HAP funding (not including individual PHA’s available Net Restricted Assets as described below). NAHRO will work with HUD and Congress in an attempt to ascertain likely HAP pro-rations for FY 2012 as soon as possible. NAHRO will provide additional information for PHAs’ operational considerations on this topic in the near future. In the meantime, please feel free to check out NAHRO’s HCV Resourcespage, which provides information and tools to assist PHAs in maximizing their HAP, NRA, and administrative fee resources.

HUD’s track record of providing House and Senate with accurate estimates of HAP funding needs in order to achieve 100 percent HAP pro-rations has proven to be less than perfect. To that end, the Joint Explanatory Statement accompanying the conference report “direct[s] HUD to monitor and provide quarterly briefings to the House and Senate Committees on Appropriations on the Section 8 program, including data on leasing and trends or changes in rents or tenant income.”

Base Voucher HAP Renewal Formula: The conference agreement establishes the base voucher HAP renewal funding formula based on each PHAs’ calendar year 2011 voucher leasing and HAP costs (with MtW agencies being funded according to their respective MtW agreements), as proposed by the administration in its FY 2012 budget request. This is a marked change from FY 2011 (as well as FY 2007-FY 2010) when Congress enacted a formula based on PHAs’ previous Federal Fiscal Year voucher leasing and HAP costs and previous fourth quarter HAP set-aside adjustments for increased leasing. Through both authorizing and appropriations committees, NAHRO has long advocated for a prior calendar year base voucher HAP renewal funding formula because it is consistent with the voucher programs’ funding and utilization period for all PHAs and contains the most up-to-date information possible on per voucher HAP costs.

HAP Set-Aside Adjustment Fund: In addition to the $17.139 billion for PHAs’ base voucher HAP renewal funding, the conference agreement includes $103 million in HAP-set aside funding (31 percent less than FY 2011 enacted levels) for a range of categories, including:

  • Portability reimbursement from 2011 and additional HAP costs due to “unforeseen circumstances;”
  • Increased HUD-VASH HAP costs;
  • Project-Based Vouchers not under leasing during 2011 but committed under an Agreement to Enter into a Housing Assistance Payments Contract (AHAP); and
  • Incremental tenant-based assistance for eligible families assisted under the Disaster Housing Assistance Program for Hurricanes Ike and Gustav, provided that the vouchers would not be re-issued when families leave the program.

HUD’s FY 2012 budget request included $150 million for the adjustment fund along with several additional eligibility categories that were not adopted in the conference agreement, such as:

  • Adjustments for PHAs with voucher leasing rates at the end of the Calendar Year that exceed the average leasing for the 12-month period used to establish the allocation (restored from previous years),
  • Adjustments for any increase in the costs associated with deposits to family self-sufficiency program escrow accounts, and
  • Adjustments for PHAs that experienced a significant increase, as determined by HUD in renewal costs as a result of participation in the Small Area Fair Market Rent Demonstration.

The Senate bill contained the same amount of funding and the same eligibility categories as the conference agreement. The House subcommittee’s bill set aside $135 million for the adjustment fund, matching HUD’s FY 2012 budget request, but with fewer eligible purposes.

In recommendations provided to authorizers earlier this year, NAHRO offered its analysis of the statutory funding problems facing voucher programs. In FY 2003, a set-aside HAP fund enabled eligible PHAs that had used half of their NRA to increase leasing up to their authorized number of vouchers in the current calendar year. The set-aside fund worked in tandem with the “budget-based” HAP renewal formula by providing savings relative to the formula in place in FY 2002, by further incentivizing PHAs to lease their authorized vouchers by utilize their existing budget authority and NRA, and by providing a relatively modest amount to enable eligible PHAs whose renewal HAP and NRA were insufficient to enable them to lease up to their authorized number of vouchers to do so. Based on lessons learned, NAHRO recommended that the renewal HAP funding policy that was in place in FY 2003 should be restored under SESA/SEVRA.

Rescission of Net Restricted Assets: The bill includes a $650 million rescission/offset from non-MtW and MtW PHAs’ Net Restricted Assets “(in accordance with VMS data in calendar year 2011 that is verifiable and complete), as determined by the Secretary.” The bill enables HUD to derive the required $650 million rescission to be derived by HUD from reductions to PHAs’ calendar year 2012 allocations.

HUD’s FY 2012 budget request included a rescission of PHAs’ NRA but with no set or requested dollar amount as was the case with the administration’s proposed offset of $1 billion in PHAs’ public housing operating reserves . HUD’s FY 2012 budget request indicated that the NRA offset and reallocation would be established by the Department through regulation and published in the Federal Register. Language contained in HUD’s FY 2012 budget request sought approval from Congress to promulgate regulations requiring both offsets and reallocations of NRA in FY 2012 from PHAs that are “unable or reluctant to serve additional families with existing resources.” Under HUD’s FY 2012 budget request, reallocated funds would first be used to avoid or reduce the downward proration of renewal funding for all PHAs, and would then be applied on the basis of PHA need (for example, to avoid the termination of families’ rental assistance) and performance.

