On March 25, the House Appropriations Committee unanimously passed its FY 2017 Transportation, Housing and Urban Development (T-HUD) spending bill after debate on several housing- and transportation-related amendments, though only a manager’s amendment making technical changes to the bill was ultimately approved. The House bill received a robust $48.2 billion allocation, which is $1.7 billion higher than the Senate allocation, but due to differences in accounting tactics, the Senate bill provides higher funding levels for most housing and community and development programs compared to the House bill. The Senate approved its T-HUD bill on March 19 with an 89-8 vote.

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Today’s Direct News item is intended to provide NAHRO members with a comprehensive summary of the House bill as it relates to HUD’s Community Planning and Development programs, including the Community Development Block Grant (CDBG), HOME Investment Partnerships Program (HOME), Homeless Assistance Grants, and Housing Opportunities for Persons with AIDS (HOPWA). NAHRO will also publish comprehensive coverage of the House bill’s treatment of Public Housing and Section 8 Programs in the coming days.

If you have questions on any of the items in this Direct News, please contact Jenny Hsu, NAHRO’s Community Development Policy Analyst at jhsu@nahro.org or x7202.

Community Development Fund

Community Development Block Grants: For FY 2017, the House bill would provide $3.06 billion for the Community Development Fund. Of that amount, $3.0 billion would be used for carrying out the Community Development Block Grant (CDBG) program, equal to FY 2016 enacted and the Senate T-HUD bill. Both the House and Senate bills would spare CDBG from the $200 million cut that was proposed in the President’s FY 2017 budget request.

NAHRO applauds both House and Senate appropriators for continuing to reject the President’s proposal to reduce the overall number of CDBG grantees by establishing a minimum grant threshold for entitlement communities. The House T-HUD report includes concerns long voiced by NAHRO regarding this CDBG proposal: “The Committee is concerned about the impact of this change on smaller communities….[Communities] that would otherwise have directly received funding would have to compete with other communities for a portion of the funding allocated to their state.” The House bill also includes language first introduced by NAHRO requiring HUD to notify grantees of their CDBG formula allocations within 60 days of enactment of the Act.

In the Senate T-HUD report, appropriators call on HUD to extend flexibility for rural communities to use alternate sources of data to establish the Low-Moderate Income Survey Data (LMISD) whenever the American Community Survey (ACS) data on low- and moderate-income (LMI) households are considered unreliable by the CDBG applicant. House appropriators have taken a more direct approach to this issue by instructing HUD to publish, within 90 days of the Act’s enactment, the margin of error at the place level for the LMI ACS data that the Department used to determine CDBG eligibility for each place that has a margin of error that is 20 percent or greater.

The House Committee also addresses concerns voiced by numerous local governments and organizations, including NAHRO, over the lack of communication from HUD on compliance with the Affirmatively Furthering Fair Housing (AFFH) rule and the lack of clarity around the rule’s requirements. Through report language, the House directs HUD to work with grantees and stakeholders to address their worries, and directs HUD to continue to refine their AFFH assessment tools and resources. The House also recommends the resources under the salaries and expenses and policy, development, and research accounts be used for the aforementioned purposes. In comparison, the report language accompanying the Senate bill also addresses the AFFH rule, but focuses on the problem that when local governments submit their Assessment of Fair Housing (AFH) plans to HUD, the Department will not certify that these communities have effectively assessed or met their fair housing obligations. The Senate directs HUD to “consider” modifying the AFFH process to provide written approval of grantees’ AFHs, while ensuring there are no delays in approving consolidated plans – which could cause a community’s CPD formula grant allocations to be delayed. The Senate also encourages HUD to develop streamlined assessment tools for small CDBG entitlement grantees, an effort strongly supported by NAHRO.

Indian Community Development Block Grant: As has been common appropriations practice, the House bill sets aside funds under the Community Development Fund for the Indian Community Development Block Grant (ICDBG) program. The bill would provide $60 million for ICDBG, level with FY 2016 and the Senate bill, but $20 million below the President’s request.

Section 108 Community Development Loan Guarantee Program

The House bill provides a Section 108 loan guarantee level of $300 million, equal to both the Senate bill and the President’s budget. The bill continues language requiring HUD to use borrower fees to cover the credit subsidy costs of operating the program. In 2015, HUD began rulemaking to implement Section 108 into a fee-based, zero-subsidy program.

HOME Investment Partnerships Program

The House bill would preserve the $950 million in HOME program funding that was successfully secured by affordable housing supporters for FY 2016, which is equal to the funding provided in the Senate bill and requested by the Administration. House appropriators also continue to reject the President’s proposal to shift the Self-Help and Assisted Homeownership Opportunity Program (SHOP) account into a $10 million set-aside under the HOME program, which would reduce HOME’s overall funding. The House bill would not continue a provision that creates an exception to the 30-day eviction notice in instances where a tenant poses a threat, an exception long supported by NAHRO and included in the Senate T-HUD bill. However, the House bill does continue the provision requiring HUD to notify HOME grantees of their formula allocations within 60 days of enactment of the Act.

