CHAPA Summary of HUD FY2015 Budget - January 6, 2015

Post date
January 6, 2015

HUD’s FY2015 budget was finalized as part of an omnibus appropriations bill (H.R. 83) signed by the President on December 16, 2014. It provides $45.4 billion for HUD programs ($90 million less than in FY2014) and as noted in a Center on Budget and Program Priorities summary, it leaves most HUD programs at “historically low levels.” See the National Low Income Housing Coalition’s budget chart for funding levels by program (FY2010 through FY2015). 

Almost no programs were funded at levels that permit expansion of assistance.  However, the bill includes welcome changes to the Rental Assistance Demonstration (RAD) program, including raising the number of public housing units (from 60,000 to 185,000) that can convert to project-based rental assistance and making the second component of RAD (preservation of private assisted housing) permanent. Cost-saving reforms for tenant-based rental assistance and public housing proposed by HUD (including changing the threshold for medical deductions from 3% to 10% of income) were not adopted. 

FY15 funding and provisions for major HUD programs include the following.

  • Tenant-Based Rental Assistance (TBRA) - The FY2015 budget provides sufficient funding ($17.5 billion -up 0.7% from FY2014) to renew all vouchers currently in use but not enough to fully restore all vouchers shelved in FY13 due to sequestration (1,431 in Massachusetts), according to an analysis by the Center on Budget and Policy Priorities (CBPP). As in FY2014, the FY2015 budget provides $75 million to fund 10,000 new vouchers for homeless veterans, including a set-aside for a pilot program for homeless vets in Indian areas. Despite a small increase in funding for administrative fees, HUD predicts that the FY2015 proration will be around 75% (down from 79% in FY2014).  CBPP notes that carryover funds may allow it to go as high as 78%. 
     
  • Tenant protection vouchers (TPV) - level funded at $130 million, $20 million less than requested by the Administration to cover rising need as mortgages mature. New language forbids the reissuance of TPVs to other families, except in the case of “replacement” vouchers (to be defined by HUD by notice). The impact of this language will depend on HUD’s definition of replacement.  The budget also continues a set-aside of $5 million for vouchers to assist families in low vacancy areas who would not otherwise be eligible for TPVs. This provision has been very important to Massachusetts preservation efforts.
     
  • Project-Based Rental Assistance - Funded at $9.73 billion, down 1.9% from FY14, including a 1.4% decrease for renewals. CBPP describes this funding as consistent with the Administration’s proposal to transition the program to calendar year funding over two years.  It notes that a $1 billion increase will be required in FY2016 to complete the transition.
     
  • Public Housing - The FY2015 budget provides $4.44 billion for the operating fund, up $40 million from FY2014 (0.9%).  CBPP projects this will result in an 87% proration, compared to 88.8% in 2014.  New budget language also lets larger PHAs (250 units+) transfer up to 25% of their capital funding to their operating fund (vs. the 20% currently allowed by law), with no limit for transfers to anticrime and antidrug activities.  (Smaller PHAs already have unlimited authority to move funds between capital and operating funds.)  The FY2015 budget level funds the Capital Fund at $1.875 billion, continuing set-asides of $45 million for ROSS and $15 million for the “Jobs-Plus Initiative” pilot. 

    An administrative provision (§238) revises language added in FY2014 that required PHAs to set flat rents (for tenants who have opted to pay one) at no less than 80% of the Fair Market Rent.  It allows HUD to establish an alternative floor based on local market conditions and lets PHAs seek exceptions if neither floor reflects local market conditions.
     

  • Rental Assistance Demonstration (RAD) - Administrative provision §234 raises the current cap on the number of public housing (and certain Mod Rehab) units that can convert their subsidy from 60,000 units to 185,000 units. According to new HUD interim guidance, the new cap is sufficient to process all applications on its waiting list as well as 8,000 new units (the deadline for applying was also extended 3 years to September 30, 2018). §234 also permanently extends the second component of RAD to preserve projects with older forms of rental assistance, allows those conversions to be using either project-based rental assistance (PBRA) or project based vouchers (PBV), and newly allows RAD to be used to preserve McKinney Vento Mod Rehab SRO units.
     
  • Family Self Sufficiency - Level funded at $75 million. New language extends eligibility to families in Project Based Rental Assistance developments (at owner’s option) and authorizes HUD to create a demonstration to test offering FSS services to homeless youth with vouchers under the Family Unification Program (FUP).
     
  • HOME Investment Partnerships - Provides $900 million, down 10% from FY2014.
     
  • Homeless Assistance - Provides $2.135 billion, up 1.4% from FY2014 and far less than the Administration’s $2.41 billion request which included (a 20% increase for renewals) and a new 37,000 bed permanent supportive housing initiative.  The latter was not funded and, as CBPP notes, it is difficult to predict renewal requests and thus whether the final FY2015 amount will support all renewal requests.
     
  • Section 811- Provides $135 million, sufficient to renew existing contracts.  It does not provide funding for new project-based rental assistance (the Administration had requested $25 million for that purpose).
     
  • Section 202 - Funded at $420 million, sufficient to renew existing contracts but with no funds for expansion.  Funding for service coordinators was reduced slightly.
     
  • Community Development Block Grants (CDBG) - Provides $3.0 billion for formula grants, down 1% from FY2014.
     
  • Housing Counseling - Provides $47 million, up $2 million from FY2014, and includes language authorizing multi-year agreements, subject to appropriations.
     
  • Homeowners Armed with Knowledge (HAWK) - An administrative provision (§235) forbids the use of FY2015 appropriations for this pilot program which would have reduced FHA insurance premiums for homebuyers who completed housing counseling by HUD-certified counselors and stayed current on their loan.  HUD estimated that the average buyer would have saved approximately $9,800 over the life of their loan.
     
  • Policy Development and Research/Transformation Initiative – Provides $72 million in new appropriations for research, surveys, program evaluations, demonstration programs and technical assistance, by 16% compared to FY2014.  Level-funded the American Housing Survey (AHS).