Big Cuts in FY12 HUD and Rural Development Funding

On November 18, the President signed into law H.R. 2112, the “minibus” FY12 appropriations bill, which provides funding for various federal agencies, including HUD and the Department of Agriculture (USDA). Though the conference committee agreed on the FY12 bill with fewer delays than experienced with the FY11 version, which didn’t pass Congress until more than six months after the start of the fiscal year, the cuts to housing programs overall are severe.

For HUD, the Project-Based Section 8 program received $9.34 billion for FY12 contract renewals. While that figure is a 1% increase from FY11, it is slightly below the amounts requested and included in the House and Senate versions of the bill. H.R. 2112 also rescinds $200 million for the Housing Certificate Fund, which HUD uses to supplement the amount appropriated should it not meet the need for all new and existing contract renewals. HUD says the funding received will allow it to renew contracts for the full 12 months, but advocates did learn that HUD intends to pursue use of residual receipt accounts in funding shortfall situations.

The Tenant-Based Rental Assistance program received $18.91 billion. While that is a 3% increase from FY11, advocates believe the total does not allow for renewal of all authorized vouchers, possibly resulting in the loss of as many as 24,000 nationwide. The 7% cut in the amount reserved for public housing agencies’ administrative fees, on top of the 8% cut seen in FY11, will likely mean, at the very least, slower processing times for use of vouchers that are funded. The set-aside for Tenant Protection Vouchers and Enhanced Vouchers, which provide tenant-based rental assistance to qualified residents should the owner of their building prepay some HUD mortgages or opt out of a project-based assistance contract, decreased by 32% from FY11 to $75 million. Included in that total is $10 million specifically residents at properties with unassisted maturing mortgages who would otherwise not receive any protection and face eviction. Policy provisions enacted in H.R. 2112 also include the ability to project-base such vouchers at certain properties (see additional posting).

The bill cut HOME program funding down to $1 billion, 38% below FY 11 and following a 12% decrease last year. The Community Development Block Grant program received a 12% reduction. The Section 202 (Housing for the Elderly) program saw an additional 6% cut after it was slashed by 52% in FY11. The only HUD production program with an increase for FY12 was Section 811 (Housing for Persons with Disabilities), which received 10% more funding, providing some relief from its 50% cut in FY11. Both the Rural Innovation Fund and the Energy Innovation Fund, HUD programs with eligible uses related to preservation of multifamily rental housing, received no funding for FY12.

For USDA Rural Development (RD), H.R. 2112 set funding for the Section 515 Rental Housing Direct program at $64.5 million and for the Section 514/516 Farm Labor Housing programs at $27.9 million, which represent 7% and 21% cuts, respectively. As expected, the Preservation Revolving Loan Fund received no funding. However, the Multifamily Housing Revitalization Demonstration program did receive $2 million, an 87% cut from FY11, after not being included at all in the President’s budget or in the House version of the bill.

The bill funds the Section 521 Rental Assistance program at $904.7 million, which is a 5% decrease and on the heels of sa 2.5% cut in FY11 as well. The program provides project-based rental assistance in many RD properties and cuts ultimately lead to fewer units affordable to people with the lowest incomes. Just as in FY11, there will be no specific set-aside for rental assistance in RD preservation projects.

Click here for further information on the HUD appropriations totals. Click here for further information on the USDA RD appropriations totals.

— Posted on 11/21/2011