June 6, 2017

HUD Policy Proposals in President’s Budget Would Serve Fewer Families

This week Secretary of Housing and Urban Development Ben Carson is defending the Administration’s fiscal year (FY) 2018 budget request for HUD to the House and Senate Appropriations committees. While Sec. Carson has stated that he believes HUD serves an important role in addressing poverty, the administration’s budget request proposes reducing federal investment in housing by over $ 6 billion and eliminating programs that revitalize communities, create jobs, and prevent homelessness. Both Republicans and Democrats in Congress as well as local government officials around the country have expressed alarm at the damage such severe cuts could have on communities in both cities and rural areas. Read Enterprise’s blog detailing the proposed cuts to housing and community development programs.

The administration’s budget request also proposes policy provisions for rental assistance and public housing programs that have been floated in Congress before and may have a receptive audience among lawmakers during the upcoming appropriations cycle. The budget argues that the proposals will improve program efficiency and reduce the cost of administering programs, and while the Administration claims that HUD will continue assisting current residents while reducing costs, the budget cuts are far greater than what could be offset by cost savings from the policy proposals. It seems untenable that these policies would help HUD better serve low-income families.

The budget proposes several policy provisions relating to HUD’s assisted housing programs, including  increased tenant rent contributions, the establishment of mandatory minimum rents, and the end of utility allowance reimbursements, among others.

Specifically the budget request for HUD includes:

  • HUD could require housing authorities to raise tenant rent contributions from 30 percent to 35 percent of monthly income.
  • The minimum rent in HUD-assisted housing would be $50, even if that is greater than 35 percent of a household’s monthly income.
  • HUD would prohibit agencies to provide payment to help households pay utility bills.
  • Institute a one-year freeze on annual rent adjustment increases for Project-Based Rental Assistance (PBRA), Section 202, and Section 811 units.

These proposals would raise housing costs on extremely low-income families, placing many at risk of financial instability and eviction if they cannot make the increased rent. Paired with the extreme cuts  proposed to rental assistance programs, if enacted, the budget proposal would serve fewer families with less assistance – at a time when our nation’s affordable housing needs are growing.

Furthermore, these proposals undercut rental reform provisions in H.R. 3700, the Housing Opportunity Through Modernization Act, which was unanimously approved by both the House and Senate and signed into law last year.

The budget request also includes proposals that aim to increase flexibility for Public Housing Authories (PHAs), including:

  • Expanding authority for public housing agencies to waive statutory or regulatory provisions, especially as they apply to reporting requirements, energy audits, income recertification, and program assessments for Tenant-Based Rental Assistance and public housing units.
  • Allow full funding flexibility between Public Housing Capital and Operating funds for all public housing authorities, including use of existing operating reserves for capital improvements.

While granting PHAs these flexibilities could enable them to serve more people, a $1.8 billion cut to the Public Housing Operating and Capital funds as proposed by the budget would negate this possibility.

The budget request additionally proposes a number of reforms to the Rental Assistance Demonstration (RAD) program. RAD preserves affordable housing by converting public housing into long-term project-based Section 8 rental assistance (PBRA) and project-based voucher units. The conversion allows PHAs to leverage other sources of private and public financing, like the Low-Income Housing Tax Credit, to address PHAs’ capital needs. Proposed reforms to the program include:

  • Eliminating the 225,000-unit cap on public housing units authorized to convert under RAD.
  • Eliminating the September 30, 2020 deadline for RAD application under the “first component” of RAD for public housing; and expanding the “second component” of RAD for other HUD-assisted programs to include the conversion of Section 202 Project-Based Rental Assistance Contracts (202 PRACS)

While expanding the authority of the RAD program provides greater flexibility for PHAs to rehabilitate and preserve affordable units, effective utilization of RAD requires fully funding Section 8 and public housing, both of which the budget proposes to significantly cut.

In the future, Enterprise urges Secretary Carson and Deputy Secretary nominee Pam Patenaude to lead the development and implementation of solutions that serve the growing need for affordable homes.

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