Affordable Housing Finance

HOUSING POLICY

Washington Update

HUD May Get More Money

AFFORDABLE HOUSING FINANCE • September 2009

Fiscal 2010 appropriations bill includes more than requested

BY BARRY G. JACOBS

Congress seems poised to approve a fiscal 2010 Department of Housing and Urban Development (HUD) appropriations bill (H.R. 3288) that provides more money for key programs than the Obama administration requested.

For Sec. 8 tenant-based assistance, the House-passed version of the bill includes $18.24 billion, and the Senate Appropriations Committee approved $18.14 billion, while the administration asked for $17.84 billion.

Both bills would continue to fund renewals of tenant-based assistance on the basis of leasing and cost data for the most recent federal fiscal year. Neither includes the administration’s proposed changes to the voucher funding system, which would lift the ceiling on the number of units that a public housing authority (PHA) can lease up and give HUD broad authority to reallocate PHA reserves.

The House and Senate have taken different approaches to the administration’s plan to provide $250 million for a new Choice Neighborhoods initiative to redevelop impoverished neighborhoods by preserving and transforming public and assisted housing. The program would expand upon and replace the HOPE VI program for revitalizing severely distressed public housing.

The Senate committee approved the administration’s proposal, while expressing some concern about the lack of details. The House, on the other hand, refused to fund the new program because it hasn’t been authorized. Instead, the House bill includes $250 million to continue HOPE VI.

Money cut for rural assistance

The House and Senate have both approved a $111 million cut in the administration’s request for fiscal 2010 rural rental assistance funds, while the two versions of the agriculture appropriations bill (H.R. 2997) differ on other housing programs.

The administration asked for $1.09 billion for rental assistance, the amount it said is needed to fund one-year renewals for about 248,000 existing contracts, while providing about $5 million for assistance in conjunction with loans for new construction. However, the legislators approved only $980 million.

For multifamily, the Senate version of the bill includes the administration requests of $69.5 million for Sec. 515 direct loans and $129.1 million for Sec. 538 guaranteed loans, with no interest subsidies for Sec. 538. The House bill also follows the budget for Sec. 538, including the interest subsidy ban, but provides $80 million for Sec. 515.

The House approved $31.8 million for the multifamily revitalization program and the Senate, $39.7 million, while the budget called for $26.6 million.

For the Sec. 502 single-family loan program, the Senate approved $1.23 billion for direct loans and $12 billion for unsubsidized guaranteed loans, compared with the budget requests of $1.12 billion and $6.2 billion, respectively. The House bill includes the budgeted amounts.

HUD to allow TCAP funds for land costs

HUD has revised its guidance (Notice CPD-09-03) for the low-income housing Tax Credit Assistance Program (TCAP) to allow funds to be used for land acquisition, on-site demolition costs, and the cost of remediating hazardous materials, as well as costs includable in eligible tax credit basis.

The department had originally restricted TCAP funding to items that are included in eligible basis. HUD has also made projects with only Gulf Opportunity (GO) Zone or disaster area tax credits eligible for TCAP, after Congress amended the TCAP statute to expand the scope of the program. HUD previously said projects with GO Zone or disaster area credits would be eligible for TCAP aid only if they also had at least a nominal amount of tax credits allocated under the regular program.

A TCAP grantee must repay funds that are used for ineligible costs, for a project that is never completed, or for a project that doesn’t meet tax credit program requirements. The Treasury Department has also provided additional guidance, in the form of frequently asked questions (FAQs), for the program allowing state agencies to exchange a portion of their tax credits for Treasury grants.

The guidance spells out recapture requirements for credit exchange funds, which will apply if, during the 15-year compliance period, the applicable fraction of a building drops below the greater of the minimum set-aside or the percentage of eligible basis funded through the credit exchange program. The amount of recapture will be the full amount of the credit exchange subaward to a building, reduced by 6.67 percent for each year in the compliance period before the recapture event.

The FAQs say credit exchange funds can’t be used for land acquisition, but Treasury is reportedly reconsidering that restriction.

Barry G. Jacobs is editor of Housing and Development Reporter, the nation’s premier source for in-depth, factual coverage of all aspects of affordable housing and community development. The two-part publication includes informed reports and insightful analyses in “HDR Current Developments,” and an up-to-date compilation of essential documents in the “HDR Reference Files.” Jacobs is also the author of the annually updated HDR Handbook of Housing and Development Law. For more information, call (800) 723-8077.