Department of Housing and Urban Development (HUD): FY2012 Appropriations
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Department of Housing and Urban
Development (HUD): FY2012 Appropriations
(name redacted), Coordinator
Specialist in Housing Policy
(name redacted)
Specialist in Housing Policy
(name redacted)
Analyst in Federalism and Economic Development Policy
(name redacted)
Analyst in Housing Policy
December 9, 2011
Congressional Research Service
7-....
www.crs.gov
R41700
CRS Report for Congress
Prepared for Members and Committees of Congress
Department of Housing and Urban Development (HUD): FY2012 Appropriations
Summary
The President’s FY2012 budget was released on February 14, 2011. It included a request for
nearly $47.9 billion in gross new appropriations for HUD in FY2012. After accounting for
rescissions of prior-year unobligated balances and offsets available from the Federal Housing
Administration (FHA) mortgage insurance programs, the President’s request for net new budget
authority for HUD in FY2012 totaled just over $42 billion. The President’s budget, which was
released prior to enactment of a final FY2011 appropriations law, included proposals for some
funding increases relative to FY2010 (Section 8 Tenant-Based Rental Assistance and ProjectBased Rental Assistance), and some funding decreases relative to FY2010 (public housing
operating fund, Community Development Block Grant program, HOME, and Section 202 and
811). However, in the case of almost all of the programs proposed for funding decreases relative
to FY2010, the President’s requested amount was higher than what was ultimately provided in the
FY2011 appropriations law. In total, the President’s funding request for HUD would have resulted
in a nearly $2.5 billion increase in gross new appropriations in FY2012 relative to FY2011.
However, because the President’s budget estimated a substantial increase (nearly $2 billion) in the
amount of offsetting receipts available from FHA in FY2012 relative to FY2011, the net budget
authority requested in the President’s budget would have represented an increase of only about
$600 million in FY2012 relative to FY2011.
While the House Appropriations Committee did not formally report an FY2012 Transportation,
HUD, and Related Agencies (THUD) bill, on September 7, 2011, the THUD subcommittee
released a draft version, including about $3 billion less in net funding for HUD than was provided
in FY2011 (about $1.4 billion less in gross appropriations). It was approved by the subcommittee
the next day.
On September 21, 2011, the Senate Appropriations Committee reported its FY2012 THUD
funding bill (S. 1596). It included about $4 billion less in net funding for HUD than was provided
in FY2011 (about $1.3 billion less in gross regular appropriations). On November 1, 2011, the
full Senate approved S.Amdt. 738 to H.R. 2112, the so-called Senate “Minibus.” It included
FY2012 appropriations for those agencies under the jurisdiction of the THUD subcommittee
(reflecting S. 1596) as well as two other subcommittees (Agriculture and Commerce-JusticeScience). Several HUD-related amendments were considered and adopted.
In mid-November, the House and Senate reported a conference agreement on the Minibus (H.R.
2112, H.Rept. 112-284), which was subsequently enacted by Congress and then signed into law
by the President on November 18, 2011 (P.L. 112-55). The final FY2012 appropriations law
provided about $37.3 billion in net funding for HUD, which is about 9% less than was provided
in FY2011. However, part of the decrease in net funding is attributable to increases in offsetting
receipts and rescission. Looking only at gross appropriations, total funding for HUD’s programs
was decreased by about 2%.
While not directly affecting HUD funding, the provisions in the Budget Control Act of 2011 (P.L.
112-25) relating to statutory discretionary budget caps and their enforcement through
sequestration could have implications for the amount of funding available for HUD in FY2012
and the future (see the Appendix for more information).
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
Contents
Introduction to the Department of Housing and Urban Development (HUD)................................. 1
Overview and Trends in HUD Funding........................................................................................... 2
FY2011 ............................................................................................................................................ 7
FY2012 ............................................................................................................................................ 8
Status of FY2012 Appropriations .............................................................................................. 8
Final FY2012 HUD Appropriations, P.L. 112-55................................................................ 8
Senate Action ...................................................................................................................... 8
House Action....................................................................................................................... 8
President’s Budget Request................................................................................................. 9
Selected Accounts and Key Budget Issues .................................................................................... 11
Section 8 Tenant-Based Rental Assistance .............................................................................. 11
Public Housing ........................................................................................................................ 13
Operating Fund.................................................................................................................. 13
Capital Fund ...................................................................................................................... 14
HOPE VI/Choice Neighborhoods ..................................................................................... 14
PHA Compensation........................................................................................................... 15
Administrative Reforms to Rental Assistance Programs......................................................... 15
Transforming Rental Assistance .............................................................................................. 16
Community Development Block Grants (CDBG)................................................................... 16
Formula Grants.................................................................................................................. 17
CDBG Disaster Assistance................................................................................................ 18
Section 108: Restructuring ...................................................................................................... 19
Sustainable Communities ........................................................................................................ 20
HOME ..................................................................................................................................... 21
Self-Help and Assisted Homeownership Opportunity Program (SHOP) ................................ 22
Homelessness Assistance......................................................................................................... 23
Section 8 Project-Based Rental Assistance ............................................................................. 24
Section 202 and Section 811.................................................................................................... 24
Housing Counseling ................................................................................................................ 26
NeighborWorks America................................................................................................... 27
The Status of FHA................................................................................................................... 27
Credit Subsidy and Offsetting Receipts ............................................................................ 28
Financial Status and FHA Reforms ................................................................................... 29
FHA Loan Limits .............................................................................................................. 30
Figures
Figure 1. HUD (Non-emergency) Budget Authority, FY2002-FY2011 .......................................... 2
Figure 2. Components of HUD Funding, FY2002-FY2011 ............................................................ 4
Figure 3. Percent Change Since 2002 in Annual Appropriations for Section 8 Programs
Compared to All Other HUD Programs Combined ...................................................................... 5
Figure 4. Section 8 Appropriations (TBRA and PBRA), FY2002-FY2011 .................................... 6
Figure 5. FHA Receipts, FY2002-FY2011 ...................................................................................... 7
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
Tables
Table 1. Department of Housing and Urban Development Appropriations,
FY2007-FY2011........................................................................................................................... 1
Table 2. Appropriations for HUD, FY2011-FY2012 ....................................................................... 9
Table 3. Detailed Table: Tenant-Based Rental Assistance, FY2011-FY2012................................ 12
Table 4. Community Development Fund and CDBG, FY2011-FY2012 ....................................... 19
Appendixes
Appendix. Related Legislation ...................................................................................................... 31
Contacts
Author Contact Information........................................................................................................... 33
Congressional Research Service
Department of Housing and Urban Development (HUD): FY2012 Appropriations
Introduction to the Department of Housing and
Urban Development (HUD)
Most of the funding for the activities of the Department of Housing and Urban Development
(HUD) comes from discretionary appropriations provided each year in the annual appropriations
acts enacted by Congress. HUD’s programs are primarily designed to address housing problems
faced by households with very low incomes or other special housing needs. These include several
programs of rental assistance for persons who are poor, elderly, and/or have disabilities. Three
rental assistance programs—Public Housing, Section 8 Vouchers, and Section 8 project-based
rental assistance—account for the majority of the department’s non-emergency funding (about
three-quarters of total funding in FY2010). Two flexible block grant programs—HOME and
Community Development Block Grants (CDBG)—help communities finance a variety of housing
and community development activities designed to serve low-income families. Other, more
specialized grant programs help communities meet the needs of homeless persons, including
those with AIDS. HUD’s Federal Housing Administration (FHA) insures mortgages made by
lenders to home buyers with low downpayments and to developers of multifamily rental buildings
containing relatively affordable units. FHA collects fees from insured borrowers, which are used
to sustain the insurance fund and offset its administrative costs. Surplus FHA funds have been
used to offset the cost of the HUD budget.
In recent years the HUD budget has also received significant amounts of emergency supplemental
funding. Almost $20 billion was provided through HUD’s budget for recovery assistance to
communities affected by Hurricane Katrina and the other hurricanes of 2005. The economic
stimulus legislation enacted in 2009 (P.L. 111-5) provided over $13 billion to HUD’s programs.
Table 1 presents total enacted appropriations for HUD over the past five years, including
emergency appropriations.
Table 1. Department of Housing and Urban Development Appropriations,
FY2007-FY2011
(net budget authority in billions of dollars)
FY2007
FY2008
FY2009
FY2010
FY2011
35.80a
47.66b
55.20c
46.16d
41.11
Source: Figures are taken from tables produced by the House Appropriations Committee.
Note: Final appropriations levels for any fiscal year include all supplemental appropriations or rescissions. They
do not reflect revised estimates of offsetting receipts. They include advance appropriations provided in the fiscal
year, not advance appropriations available in the fiscal year.
a.
Figure includes $7 million in emergency supplemental funding. Regular FY2007 appropriations totaled just
under $35.8 billion.
b.
Figure includes $3.22 billion (P.L. 110-116 and P.L. 110-252) in emergency supplemental funding in response
to the hurricanes of 2005 and $6.8 billion (P.L. 110-252 and P.L. 110-329) in emergency supplemental
funding for the disasters of 2008. Regular FY2008 appropriations totaled $37.64 billion.
c.
Figure includes $13.67 billion in emergency funding provided as fiscal stimulus by P.L. 111-5. Regular FY2009
appropriations totaled $41.5 billion.
d.
Figure includes $100 million in emergency funding provided by P.L. 111-212 for assistance in response to
disasters occurring in the spring and summer of 2010.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
Overview and Trends in HUD Funding
HUD’s budget authority (not including emergency supplemental funding, discussed later) has
increased by about 40% since 2002. As demonstrated by the line in Figure 1, the rate of growth
had increased in recent years. In FY2004 and FY2005, year-over-year growth was relatively flat
(under 2%), but, beginning in FY2006, HUD’s budget had year-over-year increases of 5% or
more each year, with growth of nearly 10% in FY2009 and nearly 12% in FY2010. The FY2011
appropriations act reversed the recent trend of increasing budget authority by decreasing HUD’s
budget authority by nearly 11% compared to FY2010.
Adjusting for inflation, the growth in “real” funding (shown by the gray bars in Figure 1) has
been less robust. Over the 10-year period, adjusting for inflation, HUD’s budget grew by about
15%. Through FY2008, the year-over-year growth never exceeded about 3.5%, and in two years
there were declines. Most of the growth over the previous 10 years came in two years: FY2009
and FY2010, although about half of that growth was eliminated with the reductions in FY2011.
Figure 1. HUD (Non-emergency) Budget Authority, FY2002-FY2011
In nominal dollars and in real (2011) dollars
$50
$45
$40
$35
Real
(inflationadjusted)
b illio n s
$30
$25
Nominal
$20
$15
$10
$5
$0
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
Enacted
Source: CRS analysis of congressional funding data contained in annual appropriations acts.
Notes: Real figures are presented in 2011 dollars, adjusted using the GDP chained index from the President’s
FY2012 budget request as well as the Congressional Budget Office’s estimate for FY2010, as presented in their
Budget and Economic Outlook: Fiscal Years 2011 to 2021. Figures are net budget authority figures, which include
appropriations, offsets, and rescissions.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
As shown in Figure 2, HUD’s funding is made up of several components. The components of
HUD’s annual funding, or budget authority, include regular annual appropriations, emergency
appropriations, rescissions, and offsets.1
HUD’s programs and activities are funded almost entirely through regular annual appropriations,
also referred to as discretionary appropriations.2 The amount provided in the annual
appropriations acts each year generally determines how much funding will be obligated and
eventually spent for each of HUD’s programs and activities.
