Editor’s Note: NAHRO’s Section 8 coverage of the FY 2017 Senate Appropriations Bill has been updated on April 29, 2016 with additional information on the Mobility Demonstration and additional information on triennial recertification regulations from the Fixing America’s Surface Transportation (FAST) Act.

On April 21, the Senate Appropriations Committee for Transportation, Housing and Urban Development (T-HUD) approved a $56.5 billion FY 2017 Appropriations Bill, representing an $800 million cut from FY 2016. Combined with increases to the cost of providing rental assistance and a downturn in Federal Housing Administration (FHA) revenues that are added to the HUD budget, the impact of the cut appeared to be as high as $1.2 billion. However, FHA receipts are estimated to be more robust than initial reports and the subcommittee was able to recapture unobligated funding from prior fiscal years, saving most programs from drastic cuts. In all, the bill represents a huge win for housing and community development programs.

Today’s Direct News item is intended to provide NAHRO members with a comprehensive summary of the Senate 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’s detailed coverage of the Senate bill’s treatment of Public Housing and Section 8 Programs are also available online (log-in required).

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 Grant: The Senate bill would provide $3 billion for the Community Development Fund (the account that includes the CDBG program) for FY 2017. The entire amount of $3 billion would be used for carrying out the CDBG program, a figure that is equal to FY 2016 enacted and is spared the $200 million cut proposed by the President’s FY 2017 budget. While CDBG remains intact under the Senate bill, program funding is still nowhere near its former baseline levels. Since FY 2010, CDBG has been cut by nearly 25 percent (almost $1 billion), even before taking into account inflation. According to recent research by the CDBG Coalition, continued cuts to the program will cause a decline in neighborhoods, downtown areas, and business losses to local economies across the nation. Ninety-one CDBG entitlement communities have reported that only 49 percent of all of their CDBG applications submitted would be funded in FY 2015. These communities estimate that at least $132 million in additional formula funding would be needed to fund all of their applications.

Once again, NAHRO applauds the Senate appropriators’ continued rejection of the President’s proposal to reduce the number of CDBG grantees receiving small entitlement allocations. This would be achieved by eliminating the program’s “grandfathering” provision and introducing a new minimum grant threshold. The Senate bill continues a provision that prohibits HUD from using any appropriated CDBG funds to terminate the status of a unit of general local government as a metropolitan city. This provision was first included in the FY 2015 Appropriations Act at the behest of an individual member of Congress who sought to protect the entitlement status of a particular community that had experienced a population decline to below the CDBG program’s 50,000 person entitlement community threshold.

Furthermore, Senate appropriators once again calls upon HUD to extend flexibility for rural communities to use alternate sources of data to establish Low-Moderate Income Survey Data (LMISD) when American Community Survey (ACS) data is considered by the CDBG applicant to be unreliable. The LMISD supports the program’s national objective of providing benefit to low- and moderate-income persons on an area basis (LMA) and is calculated through a special data tabulation by the U.S. Census. In 2015, HUD transitioned from Decennial Census (10-year) data to ACS (5-year) data to establish LMISD and the Senate’s recommendation stems from the understanding that, for some rural communities, the ACS data may produce inaccurate LMA results. The bill also continues language, first proposed by NAHRO, requiring HUD to notify grantees of their CDBG formula allocations within 60 days of enactment of the Act.

Indian Community Development Block Grant: In a departure from traditional appropriations practice, the Senate bill does not provide a Community Development Fund set-aside for the Indian Community Development Block Grant (ICDBG) program. In order to increase funding transparency, Senate appropriators are seeking to combine the ICDBG program and the Indian Housing Block Grant (IHBG) program into a single “Indian Block Grants” account – operated under the Office of Public and Indian Housing. The Senate bill would provide $60 for the ICDBG program, equal to FY 2016.

Section 108 Loan Guarantee Program: The Senate bill provides a Section 108 loan guarantee level of $300 million, equal to FY 2016 and the President’s request. The bill would continue to require HUD to use borrower fees to cover the credit subsidy costs of operating the program. In 2015, HUD began establishing regulations to implement Section 108 into a fee-based, zero-subsidy program. Senate appropriators anticipate HUD will put in place a financing structure prior to the beginning of the 2017 fiscal year.

HOME Investment Partnerships Program

The Senate appropriations bill would preserve the $950 million in HOME program funding that was successfully secured by affordable housing supporters for FY 2016. While $950 million is equal to the President’s request for HOME, it does not include the Administration’s proposed $10 million Self-Help and Assisted Homeownership Opportunity Program (SHOP) set-side. NAHRO supports funding for SHOP, but only as a standalone line that would not reduce HOME’s overall formula funding.

