President Signs HUD Bill

Eugene T. Lowe

glowe@usmayors.org

Both the House and Senate agreed this week on the conference report for FY97 appropriations for VA, HUD and Independent Agencies. Not only were final decisions made on funding levels for the next fiscal year, but several important administrative changes were extended for public housing, and a demonstration program was expanded that would allow HUD to address FHA-insured properties with Section 8 contracts expiring this year. The President has signed the bill.

The Community Development Block Grant (CDBG) program was funded at $4.6 billion and HOME at $1.4 billion. Set-asides in the CDBG program continue to grow. This year's set-asides are nearly $300 million; last year's program set-asides were nearly $200 million. There is little doubt that CDBG is being called upon to provide supplemental funding for a number of HUD programs. The Conference of Mayors and a number of other national groups have been very concerned about the effect of this trend on the flexibility of the CDBG program as well as the probable diminishing allocation of program funds to cities.

In addition to CDBG and HOME, the appropriations measure combined the funding for public housing programs into a program called "Preserving Existing Housing Investment". Within the new program, $2.9 billion is for public housing operating subsidies and $2.5 billion for public housing modernization. The Drug Elimination Grants program is funded at $290 million and HOPE VII for the revitalization of severely distressed public housing is funded at $550 million.

Elderly and handicapped housing is funded at $839 million and Homeless Assistance Grants at $823 million. The Housing Opportunities for Persons with AIDS (HOPWA) program is funded at $171 million.

The changes that had been previously made for public housing in various other pieces of legislation (the Balanced Budget Act of 1996 and the Rescissions Act of 1995) were extended for FY97. These include the repeal of federal preferences, the repeal of one-for-one replacement, and a provision on ceiling and minimum rents. Since it is now certain that a public housing reform bill will not pass, the extension of these substantive public housing changes will maintain current policy, at least for another year.

Also still awaiting a longer-term solution in the next Congress is the problem of expiring project-based Section 8 contracts. The conference report, adopting language from the Senate bill, expands an existing program that allows the restructuring of Federal Housing Administration (FHA) mortgages with Section 8 contracts expiring this year.