In some years, Congress will also provide emergency appropriations, usually in response to
disasters, through one or more of HUD’s programs. These funds are generally provided outside of
the regular appropriations acts—often in emergency supplemental spending bills—and are
generally provided in addition to regular annual appropriations.
Congressional appropriators are generally subject to limits on the amount of new non-emergency
discretionary funding they can provide in a year. One way to stay within these limits is to provide
less in regular annual appropriations. Another way is to find offsets. A portion of the cost of
HUD’s regular annual appropriations acts is generally offset in two ways. The first is through
rescissions, or cancellations of unobligated or recaptured balances from previous years’ funding.
The second is through offsetting receipts and collections, generally derived from fees paid by
HUD partners or clients.
The interaction between new appropriations and offsets provided through rescissions, receipts,
and collections determines HUD’s total net budget authority. Net budget authority is also the
“cost” of the HUD budget, as estimated by the Congressional Budget Office (CBO) in its
scorekeeping process.3 The total amount of net budget authority provided to HUD each year,
while important for federal budgeting purposes, is not necessarily the best measure of the amount
of funding that is being provided for HUD’s programs and activities. Because of the role of
offsets, declining or increasing net budget authority does not necessarily mean declining or
increasing regular appropriations.
As shown by the line in Figure 2, which repeats the data shown by the line in Figure 1, net nonemergency budget authority for HUD increased 40% between FY2002 and FY2011, from over
$29 billion to over $41 billion. However, the overall increase in net new non-emergency budget
authority masks several important trends.
1
For more information, see CRS Report RS20095, The Congressional Budget Process: A Brief Overview, by (name red
acted).
2
According to Congressional Quarterly’s American Congressional Dictionary, discretionary appropriations are
defined as appropriations not mandated by existing law and therefore made available annually in appropriation bills in
such amounts as Congress chooses. The Budget Enforcement Act of 1990 defines discretionary appropriations as
budget authority provided in annual appropriation acts and the outlays derived from that authority, but it excludes
appropriations for entitlements.
3
According to Congressional Quarterly’s American Congressional Dictionary, scorekeeping is defined as the process
of calculating the budgetary effects of pending and enacted legislation and assessing its impact on applicable budgetary
targets, as required by the Congressional Budget Act of 1974.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
Figure 2. Components of HUD Funding, FY2002-FY2011
$60
Emergency
Appropriations
$50
Regular
Appropriations
(including
advance from
prior year)
Offsets
$40
billions
$30
$20
$10
Rescissions
$0
ted
En
ac
20
10
FY
20
11
FY
20
09
FY
20
08
FY
20
07
FY
20
06
FY
20
05
FY
20
04
FY
20
03
FY
FY
20
02
-$10
Net NonEmergency
Budget
Authority
Source: CRS analysis of congressional funding data contained in annual appropriations acts.
As noted earlier, between FY2002 and FY2010, HUD’s net non-emergency budget authority
increased by 57%. During that period, regular annual appropriations, which is the amount
provided by Congress to fund HUD’s programs and activities, grew by only 37% (shown by the
dark green bars in Figure 2). During the same period, the amount available in offsetting receipts
and collections and the amount rescinded, which Congress uses to reduce the cost of providing
new appropriations, declined by more than 70% and 96%, respectively (shown by the dark and
light red bars in Figure 2). In summary, from FY2002-FY2010, appropriations were increasing,
but the amount of offsets and rescissions available to offset the cost of those appropriations was
decreasing.
That trend was reversed in FY2011, when Congress cut the amount of appropriations relative to
FY2010 and, at the same time, the amount of available offsets increased. In terms of net budget
authority, HUD’s funding was cut by 11% in FY2011 compared to FY2010. However, regular
appropriations in FY2011 were only cut by about 4%. The difference between the cut in net
budget authority and appropriations is attributable to a 43% increase in offsets (discussed later in
this section).
The growth in regular appropriations during this period (shown by the dark green bars in Figure
2) is largely attributable to growth in HUD’s Section 8 tenant-based voucher and project-based
rental assistance programs, which combined are the largest component of the HUD budget. As
can be seen in Figure 3, from FY2002 to FY2011 appropriations for the combined Section 8
programs grew by 77%, while combined funding for all other HUD programs and activities
declined by about 6%. During this period, the Section 8 programs went from accounting for about
46% of HUD’s regular appropriations to accounting for over 60% of HUD’s regular
appropriations. As can be seen in the chart, for a number of years Section 8 funding grew while
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
combined funding for all other HUD programs declined. In FY2008, FY2009, and FY2010,
combined funding for other HUD programs began to grow, but it declined sharply in FY2011.
Figure 3. Percent Change Since 2002 in Annual Appropriations for Section 8
Programs Compared to All Other HUD Programs Combined
90%
80%
Percent Change from FY2002.
70%
60%
Section 8
(PBRA and
TBRA)
50%
40%
All Other HUD
Programs
Combined
30%
20%
10%
0%
(10%)
(20%)
FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011
Source: CRS analysis of congressional appropriations documents.
Notes: Figures for HUD represent gross appropriations, not reduced for rescissions or offsets and not including
emergency appropriations. Figures for Section 8 include both tenant-based and project-based rental assistance.
Section 8 figures include advance appropriations available in the fiscal year and are reduced for rescissions of
funding from advance appropriations, but not rescissions of prior-year unobligated balances. TBRA: tenant-based
rental assistance; PBRA: project-based rental assistance.
As noted earlier, there are two Section 8 programs: tenant-based rental assistance (vouchers) and
project-based rental assistance. They were funded in the same account for many years, but since
FY2005 they have been funded separately. As is shown in Figure 3, appropriations for the
Section 8 programs combined have grown by nearly 80% from FY2002 to FY2011. However, it
is important to note that the rates of growth have not been the same across the two Section 8
programs. As shown in Figure 4, appropriations for the Section 8 project-based rental assistance
(PBRA) program grew by 75% from FY2005 to FY2011; appropriations for the Section 8 tenantbased rental assistance (TBRA) program, or Section 8 Housing Choice Voucher program, grew
only about one-third as much during that period, by about 24%. The growth in appropriations for
PBRA is largely attributable to the renewal of old project-based Section 8 contracts when they
expire. Those contracts were originally funded in the 1970s and 1980s with long-term
appropriations. The contracts typically require new annual appropriations in order to be renewed.
The vast majority of contracts are now funded with annual appropriations, but some expirations
continue to occur and require new appropriations each year.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
Figure 4. Section 8 Appropriations (TBRA and PBRA), FY2002-FY2011
FY2011
FY2010
FY2009
FY2008
TBRA
FY2007
PBRA
FY2006
Section 8 Total
FY2005
FY2004
FY2003
FY2002
$0
$5
$10
$15
$20
$25
$30
billions
Source: CRS analysis of congressional appropriations documents.
Notes: Section 8 figures include advance appropriations available in the fiscal year and are reduced for
rescissions of funding from advance appropriations, but not rescissions of prior-year unobligated balances.
As discussed earlier and shown in Figure 2, between FY2002 and FY2010 the amount of
offsetting receipts declined by about 70%. That decline was largely attributable to declines in
offsetting receipts available from the FHA mortgage insurance programs. The amount available
from FHA to offset the cost of new HUD appropriations had declined from a high of over $3.5
billion in FY2004 to well under $0.5 billion in FY2010. That trend completely reversed in
FY2011 when the amount of offsetting receipts from FHA increased to over $4 billion, the
highest level in a decade. The increase is attributable to FHA’s increasing market share following
the downturn in the economy, as well as to policy changes made by FHA that increased the fees
charged to new FHA-insured borrowers.4
4
See the discussion of the House budget resolution in the Appendix for more information about a proposal to change
the way FHA offsets are calculated, which would potentially result in much lower receipt estimates.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
Figure 5. FHA Receipts, FY2002-FY2011
$4.5
$4.0
$3.5
billions
$3.0
$2.5
$2.0
$1.5
$1.0
$0.5
$FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011
enacted
Source: CRS analysis of congressional appropriations documents.
FY2011
When no FY2011 appropriations legislation was enacted before the beginning of the fiscal year
(October 1, 2010), the 111th Congress enacted a series of continuing resolutions (CRs) that
continued funding at the FY2010 level for most accounts in the federal budget (including all of
the accounts in HUD’s budget). The final CR of the 111th Congress, P.L. 111-322, was slated to
expire at the earlier of March 4, 2011, or enactment of FY2011 appropriations legislation. In
addition to continuing funding for HUD programs, P.L. 111-322 also extended, through the end of
FY2011, FHA mortgage limit increases that would otherwise have expired in December 2010.
In the week before funding under P.L. 111-322 was scheduled to expire, the 112th Congress
approved a short-term CR (H.J.Res. 44, P.L. 112-4) to fund the government through March 18,
2011. This short-term CR continued funding for all HUD programs at their FY2010 levels except
for the Community Development Fund, which was reduced to eliminate funding for Economic
Development Initiative (EDI) and Neighborhood Initiative (NI) earmarks.
In the week before funding under P.L. 112-4 was scheduled to expire, Congress approved another
short-term CR, which continued funding through April 8, 2011 (H.J.Res. 48, P.L. 112-6). It
maintained funding at the FY2010 levels for most HUD programs, but, like H.J.Res. 44, it
provided no funding for EDIs and NIs. Further, P.L. 112-6 includes no funding for HUD’s
Brownfields Redevelopment program. Congress enacted one final short-term continuing
resolution (P.L. 112-8), before enacting a final FY2011 appropriations law.
On April 15, 2011, the Department of Defense and Full-Year Continuing Appropriations Act of
2011 was signed into law (P.L. 112-10). Division A provided year-long FY2011 appropriations for
the Department of Defense; Division B provided year-long FY2011 appropriations for the
remaining government agencies, including HUD. It funded some HUD programs at FY2010
levels, but it reduced funding for other programs and increased funding for the two Section 8
programs. The act also included an across-the-board 0.2% rescission from all non-defense
discretionary accounts, including those in HUD’s budget.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
The law provided $41.1 billion in net new budget authority for HUD, a decrease of about 11%
from the FY2010 enacted level. However, the decrease in net new budget authority only
represented a 4% decrease in appropriations for HUD programs in aggregate, due to a substantial
increase in offsetting collections and receipts from the FHA mortgage insurance programs from
FY2010 to FY2011.
FY2012
Status of FY2012 Appropriations
Final FY2012 HUD Appropriations, P.L. 112-55
The Consolidated and Further Continuing Appropriations Act of 2012 (H.R. 2112, P.L. 112-55)
was signed into law on November 18, 2011. The law provides year-long appropriations for
several government agencies, including HUD, and provides continuing appropriations through
December 16, 2011, for the remaining government agencies. In terms of funding for HUD, the act
provides about $37.3 billion in net funding for HUD, which is about 9% less than was provided in
FY2011. However, part of the decrease in net funding is attributable to increases in offsetting
receipts and rescission. Looking only at gross appropriations, total funding for HUD’s programs
was decreased by about 2%.
Senate Action
On September 21, 2011, the Senate Appropriations Committee reported an FY2012 THUD
funding bill (S. 1596). It included about $3 billion less in net budget authority (reflecting
increased offsetting receipts) and about $1.3 billion less in regular appropriations (not reflecting
rescissions) for HUD than was provided in FY2011.