The House subcommittee bill had no such rescission or reallocation provision. The conference report’s modified version of the Senate bill’s offset language, in both amount and design, lowered the amount of the offset from $750 million to $650 million, and did not include HUD’s requested reallocation authority. Furthermore, while the conference report provides HUD withoffset authority, it lacks specificity regarding the design HUD must use to execute its offset of PHAs’ NRA in FY 2012 as was previously included in the Senate bill. The Senate’s previous direction to HUD defined “excess” NRA subject to offset at no less than one month of each PHA’s FY 2012 HAP budget authority. The language adopted by the conferees is of great concern to NAHRO. We will follow up on this issue in an effort to ensure that the bill language is not misinterpreted or abused by HUD to the detriment of all PHAs.

Cap on Voucher Leasing: The conference agreement includes a provision prohibiting PHAs from leasing more than 100 percent of their unit months available (UMA) under their ACC with HUD by calendar year 2012, regardless of their PHA fiscal year end date (i.e. 3/31, 6/30, 9/30, 12/31). Both the Senateand House subcommittee’sbills containeda cap on voucher leasing, while HUD’s FY 2012 budget request sought to “bust the caps”to allow PHAs with available funds to lease as many vouchers as possible.

Timely Implementation of Voucher Funding Amounts: The conference agreement requires HUD to inform each PHA within 60 days of enactment of the bill of the amounts that will be made available to each agency for FY 2012.

Voucher Programs’ Ongoing Administrative Fees: The conference report provides $1.300 billion for ongoing administrative fees in the HCV program, compared to $1.05 billion in the House bill and $1.350 billion in the Senate-passed bill. The conference agreement funding level is $97 million less (-7 percent) than the FY 2011 enacted level. HUD's FY 2012 budget request for ongoing administrative fees was $1.598 billion, compared with HUD’s FY 2011 budget request for ongoing administrative fees of $1.741 billion.

As in previous appropriations acts, the conference agreement includes a provision advocated by NAHRO that would provide the ability to utilize, to the extent necessary, unobligated balances (including recaptures and carryovers) remaining from funds appropriated for the Section 8 Tenant-Based Rental Assistance Program for FY 2011 and prior fiscal years to provide up to 100 percent proration of on-going fees as well as special fees. Although similar language has been in each annual appropriations bill going back several years, the Department has never utilized this provision.

NAHRO estimates that the funding level included in the conference report will result in a administrative fee pro-ration of roughly 76 percent. Note, however, that pro-rations are based on a number of factors, including but not limited to the number of voucher-assisted households leased in FY 2011 and in which cities and towns they are leased. Information on all of these factors could not be known within reasonable limits for FY 2012 at this time. As such, NAHRO will work with HUD and Congress in an attempt to ascertain a more accurate estimate of ongoing administrativepro-rations for FY 2012 as soon as possible. NAHRO will provide additional information for PHAs’ operational considerations on this topic in the near future.

The conference agreement unfortunately does not include an amendment advocated by NAHRO and sponsored by Senator Tim Johnson (D-SD), Chair of the Senate Banking, Housing and Urban Affairs Committee, that would have allowed PHAs to use their Net Restricted Assets not only for HAP but also to augment directly appropriated ongoing administrative fee pro-rations up to 90 percent for all authorized vouchers under lease at pre-QHWRA fee rates if available. Senator Johnson’s amendment did not require the appropriation of any additional FY 2012 funds and did not score with the non-partisan Congressional Budget Office (CBO).

At 83 percent pro-rations, FY 2011 marked the lowest ongoing administrative fee pro-ration as well as the widest gap between ongoing administrative fee pro-rations and national voucher lease-up rates in the 36-year history of the program. Ongoing administrative fee funding levels in the conference agreement will establish FY 2012 as the new low-water mark. As a percentage of HAP funds, the HCV program’s ongoing and special administrative fee funding levels in FY 2012 is 7.83 percent compared with 8.38 percent in FY 2011. Historically, when administrative fee funding achieved 100 percent pro-rations, funding levels ranged from 10.0 to 10.4 percent of HAP.

Additional Administrative Fees: The conference agreement includes an additional $50 million in administrative fees for PHAs that need additional funds to administer tenant-protection vouchers as well as the administration of disaster-related vouchers, and Veterans Affairs Supportive Housing vouchers. This is the same amount as in the House subcommittee’s bill and HUD’s FY 2012 budget request. Some of the $50 million available for additional administrative fees may ultimately be available to HUD to augment the $1.300 billion in ongoing administrative fees for FY 2012, although this is not a certainty by any means.

