The Senate has passed a combined fiscal 2012 appropriations bill (H.R. 2112) that includes funding for the Department of Housing and Urban Development (HUD) and the Rural Housing Service (RHS), though the final measure is subject to change by a Senate-House conference.

The HUD funding includes $18.87 billion for Sec. 8 tenant-based assistance and $9.42 for Sec. 8 project-based aid, which should be enough to renew all expiring contracts. The tenant-based funding also includes $1.4 billion for fees to public housing authorities (PHAs) to administer the voucher program.

The bill would also authorize the Obama administration to begin implementing its rental assistance demonstration (RAD) program for the voluntary conversion of public and assisted housing to long-term Sec. 8 project-based voucher or rental assistance contracts. However, the authority would be limited to the conversion of public housing, though the administration's proposal would include rent supplement, Sec. 236 rental assistance program, and Sec. 8 moderate-rehabilitation projects.

No more than 60,000 units could be converted under the Senate bill, and conversions would have to be funded through money provided for the public housing capital and operating funds. The administration has requested a separate appropriation of $200 million for RAD.

Accordingly, implementation of RAD under the Senate bill would put additional pressure on public housing funds, which would already take cuts from current levels. The bill provides $1.87 billion for the capital fund and $3.96 billion for the operating fund, down from $2.04 billion and $4.62 billion, respectively, in fiscal 2011.

The administration also requested $3.96 billion for the operating fund, which it would supplement with $1 billion in what it called excess operating reserves to provide PHAs full formula funding for operating subsidies. The Senate bill would authorize the offset but limit it to $750 million. In addition, no PHA reserves could be reduced below $100,000 through the offset.

The bill also provides $120 million for the Choice Neighborhoods initiative, the administration's successor to HOPE VI, which is aimed at replacing and rehabilitating public and assisted housing in order to transform poor neighborhoods into sustainable mixed-income communities.

The measure would also cut HOME and community development funds. The bill includes $1 billion for HOME grants to support state and local affordable housing programs, down from $1.61 billion in fiscal 2011. Community development would be cut from $3.5 billion to $3 billion, including $2.85 billion for Community Development Block Grants.

Other funding in the Senate bill includes $1.9 billion for homeless assistance grants, $650 million for Indian housing block grants, $370 million for Sec. 202 housing for the elderly, and $150 million for Sec. 811 housing for the disabled. For mortgage finance, the bill provides commitment limits of $400 billion for the FHA Mutual Mortgage Insurance Fund; $25 billion for the General and Special Risk account, which insures multifamily mortgages; and $500 billion for Ginnie Mae mortgagebacked securities.

The bill would also amend the U.S. Housing Act of 1937 to revise income and rent provisions for Sec. 8 and public housing. The bill would drop the requirement for annual income reviews for families on fixed incomes. The change would apply if a family certifies that at least 90 percent of its income comes from fixed sources, which haven't changed since the prior year. Fixed income families would still have to be reviewed at least every three years.

In computing adjusted income, the exclusion for elderly and disabled families would be raised from $400 to $675, and the floor for medical expenses would be increased from 3 percent of income to 10 percent.

HUD would be required to establish area median incomes and program income limits at least annually, and it would have to publish fair market rents (FMRs) at least once a year on its Web site.

FMRs would become effective no earlier than 30 days after publication, but the current requirement to publish proposed FMRs for comment would be eliminated. However, interested parties would be allowed to comment on FMRs after they are published and ask for a reevaluation.

PHAs could set voucher payment standards as high as 120 percent of FMR without HUD approval in order to provide a reasonable accommodation to a person with a disability. If FMRs are reduced, PHAs wouldn't have to lower the payment standard for any voucher holder continuing to reside in the same unit.

The bill would also extend the Sec. 8 Mark-to-Market program until Oct. 1, 2015.

The RHS funding in the bill includes $64.5 million for Sec. 515 direct rental housing loans, a program level of $130 million for Sec. 538 guaranteed multifamily loans, $904.6 million for rural rental assistance, $24 billion for Sec. 502 guaranteed single-family loans, and $900 million for Sec. 502 direct loans.

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-todate 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.