On October 20, 2011, the Senate began consideration of the provisions of S. 1596 as a part of the
so-called “Minibus.” The Minibus, S.Amdt. 738 to H.R. 2112, includes FY2011 appropriations
for those agencies under the jurisdiction of the THUD subcommittee (reflecting S. 1596) as well
as two other subcommittees (Agriculture and Commerce-Justice-Science).
The bill was approved by the full Senate on November 1, 2011.
House Action
The House Appropriations Committee did not formally report an FY2012 THUD bill; however,
on September 7, 2011, the THUD subcommittee released a draft version of its unnumbered bill,
which was approved by the subcommittee the next day. According to the subcommittee’s press
release, the bill included about $3 billion less for HUD than was provided in FY2011 and $4
billion less than was requested by the President. The subcommittee also released a draft
committee report and summary table.
The draft bill was not formally introduced.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
President’s Budget Request
In February 2011, the President released his budget request for FY2012. It included a request for
nearly $47.9 billion in gross new appropriations for HUD in FY2012. After accounting for
rescissions of prior-year unobligated balances and offsets available from the Federal Housing
Administration (FHA) mortgage insurance programs, the President’s request for net new budget
authority for HUD in FY2012 totaled over $42 billion.
Table 2 includes an account-by-account comparison of the President’s request and the final
FY2012 law.
Table 2. Appropriations for HUD, FY2011-FY2012
(in billions of dollars)
Accounts
FY2011
enacted
FY2012
Request
1.315
1.350
FY2012 House
(Draft—See
Note)
FY2012
Senate
FY2012
enacted
1.233
1.350
1.332
18.914a
Appropriations
Management and Administration
Tenant Based Rental Assistance (Section 8
vouchers)
18.371
19.223
18.468
18.872a
Housing Certificate Fund
0.000
0.050
0.050
0.000
0.000
Transforming Rental Assistance
0.000
0.200
0.000
0.000
0.000
Public housing capital fund
2.040
2.405
1.532
1.875
1.875
Public housing operating fund
4.617
3.962
3.862
3.962
3.962
Choice Neighborhoods
0.000
0.250
0.000
0.120
0.120
HOPE VI
0.100b
0.000
0.000
0.000
0.000
Native American housing block grants
0.649
0.700
0.649
0.650
0.650
Indian housing loan guarantee
0.007
0.007
0.006
0.007
0.006
Native Hawaiian Block Grant
0.013
0.010
0.000
0.013
0.013
Native Hawaiian loan guarantee
0.001
0.000c
0.000
0.000
0.000
Housing, persons with AIDS (HOPWA)
0.334
0.335
0.334
0.330
0.332
Community Development Fund
(including CDBG)
3.501
3.781
3.501
3.001
3.308
Sustainable Communities
0.000
0.150
0.000
0.000
0.000
Section 108 loan guarantee; subsidy
0.006
0.000c
0.007
0.005
0.006
HOME Investment Partnerships
1.607
1.650
1.200
1.000
1.000
Self-Help Homeownership
0.082
0.050
0.049
0.057
0.054
Homeless Assistance Grants
1.901
2.372
1.901
1.901
1.901
Project Based Rental Assistance (Section 8)
9.265
9.429
9.429
9.419
9.340
Housing for the Elderly
0.399
0.757
0.600
0.370
0.375
Housing for Persons with Disabilities
0.150
0.196
0.196
0.150
0.165
Housing Counseling Assistance
0.000
0.088
0.000
0.060
0.045
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
FY2011
enacted
FY2012
Request
Manufactured Housing Fees Trust Fund
0.016
0.014
Rental Housing Assistance
0.040
FHA Expenses
FY2012 House
(Draft—See
Note)
FY2012
Senate
FY2012
enacted
0.000
0.009
0.007
0.016
0.016
0.001
0.001
0.215
0.239
0.216
0.207
0.207
GNMA Expenses
0.011
0.030
0.019
0.020
0.020
Research and technology
0.048
0.057
0.048
0.046
0.046
Fair housing activities
0.072
0.072
0.072
0.071
0.071
Office, lead hazard control
0.120
0.140
0.120
0.120
0.120
Working capital fund
0.200
0.243
0.218
0.192
0.199
Inspector General
0.125
0.126
0.115
0.125
0.124
Transformation Initiative-Combating Mortgage
Fraud
0.071
0.000
0.050
0.000
0.050
Appropriations Subtotal (including advances
provided in current year for subsequent year)
45.274
47.902
43.890
43.933
44.241
Housing Certificate Fund
0.000
-0.050
-0.050
-0.200
-0.200
TBRA Prior Year Advance Rescission
0.000
0.000
0.000
-0.750
-0.650
Rental housing assistance rescission
-0.041
-0.007
-0.007
-0.232
-0.232
Rescissions Subtotal
-0.041
-0.057
-0.057
-1.182
-1.082
Manufactured Housing Fees Trust Fund
-0.007
-0.007
0.000
-0.004
-0.004
Federal Housing Administration (FHA)
-3.386d
-5.113
-5.113
-5.177
-5.172
GNMA
-0.729d
-0.645
-0.645
-0.651
-0.650
Offsets Subtotal
-4.122
-5.765
-5.758
-5.832
-5.826
Emergency CDBG
0.000
0.000
0.000
0.400
0.100
Emergency Subtotal
0.000
0.000
0.000
0.400
0.100
Authorized Budget Authority, Excluding
Emergency Funding
41.111e
42.080
38.076
36.919
37.334
Available Budget Authority, Excluding
Emergency Funding (adjusted for advances)
41.096
42.080
38.076
36.919
37.334
Authorized Budget Authority, Including
Emergency Funding
41.111
42.080
38.076
37.319
37.434
Available Budget Authority, Including
Emergency Funding (adjusted for advances)
41.096
42.080
38.076
37.319
37.434
Accounts
Rescissions
Offsetting Collections and Receipts
Emergency Funding
Totals
Source: Table prepared by CRS based on information available in H.Rept. 112-284 (for FY2011 enacted, FY2012
request, and FY2012 enacted), S.Rept. 112-83 (for FY2012 Senate), and draft documents available on the House
Appropriations Committee website (for FY2012 House Draft).
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
Note: FY2012 House Draft figures are CRS estimates based on the information contained in draft documents
posted on the House Appropriations Committee website: http://appropriations.house.gov/UploadedFiles/
FY_2012THUD.bill_xml.pdf. Totals shown in this table may not match those in summary documents due to
differences in assumptions.
a.
This amount includes the advance appropriation provided for FY2013. The advance appropriations provided
for FY2012 will be reduced by the amount shown under “TBRA Prior Year Advance Rescission” later in this
table. Therefore, the amount available for the TBRA account in FY2012 will be the amount shown here, less
the amount of the rescission ($750 million proposed by the Senate, $650 million in the final law).
b.
Includes a $65 million set-aside for a Choice Neighborhoods demonstration.
c.
The President’s budget requested a new fee structure for this account, which would eliminate the need for
appropriations.
d.
Totals include CBO’s estimates of increased offsetting receipts resulting from increased loan limits
authorized in Section 145 of P.L. 111-242.
e.
Totals shown here differ from totals shown in committee documents by $8 million because of a difference
in the treatment of advance appropriations in the tenant-based rental assistance account.
f.
Includes an additional $9 million payment to the manufactured housing fee trust fund.
Selected Accounts and Key Budget Issues
Section 8 Tenant-Based Rental Assistance
The Section 8 Housing Choice Voucher program is funded through the tenant-based rental
assistance account; it is both the largest assistance program administered by HUD and the largest
account in HUD’s budget. Most of the funding provided to the account each year is for the annual
renewal of the roughly 2 million vouchers that are currently authorized and being used by
families to subsidize their housing. The account also provides funding for the administrative costs
incurred by the PHAs that administer the program. The account is funded using both current-year
appropriations and advance appropriations provided for use in the following fiscal year.5 (For
more information about the program, see CRS Report RL34002, Section 8 Housing Choice
Voucher Program: Issues and Reform Proposals, by (name redacted).)
5
For more information about advance appropriations, see CRS Report RS20441, Advance Appropriations, Forward
Funding, and Advance Funding, by (name redacted).
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Table 3. Detailed Table:Tenant-Based Rental Assistance, FY2011-FY2012
(in billions)
Section 8 Tenant-Based Rental
Assistance
FY2011
enacted
FY2012
request
FY2012
House Draft
FY2012
Senate
FY2012
Conf.
Total Provided in Bill
(available in CY2012)
18.379
19.223
18.468
18.872
18.914
Total Available in FY
18.371
19.223
18.468
18.122
18.264
Current Year Budget Authority
14.379
15.223
14.468
14.872
14.914
Advance Appropriation provided
for next FY
4.000
4.000
4.000
4.000
4.000
Advance Appropriation available
for current FY
3.992
4.000
4.000
3.250
3.350
Rescission from advance for
current FY (reflected above)
0.000
0.000
0.000
-0.750
-0.650
16.669
17.144
17.044
17.144a
17.242a
0.150
0.135
0.135
0.103
0.103
Administrative fees
1.447
1.648
1.100
1.400
1.350
Set-Aside Fees
0.050
0.050
0.050
0.050
0.050
Family Self Sufficiency (FSS)
Coordinators
0.060
0.060
0.060
0.060
0.060
Tenant Protection Vouchers
0.110
0.075
0.075
0.075
0.075
Veterans Affairs Supported Housing
0.050
0.075
0.075
0.075
0.075
Section 811 Voucher Renewals
0.035
0.114
0.114
0.114
0.112
Homeless Voucher Demonstration
0.000
0.057
0.000
0.005
0.000
Disaster Housing Assistance-Ike and
Gustav
0.000
0.050
0.000
0.000
0.000
Details
Budget Authority for Voucher Renewals
Reserve Set-Aside
Source: Table prepared by CRS based on information available in H.Rept. 112-284 (for FY2011 enacted, FY2012
request, and FY2012 enacted), S.Rept. 112-83 (for FY2012 Senate), and draft documents available on the House
Appropriations Committee website (for FY2012 House Draft).
a.
Amount shown is amount pre-rescission. Post-rescission, the amount available for renewals in CY2012 is
$16.592 billion (Senate level would have been $16.394 billion). See discussion following table for more
details about the implementation of the rescission.
The President’s budget requested over $19.2 billion for Section 8 vouchers in FY2012, which is
over $800 million more than was provided in FY2011. The President’s budget documents
indicated that the amount requested would be sufficient to fund all existing vouchers expected to
be in use by families in FY2012. It also requested funding to create new vouchers to serve
homeless veterans, families involved in the child welfare system, and new interagency
collaborative demonstrations between HUD and other agencies for homeless and at-risk families
with children and persons with disabilities. (For more information on the President’s request for
funding for new vouchers to serve homeless veterans, homeless and at-risk families with children,
and homeless individuals with disabilities, see the “Homelessness Assistance” section later in this
report.)
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
P.L. 112-55 provides $18.9 billion for the tenant-based rental assistance account, of which $17.2
billion is for voucher renewals. While the amount provided for renewals in FY2012 would appear
to be higher than the amount provided in FY2011, the law rescinds $650 million from the
advance appropriation provided in FY2011 for use in FY2012. As a result, the total amount of
funding available for the TBRA account in CY2012—the program is funded and managed in a
calendar year cycle—is $18.3 billion, of which $16.6 billion is for voucher renewals. In order to
offset the impact of the lower funding level attributable to the rescission, the law directs the
Secretary of HUD to reduce the funding allocation to those PHAs with excess balances in their
reserve accounts (referred to as net restricted assets, or NRA). The intent of this offset is to
require PHAs to spend down their reserves equivalent to the rescission so that total funding for
the program in CY2012 is equivalent to the pre-rescission funding level.