Limited English Proficiency: That conference agreement includes $300,000 for the creation and promotion of translated materials and other programs that support the assistance of persons with limited English proficiency (LEP) in utilizing the services provided by HUD. The funding previously provided for this activity supports both the translation and dissemination of documents. The Senate Appropriations Committee urged the Department to move expeditiously to meet the intent of these funds. In addition, HUD is directed in the Committee's report to provide information on its work on this program in its 2013 budget justification, including plans and costs of: translating and updating documents, conducting outreach and disseminating vital documents, and operating an interpretation hotline. Neither the House version of the bill nor HUD’s FY 2012 budget included funding for this purpose. Over the years, NAHRO has supported efforts led by the National Affordable Housing Managers Association, National Multi-Housing Assistance Council / National Apartment Association, National Leased Housing Association and the National Association of Realtors, to authorize and fund such LEP activities.

HCV Family Self-Sufficiency (FSS): The conference agreement includes $60 million, equal to HUD’s FY 2012 budget request, theHouse’s and Senate’s bills, and the FY 2011 enacted level.

HUD-VASH: The conference agreement provides $75 million for incremental HUD-VASH vouchers, an amountequal to HUD’s FY 2012 budget request and theSenate’sHouse subcommittee’s versions of the bill. There are still a number of outstanding questions related to HUD’s handling of HUD-VASH. The conference report states that HUD is required to separately track all special purpose vouchers funded under Section 8 tenant-based programs, including but not limited to HUD-VASH, Family Unification Program (FUP), and Mainstream voucher programs. Outstanding issues where NAHRO continues to seek clarification from HUD and Congress are listed in our previous articles titled, “NAHRO Contacts HUD for Answers to Their Significant Change to HUD-VASH NRA” and “NAHRO Helps Unpack HAP Funding for PHAs with HUD-VASH and Other Voucher Programs.”

The Joint Explanatory Statement accompanying the conference report states that HUD is required to also “report on HUD–VASH utilization rates, challenges encountered with the program and efforts to increase veteran self-sufficiency by January 15, 2012, as proposed by the House…The conferees reiterate direction included by the Senate on tracking the housing stability of veterans utilizing the HUD–VASH program, addressing the needs of rural area and sharing best practices with grantees.”

Demonstrations Related to Serving Homeless or At-Risk Families: The bill does not include language or funding related to new homeless demonstrations as proposed by HUD in its FY 2012 budget request and included by the Senate. The Senate bill would haveprovided $5 million for payments to PHAs, to be awarded competitively, to demonstrate the effectiveness of leveraging mainstream resources to address the needs of families and individuals who are homeless or at risk of homelessness, as defined by the Secretary of Housing and Urban Development. Funding would have been administered by the Secretary in conjunction with the Department of Health and Human Services and the Department of Education. HUD’s FY 2012 budget request included $57 million in HAP funding for these proposed demonstrations.

Disaster Housing Assistance: HUD’s FY 2012 budget request included up to $50 million for incremental tenant-based assistance for eligible families assisted under the Disaster Housing Assistance Program for Hurricanes Ike and Gustav, provided that the vouchers would not be re-issued when families leave the program. The conference agreement does not provide dedicated funding for this purpose, but it is included as an eligible purpose in the $103 million HAP set-aside account described above. The House subcommittee’s bill did not include funding for this purpose.

Moving-to-Work Demonstration: NAHRO supported an expansion of the MtW demonstration by three slots. Regrettably, the conference agreement does not provide HUD with the authority to increase the number of Moving-to Work(MtW) agencies. HUD’s FY 2012 budget requested the authority to increase the MtW demonstration by three agencies. The Senate bill would have allowed for up to three PHAs to participate in the demonstration, but the House version of the bill did not include an expansion of the demonstration.

Tenant-Protection Vouchers: The conference agreement provided$75 million for first-time renewal funding of tenant-protection vouchers, the same amount as HUD’s FY 2012 budget request. Included within this subaccount is a new provision that would direct up to $10 million toward tenant protection vouchers to unassisted maturing mortgage properties. This provision was not in the House subcommittee’s bill.

The Rental Assistance Demonstration (RAD) heading of the conference agreement includes a allowing property owners with Rent Supplement and Rental Assistance Payment (RAP) contracts in FY 2012 and FY 2013 to convert tenant protection vouchers to project-based vouchers in order to preserve their development’s long-term affordability for low-income households. The conference report directs the Government Accountability Office (GAO) to study the long-term impact of these conversions on the ratio of tenant-based to project-based vouchers.

Section 811 Tenant-Based Vouchers: The conference agreement provides $165 million for the section 811 program, instead of $196 million as proposed by the House and $150 million as proposed by the Senate. This amount is $15 million above the FY 2011 enacted funding level. The conference agreement does not include funds for new construction. HUD’s FY 2012 budget request included $111 million to expand the number of housing units assisted by this program through new awards. The conference agreement also provides HUD with the authority to fund activities authorized under section 811(b)(3) of the Cranston-Gonzalez National Affordable Housing Act to allow for project rental assistance to State housing finance agencies and other appropriate entities. The Joint Explanatory Statement directs HUD to issue guidance to housing agencies administering mainstream (811) vouchers to continue to serve people with disabilities upon turnover.

