CARH’S BROADCAST EMAIL – Budget Update

March 21, 2019

As CARH members know from our March 12^th Broadcast Email, on March 11^th the Trump Administration formally unveiled its $4.7 trillion Fiscal Year (FY) 2020 budget proposal. This document was more conceptual than an actual budget. On March 18^th, a more detailed budget document was released which provided specific numbers as well as proposed changes to programs. The proposed budget for FY 2020 mirrors the proposed budget for the last two fiscal years in that most domestic programs would be cut or eliminated.

The previous Congress rejected much of the Administration’s proposed FY 2018 and 2019 budget recommendations. Despite Congress’ rejection, the Administration proposed budget for FY 2020 contains many of the same recommendations as was seen in the previous two years budget submissions. It seems unlikely, especially with the Democrats now in charge in the House of Representatives, that Congress will change its views as it takes up the FY 2020 budget in the coming weeks and months. It is going to be critical for CARH, our members, and the rural housing industry to fight for restoration of funding for the programs that have been targeted both at the United States Department of Agriculture (USDA) and at the Department of Housing and Urban Development (HUD).

As CARH members can see from the attached chart, the proposed budget would provide $1.407 billion for Rural Development’s (RD) Section 521 Rental Assistance (RA) program. The Administration’s proposed level of funding appears larger than the FY 2019 level of $1.331.4 billion. However, this larger number is due to a proposal to put RD’s Section 524 voucher program under the RA account, a recommendation from FY 2019 that Congress rejected. When factoring in $32 million for vouchers, the proposed budget is only slightly higher than previous years approved levels of funding. The budget also proposes a rescission of $40 million for RA that was appropriated in FY 2019. This $40 million is intended to fund contracts that are set to be renewed at the beginning of FY 2020, a policy that is important should Congress not pass a full year appropriation bill and a Continuing Resolution is in place. A similar rescission was proposed for FY 2018 funds and rejected by Congress.

Rural voucher funding has been under the Multifamily Housing Revitalization Program (MPR).  Under the proposed budget, the MPR program would be eliminated. The Section 515 program would also be eliminated. Residents would be required to pay a minimum of $50.00 a month unless the Secretary determines a lower amount because the resident in the unit requires a hardship exemption. Again, these recommendations were in last year’s budget proposal, which were rejected by Congress.

The only RD multifamily program not to experience reductions would be the Section 538 Guaranteed Rural Rental Housing program which would have $250 million in budget authority, an increase of $20 million over the FY 2019 level. As CARH members know, the Section 538 program does not cost the government money because of the fee structure that CARH, working with the department several years ago, was able to have approved. The only costs to the government for this program are the administrative expenses associated with the program.

CARH members will recall that in 2017, Secretary Perdue announced the reorganization of parts of USDA and the removal of the Under Secretary for Rural Development and related offices. In the Agriculture Improvement Act of 2018 (P.L.115-334), or more commonly known as the “Farm Bill,” the position of Under Secretary for Rural Development was re-authorized. However, the Administration’s proposed budget does not provide funding for the Undersecretary’s position.

HUD’s proposed budget is equally as worrisome. The recommendations included basically the same rent reform proposals, including work requirements for many residents, also rejected by Congress last year. The budget would decrease HUD’s funding by 16.4 percent from the FY 2019 level of $53.8 billion. As CARH members can see from the attached chart, the Community Development Financial Institutions (CDFI) Fund, which plays an important role in generating economic growth in distressed communities throughout the country, would be eliminated, as would CDBG, HOME, the Housing Trust Fund, and the Capital Magnet Fund. There would be no funding for the Public Housing Capital Fund. Choice Neighborhoods would also be eliminated. Project Based Rental Assistance would see a small increase in funding from $11.747 billion in FY 2019 to $12.021 billion in FY 2020. The budget proposes $22.3 billion for Housing Choice Vouchers and other tenant based assistance. The Administration is also seeking double the money for lead-based paint inspections and enforcement to $290 million. Sequestration also remains an issue that could further reduce future appropriations.

The proposed budget provides $100 million for the Rental Assistance Demonstration program and expands its authority to convert additional properties to long-term, project-based Section 8 contracts that can leverage private financing for capital improvements. Under existing authorities, Public Housing Authorities (PHAs) and other owners of rental properties assisted under the Public Housing, Moderate Rehabilitation, Moderate Rehabilitation Single-Room Occupancy, Rent Supplement, Rental Assistance Payment, and Section 202 Housing for the Elderly Project Rental Assistance Contracts programs are offered the option to convert their properties to long-term Section 8 contracts.

HUD published a document entitled “Budget In Brief” regarding the proposed FY 2020 budget. Click here to view that document.

The recent partial government shutdown was evidence of how programs, services, and residents who live in affordable housing can be negatively impacted when the budget process breaks down as it did last year and early this year. It is vitally important for CARH members and your residents to weigh in on the importance of these vital affordable housing programs to their Congressional delegations and the Administration. Congress must also pass full year FY 2020 appropriations bills before September 30, the end of the current fiscal year. CARH has updated our issue briefs to reflect policies and concerns of the industry. Feel free to email these issue briefs to your member of Congress and their staff. (CARH members can access these Issue Briefs by clicking here. Please note you must log into to the CARH website in order to access. Members can contact carh@carh.org if you need assistance in logging in.)

Also, do not forget to invite your members of Congress and their staff to your multifamily properties for them to see the work that you do and its importance to the residents and rural communities throughout America. It is also important that members of Congress and staff understand that the direct funding programs help the Housing Credit and Housing Bond programs work and vice versa.

We remain very engaged on legislative proposals that will help to further modernize the Housing Credit and Housing Bond programs (such as those that were introduced in the 115th Congress — S. 548 introduced by Senator Maria Cantwell (D-WA) and H.R. 1661 introduced by Representative Richard Neal (D-MA)) by both strengthening and expanding these two important programs so that rural housing preservation and new construction can take place. There has been overwhelming bipartisan support for the programs.

CARH is a member of the Steering Committee “A Call to Invest in Our Neighborhoods” (ACTION) Campaign promoting the Housing Credit and Housing Bond programs. The Steering Committee, which is composed of the leadership of housing industry stakeholders, plays an active role in advocating for the Housing Credit and Housing Bond programs by developing initiatives which demonstrate the strong need for both programs. CARH supports new legislation being introduced in the 116^th Congress.

The Housing, Community Development, and Insurance Subcommittee of the House Financial Services Committee had scheduled a hearing for February 14 entitled: “The Affordable Housing Crisis in Rural America: Assessing the Federal Response.” CARH’s Chairman of the Board, Tanya Eastwood of Greystone Affordable Development, was scheduled to testify at this hearing. However, the hearing was postponed until April 2. In her testimony, Ms. Eastwood will outline many of the issues that rural housing providers face in their efforts to provide decent and affordable housing throughout rural America.

CARH will continue to keep our members informed as the FY 2020 appropriations process moves forward through Congress.

If you have any questions, please contact CARH at carh@carh.org or 703-837-9001.