This funding mechanism—a rescission from the advance appropriations offset against agency
reserves—has been used in prior years, most recently in FY2009. The Senate bill, S. 1596, had
proposed a similar strategy, although the rescission would have been $100 million higher. The
House draft did not propose such a rescission.
Public Housing
The public housing program provides publicly owned and subsidized rental units for very lowincome families. Created in 1937, it is HUD’s oldest housing assistance program, and arguably
HUD’s most well-known assistance program. (For more information, see CRS Report R41654,
Introduction to Public Housing, by (name redacted).) Although no new public housing
developments have been built for many years, Congress continues to provide funds to the more
than 3,100 public housing authorities (PHAs) that own and maintain the existing stock of more
than 1 million units. Public housing receives federal funding under three accounts, which, when
combined, result in public housing being the third-largest funded program in HUD’s budget
(following the two Section 8 programs, discussed later in this report). Through the operating
fund, HUD provides funding to PHAs to help fill the gap between tenants’ contributions toward
rent and the cost of ongoing maintenance, utilities, and administration of public housing. Through
the capital fund, HUD provides funding to PHAs for large capital projects and modernization
needs. HOPE VI is a competitive grant program that provides funding to help demolish and/or
redevelop severely distressed public housing developments, with a focus on building mixedincome communities.
Operating Fund
In terms of public housing operating funding, the President’s FY2012 budget requested a 14%
reduction compared to the final FY2011 funding law. The amount requested was less than what
would be needed to “fully fund” the amount PHAs would be eligible to receive under the
operating fund formula (a proration of about 80%).
The President’s budget proposed to supplement the requested funding level by offsetting the
funding allocations to certain PHAs (those that have reserves above a certain level). Under the
proposal, PHAs would not have received an even proration level of 80%; instead, PHAs with
large reserves would receive less than 80% of the funding allocation for which they are eligible,
and PHAs without large reserves would receive more than 80%. This proposal would effectively
force certain PHAs to supplement their reduced funding level by spending down their reserves.
The President’s budget requested the authority to offset about $1 billion in funding to PHAs with
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
high reserve levels. Adding together the amount of funding requested and assuming the use of
$1 billion in reserves, the overall resources available for the program would be close to 100% of
formula eligibility.
The proposed offset was opposed by PHA industry groups, which contended that the reserves are
important assets for those PHAs that have them and that the proposal punishes PHAs that have
managed their funding well.6 HUD contended that, in a limited funding environment, this strategy
ensures higher funding levels for those PHAs without the reserves necessary to offset funding
reductions.7
The final FY2012 HUD funding law funds the operating fund at the President’s requested level. It
includes the requested authority to reduce funding to PHAs with large reserves, but caps that
offset at $750 million. The final FY2012 funding law matches what was included in the Senatepassed HUD appropriations bill; the House draft bill had proposed $100 million less than what
had been requested by the President and had included a modified version of the offset language.
Capital Fund
In terms of public housing capital funding, the President’s FY2012 budget requested $2.4 billion,
about a $100 million decrease compared to FY2010 (a 4% decrease). However, the amount
requested by the President was a nearly 19% increase compared to the amount provided in
FY2011 ($2 billion). HUD’s budget documents note that the department feels that capital funding
alone will not be sufficient to meet the backlog of unmet capital needs in public housing, and that
the department is pursuing its Transforming Rental Assistance initiative in order to help PHAs
leverage private capital. (See “Transforming Rental Assistance” later in this report.)
The final FY2012 appropriations law provides less than $1.9 billion for the capital fund. This is
the same amount that was proposed by the Senate, but more than $200 million above the amount
included in the draft House bill.
HOPE VI/Choice Neighborhoods
As in FY2010 and FY2011, the President’s FY2012 budget requested no new funding for HOPE
VI; instead, it requested $250 million for the Choice Neighborhoods Initiative. Choice
Neighborhoods was a new Obama Administration proposal in the FY2010 budget. It is modeled
after the HOPE VI program, which provides competitive grants to PHAs to revitalize severely
distressed public housing. The Choice Neighborhoods Initiative broadens the scope of HOPE VI
by offering competitive grants to revitalize severely distressed neighborhoods, not limited to
public housing. In addition to PHAs, local governments, nonprofits, and for-profit developers
would be eligible to compete for the funding. In FY2010, Congress provided $200 million to the
HOPE VI account, but set aside up to $65 million for a Choice Neighborhoods demonstration.
The FY2011 appropriations law reduced the funding level for the HOPE VI account to $100
million, but maintained the Choice Neighborhoods set-aside.
6
See Council of Large Public Housing Authorities (CLPHA) Issue Brief on Operating Reserves, available from
http://www.clpha.org/articledetail/?aid=233.
7
See Written Testimony of Sandra B. Henriquez, Assistant Secretary for the Office of Public and Indian Housing, U.S.
Department of Housing and Urban Development (HUD), Hearing before the House Appropriations Subcommittee on
Transportation, Housing and Urban Development, and Related Agencies, May 25, 2011.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
The final FY2012 HUD appropriations law provides $120 million for Choice Neighborhoods and
no funding for HOPE VI. However, the law requires that $80 million of the amount provided be
used for public housing.
PHA Compensation
P.L. 112-55, the final FY2012 appropriations law, contains a provision limiting the use of funds
provided under the act for PHA staff salaries. Specifically, the act prohibits the use of funding
appropriated under the act for the public housing program or Section 8 tenant-based voucher
program for any PHA staff salaries above level IV of the federal Executive Schedule. A similar,
but broader, provision was included in the House draft bill; no similar provision was included in
the Senate bill, or in the President’s request.
Administrative Reforms to Rental Assistance Programs
The President’s budget included a request for several statutory changes that would affect HUD’s
rental assistance programs, including the public housing and Section 8 programs. Specifically,
HUD asked for language that would
•
broaden the definition of “extremely low-income” to reflect the higher of 30% of
area median income or the poverty thresholds published by the Department of
Health and Human Services (HHS);
•
revise the deductions from income used to calculate rent for elderly or disabled
families by increasing the standard deduction and increasing the threshold for
deducting medical or related costs;
•
permit the income of “fixed-income” families to be recertified every three years
instead of every year;
•
allow higher voucher payment standards for persons with disabilities;
•
permit HUD to make revisions to the way Fair Market Rent is calculated; and
•
permit HUD to run a demonstration to test different models for setting rent in
rental assistance programs.
Versions of these provisions were included in Section 8 voucher reform legislation considered in
the 111th Congress.8 HUD estimated that these changes would result in an overall reduction in the
cost of HUD rental assistance programs.
The final FY2012 HUD appropriations law did not include these proposed policy changes. The
Senate bill had included them, whereas the House draft bill had not.
8
For more information about Section 8 voucher reform legislation, see CRS Report RL34002, Section 8 Housing
Choice Voucher Program: Issues and Reform Proposals, by (name redacted).
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
Transforming Rental Assistance
President Obama’s FY2012 budget again requested funding for a new “Transforming Rental
Assistance” initiative, which was initially proposed in the FY2011 budget request. The initiative
is designed to streamline HUD’s multiple rental assistance programs in order to permit owners of
HUD-assisted properties to better leverage outside resources. Specifically, the $200 million
requested was to be used to transfer a variety of HUD-assisted housing units with project-based
rental assistance from their existing subsidy types to a new form of project-based rental
assistance. For FY2012, HUD proposed that TRA be treated as a demonstration, called the
“Rental Assistance Demonstration (RAD)” with a rigorous assessment component, under which
up to 236,000 units of public housing and other rent-assisted units owned by private property
owners could convert to long-term Section 8 contracts or project-based Section 8 vouchers.
According to HUD’s budget documents, the demonstration would test conversion under RAD as a
tool for preserving public and other assisted housing. Further, this new form of rental assistance
would feature tenant portability, meaning that families living in units receiving this new form of
project-based rental assistance would have the option to take their subsidies with them if they
choose to move to a new unit of private market housing.
The final FY2012 appropriations law includes language authorizing a modified version of RAD.
It will permit up to 60,000 units of public housing and/or Section 8 moderate rehabilitation
properties to convert to a project-based Section 8 contract. The law does not contain any direct
funding for the demonstration, but does permit HUD to transfer funds from public housing and
Section 8 accounts to cover the costs of the conversion. The enacted version of RAD does not
specifically include the portability provisions requested in the budget request. The Senate bill had
included a version of RAD; the House draft bill had not.
P.L. 112-55 also included an assisted housing preservation provision which permits the projectbasing of certain tenant protection vouchers.
Community Development Block Grants (CDBG)
The Community Development Fund (CDF) account funds the CDBG program and several other
set-asides. The CDBG program, which was first authorized under Title I of the Housing and
Community Development Act of 1974 (P.L. 93-383, 42 U.S.C. 5301 et seq.), is the largest source
of federal financial assistance in support of state and local neighborhood revitalization, housing
rehabilitation, and economic development activities. For FY2010, CDBG formula funds were
awarded to approximately 1,151 entitlement communities, the 50 states, the District of Columbia,
Puerto Rico, and the insular areas of Guam, the Virgin Islands, American Samoa, and the Mariana
Islands. CDBG assistance may be used to fund eligible activities that meet one of three national
objectives:
•
to principally benefit low- and moderate-income persons,
•
to aid in eliminating or preventing slums or blight, or
•
to address an imminent threat to the health and safety of the public.
The Administration’s FY2012 budget recommended a total funding level of $3.781 billion for
programs funded under the CDF account. The proposed funding level represented about an 8%
increase above the $3.501 billion appropriated for FY2011. The Administration’s FY2012 budget
also proposed restructuring the CDF account by minimizing, through transfer or termination,
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
activities not directly related by authorizing statute to the CDBG program. The Administration’s
budget proposed to
•
eliminate funding for the Neighborhood Initiative (NI) and Economic
Development Initiative (EDI) programs;
•
eliminate funding for Section 107 (university programs) activities;
•
transfer its Sustainable Communities Initiative (SCI) to a new stand-alone
account.
Formula Grants
For FY2012, the Administration requested an 11.5% increase in funding for the CDBG formula
component of the CDF account, from $3.296 billion appropriated in FY2011 to $3.668 billion,
including grants to insular areas. It also sought to fund CDBG grants for Indian tribes at $65
million, as required by the CDBG program’s authorizing statute.
In addition, the Administration requested $25 million for Rural Innovation Grants and $23 million
for Guam beyond the amount it would have received as an insular area grantee. Rural Innovation
Funds would have been awarded competitively and targeted to rural areas whose populations do
not exceed 20,000 persons to support innovative housing and economic development efforts,
while assistance to Guam was intended to address community development needs arising from
the relocation of military facilities and personnel to the island.
As in previous years, the Administration’s budget did not include funding for Economic
Development Initiatives and Neighborhood Initiatives grants, two programs subject to
congressional earmarks. The Administration stated that it opposed earmarking NI and EDI funds.