Eligibility of College Students for Assisted Housing under Section 8:Section 215 of the bill modifies a provision proposed by the House and Senate on the requirements for eligibility for Section 8 voucher assistance, and includes a consideration for persons with disabilities.Item six in bold text below is the amended language to the existing rule (http://edocket.access.gpo.gov/2008/pdf/E8-19435.pdf). Section 215(a) in the conference agreement states:

“No assistance shall be provided under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f) to any individual who—

(1) is enrolled as a student at an institution of higher education (as defined under section 102

of the Higher Education Act of 1965 (20 U.S.C.1002));

(2) is under 24 years of age;

(3) is not a veteran;

(4) is unmarried;

(5) does not have a dependent child;

(6) is not a person with disabilities, as such term is defined in section 3(b)(3)(E) of the United States Housing Act of 1937 (42 U.S.C.1437a(b)(3)(E)) and was not receiving assistance under such Section 8 as of November 30, 2005; and

(7) is not otherwise individually eligible, or has parents who, individually or jointly, are not

eligible, to receive assistance under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f).

(b) For purposes of determining the eligibility of a person to receive assistance under section 8

of the United States Housing Act of 1937 (42 U.S.C. 1437f), any financial assistance (in excess

of amounts received for tuition and any other required fees and charges) that an individual

receives under the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), from private sources, or an institution of higher education (as defined under the Higher Education Act of 1965 (20

U.S.C. 1002)), shall be considered income to that individual, except for a person over the age of 23 with dependent children.

SEVRA/SESA Provisions: The conference agreement does not include any Section 8 voucher program reforms requested by the Administration in its FY 2012 budget request, some of which were included in the Senate’s version of the bill.

The Senate version of the bill included several provisions from the “Section Eight Voucher Reform Act” (SEVRA) and “Section Eight Savings Act” (SESA) directly affecting the Housing Choice Voucher, Project-Based Rental Assistance, and Public Housing programs. These provisions would 1) broaden the extremely low-income targeting requirement by applying it to families with the higher of 30 percent of Area Median Income or the federal poverty level; 2) increase the standard deduction for elderly and disabled households from $400 to $675 and raise the deduction for excess medical expenses from 3 percent to 10 percent of income; 3) streamline the program by permitting three-year annual re-certification for households that certify that 90 percent or more of their income is fixed (i.e. SS and SSI) and that their income has not changed from the previous year; 4) provide PHAs the authority to approve exception rents for disabled voucher households without HUD approval; and 5) enable HUD to produce more timely Fair Market Rent data on an annual basis.

Section 8 Project-Based Programs

Section 8 Project-Based Rental Assistance: The conference agreement provides $9.34 billion for Section 8 Project-Based Rental Assistance, compared with HUD’s budget request and House bill funding level of $9.429 billion. The Senate bill would have provided $9.419 billion. Of this amount, the conference agreement includes an allowance for the Performance-Based Contract Administrators for Section 8 Project-Based Assistance not to exceed $289 million, as requested in HUD’s FY 2012 budget.

The Senate Appropriation Committee’s rescission/offset of $200 million in the PBRA account to help supplement directly appropriated funds would have fallen short of the treatment this account received from Congress in previous years. The amount of funds recaptured and carried over within the PBRA account was increased by the conference committee from $200 to $400 million, in order to augment the amount directly appropriated by Congress for renewal funding at 100 percent pro-rations.

The conference agreement also extended the Mark-to-Market program through October 1, 2015.

Working Capital Fund: The conference agreement authorized $199 million to remain available until September 30, 2013 for additional capital for the Working Capital Fund for the development of, modifications to, and infrastructure for Department-wide and program-specific information technology systems, for the continuing operation and maintenance of both Department-wide and program-specific information systems, and for program-related maintenance activities. Any amounts transferred to this Fund under this bill are required to remain available until expended. Any amounts transferred to this Fund from amounts appropriated by previously enacted appropriations Acts may be used for the purposes specified under this Fund, in addition to any other information technology the purposes for which such amounts were appropriated. Not more than 25 percent of the funds made available under this Fund for Development, Modernization and Enhancement, including development and deployment of a Next Generation of Voucher Management System (NGVMS) and development and deployment of modernized Federal Housing Administration systems may be obligated until the Secretary submits to the Committees on Appropriations a plan for expenditure. HUD’s FY 2012 budget requested a direct appropriation of $243 million to maintain IT business operations, infrastructure, and personnel. An additional $72 million in HCD program transfers to augment the direct appropriation to support program-specific IT systems. Prior to HUD’s Transformation Initiative, Congress provided $155 million to HUD’s Working Capital Fund in FY 2008 and $224 million for FY 2009.

For more information or questions regarding this Direct News item, contact Jonathan Zimmerman, NAHRO’s Senior Policy Advisor for Housing Assistance Programs

 

FY 2012 T-HUD Conference Agreement: Public Housing Programs

As NAHRO previously reported, Senate and House conferees on November 14 released a compromise FY 2012 ”minibus” appropriations measure (H.R. 2112) that includes funding for HUD programs. Today’s Direct News item is intended to provide NAHRO members with a comprehensive summary of the conference report’s treatment of public housing programs, including the Operating Fund, Capital Fund, and HOPE VI. NAHRO will issue similar pieces covering Section 8 and Community Planning and Development programs, respectively, in the coming days.