The Senate bill continues a few provisions first supported by NAHRO, including a provision that creates an exception to the 30-day eviction notice in instances where a tenant poses a threat, and the provision that requires HUD to notify HOME grantees of their formula allocations within 60 days of enactment of the Act. However, the Senate bill does not include any of the statutory changes proposed for the HOME program found in the President’s budget. Instead, Senate appropriators directs HUD to work with the appropriate authorizing committee to address these policy changes. The President’s policy proposals for the HOME program include:

  • Eliminate the 24-month commitment requirement. This elimination is a commonsense policy change supported by NAHRO. Current statute requires Participating Jurisdictions (PJs) to commit its funds to projects within 24 months of HUD’s obligation of funds to a PJ. However, with the recent implementation of the HOME Final Rule that requires all project financing to be secured by the PJ prior to a commitment of funds, the 24-month deadline is now more difficult to meet and is unnecessary as an interim step towards the completion of HOME-funded projects by the four-year deadline.
  • Eliminate the statutory requirement that PJs set-aside at least 15 percent of each grant for Community Housing Development Organizations (CHDOs). NAHRO is cautious of implementing this policy proposal because it could very well undermine the program’s statutory goal of strengthening community-based housing partnerships.
  • Establish a single qualification threshold and eliminate the current “grandfathering” provision in order to reduce the number of PJs receiving small HOME allocations. NAHRO has consistently advocated against program changes that would strip entitlement status away from small and vulnerable communities. According to HUD, if these program changes were implemented, almost half of all PJs (over 280 cities and counties) would lose their eligibility for funding under HOME.

Self-Help Homeownership Opportunity Program

The Senate bill would maintain level funding for the SHOP account at $54 million, with $10 million 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 also provides $4 million for a SHOP set-aside that rehabilitates and modifies the homes of disabled and low-income veteran.

Homeless Assistance Grants

For FY 2017, Senate appropriators seek to increase McKinney-Vento Homeless Assistance Grants funding by 2 percent. The Senate bill would provide $2.330 billion for this account, $80 million above FY 2016 enacted, yet $334 million short of the President’s request. The Senate bill would require at least $250 million be made available for the Emergency Solution Grants (ESG) program and at least $2.013 billion would be available for the Continuum of Care (CoC) and Rural Housing Stability Assistance programs. Up to $7 million would be earmarked for the national homeless data analysis project, which produces the Annual Homeless Assessment Report (AHAR) to Congress.

The Senate bill would authorize the President’s proposal to allow HUD to award one-year transition grants to program recipients transitioning from on CoC program component to another. This grant would relieve the undue hardship on an organization’s staff and resources during reallocation. Unfortunately, the Senate bill does not include the President’s proposal to allow public housing authorities (PHAs) to act as eligible subrecipients of ESG program funds. This is a statutory change that has been strongly advocated for by NAHRO since PHAs are often highly qualified to act as homeless service providers in their communities. This is also a provision included in HR 3700, the Housing Opportunities Through Modernization Act, that unanimously passed out of the House and is currently being considered by the Senate.

The Senate bill continues to include appropriations language that emphasize the strategic reallocation of CoC program funds and the prioritization of high performing projects during the CoC program competition. According to Senate appropriators, permanent supportive housing (PSH) is the most efficient and effective way to address homelessness among adults when compared to transitional housing. Thus, PSH projects are increasingly awarded funding, while transitional housing projects are receiving less. Interestingly, the Senate report makes note that, in some communities, transitional housing can be found to be more effective and encourages HUD to be “receptive to renewing such transitional housing projects” in order to “avoid service gaps at the local level.”

Senate appropriators also continue to express concern over youth homelessness and would provide up to $40 million to continue pilot projects that implement comprehensive approaches to serving homeless youth, a $7 million increase from the previous fiscal year. These projects would involve youth (aged 24 and under) in up to 10 urban and rural communities, and would be subject to same renewal terms as other CoC program renewal applicants. The Senate bill would also continue clarifying provisions that allow unaccompanied youth living in “unsafe situations” to be served by all youth-serving providers under this account, and waive third-party documentation requirement for youth participating in the CoC program. No additional funds for technical assistance on youth homelessness would be provided.

Housing Opportunities for Persons with AIDS

The Senate bill would provide $335 million for the HOPWA program, level with FY 2016 enacted and the President’s budget request. Once again, Senate appropriators would accept the Administration’s proposals to modernize the HOPWA allocation formula so that funds are more equitably directed towards areas of greatest need. According to the Senate report, “53 percent of the statutorily required cumulative AIDS cases used to determine the formula program represent deceased individuals.” The Senate bill would require 75 percent of formula funds to be allocated to cities with population greater than 500,000 and with more than 2,000 persons living with HIV. The remaining 25 percent would go to States and metropolitan statistical areas based on fair market rents (to account for high housing cost in certain areas) and area poverty indexes (to account for high-poverty areas lacking services). To protect communities from dramatic funding changes, no HOPWA grantee would lose more than 5 percent or gaining more than 10 percent of the average share of the total formula allocation of the previous fiscal year.

Section 202 and Section 811

For FY 2017, the Senate appropriators elected to fulfill the President’s request for both Section 202 Supportive Housing Program for the Elderly and Section 811 Housing for Persons with Disabilities. The Senate bill would provide $505 million for the Section 202, $72.3 million over FY 2016, and $154 million for Section 202, a $3.4 million increase compared to the previous fiscal year.

Additional Resources:

Senate Appropriations Committee Approves T-HUD Spending Bill

NAHRO’s Public Housing Coverage of the FY 2017 Senate Appropriations Bill

NAHRO’s Section 8 Coverage of the FY 2017 Senate Appropriations Bill

Full Text of Senate FY 2017 Appropriations Bill

T-HUD Manager’s Package – List of amendments to T-HUD bill

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