The House draft bill recommended $3.501 billion for CDF activities, including $3.466 billion for
CDBG formula grants to states, local governments, and insular areas; and $35 million for Indian
tribes. Although the subcommittee-approved draft bill would have maintained overall CDF
appropriations at the FY2011 funding level, the accompanying draft report noted that the report
accompanying H.Con.Res. 34, the FY2012 Budget Resolution, recommended eliminating the
program on the grounds that it was not a core federal government function. While the report
accompanying the THUD draft bill did not eliminate funding for the CDBG program, it did note
that “states and local communities can and should undertake more of their community
development activities using state and local taxes. Such a shift will provide better transparency
and accountability of local officials, who use taxpayer dollars on local community development
activities.”9
The House draft bill would have shifted CDF funding priorities, including eliminating funding for
the Administration’s Sustainable Communities Initiative, and reducing funding for CDBG Indian
Tribes from $64 million appropriated in FY2011 to $35 million. In addition, the bill included a
provision that recommended lowering the ceiling on the percentage of funds grantees could use to
9
U.S. Congress, House Committee on Appropriations, Subcommittee on Transportation, Housing and Urban
Development, and Related Agencies, Department of Transportation, Housing and Urban Development, and Related
Agencies, draft report to accompany un-numbered draft bill, 112th Cong., 1st sess., 2011, p. 85. at
http://appropriations.house.gov/UploadedFiles/FY_2012THUDReport.pdf.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
cover CDBG administrative expenses from the current 20% to 10% of the grantee’s CDBG
allocation.
The Senate bill recommended a substantial reduction in the CDF account. Overall CDF funding
would have declined to $3.0 billion, excluding $400 million for CDBG supplemental disaster
assistance. The proposed $3 billion appropriations level for CDF activities was $500 million less
than appropriated for FY2011 or the House subcommittee draft bill, and about $800 million less
than requested by the Administration. The Senate bill recommended $2.851 billion for CDBG
formula funding.
The final FY2012 HUD appropriations law, P.L. 112-55, appropriated $3.408 billion for CDF
activities, and with the exception of $400 million in CDBG disaster assistance, the act
appropriated funds only for core CDBG programs, specifically, $60 million for Indian Tribes, and
$2.948 billion for formula grants to states, entitlement communities, and insular areas. The
$2.948 billion for CDBG formula grants is about 12% less than appropriated in FY2011, 20% less
than requested by the President, and 15% less than recommended by the House, but about 3%
more than recommended by the Senate.
P.L. 112-55 did not include
•
a provision included in the Senate version of H.R. 2112, which would have
prohibited the use of federal grants, such as CDBGs, from being used to repay
other federal loans, such as CDBG Section 108 loan guarantees; and
•
a provision recommended in the House draft bill that would have reduced the
percentage of CDBG funds a grantee could use for administrative expenses from
20% to 10%.
The act does include a provision directing the Government Accountability Office (GAO) to
undertake a study of the effectiveness of the two block grant programs (CDBG and HOME)
administered by HUD’s Office of Community Planning and Development (CPD). The study is to
be completed and presented to Congress within 180 days following the enactment of P.L. 112-55.
The act also directs HUD to submit to Congress, within 120 days following the passage of the act,
a progress report on efforts the department has undertaken to improve grantee accountability in
the management of programs administered by CPD. In addition, the conference report directs
HUD to undertake an analysis of the extent to which CDBG funds are being used to meet the
matching fund requirements of other federal programs.
CDBG Disaster Assistance
In addition to the regular CDBG appropriations for FY2012, P.L. 112-55 includes $400 million in
CDBG supplemental disaster assistance. Funds are to be disbursed to states and local
governments to manage recovery efforts in areas declared disaster by the President in 2011. These
supplemental funds are to be used to assist such states and local governments undertake disaster
relief and long-term recovery plans, including those related to the restoration of housing,
infrastructure, and economic revitalization. Funds may not be used for activities funded by or
eligible for reimbursement by the Federal Emergency Management Agency or the Army Corps of
Engineers. In order to receive funds, eligible states and local governments must submit disaster
recovery plans detailing the use of funds and how planned activities will contribute to disaster
recovery efforts. The act allows HUD to waive statutory or regulatory provisions governing the
use of CDBG funds, except those related to fair housing, nondiscrimination, labor standards, and
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
environmental review. In seeking a waiver of CDBG program requirements, grantees must
explain why such waiver is necessary to the grantee’s recovery efforts. Of that amount, $100
million is exempt from discretionary spending limits imposed by the Balanced Budget and
Emergency Deficit Control Act of 1985, as amended by the Budget Control Act, P.L. 112-25.10
Table 4. Community Development Fund and CDBG, FY2011-FY2012
(in millions)
FY2011
Enacted
FY2012
Request
Community
Development Fund
3,501
3,781
CDBG Formula
Grantsa
3,338
Indian Tribes
FY2012 House
Draft
FY2012
Senate
FY2012
Conf.
3,501
3,401
3,408
3,668
3,466
2,851
2,948
64
65
35
60
60
Guam
0
23
0
0
0
Rural Innovation
Funding
0
25
0
0
0
Sustainable
Communities
99
b
0
90
0
Disaster Funding
0
0
0
400c
400d
Source: Table prepared by CRS based on information available in H.Rept. 112-284 (for FY2011 enacted, FY2012
request, and FY2012 enacted), S.Rept. 112-83 (for FY2012 Senate), and draft documents available on the House
Appropriations Committee website (for FY2012 House Draft).
a.
Includes funding for insular areas and funds to be transferred under HUD’s Transformation Initiative.
b.
The President’s budget requested $150 million for this program in a separate account.
c.
This amount is designated “emergency” for budget enforcement purposes.
d.
$100 million of this amount is designated “emergency” for budget enforcement purposes.
For more information, see CRS Report R41754, Community Development Block Grants: Funding
Issues in the 112th Congress and Recent Funding History, by (name redacted).
Section 108: Restructuring
The Section 108 loan guarantee program allows states and entitlement communities to pledge
their annual CDBG allocations as collateral in order to help finance redevelopment activities.
CDBG entitlement communities and states are allowed to borrow, for a term of up to 20 years, an
amount equal to as much as five times their annual CDBG allocations for qualifying activities. As
security against default, states and entitlement communities must pledge their current and future
CDBG allocations.
The Administration’s FY2012 budget proposed restructuring the program and doubling its loan
commitment ceiling from $250 million in FY2010 to $500 million in FY2012. The
10
For additional information on the spending caps and exemptions under the Budget Control Act, see CRS Report
R41965, The Budget Control Act of 2011, by (name redacted), (name redacted), and (name redacted).
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
Administration’s FY2012 budget justifications noted that given the continued difficulties in the
credit markets, the proposed increase in funding would help local governments finance largescale projects at a rate slightly above Treasury yields. In addition to an increase in the loan
commitment ceiling, the Administration proposed revamping the program by charging a feebased assessment to borrowers accessing the program, which would eliminate the need for an
appropriated credit subsidy. This proposal was first made by the Administration in its FY2010
budget, but it was rejected by Congress in FY2010 and FY2011 in favor of maintaining the status
quo.
The House draft bill recommended an appropriation of $6.8 million in credit subsidies in support
of $275 million in loan guarantee commitments. The Senate bill recommended $4.960 million in
credit subsidies in support of $200 million in loan guarantee commitments. Among the
amendments approved for inclusion in the bill was S.Amdt. 796. Proposed by Senator Coburn,
the amendment would have prohibited the use of grants made available under the bill from being
used to repay any other federal loans. This amendment has implications for the CDBG program
and its companion Section 108 loan guarantee program. Statutory authority governing the Section
108 loan guarantee program allows CDBG funds to be used as collateral to secure and repay
Section 108 loan guarantees in case of default. In order to avoid default on Section 108 loan
guarantees, states and communities have used CDBG funds to cover revenue shortfalls associated
with the repayment of bonds used to finance Section 108 supported projects.
For the third year in a row, the Administration failed to win congressional support for its proposal
to convert Section 108 loan guarantees to a fee-based program. P.L. 112-55 maintains the
program’s current structure while appropriating $5.952 million in credit subsidies in support of
the $240 million in Section 108 loan guarantee commitments. The act included an additional
provision that prohibits a state from diverting proceeds from sale of notes backed by Section 108
loan guarantees to any other community other than the local government that initially sought and
received the loan guarantee commitment.11 It did not include the provision included in the Senate
bill that would have prohibited federal funds, such as CDBG, from being used to repay other
federal assistance, such as Section 108 loan guarantees.
Sustainable Communities
The Administration requested $150 million to fund its multipronged Sustainable Communities
Initiative (SCI) in the FY2012 budget. This was the same amount requested by the Administration
and approved by Congress for FY2010, the first year of the SCI, but it is $51 million more than
the amount appropriated for FY2011. Unlike the FY2010 and FY2011 appropriations for SCI,
which were included as subaccounts under the Community Development Fund (CDF), the
Administration proposed funding the SCI as a separate appropriation. The Administration’s
FY2012 request would have been used to fund the program’s three components:
•
11
Regional Integrated Planning Grants. The Administration requested $100
million that would have been competitively awarded to regional organizations in
metropolitan areas to support efforts to develop effective models that would
integrate the planning requirements of various disciplines critical to the
development of sustainable communities. This would be done in collaboration
P.L. 112-55, Division C, §221.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
with the Department of Transportation (DOT), the Environmental Protection
Agency (EPA), and other federal agencies.
•
Community Challenge Grants (CCGs). The Administration requested $40
million for this component of SCI. Funds would be competitively awarded to
communities to reform existing building codes and zoning ordinances with the
goal of promoting sustainable growth and discouraging inefficient land use
patterns.
•
Research and Evaluation. The Administration requested $10 million to support
research efforts focusing on quantifying and evaluating the benefits and tradeoffs
related to sustainable communities, including the long-term benefits of Regional
Integrated Planning Grants and Community Challenge Grants. In addition, funds
would be used to support efforts to improve the technical capacity of entities
involved in regional and community planning and development.
It should be noted that, as proposed by the Administration, these three initiatives were to be
administered through the recently created Office of Sustainable Housing and Communities
within HUD.
The House draft bill did not include funding for the Administration’s SCI, while the Senate bill
recommended $90 million for the SCI activities, which was $60 million less than the amount
requested by the President and $9 million less than appropriated for FY2011. P.L. 112-55 did not
include a specific appropriation for SCI activities. However, the conference report accompanying
H.R. 2112 (P.L. 112-55) noted that such activities could be carried out with CDBG and the
agency’s Transformation Initiative funds.12
HOME
The HOME Investment Partnerships Program provides block grant funding to states and certain
localities (known as “participating jurisdictions”) to be used for a variety of affordable housing
activities. HOME funds can be used for either owner-occupied or rental housing activities, and
they must benefit households that are considered to be either low-income (i.e., incomes at or
below 80% of area median income) or very low-income (i.e., incomes at or below 60% of area
median income).13 Between the program’s inception in 1992 and the end of FY2010, the HOME
program has funded nearly 979,000 units of affordable housing and funded tenant-based rental
assistance for nearly 234,000 families.14
The President’s FY2012 proposed budget requested $1.65 billion for the HOME program. This
represented an increase of $43 million from the enacted FY2011 funding level of $1.607 billion,
but a reduction of $175 million from the enacted FY2010 funding level of $1.825 billion.
12
U.S. Congress, House Appropriations Conference Committee, Agriculture, Rural Development, Food and Drug
Administration, Related Agencies Programs for the Fiscal Year Ending September 30, 2012, and for Other Purposes,
Report to accompany H.R. 2112, 112th Cong., 1st sess., November 14, 2011, H.Rept. 112-284 (Washington: GPO,
2011), p. 317.
13
For more information about the HOME Investment Partnerships Program, see CRS Report R40118, An Overview of
the HOME Investment Partnerships Program, by (name redacted).