Public Housing Operating Fund

The conference report provides $3.962 billion for the Public Housing Operating Fund for 2012, matching the administration’s request and the Senate-passed version of the FY 2012 Transportation, Housing and Urban Development, and Related Agencies (THUD) appropriations bill, an amount equivalent to 80 percent of HUD’s estimate for subsidy eligibility for the year. The conference report adopts the Senate’s approach to an offset of PHAs’ “excess” operating reserves, placing additional limitations beyond those in the administration’s request or the House THUD appropriations subcommittee’s version of the bill. Although the conferenced bill still allows the Secretary to “take into account PHAs’ excess operating reserves, as determined by the Secretary,” when determining PHAs’ 2012 funding, the conference report includes several measures intended to address concerns raised by NAHRO and others regarding the offset:

  • The bill limits the offset to $750 million. Whereas the administration’s original proposal assumed 1) that agencies with inadequate operating reserves would be funded at 100 percent of operating subsidy eligibility for 2012, and 2) that for agencies subjected to the offset, the amount of 2012 subsidy added to the amount of the offset would equal 100 percent of eligibility, the $750 million offset cap in the conference agreement will most likely require HUD to assume a baseline proration of approximately 95 percent of formula eligibility prior to the calculation and imposition of individual agency offsets.
  • The conference agreement requires that no PHA be “left with less than $100,000 in operating reserves” as a result of the allocation reduction. Because the bill authorizes an offset but not a recapture, there are questions about how this provision will be implemented.
  • The bill stipulates that Moving to Work agencies shall “receive a pro-rata reduction consistent with their peer groups.”
  • The bill directs the Department to establish an appeals process that will allow PHAs to challenge initial allocation amounts. The Secretary is required to “consider adjustments” due to factors such as “prior funding reservations, commitments related to mixed finance developments, or reporting errors.” The Secretary is required to notify PHAs of the appeals process “and what documentation may be required as part of such appeal,” and final allocations cannot be made until the appeals process has concluded. NAHRO believes that this requirement cannot be satisfied by the now-concluded process for requesting exclusions as outlined under PIH 2011-55.
  • The conferenced bill allows the HUD Secretary to set aside up to $20 million from the Operating Fund appropriation “to provide assistance to any [PHA] who encounters hardship as a direct result of an excess reserve offset.”

In addition to these limitations, the Joint Explanatory Statement accompanying the conference agreement directs HUD to “submit an implementation plan to offset 2012 allocations based on reserve balances to the Committees on Appropriations within 30 days of the enactment of this Act.” The conferees further instruct HUD to include in its report a “clear methodology for determining excessive reserves and the impact of the plan on each PHA.” This requirement is based on House report language offered by Rep. Price (D-NC) in response to industry concerns. However, unlike the House report, this language does not explicitly require the committee to approve the plan before HUD is allowed to move forward with implementation.

Use of Operating Reserves for Capital Improvements: In a welcome development reflecting NAHRO advocacy, the conference report requires the Department to “provide flexibility to [PHAs] to use excess operating reserves for capital improvements.” NAHRO has been highly critical of the Department’s arbitrary policy change, communicated through the Assistant Secretary’s February letter to PHA executive directors, restricting the use of reserves for capital expenditures. NAHRO has been particularly concerned about the confusion the Department’s actions have created among agencies with fewer than 250 units of public housing. Under the 1937 Act as amended by the Quality Housing and Work Responsibility Act, these small agencies have total fungibility between operating and capital subsidies and have the right under statute to use operating subsidy and reserves for any Capital Fund eligible activity.

The Joint Explanatory Statement accompanying the bill directs the Secretary to “establish clear guidance on how operating reserves can be used going forward, and in the interim expects this flexibility to be granted to PHAs to make capital improvements, but not to include large modernization projects.” Unlike the Senate report, it does not provide a timeline for this guidance. HUD has repeatedly promised to issue guidance on eligible uses of operating reserves, including so-called “expanded use” funds, as well as a clarification regarding the inapplicability of the Assistant Secretary’s letter to small PHAs, but no such guidance has yet been released.

Federalized Units: Unlike the House THUD subcommittee’s version of the bill (which was never taken up by the full House Appropriations Committee), the conferenced bill contains no prohibition against use of funds for public housing units that were federalized under ARRA. NAHRO was vocal in its objections to that prohibition and is pleased that conferees rejected it.

Public Housing Capital Fund

The conference bill provides $1.875 billion for the Public Housing Capital Fund for FY 2012. This amount is equivalent to the Senate bill, and $343 million more than the House subcommittee mark. This appropriation represents a new low watermark for the program, which was funded at $2.040 billion for FY 2011 and $2.5 billion for FY 2010. Put another way, the Capital Fund has over the past two years experienced an unprecedented 25 percent reduction from what was already an inadequate funding level given the inventory’s annual accrual of capital needs. Furthermore, in July of this year, HUD released the Capital Needs Assessment completed by Abt Associates, which estimated that the backlog of capital needs in the public housing portfolio is about $26 billion, with an annual accrual rate of approximately $3.4 billion.

