The Obama administration has sent to Congress a fiscal 2012 Department of Housing and Urban Development (HUD) budget with a mix of program increases and reductions, boosting funding for Sec. 8 and homeless assistance while cutting Community Development Block Grants (CDBGs), public housing, and HOME.

Overall, the budget calls for $47.8 billion in gross discretionary budget authority, exclusive of offsetting Federal Housing Administration (FHA) and Ginnie Mae receipts, up from $47 billion in fiscal 2010. (Fiscal 2011 funding was still unsettled when the budget was released.) When offsetting receipts and mandatory programs are taken into account, net budget authority would increase from $45.1 billion to $47.2 billion.

The administration is also making another attempt at launching its transforming rental assistance (TRA) initiative to combine rental assistance programs, seeking $200 million for a voluntary demonstration program to convert public housing, Sec. 8 moderate rehabilitation, rent supplement, and Sec.

236 rental assistance program (RAP) projects to Sec. 8 project-based vouchers or other Sec. 8 project-based assistance.

According to the budget, the funding could support the conversion of up to 263,000 units. The demonstration is intended to test TRA conversions as a tool for preserving public housing and other HUD-assisted units by increasing access to private capital and management techniques, creating mixedincome communities, and increasing housing choice for residents.

The budget provides $19.2 billion for Sec. 8 tenant-based assistance, including an advance appropriation of $4 billion to become available Oct. 1, 2012. Including previously appropriated funds, the budget would make at least $17.1 billion available for the renewal of existing tenant- based Sec. 8 contracts.

By comparison, Congress appropriated $18.1 billion for tenant-based assistance in fiscal 2010.

For project-based Sec. 8, the budget includes $9.4 billion, including a $4 billion advance appropriation, and makes $9.4 billion available for use in fiscal 2012, including previously appropriated funds, up from $8.6 billion in 2010. The 2012 funds include $9.1 billion for contract renewals and amendments.

The budget would boost funding for homeless assistance grants from $1.8 billion in 2010 to $2.4 billion and give Housing Opportunities for Persons with AIDS (HOPWA) a slight increase, from $332 million to $335 million.

Public housing funding would be cut from $4.8 billion to $3.9 billion for the operating fund and from $2.5 billion to $2.4 billion for the capital fund. The budget also includes $250 million for the Choice Neighborhoods initiative, with no money for HOPE VI.

Sec. 202 housing for the elderly is budgeted at $757 million, down from $817 million in 2010, and Sec. 811 housing for the disabled would be cut from $297 million to $196 million.

The budget provides $3.8 billion for the community development fund, including $3.7 billion for formula CDBGs. The funding reflects a $300 million cut in the popular CDBG program.

In addition, the budget includes $150 million for the sustainable communities initiative.

The HOME program is slated for a cut from $1.8 billion to $1.6 billion.

For housing finance, the budget provides fiscal 2012 commitment limits of $400 billion for the FHA mutual mortgage insurance fund; $25 billion for the FHA General and Special Risk account, which includes multifamily mortgages; and $500 billion for Ginnie Mae mortgage- backed securities.

RHS budget includes Sec. 515 funds, no money for Sec. 538

The fiscal 2012 Rural Housing Service (RHS) budget includes $95.2 million for Sec. 515 direct multifamily loans, but no money for the Sec. 538 multifamily guarantee program.

The budget also includes $906.7 million for rural rental assistance, $16 million for rural housing vouchers for lowincome families living in Sec. 515 projects whose mortgages are prepaid after Sept.

30, 2005, $27 million for Sec. 514 farm labor housing loans, $9.8 million for Sec. 516 farm labor housing grants, and $11.5 million for Sec. 504 very-low-income housing repair grants.

GOP announces new leaders on House committees

With the Republicans in control of the House for the 112th Congress, the GOP has announced new leaders for key housing-related committees and subcommittees.

Rep. Spencer Bachus (R-Ala.) has taken over the chairmanship of the Financial Services Committee, swapping places with former chairman Barney Frank (D-Mass.), who is now ranking member. Republicans have a 34-27 majority on the committee.

Rep. Judy Biggert (R-Ill.) is the new housing subcommittee chair, with Rep. Luis Gutierrez (D-Ill.) as ranking member. Reps. Shelley Moore Capito (R-W. Va.) and Scott Garrett (R-N.J.) will chair the financial institutions subcommittee and capital markets and governmentsponsored enterprises subcommittee, respectively, with Reps. Carolyn B. Maloney (D-N.Y.) and Maxine Waters (D-Calif.) as ranking members.

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.

Tax Proposals Include Changes to Low-Income Housing Tax Credit

The tax package sent to Congress as part of the administration's fiscal 2012 budget includes two changes to the low-income housing tax credit program.

To encourage mixed-income development, the proposals would allow owners to elect an average income method to meet low-income occupancy requirements. Under this plan, at least 40 percent of the units in a building would have to be occupied by tenants whose incomes average no more than 60 percent of the area median income (AMI). No tenants in rentrestricted units could have an income over 80 percent of the AMI, and any units with an income limit below 20 percent of AMI would be considered to have a 20 percent limit for purposes of the average income calculation.

The other change would allow certain preservation projects financed by tax-exempt bonds to qualify for a 30 percent basis increase. The projects must have been originally financed with federal funds, including tax credits, and they must show a serious backlog of capital needs or deferred maintenance.

The tax proposals also include a one-year extension of the New Markets Tax Credit, with an investment allocation of $5 billion for calendar 2012. In addition, tax credits from investments made after Dec. 31, 2010, could be used to offset alternative minimum tax liability.