14
U.S. Department of Housing and Urban Development, FY2012 HOME Investment Partnerships Program Budget
Justification, p. V-2, http://portal.hud.gov/hudportal/documents/huddoc?id=HOME_2012.pdf.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
The House draft bill included $1.2 billion for the HOME program, $450 million less than the
President’s budget request and $400 million less than the enacted FY2011 funding level. The
Senate bill included $1 billion for the HOME program, $650 million below the President’s budget
request and $607 million below the FY2011 enacted level. The Senate bill also included a number
of provisions relating to the expenditure of HOME funds.
The proposed reductions, and the additional provisions in the Senate bill, were partially in
response to concerns raised in an article in the Washington Post related to the use of HOME
funds.15 The article alleged that some HOME funds used for rental housing developments had
been mismanaged by participating jurisdictions, and that HUD did not provide sufficient
oversight of participating jurisdictions’ use of funds.16 A 2009 HUD Office of the Inspector
General (OIG) report also stated that HUD should improve its oversight of HOME funds.17 HUD
maintains that its oversight of the program is adequate, and notes that block grant programs by
design delegate much of the responsibility of overseeing the expenditure of funds to the
jurisdictions that participate in the program.18
P.L. 112-55 includes $1 billion for the HOME program, the same amount as the Senate bill, along
with the provisions related to the expenditure of HOME funds.
Self-Help and Assisted Homeownership Opportunity Program
(SHOP)
The Self-Help and Assisted Homeownership Opportunity Program account provides funds for the
Self-Help Homeownership Opportunity Program (SHOP), as well as set-asides for capacity
building and for the Housing Assistance Council. SHOP provides funding to eligible nonprofits,
such as Habitat for Humanity, to use for acquisition and infrastructure improvement costs related
to sweat equity and volunteer-based homeownership programs that benefit low-income families.
The President’s FY2012 budget proposed eliminating funding for SHOP and funding capacity
building in its own account. HUD’s FY2012 Congressional Budget Justification noted that the
activities funded under SHOP are also activities on which states and participating jurisdictions
can choose to use their HOME funds.19
15
U.S. Congress, Senate Committee on Appropriations, Transportation and Housing and Urban Development, and
Related Agencies Appropriations Bill, 2012, report to accompany S. 1596, 112th Cong., 1st sess., September 21, 2011,
S.Rept. 112-83 (Washington: GPO, 2011), p. 124.
16
Cenziper, Debbie, and Jonathan Mummolo, “A trail of stalled or abandoned HUD projects,” Washington Post, May
14, 2011. See U.S. Congress, Senate Committee on Appropriations, Transportation and Housing and Urban
Development, and Related Agencies Appropriations Bill, 2012, report to accompany S. 1596, 112th Cong., 1st sess.,
September 21, 2011, S.Rept. 112-83 (Washington: GPO, 2011), p. 124.
17
McKay, James D., Regional Inspector General for Audit, Atlanta Region, HUD Lacked Adequate Controls to Ensure
the Timely Commitment and Expenditure of HOME Funds, U.S. Department of Housing and Urban Development,
Office of the Inspector General, Audit Report Number 2009-AT-0001, September 28, 2009.
18
U.S. Department of Housing and Urban Development, “Setting the Record Straight: What the Washington Post Got
Wrong About the HOME Program,” The HUDdle: U.S. Department of Housing and Urban Development’s Official
Blog, May 19, 2011, http://blog.hud.gov/2011/05/19/setting-record-straight-washington-post-wrong-home-program/.
19
U.S. Department of Housing and Urban Development, Fiscal Year 2012 Budget Justifications for Estimates, page X1, http://portal.hud.gov/hudportal/documents/huddoc?id=SHOP_2012.pdf.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
The House draft bill and the Senate bill both continued to provide funding for SHOP, as did the
final enacted law. The House draft bill provided $10.9 million for SHOP, a reduction of nearly
$16 million from the FY2011 enacted level of $27 million. The Senate bill included $17 million
for SHOP, a decrease of $10 million from FY2011 enacted level. The House draft bill funded
capacity building in its own account, while the Senate bill continued to fund capacity building
within the SHOP account.
P.L. 112-55 provides $13.5 million for SHOP, and continues to provide funding for capacity
building within the SHOP account.
Homelessness Assistance
The primary source of federal funding for housing for homeless individuals and families is the
HUD Homeless Assistance Grants, which were most recently reauthorized in the 111th Congress
through the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act
(P.L. 111-22). Prior to enactment of P.L. 111-22, there were four Homeless Assistance Grants; the
new law consolidated three of the grants, so two grants remain: the Emergency Solutions Grants
(ESG) program and the new Continuum of Care (CoC) program. In addition, rural communities
will have the option of applying for their CoC allocation separately, through a new Rural Housing
Stability (RHS) grant program. The ESG program funds the emergency needs of people who are
homeless and homelessness prevention activities. The CoC program focuses on the longer-term
needs of persons experiencing homelessness, including transitional and permanent housing and
supportive services.
For FY2012, Congress provided the same amount for the Homeless Assistance Grants that was
appropriated in FY2011—$1.9 billion—and less than the amount proposed in the President’s
budget for FY2012 ($2.4 billion). The language in P.L. 112-55 specifies that the funds
appropriated are for the new programs authorized by the HEARTH Act. Not less than $250
million is to be used for the ESG program (an increase from $225 million in FY2011), and nearly
$1.6 billion is to be used for the CoC and RHS grants. The conference report accompanying P.L.
112-55 (H.Rept. 112-284) noted concern that HUD had not yet implemented the new HEARTH
Act programs, and directed that HUD “publish at least interim guidelines for the Emergency
Solutions Grants and Continuum of Care this fiscal year and to implement the new grant
programs as soon as possible, so that the updated policies and practices in HEARTH can begin to
govern the delivery of homeless assistance funding.”
While draft regulations for the ESG program have been released,20 HUD has yet to release
regulations regarding the CoC program.
Additional funding for homeless veterans in FY2012 is also provided through the Section 8
tenant-based rental assistance account. Congress has funded Section 8 vouchers for homeless
veterans through the tenant-based account since FY2008, providing total funding sufficient to
support more than 30,000 vouchers for one year ($275 million from FY2008 through FY2011). In
P.L. 112-55, Congress appropriated another $75 million for Section 8 vouchers for homeless
veterans, which is expected to support an additional 10,000 vouchers. Each of the funding
20
U.S. Department of Housing and Urban Development, Homeless Emergency Assistance and Rapid Transition to
Housing: Emergency Solutions Grants Program and Consolidated Plan Conforming Amendments, October 26, 2011,
http://hudhre.info/documents/HEARTH_ESGInterimRule&ConPlanConformingAmendments.pdf.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
proposals for FY2012—the House draft bill, S. 1596, and the President’s budget—had also
proposed funding these vouchers at $75 million. In addition, for the second year in a row, the
President’s budget would have funded a demonstration program in which HUD would have
collaborated with the Department of Health and Human Services (HHS) to fund vouchers for
homeless individuals with physical and mental health issues and with the Department of
Education (ED) to fund vouchers for homeless families with children. The budget proposed $57
million for the demonstration program, and while the Senate bill would have included $5 million
for this proposal, neither the House draft bill nor P.L. 112-55 included the demonstration.
Section 8 Project-Based Rental Assistance
The project-based rental assistance account provides funding to administer and renew existing
project-based Section 8 rental assistance contracts between HUD and private multifamily
property owners. Under those contracts, HUD provides subsidies to the owners to make up the
difference between what eligible low-income families pay to live in subsidized units (30% of
their incomes) and a previously agreed-upon rent for the unit. No new contracts have been
entered into under this program since the early 1980s. When the program was active, Congress
funded the contracts for 20- to 40-year periods, so the monthly payments for owners came from
old appropriations. However, once those contracts expire, they require new annual appropriations
if they are renewed. As more contracts expire, and assuming the owners choose to renew, more
new appropriations are needed to maintain the subsidies. Further, some old contracts do not have
sufficient funding to finish their existing terms, so new funding is needed to complete the contract
(referred to as amendment funding). As more contracts have shifted from long-term
appropriations to needing new appropriations, this account has grown and become the secondlargest account in HUD’s budget.
The President’s budget request included a $165 million increase in funding for project-based
rental assistance. The amount requested included funding to renew all contracts that are now in
need of new appropriations (approximately 83% of all contracts, according to HUD’s budget
documents). The final appropriations law for FY2012 funds the account about $100 million
below the requested level. The conference report notes that the level provided reflects revised
estimates of need provided by HUD. The House draft bill had proposed to fund the account at the
requested level, and the Senate bill had proposed to fund the account just below the requested
amount.
Section 202 and Section 811
Through the Section 202 Supportive Housing for the Elderly program and the Section 811
Supportive Housing for Persons with Disabilities program, HUD provides capital grants and
rental assistance to nonprofit developers to build or rehabilitate housing units for elderly residents
and residents with disabilities.21 HUD capital grants have funded more than 106,000 units of
Section 202 housing and more than 30,000 units of Section 811 housing.22 In addition, the Section
21
For more information about the Section 202 program, see CRS Report RL33508, Section 202 and Other HUD Rental
Housing Programs for Low-Income Elderly Residents, by (name redacted). For more information about the Section 811
program, see CRS Report RL34728, Section 811 and Other HUD Housing Programs for Persons with Disabilities, by
(name redacted).
22
U.S. Department of Housing and Urban Development, FY2009 Performance and Accountability Report, November
16, 2009, p. 349, http://hud.gov/offices/cfo/reports/hudfy2009par.pdf. Note that prior to the capital grants, which were
(continued...)
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
811 program has historically provided funding for tenant-based vouchers for persons with
disabilities. Currently, approximately 14,811 vouchers are funded.23
Section 202
The Housing for the Elderly budget account includes funding for not only the Section 202
program, but also funds for Service Coordinators and the Assisted Living Conversion Program.
For FY2012, Congress reduced funding for Section 202 and these related programs by
approximately $24 million, from $399 million appropriated in FY2011, to $375 million. The
reduction is even greater when compared to program appropriations in the years preceding
FY2011. From FY2001 through FY2010, appropriations ranged from $722 million to $825
million.
Within the FY2012 Housing for the Elderly appropriation, $91 million is reserved for Service
Coordinators and $25 million is set aside for the Assisted Living Conversion Program. This
leaves approximately $232 million for the Section 202 program, to be used to renew existing
rental assistance contracts and potentially to provide rental assistance to tenants who have not
previously received it.24 Unlike previous years’ appropriations for Section 202, there is not
sufficient funding to support the construction of new housing units. Prior to enactment of P.L.
112-55, proposals to fund Section 202 in FY2012 ranged from about $370 million in the Senate
bill (S. 1596) to $600 million in the House draft bill, and $747 million in the Administration’s
proposed budget.
Section 811
For FY2012, Congress appropriated $165 million for Section 811, which is $15 million more than
the appropriation of $150 million in FY2011. However, in order to determine total funding for
housing units authorized through the Section 811 program, it is also necessary to look at the
Section 8 tenant-based rental assistance account. Prior to FY2011, the Section 811 account
funded both project-based and tenant-based rental assistance, but Congress has since begun
funding the renewal of Section 811 tenant-based vouchers through the Section 8 tenant-based
rental assistance account.25 In FY2012, the total provided for Section 811 through these two
accounts increased by approximately $92 million compared to FY2011. In FY2011, Congress
appropriated $150 million to the Section 811 account, $118 million for capital grants and project
rental assistance, and $32 million to renew tenant-based rental assistance vouchers. Another
(...continued)
instituted in 1992, the Section 202 program funded new units of housing through direct government loans.
Approximately 216,000 units of housing were funded during the loan phase of the Section 202 program. See U.S.