Capital Fund Set-asides

Emergency Capital Needs: The conference bill sets aside up to $20 million for emergency capital needs “including safety and security measures necessary to address crime and drug-related activity as well as needs resulting from unforeseen or unpreventable emergencies and natural disasters, excluding emergencies and disasters with a Presidential declaration.” This language is equivalent to the Senate mark, and rejects the administration’s recommendation to remove safety and security from the eligible purposes. The House subcommittee mark would have eliminated this set aside.

ROSS: The conference committee’s bill maintains the traditional set aside of $50 million for the Resident Opportunities and Self-Sufficiency (ROSS) program. This set aside mirrors the Senate bill, although it was not included in the House subcommittee mark. For the third year in a row, the administration’s FY 2012 budget proposed eliminating funding for ROSS. The administration continues to justify its decision not to seek ROSS funding by arguing that self-sufficiency activities are currently an eligible expense under other programs, including the Operating Fund.

REAC and Receiverships:The conference bill provides up to $10 million to support the financial and physical assessment activities of the Real Estate Assessment Center. It also provides up to $5 million for the cost of administrative and judicial receiverships.

Community Facilities: No funding has been set aside for the construction, rehabilitation or acquisition of community facilities for early childhood education, adult education, job training and other appropriate services for public housing residents. The Capital Fund Community Facilities program was funded at $40 million for FY 2011, but the President’s FY 2012 budget did not request set-aside funding for this program.

Rental Assistance Demonstration

The conference bill includes a modified version of the language included in the Senate bill authorizing the administration’s Rental Assistance Demonstration (RAD), which would allow for the voluntary conversion of up to 60,000 public housing and Mod Rehab units to project-based contracts or project-based vouchers under Section 8. The bill provides no additional funding for the demonstration, but includes language mandating that the price tag associated with conversions to a new subsidy form be met entirely through transfers from the Operating and Capital Funds. Regarding such transfers, Senate report language had previously clarified that “increases and decreases will be directly related to the units of housing that are part of the demonstration” and, “as a result, the changes should not adversely impact PHAs that continue to rely on the public housing programs,” although NAHRO notes this same clarification was not included in the Joint Explanatory Statement accompanying the conference report. It should be noted, however, that the conferees indicated through the Joint Explanatory Statement that “the conference agreement includes language for a Rental Assistance Demonstration, as proposed by the Senate with modifications” (emphasis added).

The conference report contains two provisions that were not included in the Senate language. The first specifies that initial long-term contracts “may allow for rental adjustments only by an operating cost factor established by the Secretary and shall be subject to the availability of appropriations.” NAHRO is concerned that not only does the bill fail to specify any mechanisms for setting the initial rent, this provision is equally unclear with respect to annual rent adjustments. The bill also includes a provision stating that “the Secretary shall offer and the owner of the property shall accept renewal of the contract subject to the terms and conditions applicable at the time of renewal and the availability of appropriations each year of such renewal.” In effect, this provision would require owners to maintain the properties’ affordability in perpetuity with no ability to negotiate the terms of future contracts. NAHRO has long argued that adequate, stable funding must be an essential element of any effort to preserve public housing through conversion.

Although the text of the conference bill does not reflect HUD’s proposal to attach a mobility requirement (Resident Choice Option) to public housing units converted to PBRA contracts, it does provide the Secretary discretion to “waive or specify alternative requirements for any provision…necessary for the effective conversion of assistance under the demonstration.” This extremely broad provision remains a source of concern for NAHRO. NAHRO notes that the Senate Appropriations Committee’s earlier report accompanying its version of the bill stated that “the Committee supports the objective of offering public housing choice mobility as an important component of this demonstration in a manner that serves residents and provides flexibility for PHAs to work with HUD, to determine how to meet this objective.” NAHRO and others have repeatedly raised concerns about the potential consequences of the proposed mobility feature within the context of conversions to PBRA, arguing that it is likely to freeze Section 8 waiting lists while destabilizing rental income and increasing turnover costs, thus making it more difficult for PHAs to attract the private capital needed to preserve units.

NAHRO is working to gain a better understanding of how HUD would implement RAD under the terms of the conference bill - and without incremental appropriations. We will provide a more comprehensive review when additional information is available.

HOPE VI/Choice Neighborhoods

The conference bill mirrors the Senate by including no funding for HOPE VI but providing $120 million for the administration’s still-unauthorized Choice Neighborhoods Initiative. The bill requires that “not less than $80 million shall be awarded to public housing authorities,” although no language is included to ensure that Choice Neighborhoods awards directly target public housing units. In addition, no more than $5 million may be used for planning grants. The House subcommittee’s bill provided no funding for either the HOPE VI program or Choice Neighborhoods. HOPE VI was funded at $100 million for FY 2011, although HUD (over NAHRO’s objections) set aside $65 million of this funding for its demonstration of Choice Neighborhoods. These funds were awarded under the FY 2010 NOFA, with only four of the six successful applicants including any public housing in their redevelopment plans. The bill also contains a provision to extend the authorization of HOPE VI through 2012.

