President Biden released his FY2023 Budget Proposal requesting $71.9 billion for the Department of Housing and Urban Development (HUD), about $6.2 billion more than what was enacted in the FY2022 spending bill. The administration seeks significant increases in funding to expand rental assistance and increase affordable housing supply and opportunity for homeownership. However, it also proposes funding levels for some key programs that would represent a decrease from their FY22 levels.
The President’s budget also proposes creating a Housing Supply Fund, a new $35 billion mandatory program to provide resources for State and local housing finance agencies and their partners to provide grants, revolving loan funds and other streamlined financing tools. This includes $10 billion in grants to advance State and local jurisdictions’ efforts to remove barriers to affordable housing development, including funding for housing-related infrastructure
Mandatory spending includes entitlement programs, such as Social Security and Medicare while discretionary spending is subject to annual fluctuations determined by Congress. Moving funding for affordable housing to the mandatory side of the budget has been a longtime policy priority for NYHC. We are excited to see the administration embracing this approach and hope it signals a true long term commitment to addressing the affordable housing crisis.
Rental Assistance: The bill proposes $15 billion for Project Based Rental Assistance and $32 billion for Tenant Based Rental Assistance. $1.6 billion is for incremental vouchers for 200,000 additional households, including those who are experiencing or at risk of homelessness or fleeing or attempting to flee domestic violence, dating violence, sexual assault, stalking, or human trafficking.
This represents a major increase from the $200 million to expand vouchers to 25,000 households in the FY22 enacted budget and would be a major down payment towards universal rental assistance.
Public Housing: The bill funds public housing operating at $5.06 billion, a $4 million decrease from the FY22 enacted budget. $3.72 billion is requested for public housing capital, which includes: $3.2 billion for the Capital Fund, $300 million to improve energy or water efficiency or climate resilience, $60 million to prevent and mitigate other housing-related hazards, such as fire safety and mold, $40 million for emergency capital needs and $25 million to address lead-based paint hazards.
While there is a small decrease in the proposed operating budget for public housing, it would also go to about 25,000 fewer public housing units requiring formula funding between FY2022 and FY2023 due to PHAs utilizing tools such as RAD. It is unclear at this stage how it would impact operating funding for NYCHA.
Low-Income Housing Tax Credit (LIHTC): The budget proposes a change to LIHTC to allow allocating agencies to give nongeographic basis boosts to bond-financed affordable housing if it is required for financial feasibility. For more details on this proposal see analysis from Novogradac.
Key HUD Programs: The bill proposes $3.8 billion for the Community Development Block Grant (CDBG) program, including $195 million to spur equitable development and the removal of barriers to revitalization in 100 of the most underserved neighborhoods in the United States.
$1.95 billion is proposed for the HOME Investments Partnerships program (HOME), an increase of $450 million from the FY22 enacted budget. The administration estimates over time this funding will result in the production of approximately 41,000 units of affordable housing and support over 15,000 low-income households with tenant-based rental assistance. This request includes a $100 million set-aside for a FirstHOME Downpayment initiative to expand homeownership opportunities for first-generation and/or low wealth first-time homebuyers.
Additionally, the budget requests $15 million in credit subsidy for a new Home Equity Accelerator Loan (HEAL) Pilot program. The HEAL program would offer new loan products to increase access to homeownership and facilitate faster accumulation of home equity for first-generation and/or low-wealth first-time homebuyers.
$966 million is requested for the Section 202 Housing for the Elderly program and $287 million for the Section 811 Housing for People with Disabilities program. These are decreases of $67 million and $64 million from FY22 respectively.
The budget proposes $3.6 billion for Homeless Assistance grants an increase of $363 million over FY22. This funding would support more than 25,000 additional households, including survivors of domestic violence and homeless youth. Of this, $82 million would be set aside for additional Youth Homelessness Demonstration Programs (YHDPs).
While we hope to see a normal appropriations process this year, often Congress misses deadlines and passes continuing resolutions with flat funding, particularly in election years. We will continue to advocate for the greatest possible investment in affordable housing both in appropriations and in any reconciliation bill that moves forward.
Read a detailed analysis from NLIHC here.