On February 9th, President Barack Obama released his budget request for FY 2017. The President called for more than $48 Billion in 2017 spending for the U.S. Department of Housing and Urban Development (HUD), an increase of about $2B over FY 2016. Much of the proposed increase in spending would be devoted to a much welcomed new initiative to combat homelessness. There are also several new policy proposals, many supporting efforts to affirmatively further Fair Housing.

  • NEW Ending Family Homelessness Effort– The President’s budget request proposes a bold new proposal to end family homelessness by 2020, building on the success of the initiative to end veteran homelessness. Through this effort, known as Opening Doors, the President challenged Congress to authorize $11B in new “mandatory” spending to serve 550,000 families over a 10 year period.  As a mandatory program, the initiative would not be subject to the often contentious annual discretionary appropriations process.  Specifically, the Administration is requesting $88 million for 10,000 new (incremental) Section 8 housing choice vouchers targeted to homeless families with children, as well as funding for 25,000 new permanent supportive housing units, and funds to provide 8,000 families with rapid rehousing assistance.  If enacted, New York would be certain to receive a considerable increase in Section 8 vouchers given our high levels of family homelessness.  Statewide, more than 80,000 New Yorkers are homeless including more than 23,000 children sleeping in shelters each night.

Other housing highlights from the President’s budget proposal are found below. For a detailed budget chart, see the National Low Income Housing Coalition’s website linked here or see the National Housing Conference Open House blog for further analysis.

  • Section 8 Housing Choice Vouchers- The 2017 budget request would fully fund all expiring Tenant Based Assistance (i.e. existing vouchers).  The budget also includes $10.8 billion for the Project-Based Rental Assistance program, which supports 12 months of funding for rental assistance contracts.  $2.1 billion is allocated for fees to housing agencies administering Section 8, using a new evidence-based formula aiming to more accurately reflect the actual cost of running the program and to provide low-income families greater access to opportunity areas.
  • NEW Housing Choice Voucher Mobility Demonstration- $15M is requested to assist households to move to areas of opportunity. In high cost cities like New York, Section 8 voucher use is primarily concentrated in low-income neighborhoods due to the limitations of Fair Market Rent levels.This is a welcomed proposal which mirrors NYHC’s policy priorities suggesting a similar program on the local level.
  • Public Housing- Operating Funds would be increased slightly while Public Housing Capital Funds would be decreased.  Given the tremendous capital needs of PHAs like NYCHA, this is disappointing.  The Choice Neighborhoods Initiative, a signature program of this administration to revitalize neighborhoods and transform public housing, would see a substantial increase in funding from $125M in 2016 to $200M in 2017.
  • RAD- The President seeks $50 million to expand the Rental Assistance Demonstration (RAD), another signature initiative of this administration to aid public housing.  RAD leverages private capital for public housing through the conversion of operating funds into rental assistance.  HUD also proposes to remove the 185,000 unit cap on the number of public housing units that can be preserved under RAD.   Additionally, the budget proposes to make Section 202 Project Rental Assistance Contract (PRAC) owners eligible to convert their subsidy stream under RAD.
  • Section 202 Elderly Housing- Funding for Section 202 Elderly Housing is increased only to cover refinancing.  No funding is proposed to create any new senior housing. The federal government has not funded new senior housing for several years, which is a huge failure given current demand and anticipated population growth.  According to recent LiveOn NY survey, more than 200,000 seniors are on 202 wait lists for an average of 7 years.  By 2040, NYC will see a 40% increase in elderly households, rising to 1.4 million seniors.
  • CDBG & HOME- Unfortunately, the request calls for a $200M cut in Community Development Block Grants (CDBG) which fund a wide variety of programs in New York and support HPD’s code enforcement activities.  HOME funding would be maintained at FY 2016 levels.
  • National Housing Trust Fund- In the request, HUD estimates that the National Housing Trust Fund will receive $136 million in 2017. This newly funded program support low-income rental housing and is allocated to States.
  • NEW Pay-for-Success (PFS)- The budget proposes a one-time mandatory appropriation of $300 million for a new Pay for Success (PFS) fund within the Department of the Treasury which would fund state and local PFS contracts or Social Impact Bonds that are expected to save federal dollars. This could be beneficial to supportive housing or innovative MRT-type projects NYS has undertaken.
  • LIHTC Income Averaging- The President’s proposal calls for Congress to authorize Low Income Housing Tax Credit (LIHTC) Income Averaging which would encourage income-mixing in projects and allow cross-subsidization to achieve deeper affordability in high-cost cities like New York.  This is one of NYHC’s top priorities.  Learn more about benefits for New York in NYHC analysis here.
  • NEW QCT Cap Lift- A legislative proposal in this budget to remove the cap on the number of census tracts that can be designated as qualified census tracts (QCTs) would greatly benefit New York by allowing more areas to qualify for the 30% LIHTC basis boost. Until this year, all of NYC qualified for the basis boost as the entire metropolitan area was considered a difficult to develop area (DDA), which also qualifies projects for the basis boost.  Currently, the population living in QCTs cannot exceed 20 percent of the population of a metropolitan area, which is problematic for dense urban areas including New York City and San Francisco.
  • NEW QAP Requirement- Qualified Allocation Plans (QAPs) for tax credit allocating agencies will be required to include “Affirmatively Furthering Fair Housing” as an explicit allocation preference. While we support this policy change, it still may not be effective in driving development in many “high opportunity areas” in NYC, where land costs are prohibitively high.
  • NEW Local Housing Policy Grants- The budget proposes $300 million in mandatory funds for a new Local Housing Policy Grants program. This program will provide grants to localities and regional coalitions to support new policies, programs or regulatory initiatives that create a more elastic and diverse housing supply, and in turn, increase economic growth, access to jobs and improve housing affordability.

The President’s proposals face, at best, an uncertain future given the election year and the difficulty we have seen in authorizing appropriation bills in recent years, not to mention Congress’ demonstrated desire to cut rather than increase funding for many of these programs. Ideally, the House and the Senate will take up the HUD budget request in the Spring as part of a “Transportation/HUD Appropriations Bill”.  Each chamber will put forward funding bills which will then be “conferenced” to resolve any differences and a final bill will be sent to the President prior to the end of the fiscal year on September 30th. In recent years however, Congress has not been able to agree on appropriations for individual agencies and has instead passed Omnibus “Continuing Resolutions” (CRs).  We will know more about what to expect in the FY2017 budget process in the upcoming months.