PHA Employee Compensation

The conference bill prohibits 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, the salary grade of the Assistant Secretary for Public and Indian Housing, or $155,000 for FY 2011. There are some indications that despite a federal pay freeze this level could be increased to $160,000 for FY 2012, and NAHRO is seeking further clarification on this issue. Although a similar provision in the House subcommittee’s mark would have prohibited the use of federal funds for any part of a salary whose total exceeds this level, the provision in the final conference agreement is limited to only the portion of the salary above this level. This restriction applies to salaries for each PHA’s FY 2012, and takes effect 120 days after the date of the bill’s enactment. NAHRO will seek additional clarification and guidance from HUD on how this provision will be implemented.

Exemption from Asset Management

The conference bill leaves unchanged the language included in recent HUD appropriations bills providing an exemption from asset management requirements for smaller agencies. For the past several fiscal years, Congress has, through a provision in the annual appropriations bill, provided PHAs that own and operate 400 or fewer units with the ability to "elect to be exempt from any asset management requirement imposed by the Secretary of [HUD] in connection with the operating fund rule." The President’s request, as in the past, did not include this language for FY 2012.

Working Capital Fund

The bill provides nearly $200 million in direct appropriations for development of and modifications to the Department’s IT systems, with no transfers from other programs. NAHRO has long advocated against the use of set-asides and transfers from program funds to support these efforts. The bill prohibits HUD from obligating more than 25 percent of the funds until the Secretary submits an expenditure plan that identifies the functional and performance capabilities to be delivered and the mission benefits to be realized, the estimated life-cycle cost, and key milestones to be met. In addition, the Department must demonstrate that each modernization project meets a set of standards and has been reviewed by the Government Accountability Office.

Transformation Initiative

The bill provides $50 million in direct appropriations, slightly above the amount proposed by the House subcommittee, for program research and evaluation, demonstrations, and technical assistance. Unlike in previous years, the administration’s request to capitalize this fund through transfers of up to .5 percent from program accounts, limited to a total of $120 million, was rejected. The Joint Explanatory Statement requires that at least $23 million of these funds be for OneCPD, and recommends that the rest of the funds be used for continuation of several studies, continuation of the pre-purchase counseling study, and physical needs assessments for PHAs, among other purposes. NAHRO notes that this amount appears inadequate to support the Department’s previously proposed $50 million demonstration of mobility in converted public housing.

For more information or questions regarding this Direct News item, contact Tamar Greenspan, NAHRO’s Policy Analyst for Public and Affordable Housing.

 

FY 2012 T-HUD Conference Agreement Released

After week-long negotiations between House and Senate appropriators, a conference agreement that includes funding for the FY 2012 T-HUD appropriations bill along with the Agriculture, Commerce and Justice Department’s spending bills was released late last night. An updated funding chart with the conference bill’s funding levels as well as the House and Senate’s FY 2012 funding levels is available at: http://www.nahro.org/status-appropriations-111511. The bill also includes a short-term continuing resolution (CR) for the federal agencies not covered by the agreement; the CR extends through December 16. This Direct News summarizes the conference bill’s treatment of those programs and provisions that are important to NAHRO members and have been the focus of our advocacy efforts.

Public Housing

The conference bill provides $3.962 billion for the Public Housing Operating Fund, which matches the administration’s request and is $1 billion below the amount estimated to fully fund 100 percent of eligibility. The conference authorizes the administration’s proposal to offset PHAs’ excess operating reserves. Like the Senate bill, the conference bill limits the offset to $750 million, which would likely require HUD to assume a baseline proration of approximately 95 percent prior to the calculation and imposition of individual agency offsets. Like the Senate bill, the conference bill also includes several measures intended to address concerns regarding the offset. The bill:

· Requires that no PHA be “left with” less than $100,000 in operating reserves as a result of the allocation reduction.

· Requires the Department to establish an appeals process that will allow PHAs to challenge initial allocation amounts.

· Allows the HUD Secretary to set aside up to $20 million from the Operating Fund appropriation “to provide assistance to any [PHA] who encounters hardship as a direct result of an excess reserve offset.”

· Requires the Department to “provide flexibility to [PHAs] to use excess operating reserves for capital improvements.” NAHRO has been highly critical of the Department’s arbitrary policy change - communicated through the Assistant Secretary’s February letter to PHA executive directors - restricting the use of reserves for capital expenditures.

· Directs HUD to submit an implementation plan to offset 2012 allocations based on reserve balances to the Committees on Appropriations within 30 days of the enactment of this Act. The conferees further direct HUD to include in its report a clear methodology for determining excessive reserves and the impact of the plan on each PHA.

