The Bush Administration's budget for housing and community development programs in fiscal year 2002 was met with strong criticism from congressional Democrats and public housing organizations.

The administration says the budget provides a 6.7% increase in HUD funding, from $28.5 billion to $30.4 billion in budget authority, but others say that calculation is misleading.

Democrats on the House Financial Services Committee contended that the administration's purported $1.9 billion increase is really a $1.3 billion cut, when a $3.63 billion "technical" increase for Sec. 8 contract renewals that doesn't boost actual spending is eliminated. (The Democrats also credit HUD with about $400 million in additional spending associated with higher FHA receipts.)

When additional inflation-related funding needs of $450 million for Sec. 8 and $435 million for other programs are taken into account, the Democrats say, the HUD budget actually provides a $2.2 billion cut in real spending.

"At a time of record budget surpluses and growing affordable housing needs, we should be increasing - not cutting - funding," said Reps. John J. LaFalce (D-N.Y.), ranking Democrat on the Financial Services Committee, and Barney Frank (D-Mass.), ranking Democrat on the housing subcommittee, in a "Dear Colleague" letter. "We should be funding a housing production program, increasing our investment in elderly housing and expanding resources to house the almost one million homeless Americans. The administration budget does none of these."

Frank contrasted the restricted HUD budget with Bush's proposal for a $1.6 trillion tax cut. "Reducing funds needed to improve the lives of the poorest children in America--those who live in public housing--is a very odd way to show compassion," Frank said. "In the face of a growing housing crisis in much of the country, President Bush thinks it is more important to reduce taxes on the wealthiest 1% than to respond to this problem."

A detailed budget won't be sent to Congress until April, and some details remained unclear at press time. But the most controversial elements of the preliminary budget outline are the cuts in public housing funds.

The public housing capital fund, which can be used for modernization and development, would be cut by $700 million from the current-year level. The $310 million public housing drug elimination grant program would be killed. On the positive side, the administration is requesting a $150 million hike in public housing operating funds, in part to cover utility rate increases.

In explaining the capital fund reduction, the outline says the funds being provided will cover all new capital needs, while $6 billion in unspent funds can be used for backlog needs. Public housing groups, however, contend that a lot of that $6 billion hasn't been spent because HUD has been slow in allocating the money.

As for the termination of the drug elimination grant program, the budget says "the program was found to have limited impact, the same activities are eligible under the public housing operating and capital programs, and regulatory tools such as eviction are more effective at reducing drug activity in public housing."

However, critics of this proposal noted that some courts have rejected efforts to evict public housing tenants for drug-related activity of guests or household members.

Other elements of the HUD budget include 34,000 incremental Sec. 8 vouchers, along with the renewal of all expiring contracts, a $200 million HOME set-aside for up to $1,500 in down payment assistance for more than 130,000 first-time low-income home buyers, and continuation of community development block grant formula funding at the 2001 level.

Sec. 8 reforms sought

The budget outline says HUD will continue to pursue Sec. 8 reforms to improve voucher utilization and stretch program dollars by ensuring that tenants pay the full amount of rent they are supposed to pay.

In addition, the administration is proposing a tax credit for the rehabilitation or construction of 100,000 homes; a tax credit for financial institutions that match private individual development accounts to save for a first home, start a business or pay for education; and a new FHA hybrid adjustable-rate mortgage to work with those tax incentives. However, the tax credits weren't included in the first tax bill Bush sent to Capitol Hill.

The administration also is proposing to finance the acquisition of affordable housing by 57,000 low- and moderate-income rural families, while eliminating HUD's $25 million rural housing and economic development program.

Weicher named to run FHA, mayor to tackle CPD

A Republican mayor and a senior fellow at a Washington think tank have been tapped to run the major housing and community development programs at HUD.

President Bush has nominated Roy A. Bernardi to be assistant secretary for community planning and development and John C. Weicher to be assistant secretary for housing-FHA commissioner. So far, however, the only HUD official confirmed by the Senate is Secretary Mel Martinez.

Bernardi, 56, now is serving his second term as mayor of Syracuse, N.Y. According to his bio, Bernardi, has overhauled municipal financial services, eliminated duplicative departmental functions and streamlined governmental operations resulting in "significant annual budgetary savings."

The bio goes on to describe Bernardi's commitment "to right-sizing municipal government and eliminating intergovernmental duplication." He was the first mayor in the Northeastern United States "to contractually merge a large city police department with those of suburban small villages, allowing for increased services and significant cost savings."

Bernardi has continued to try "to regionalize the efficient delivery of governmental services while encouraging increased neighborhood involvement and community participation."

The bio calls Bernardi "a promoter of urban neighborhoods." He used "aggressive code enforcement strategies to initiate a nationally recognized slum landlord program for chronic offenders and implemented the first-of-its kind landlord training and assistance program to clean up neighborhood eyesores."

He has worked to attract business to the city. "Downtown Syracuse has witnessed revitalization under the pro-growth policies of the Bernardi administration, and Mayor Bernardi has been successful in bringing major employees to downtown and reopening many of the once shuttered storefronts throughout the center city," the bio said.

Weicher has been with the Hudson Institute since 1993, where he has been project director of the think tank's Michigan Urban Policy Initiative. Weicher's bio calls this "the first state-level urban housing strategy in the United States." The project recommendations were enacted by the Michigan Legislature in the summer of 1999. Weicher also was a senior participant in Hudson's Wisconsin welfare reform project, which led to the creation of the state's pioneering "Wisconsin Works" program.

From 1989 to 1993, Weicher held the top policy position at HUD, serving as assistant secretary for Policy Development and Research. He served as chief economist at the U.S. Office of Management and Budget from 1987 to 1989 and as chief economist at HUD from 1975 to 1977.

HUD issues SuperNOFA for fiscal 2001 funding

HUD has issued its fiscal 2001 Super Notice of Funding Availability (SuperNOFA), making about $2.75 billion available in more than 40 funding categories. Application deadlines vary according to the program.

In the affordable housing area, the department is allocating $575 million in HOPE VI public housing revitalization grants, with an application deadline of June 22; and $75 million in HOPE VI demolition grants, with a deadline of July 10.

HUD also is making available $850 million in homeless assistance funds for supportive housing, Shelter Plus Care and Sec. 8 single room occupancy (SRO) moderate rehabilitation, with applications due May 31; and $495.9 million for Sec. 202 elderly housing and $121.2 million for Sec. 811 housing for the disabled, with a deadline of May 25 for both programs.

The department also is providing $139.1 million in Sec. 8 vouchers for persons with disabilities through the following programs, with amounts and application deadlines: mainstream housing opportunities, $54.1 million, July 20; rental assistance for non-elderly persons with disabilities related to Sec. 8 project-based developments and Sec. 202, 221(d) and 236 projects, $20 million, June 15; rental assistance for non-elderly persons with disabilities in support of designated housing plans, $20 million, May 16 (submission of plans) and July 24 (submission of entire applications); and Family Self-Sufficiency program coordinators, $45 million, April 25.

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 always up-to-date compilation of essential documents in the "HDR Reference Files." Jacobs is also author of the annually updated HDR Handbook of Housing and Development Law. Both titles are published by West Group. For more information, call (800) 723-8077 or (202) 973-7756.