Congressional leaders introduced the FY16 Omnibus Appropriations bill yesterday morning. While the bill proposes grossly inadequate funding levels to meet the housing needs of low-income families, the bill is a significant improvement over the HUD appropriations bills passed by the House of Representatives and Senate Appropriations Committee earlier this year. (Read MHP’s blog Sequestration Compliance Forces Drastic Cuts in Proposed 2016 HUD Budgets to learn more.)
Since increased funding was made available after the “Balanced Budget Act” passed in October that lifted sequester caps, Congress has negotiated funding levels for twelve appropriations bills. The bill does not raid or prohibit funding of the National Housing Trust Fund as proposed by the House or impede implementation of the new Affirmatively Furthering Fair Housing Rule also proposed earlier. The HOME program will also see fund increases, despite proposed cuts to the program made by both the House and Senate earlier this year.
Preservation of the NHTF and increased funding for HOME are major testaments to advocacy efforts made across the country.
The bill also provides increased funding to homeless assistance grants, public housing capital and operating funds, housing for the elderly and those with disabilities, and rural assistance. The Housing Choice Voucher and Project Based Rental Assistance programs received less than what is needed to renew all existing vouchers. USDA Rural Development programs all maintained funding levels from FY15, except Section 521 Rental Assistance which Congress appropriated $300 million more in funding than in FY15. To find funding levels for all HUD and USDA Rural Development programs and compare FY16 funding to previous year funding, consult the National Low Income Housing Coalition’s FY16 Budget Chart.
Details of the bill include:
- HOME funding increased to $950 million for FY16. This is a $50 million increase from FY15. The House bill would have cut HOME to $767 million and the Senate bill would have cut it to $66 million.
- Housing Choice Voucher is funded at $19.629 billion - $369 million less than what advocates estimate is required.
- Project-Based Rental Assistance is increased to $10.620 billion from $9.730 billion in FY15. This number is still short by about $200 million advocates estimate is required to renew all assistance.
- Public Housing Operating increased to $4.5 billion from $4.440 billion in FY15 and Capital Funds increased to $1.9 billion from $1.875 billion in FY15. These proposed FY16 funding levels are insufficient.
- Moving to Work (MTW) was expanded and now authorizes 100 new MTW agencies over seven years. The Senate had proposed expanding the demonstration program by 300 agencies.
- Choice Neighborhoods Initiative increased to $125 million from $80 million in FY15. This is $125 million less than the Administration requested by $105 million more than the House proposed and $60 million more than the Senate proposed.
- Native American Housing Block Grants maintained funding at $650 million.
- Community Development Block Grants (CDBG) decreased to $3,060 billion from $3,066 billion in FY15. CDBG was funded at higher levels during sequestration in 2013.
- Policy Development and Research is not funded in the bill. It was funded at $37 million in FY15 and the House had proposed $53 million while the Senate had proposed $50M.
Congress strengthens America’s primary affordable housing financing tool
On Tuesday, December 15, Congressional leadership announced a $650 billion tax extenders bill that extends or makes permanent several temporary tax provisions. The bill makes permanent the minimum 9 percent low-income housing tax credit (LIHTC) rate for new construction and substantial rehabilitation but does not establish a minimum 4 percent LIHTC rate for acquisition. This is a huge victory for housing advocates across the country and LIHTC stakeholders. The permanent extension of the 9 percent credit rate will strengthen the housing credit by allowing states to allocate more credit equity into individual developments. MHP continues to work with the ACTION Campaign to enact a permanent minimum 4 percent credit rate.
Since the establishment of a temporary minimum 9% rate, Congress has had to extend the minimum rate twice. On both occasions, the minimum rate had expired and developers were forced to accept floating rates that changed monthly while Congress negotiated extension packages. The floating rates make underwriting of LIHTC development more complicated. When rates float below the minimum 9 percent rate, less equity is available, creating gaps between available financing and the actual development costs. Overall, a LIHTC project financed in 2015 had 15 to 20 percent less housing credit equity available than one financed in 2013. Minnesota developers have been less impacted by the floating rates than developers in other states because Minnesota Housing has state resources to help fill financing gaps.
In Minnesota, between 1986 and 2013, housing credits have helped develop or preserve 48,141 homes, providing housing that is affordable to 111,707 low-income families.
Earlier this year, the Senate Finance Committee approved a two-year tax extenders package that included a temporary extensions of the minimum 9 percent and 4 percent credit rates. Amendments that would have established permanent minimum 9 and 4 percent credit rates were filed but never brought to a vote. A majority of Senate Finance Committee members supported a two-year extension on dozens of temporary provisions and expressed a desire to make numerous tax provisions permanent with future comprehensive tax reform. The House did not approve a permanent extension of housing credit rates. House Ways and Means Chairman Paul Ryan (R-WI) proposed making select provisions permanent but not the LIHTC.
In addition to LIHTC, the bill includes several other provisions related to affordable housing, community development and renewable energy. For more information on the status of other provisions, read Novogradac’s summary of the tax extenders package.