Federalized Units: Unlike the House bill, the conference bill contains no restrictions against the use of funds for public housing units federalized under the American Recovery and Reinvestment Act (ARRA).

Public Housing Capital Fund: The conference bill includes $1.875 billion for the Public Housing Capital Fund, a decrease of $165 million below the FY 2011 enacted level. The bill sets aside $50 million from the Capital Fund for the ROSS program.

Public Housing Conversion: The conference bill includes language authorizing the administration’s Rental Assistance Demonstration (RAD) to enable the voluntary conversion of up to 60,000 units of public housing or Mod Rehab units to project-based contracts or project-based vouchers under Section 8. Because the bill does not provide funding for the demonstration, language is included mandating that the price tag associated with conversions to a new subsidy form be met entirely through transfers from the Operating and Capital Funds. Although no mobility provision (Resident Choice Option) is specified in the bill language, the Secretary has broad authority to waive or stipulate alternative requirements for the demonstration. Owners of converted public housing properties will likely be required to sign long-term contracts and accept renewals in perpetuity. NAHRO will provide a more detailed analysis of the demonstration in conjunction with its detailed coverage of the agreement’s public housing provisions.

HOPE VI/Choice Neighborhoods Initiative: Like the House and Senate bills, the conference bill does not include funding for HOPE VI. The bill does provide $120 million for the administration’s proposed Choice Neighborhoods Initiative (CNI), which remains an unauthorized program. Of the funding provided for CNI, HUD would be required to award at least $80 million to PHAs.

The conference bill retains language exempting housing authorities with 400 or fewer units of public housing from asset management requirements.

Section 8 Programs

The conference agreement provides $17.24 billion for Housing Choice Voucher (HCV) Housing Assistance Payments (HAP), a funding level equal to the administration’s newly revised FY 2012 request and $573 million more than the FY 2011 enacted levels.

The agreement includes $1.3 billion for ongoing administrative fees in the HCV program, about $97 million less than the FY 2011 level. The bill does not include an amendment offered by Senator Johnson (D-S. Dak.), which would allow PHAs to use their Net Restricted Assets to increase funding for HAP and administrative fees.

The conference agreement does not include any Section 8 voucher program reforms included by either HUD included in its FY 2012 budget request or by the Senate in its bill.

The conference agreement provides $9.34 billion for Section 8 Project-Based Rental Assistance, which is $76 million above the FY 2011 enacted level.

The agreement does not provide HUD with the authority to increase the number of Moving-to Work (MtW) agencies. The Senate bill allowed for up to three PHAs to participate in the demonstration, but the House did not allow for an expansion of the demonstration.

Community Planning and Development

Community Development Block Grant (CDBG) program: The conference agreement provides at least $2.95 billion for the CDBG formula program, $388 million below the FY 2011 enacted level. Although up to $3.25 billion is technically available for the CDBG program under the Community Development Fund, the Secretary has the authority to set aside up to $300 million for disaster CDBG assistance. Unlike the House bill, the conference bill maintains the CDBG administrative and planning cap at 20 percent. The bill also requires HUD to notify CPD grantees of their formula allocations within 60 days of enactment of the bill, a provision originated and first recommended by NAHRO in 2010.

HOME Investment Partnerships program: The conference agreement includes only$1 billion for the HOME program, which is $607 million less than the FY 2011 enacted level. The bill includes a number of new provisions apparently recommended by HUD and intended to ensure the timely completion of HOME-funded projects.

Homeless Assistance Grants: The conference agreement funds the Homeless Assistance Grants at $1.9 billion, equal to the FY 2011 funding level.

Other Programs/Provisions

PHA Executive Compensation: Under the conference bill, Section 8 voucher and Public Housing Capital and Operating funds cannot be used to compensate any amount of PHA employee salary in excess of $160,000 during the PHA’s 2012 fiscal year.

Section 202: The conference agreement funds the Section 202 Housing for the Elderly at $375 million, which is approximately $24 million lower than current levels.

Section 811: The conference agreement funds the Section 811 Supportive Housing for Persons with Disabilities at $165 million, $15 million above FY 2011 levels.

Congress could vote on the conference bill as soon as this week, making the three spending bills the first of the FY 2012 appropriations bills to become law. NAHRO will provide more detailed coverage and analysis of the agreement as well as new outreach and advocacy tools shortly.

NAHRO and other concerned stakeholders were able to head off several of the more severe elements found in both the House and Senate bills, the conference agreement (pending further review) is far from where we need to be. But it should be clear that the gains and successes that were included in this bill were achieved by working together as an association and as an industry; they are also a result of the growing level of advocacy and a commitment by NAHRO members to speak out and speak up on behalf of those we serve. Thank you for all your efforts! We should value what we achieved on behalf of those in need and use the setbacks and shortcomings of this agreement as a call to renewed action and advocacy in 2012. The effort to rebuild the commitment to achieve responsible program funding and reform begins today! For questions, please contact John Bohm (jbohm@nahro.org) or Cortney Watson (cwatson@nahro.org).

 

 

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