Department of Housing and Urban Development, Section 202 Supportive Housing for the Elderly: Program Status and
Performance Measure, June 2008, p. 22, http://www.huduser.org/Publications/pdf/sec_202_1.pdf.
23
U.S. Department of Housing and Urban Development, FY2009 Performance and Accountability Report, p. 349.
24
This latter category of rental assistance is “Senior Preservation Rental Assistance Contracts” (or “Preservation
PRAC”), a new form of assistance authorized by the Section 202 Supportive Housing for the Elderly Act (P.L. 111372). For more information about Preservation PRAC, see CRS Report RL33508, Section 202 and Other HUD Rental
Housing Programs for Low-Income Elderly Residents, by (name redacted).
25
This shift was consistent with language that was enacted in the Frank Melville Supportive Housing Investment Act
(P.L. 111-374), which authorized appropriations to Section 8 sufficient to support the conversion of existing Section
811 vouchers to the Section 8 account.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
$35 million was appropriated to the Section 8 account to renew Section 811 vouchers. In FY2012,
P.L. 112-55 included $165 million for the Section 811 account and $112 million for the renewal
of Section 811 vouchers through the Section 8 account, for a total of $277 million.
The $165 million appropriated in FY2012 for Section 811 is to be used to renew project-based
rental assistance contracts. In addition, these funds may be used for a new rental assistance
program whereby state housing finance agencies may make rental assistance available in
conjunction with other forms of subsidized housing (e.g., housing supported through Low Income
Housing Tax Credits).26 While no funds are available to support the construction or rehabilitation
of new units, it is thought that without the need for Section 811 capital grants to construct
housing, more program funds may be available to fund rental assistance in other assisted housing
developments.
Prior to enactment of P.L. 112-55, the Senate had proposed to provide a total of $263 million for
Section 811 units ($150 million through the Section 811 account and $113 million through the
Section 8 account), and the House draft bill proposed the same amount as the President’s budget
request, a total of $310 million ($196 million through the Section 811 account and $114 million
through the Section 8 account). The House draft bill and the President’s request would have
included funds to support the creation of new Section 811 units.
Housing Counseling
Through its Housing Counseling Assistance Program, HUD annually provides competitive grants
to HUD-approved housing counseling agencies. These housing counseling agencies provide a
range of housing counseling services, including pre-purchase homeownership counseling; postpurchase homeownership counseling; mortgage delinquency counseling; and counseling for
renters, the homeless, or seniors seeking reverse mortgages. (Receiving housing counseling is a
requirement for obtaining a Home Equity Conversion Mortgage, or HECM, which is a reverse
mortgage insured by the Federal Housing Administration.)
In recent years, congressional appropriations for HUD’s housing counseling program had been
increasing, partly in response to increased mortgage default and foreclosure rates. In FY2010,
Congress provided $87.5 million for HUD’s housing counseling program. However, in FY2011
Congress did not provide any funding for HUD’s housing counseling program. The elimination of
HUD housing counseling funding reflected the fiscal environment at the time that the FY2011
appropriations law was passed, as well as some concerns over the time it took HUD to distribute
prior years’ funds. Some policymakers also questioned whether the funding was duplicative of
foreclosure mitigation counseling funds that have been appropriated to the National Foreclosure
Mitigation Counseling Program, administered by NeighborWorks America, since FY2008.27
(Congress did continue to fund the NeighborWorks counseling program in FY2011 at its FY2010
level of $65 million.) However, proponents of HUD’s housing counseling program note that the
HUD funding can be used for a wider range of types of housing counseling than the
26
For more information about this new program, see CRS Report RL34728, Section 811 and Other HUD Housing
Programs for Persons with Disabilities, by (name redacted).
27
For example, see U.S. Congress, House Committee on Appropriations, Subcommittee on Transportation, Housing
and Urban Development, and Related Agencies, Budget Hearing—Housing Counseling with Neighborhood
Reinvestment Corporation—Deputy Assistant Secretary for Single Family Housing and NeighborWorks Acting CEO,
112th Cong., 1st sess., March 29, 2011.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
NeighborWorks funds, which are limited to foreclosure counseling. Housing advocates and some
Members of Congress asked appropriators to restore funding for HUD’s housing counseling
program, arguing that the program is the only dedicated federal source of funds for many types of
counseling (including reverse mortgage counseling), and that current economic conditions make
the need for housing counseling services more acute.28
The President’s FY2012 budget, which came out prior to the enactment of the final FY2011
appropriations law, requested $88 million for HUD’s housing counseling program. The House
draft bill included no funds for HUD’s housing counseling program, although the draft committee
report accompanying the draft bill directed HUD to provide a briefing along with its FY2013
budget submission addressing questions about its administration of the program.29 The Senate bill
proposed $60 million, specifying that the funds must be awarded by HUD within 120 days. P.L.
112-55 includes $45 million for housing counseling, and, like the Senate bill, specifies that the
funds must be awarded within 120 days of the enactment of the act.
For more information on both HUD’s housing counseling program and the NeighborWorks
counseling funding, see CRS Report R41351, Housing Counseling: Background and Federal
Role, by (name redacted).
NeighborWorks America
As previously mentioned, in recent years additional housing counseling funds have been provided
to NeighborWorks America specifically for foreclosure mitigation counseling through the
National Foreclosure Mitigation Counseling Program (NFMCP). NeighborWorks is a
government-chartered, nonprofit corporation with a national network of affiliated organizations
that engage in a variety of community reinvestment activities, such as generating investment and
providing training and technical assistance related to affordable housing. The organization began
operating under the name NeighborWorks America in 2005, although its legal name remains the
Neighborhood Reinvestment Corporation. NeighborWorks receives a regular annual
appropriation each year under the name Neighborhood Reinvestment Corporation. This
appropriation is separate from the NFMCP funding, which is provided in addition to the regular
annual appropriation to NeighborWorks. Although NeighborWorks is not part of HUD, it is
usually funded as a related agency in the annual HUD appropriations laws.
For FY2012, P.L. 112-55 provides $80 million for the NFMCP, which is $15 million more than
was provided in FY2011.
The Status of FHA
The Federal Housing Administration (FHA) insures mortgage loans made by private lenders to
eligible borrowers. The provision of FHA insurance helps to make mortgage credit more widely
28
For example, see a letter signed by several housing advocacy organizations regarding the elimination of funding for
HUD’s housing counseling program in FY2011 on the Citizens’ Housing and Planning Association website at
http://chapa.org/pdf/HUDhousingcounselingcutletter041211.pdf. For details on a letter signed by 24 Senators
expressing support for restoring funding for housing counseling, see Senator Al Franken’s website, “Sen. Franken:
Restore Funding to Program that Helps Avoid Foreclosure,” press release, June 2, 2011, http://franken.senate.gov/?p=
press_release&id=1560.
29
See page 96 of the draft report at http://appropriations.house.gov/UploadedFiles/FY_2012THUDReport.pdf.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
available, and at a lower cost, than it might be in the absence of the insurance. Borrowers of
FHA-insured loans pay both upfront and monthly fees, or premiums, for the cost of the insurance.
The FHA insurance programs are administered primarily through two program accounts in the
HUD budget: the Mutual Mortgage Insurance/Cooperative Management Housing Insurance Fund
account (MMI/CMHI) and the General Insurance/Special Risk Insurance Fund account (GI/SRI).
The Mutual Mortgage Insurance (MMI) Fund is the largest of the FHA insurance funds, and when
there is public discussion of “FHA insurance” or “FHA loans,” it is usually related to the MMI
Fund and the single-family home loans insured under that fund. The Home Equity Conversion
Mortgage (HECM) program, FHA’s reverse mortgage program, is also included in the MMI
Fund, resulting in the establishment of two risk categories in the MMI Fund: the MMI Purchase
and Refinance risk category and the MMI HECM risk category. The GI/SRI Fund provides
insurance for more-risky home mortgages, for multifamily rental housing, and for an assortment
of special-purpose loans such as hospitals and nursing homes.
The issues discussed in this section apply to the single-family mortgage loans insured under the
MMI Fund.30
Credit Subsidy and Offsetting Receipts
Historically, the MMI Fund has had a negative subsidy rate, which means that it generates
negative credit subsidy that can be used to offset the funding needs of other programs in the HUD
budget.31 In other words, the MMI Fund has generally made more money in fees than it has paid
out in claims, and therefore it has not historically needed an appropriation from Congress in order
to operate, although it does traditionally receive a congressional appropriation for administrative
expenses.
As described earlier, the MMI Fund is divided into the MMI Purchase and Refinance risk
category and the MMI HECM risk category.32 The Administration estimated that the Purchase and
30
For more information on the programs in the MMI Fund, see CRS Report RS20530, FHA-Insured Home Loans: An
Overview, by (name redacted) and (name redacted); and CRS Report RL33843,
Reverse Mortgages: Background and Issues,
by (name redacted).
31
The Federal Credit Reform Act of 1990 (FCRA) provided that the cost of federal loan insurance in a given fiscal year
is the net present value of all expected cash flows from loans insured in that year. For the MMI fund, the cash inflows
are mainly the insurance premiums paid by borrowers, and the cash outflows are mainly the payments to lenders for the
cost of loan defaults. The net value of these cash flows is expressed as a percentage of the volume of insured loans and
is referred to as the subsidy rate. If the cash inflows exceed the cash outflows, the subsidy rate is expressed as a
negative number because net income from business type activities is shown in the budget as negative outlays. If the
cash outflows exceed the cash inflows, the subsidy rate is expressed as a positive number. When the subsidy rate is
applied to the expected loan volume in a given year, the result is the amount of credit subsidy that a federal credit
program needs over the life of the loans. The budget rules require an appropriation of this credit subsidy in the budget
year that the loans are originated. However, actual cash flows over the life of the loans are likely to differ from those
projected in the first year. Therefore, agencies are required to periodically revise the initial subsidy estimates to include
actual experience on the loans.
32
The MMI Fund also includes the FHA Refinance Program, a program that launched in September 2010. This
program is designed to allow certain borrowers of non-FHA-insured mortgages who are current on their mortgages, but
owe more than their homes are worth, to refinance into new FHA-insured mortgages, provided that the original lender
or investor agrees to write off a portion of the original principal balance. The FHA Short Refinance Program is its own
risk category in the MMI Fund. According to a HUD Economic Impact Analysis, the FHA Short Refinance Program is
expected to generate positive credit subsidy and therefore cost the government money. (See U.S. Department of
Housing and Urban Development, Economic Impact Analysis of the FHA Refinance Program for Borrowers in
(continued...)
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
Refinance risk category of the MMI Fund would have a negative subsidy rate of -2.16% for
FY2012. The Administration further estimated that the Purchase and Refinance risk category of
the MMI Fund would therefore generate about $4.7 billion in negative credit subsidy, meaning
that it would make money for the government.33
The Administration estimated that the MMI HECM risk category would have a negative credit
subsidy rate of -1.52% and would generate about $300 million in negative credit subsidy in
FY2012. The MMI Fund in total, then, would be estimated to generate about $5 billion in
negative credit subsidy in FY2012 (the $4.7 billion in credit subsidy from the Purchase and
Refinance risk category plus the $300 million from the HECM risk category).