NAHRO applauds both the House and Senate bills for rejecting the Administration’s statutory reforms proposals aimed at reducing the number of Participating Jurisdictions (PJs) receiving small HOME grant allocations. This would be done by establishing a single program qualification threshold and eliminating the current “grandfathering” provision. NAHRO has consistently advocated against these change, since they would strip the entitlement status away from vulnerable communities.

The House bill does not include the two new statutory changes to the HOME program proposed in the President’s budget. The first HOME proposal would eliminate the requirement that PJs set-aside at least 15 percent of each grant for Community Housing Development Organizations. NAHRO is cautious of implementing this policy change because it could undermine the program’s goal of strengthening community-based housing partnerships.

The second proposal from the Administration is a commonsense policy change to eliminate the HOME program’s 24-month commitment requirement. Current HOME regulations require all project financing to be secured by the PJ prior to a commitment of funds, making the 24-month commitment deadline extremely difficult to meet.  If a PJ does not commit funds within 24 months, the funds are forfeited back to HUD. This critical issue was addressed by the Senate when Sen. Dianne Feinstein (D-Calif.) and Sen. Rob Portman (R-Ohio) introduced an amendment to the Senate T-HUD bill that was approved en bloc on the Senate floor. The Senate amendment would allow communities with HOME funds that are set to expire in FYs 2016, 2017, 2018 and 2019 under the program’s 24-month commitment deadline to maintain access to those funds. The amendment was supported by NAHRO.

Self-Help Homeownership Opportunity Program

House appropriators would provide $50 million for the SHOP account, level with FY 2016 and $4 million below the Senate bill. Of that amount, $10 million would be reserved for the SHOP program, $35 million for Section 4 capacity building activities, and another $5 million for rural capacity building activities conducted by experienced national rural housing organizations. The bill would not continue finding for a set-aside program that rehabilitates and modifies the homes of disabled and low-income veterans.

Homeless Assistance Grants

For FY 2017, House appropriations seek to increase funding for the Homeless Assistance Grants programs by almost 11 percent by providing $2.487 billion for this account. While the House funding level is $177 million short of the President’s request, it is still $157 million above the level provided in the Senate bill. The House bill would require at least $270 million be available for the Emergency Solutions Grant (ESG) program and no less than $2.014 billion available for the Continuum of Care (CoC) and Rural Housing Stability Assistance programs.

In line with Senate appropriators, the House Committee continues language emphasizing a CoC program that funds high-quality, evidence-based projects through a rigorous national competition based on performance. However, the House report language also recognizes that changes of this nature may be difficult for communities to implement at the local level and includes two new provisions in the spending bill that would support the capacity of CoC program recipients.

First, the bill would provide $40 million in supplementary ESG funding to support rapid re-housing projects and other critical activities for communities that have lost significant capacity as a result of the CoC national competition. Through a HUD-determined formula, the supplementary funds would be distributed to communities that lost the most funding in the CoC program after January 1, 2016, relative to the total funding the community was eligible to receive. The supplementary funds would be used in accordance with the ESG program, would be allocated to the largest ESG recipient in the CoC, and would be awarded at the same time as the overall ESG allocations.

Second, the House bill accepts the President’s request to allow HUD to award one-year transition grants to CoC program recipients that are transitioning from one program component to another, relieving the undue hardship on an organization’s staff and resources during reallocation.This provision was also included in the Senate bill.  The House bill specifies that no more than 25 percent of each grant can be used towards the eligible activities of the original program component, and grants awarded in FY 2017 would be eligible for renewal in subsequent fiscal years to be used towards the eligible activities of the new program component.

Additionally, the House report directs HUD to report to Congress, within 180 days of the enactment of the Act, on ways to improve access to trauma-informed care and housing services for those on the verge of homelessness. The House bill would also continue clarifying provisions that allow youth greater access to HUD’s homeless assistance programs, but the bill would not continue funding for innovative pilot projects that address youth homelessness through this account.

Housing Opportunities for Persons with AIDS

The House bill would provide $335 million for the HOPWA program, level with FY 2016 and the Senate bill, as well the President’s budget. According to the House report, the HOPWA allocation formula “no longer reflects the nature of an epidemic that has been transformed by both advances in HIV health care and surveillance, and by the increasingly disproportionate impact of the virus on communities of poverty and color.” While both the Senate and the President have perused a legislative fix to the HOPWA formula through the budget process, House appropriators have opted to direct HUD to work with the authorizing committees on any additional statutory authority needed to modernize the formula.

Section 202 and Section 811

The House bill would provide $505 million for Section 202 Housing for the Elderly program, $72 million above FY 2016 enacted and equal to the president’s budget request. Additionally, the House bill would provide $154 million for Section 811 Housing for Persons with Disabilities program, $3.4 million above FY 2016 and equal to the President’s request. The Senate bill would also provide the funding levels requested by the President’s budget for both programs.

Additional Resources:

FY 2017 House T-HUD Bill – Adopted Amendments

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