Financial Status and FHA Reforms
As is generally the case when the private market tightens its lending standards, the demand for
FHA-insured mortgages has increased in the past few years. FHA estimated that it insured nearly
40% of home purchase loans in 2010, compared to 4.5% in FY2005.34 FHA’s higher loan volume
means a higher volume of mortgage insurance premiums paid into the MMI Fund, and given that
the proportion of loans to borrowers with higher credit scores has risen in recent years, FHA
believes that its newer mortgages are of a better credit quality than past mortgages.35 However,
the default rate on FHA-insured loans remains high, particularly on loans originated in earlier
years, and this puts some strain on the MMI Fund.
In the Cranston-Gonzales National Affordable Housing Act of 1990 (P.L. 101-625), Congress
mandated that within 10 years after enactment the MMI Fund must have a capital reserve ratio of
at least 2%, and that it must maintain that ratio at all times going forward. The capital reserve
ratio is a measure of the resources that FHA has on hand to cover unexpected losses, in addition
to the amount FHA has set aside for expected losses based on its current book of business. During
FY2009, the capital reserve ratio was estimated to be 0.53%. This was the first time since the
requirement was put into effect that the capital reserve ratio had fallen below 2%. The capital
reserve ratio remained under 2% in subsequent years, falling to 0.24% in FY2011.36
In FY2010, FHA made a number of changes aimed at increasing its capital reserves. These
included both increasing the premiums that borrowers pay, and making changes to underwriting
(...continued)
Negative Equity Positions, http://www.hud.gov/offices/adm/hudclips/ia/ia-refinancenegativeequity.pdf.) However,
since Treasury has agreed to use up to $8 billion in TARP funds to help cover any losses sustained through this
program, the FHA Refinance risk category is estimated to have neither a positive nor negative credit subsidy rate for
HUD in FY2012. For more information on the FHA Refinance Program, see CRS Report R40210, Preserving
Homeownership: Foreclosure Prevention Initiatives, by (name redacted).
33
The Congressional Budget Office’s estimates of credit subsidy may differ from the Administration’s estimates.
Furthermore, see the Appendix for a discussion of a proposal to direct CBO to use a different method to score FHA
receipts, and the implications of such a change for HUD’s budget.
34
U.S. Department of Housing and Urban Development, FHA-Insured Single-Family Mortgage Originations and
Market Share Report 2010 – Q3, p. 3, http://www.hud.gov/offices/hsg/rmra/oe/rpts/fhamktsh/fhamktq3_10.pdf.
35
U.S. Department of Housing and Urban Development, FHA MMIF Programs Quarterly Report to Congress for
FY2010 Q4, p. 5, http://www.hud.gov/offices/hsg/rmra/oe/rpts/rtc/fhartc_q4_2010.pdf.
36
U.S. Department of Housing and Urban Development, Annual Report to Congress, Fiscal Year 2011 Financial
Status, FHA Mutual Mortgage Insurance Fund, November 15, 2011, page 33, http://portal.hud.gov/hudportal/
documents/huddoc?id=FHAMMIFundAnnRptFY2011.pdf.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
criteria and lender enforcement designed to strengthen the credit quality of FHA-insured loans.
The FY2012 HUD Budget Justification indicated that HUD would pursue an additional increase
in the annual FHA insurance premium paid by borrowers; this increase went into effect in April
2011.37 The increased premium is expected to further strengthen FHA’s capital reserves.
FHA Loan Limits
P.L. 112-55 included a provision reinstating recently expired higher loan limits for FHA in some
areas. By statute, FHA can only insure mortgages up to a certain principal amount. These loan
limits are based on area median home prices, and therefore vary by area. There is also a national
floor and a national ceiling that affect loan limits in low-cost and high-cost areas, respectively,
and these are calculated as percentages of the national conforming loan limit for Fannie Mae and
Freddie Mac.
In early 2008, the Economic Stimulus Act of 2008 (ESA) temporarily raised the FHA loan limits
in high-cost areas and some other areas in response to the housing downturn and tighter credit
availability. Specifically, ESA specified that the FHA loan limit would be 125% of area median
home prices in most areas, with a high-cost area limit of 175% of the GSE conforming loan limit
(a ceiling of $729,750). The Housing and Economic Recovery Act of 2008 (P.L. 110-289)
established new statutory limits at 115% of area median home prices in most areas, with a highcost area limit of 150% of the GSE conforming loan limit (a ceiling of $625,500). These limits
were intended to go into effect beginning in 2009; however, the American Recovery and
Reinvestment Act of 2009 (ARRA; P.L. 111-5) specified that the loan limits in a given area would
be set at the higher of the ESA or the HERA limits through 2009.
The provision setting the FHA loan limits at the higher of the ESA limits or the HERA limits in a
given area was extended a number of times until the last extension expired at the end of FY2011,
at which time the loan limits fell to HERA levels. However, P.L. 112-55 reinstated the higher
FHA loan limits through December 31, 2013.
Not all areas are affected by a change in the FHA loan limits from those specified in HERA to
those specified in ESA.38 The change affects high-cost areas, since the high-cost area ceiling is
lower under HERA than under ESA. The change also affects some areas that are not high-cost,
depending on the trajectory of home prices in those areas, since the loan limit under ESA is 125%
of 2007 area median home prices while the loan limit under HERA is 115% of more recent area
median home prices.39
37
U.S. Department of Housing and Urban Development, FHA Mortgagee Letter 11-10, February 14, 2011,
http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/11-10ml.pdf.
38
For a discussion of areas that may be affected by a change in the loan limits, see U.S. Department of Housing and
Urban Development, Potential Changes to FHA Single-Family Loan Limits beginning October 1, 2011, from
Implementation of the Housing and Economic Recovery Act of 2008: A Market Analysis Brief, May 26, 2011,
http://portal.hud.gov/hudportal/documents/huddoc?id=fhaloanlmhera.pdf.
39
Current HERA limits are calculated using the most recent home price data; however, the first HERA limits were
calculated using 2008 home price data, and FHA has followed a policy of not allowing the HERA limits to fall relative
to earlier HERA limits in a given area. Therefore, the HERA limits in a given area could be based on home price data
from 2008 or more recent years.
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
Appendix. Related Legislation
The Budget Control Act of 2011
On August 2, 2011, President Obama signed the Budget Control Act of 2011 (BCA; P.L. 112-25)
into law following lengthy negotiations surrounding the national debt limit. The act included
provisions authorizing increases in the debt limit, as well as provisions designed to reduce the
federal deficit. One way the act attempts to reduce deficits is by establishing discretionary
spending caps, which limit the amount of money that can be spent through the annual
appropriations process over the next 10 years. These statutory budget caps are enforceable via a
process known as sequestration. If the caps are exceeded in any year, under sequestration the
executive branch is required to proportionally reduce funding for all agencies, accounts,
programs, projects, and activities by the amount necessary to reduce total budget authority to the
level authorized under the caps. Some programs are exempted from sequestration or receive
special treatment; none of HUD’s discretionary programs are exempted or receive special
treatment.
The total amount of discretionary funding available under the caps in FY2012, as established
under the BCA, is less than the amount that was available in FY2011, but is more than the
amount that was approved under the House budget resolution (discussed in the next section of
this Appendix).
The BCA included several other deficit reduction provisions that do not directly affect HUD but
could have implications for the department. The BCA created a deficit reduction “super
committee,” which was charged with finding at least an additional $1.2 trillion in deficit savings
over a 10-year period. Since the Joint Select Committee on Deficit Reduction failed to complete
its mandate, under the terms of the BCA, an automatic sequestration will take place in FY2013
and the discretionary budget caps for FY2014-FY2021 will be reduced in order to achieve the
desired $1.2 trillion in savings, barring additional action by Congress.40
FY2012 Budget Resolutions
The annual budget resolution acts as an agreement between the House and Senate establishing
parameters within which Congress can consider legislation dealing with spending and revenue. In
addition to setting forth enforceable levels of spending, revenue, and public debt, the budget
resolution provides spending allocations to House and Senate committees. Once the House and
the Senate Appropriations Committees receive a committee allocation in the budget resolution,
they divide their allocation of discretionary budget authority among their 12 subcommittees. Each
subcommittee is responsible for one of the 12 regular appropriations bills. The allocations to each
of the subcommittees are generally referred to as 302(b) allocations. While a budget resolution
and subcommittee allocations alone cannot be used to determine how much funding any
individual account or program will receive, they do set the parameters within which decisions
about funding for individual accounts and programs can be made.
40
For more information about the BCA, see CRS Report R41965, The Budget Control Act of 2011, by (name redacted),
(name redacted), and (name redacted).
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
The House and the Senate budget committees began their consideration of the FY2012 budget
resolution when they received the President’s budget. As part of the formulation process, the
committees receive information from executive branch officials, Members of Congress, and the
public, as well as “views and estimates” statements from authorizing committees with jurisdiction
over spending and revenues. The target date for completion of the budget resolution is April 15.
On April 6, 2011, the House Budget Committee reported its FY2012 budget resolution
(H.Con.Res. 34). It was agreed to by the House on April 15, 2011. On May 10, 2011, the House
Appropriations Committee released draft subcommittee allocations.41 The THUD subcommittee
received an allocation of $47.7 billion in FY2012, which was $8.7 billion (or 15%) lower than the
allocation it received in FY2011 ($56.4 billion).
In addition to setting overall spending levels, H.Con.Res. 34 contains another provision that could
have implications for the THUD subcommittee and potentially for HUD’s budget. Section 408
directs the Congressional Budget Office (CBO), at the direction of the chairman of the Budget
Committee, to use a different method when scoring FHA receipts. According to CBO, if this
alternate scoring mechanism was used in FY2012, the FHA account would not produce the $5
billion in offsetting receipts estimated in the President’s budget, but would instead require
appropriations.42
While the Senate Budget Committee did not consider an FY2012 budget resolution,43 the FY2012
discretionary spending cap, combined with specific Senate procedural provisions enacted under
the BCA, serve as an alternate to a formal Senate budget resolution for FY2012. Specifically, the
procedural provisions of the BCA required the chair of the Senate Budget Committee to establish
committee spending allocations, subject to the discretionary spending limit, and these levels are
to have the same force and effect as if they were included and associated with a budget resolution
for FY2012 adopted by Congress.44 Under these terms, the Senate established an allocation of
$57.3 billion for THUD for FY2012, which is nearly $1 billion higher than the House allocation
under H.Con.Res. 34.
Since the FY2012 discretionary spending cap enacted under the BCA (discussed in the prior
section of this Appendix) is higher than those adopted under H.Con.Res. 34, for the purposes of
conferencing on the final FY2012 THUD appropriations law (P.L. 112-55), the higher Senate
allocation for THUD was used.
41
http://www.appropriations.house.gov/_files/51111FY2012SubcommitteeAllocations302bs.pdf.
Letter from the Congressional Budget Office to Representative Paul Ryan, May 18, 2011, available at
http://www.cbo.gov/ftpdocs/120xx/doc12054/05-18-FHA_Letter.pdf.
43
On May 25, 2011, the Senate rejected a motion to proceed to H.Con.Res. 34.
44
For more information about the BCA, see CRS Report R41965, The Budget Control Act of 2011, by (name redacted),
(name redacted), and (name redacted).
42
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Department of Housing and Urban Development (HUD): FY2012 Appropriations
Author Contact Information
(name redacted), Coordinator
Specialist in Housing Policy
/redacted/@crs.loc.gov, 7-....
(name redacted)
Analyst in Federalism and Economic Development
Policy
/redacted/@crs.loc.gov, 7-....
(name redacted)
Specialist in Housing Policy
/redacted/@crs.loc.gov, 7-....
(name redacted)
Analyst in Housing Policy
/redacted/@crs.loc.gov, 7-....
Congressional Research Service
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