CLPHA Review of Senate FY17 HUD Funding Bill

The Senate Appropriations Committee (“the Committee”) approved S. 2844, on a recorded vote of 30-0, the fiscal year 2017 (FY17) Transportation, Housing and Urban Development, and Related Agencies (THUD) appropriations bill on April 21.

 

While the public housing and related programs fared better than expected when compared to FY16, nonetheless, most of the Senate proposed funding levels are still below CLPHA and industry recommended levels. CLPHA also advocated raising the Rental Assistance Demonstration cap, and we are pleased to note that the Senate is increasing the cap to 250,000 units.

 

The Senate is expected to take up the THUD spending bill sometime during the week of May 9th after returning from a week-long recess.

 

Read on for a brief review of policies and programs of interest to CLPHA members in the Senate bill and insight into Senate intent from the Committee Report, accompanied by CLPHA’s updated funding chart.

 

HUD Management and Administration

 

Circumvention of the Nomination Process—For the second year in a row, the Committee chastised HUD and the administration for their failure to pursue full Assistant Secretary nominations for Housing/FHA; Community Planning and Development; and Public and Indian Housing (PIH). Repeating strong language from last year, “the Committee is incredulous that the administration has elected to maintain the vacancy of these three mission critical positions and points to the administration’s decision to redirect a nominee, whose nomination was presented at the end of the 113th Congress, to a Principal Deputy Assistant Secretary position in lieu of re-nominating the individual during the 114th Congress as a reflection of the clear disregard of the Appointments Clause.” The position the Committee pointed to for this nominee was PIH. Clearly perturbed and in further expression of their displeasure, “the Committee has reduced amounts included in the Committee’s recommendation by amounts equal to the salary and benefits of a Principal Deputy Assistant Secretary for offices where the position of Assistant Secretary is not filled or for which a nomination for that position is not currently pending before the Senate Committee on Banking, Housing, and Urban Affairs or has been reported by that Committee to the Senate.”

 

Program Offices Salaries And Expenses Continuing unease about HUD’s capacity to manage several programs under PIH’s jurisdiction—particularly given the anticipated increase in the number of agencies qualifying for MTW status—and their previously expressed concern with improving coordination and effective approaches for program delivery, “the Committee directs HUD to prioritize the hiring of staff to fill critical positions in the following areas: staff for the management and oversight of Moving-to-Work PHAs; financial analysts for the Housing Choice Voucher program; and additional staff for the Office of Policy, Programs and Legislative Initiatives to create efficiencies in program operations.”

 

Central Office Cost Center Fees—A 2014 Office of Inspector General (OIG) audit of public housing operating and capital fund central office cost center [COCC] fees raised concerns about these fees and HUD’s oversight of them. OIG recommended that HUD eliminate the asset management fee, revise the asset management policy to ‘‘re-federalize’’ the fees paid into the COCC, and create policies and procedures to assess and monitor them. While HUD disputed several of OIG’s recommendations, HUD does intend to initiate rulemaking to re-federalize the fees paid into the COCC with a goal of implementing a final rule by no later than December 2017.  The Committee also shared OIG concerns that HUD has failed to fully evaluate its fee for service model for public housing operating and capital funds. Consequently, “HUD is directed to evaluate this model to gauge whether it is actually increasing the overall efficiency and effectiveness of administering the program and that the fee structure is reasonable. The Department is further directed to include any necessary program changes from this evaluation as part of its fiscal year 2019 congressional justifications.”

 

Program Authorization

 

Lead-Hazard Control and Remediation—Recent media reports have raised concern that HUD has failed to provide sufficient oversight to ensure that public housing agencies and property owners comply with regulations regarding inspections for and remediation of lead-based paint hazards. Additionally, since the Centers for Disease Control and Prevention (CDC) estimates that 535,000 American children under 6 years of age are affected by lead poisoning, “the Committee believes that HUD has failed to appropriately respond to the CDC’s decision in 2012 to strengthen its blood lead level standard for children under 6 years old…To address these concerns, the bill and accompanying report include a deadline for the implementation of a new regulation that strengthens HUD’s blood lead level standard, and a series of reforms and investments to address lead-based paint hazards in HUD-assisted housing and low-income housing in the private sector. The Committee includes reforms to current policies, an expansion of HUD’s oversight and enforcement capacity, and additional funding for Public Housing Agencies [PHAs] and low-income homeowners to address lead-based paint hazards in the home.”

 

 

Program Funding

 

Public Housing Operating Fund: $4.675 billion. This is $789 million below CLPHA’s request of $5.464 billion, $106 million above the Administration’s request of $4.569 billion, and $175 million above the FY16 enacted level. Similar to last year, the Committee included a provision that establishes a utility conservation pilot that incentivizes a reduction in public housing utility consumption and costs, and provides housing authorities with the ability to reinvest the savings in their properties and operations (Sec. 241 below). Moreover, “the Committee also recognizes that PHAs face administrative and regulatory burdens and it reiterates support for regulatory and administrative relief that result in cost savings, while still maintaining effective and meaningful oversight.”

 

Over-income Residents in Public Housing—In response to the 2015 OIG report that more than 25,000 public housing families are above the income limits, the Committee strongly encourages HUD to update its rules related to over-income families to ensure 1) there is a process in place to identify over-income residents and2)  where appropriate that they are transitioned out of public housing.

 

Public Housing Capital Fund: $1.925 billion. This is $3.075 billion below CLPHA’s request of $5.0 billion, $60 million above the Administration’s request of $1.865 billion, and $25 million above the FY16 enacted level. There is a set-aside of $15 million for the Jobs-Plus Pilot Program, equal to CLPHA’s request and $20 million less than the Administration’s request. There is a set-aside for the Resident Opportunities and Self-Sufficiency (ROSS) program of $35 million, equal to CLPHA’s request and $35 million more than the Administration’s request. There is a set-aside of $21.5 million for emergency capital needs with no less than $5 million for safety and security, $1.5 million more than CLPHA’s and the Administration’s request.

 

Similar to FY16, the bill increases the Capital Fund to Operating Fund flexibility to 25 percent; and, allows housing authorities to establish and maintain capital fund replacement reserves (Sec. 239 below). There is a set-aside of $10 million for ongoing financial and physical assessment activities of the Real Estate Assessment Center (REAC), and $1 million is provided for the cost of administrative and judicial receiverships. Also, there is a set-aside of $25 million for competitive grants to housing authorities to evaluate and reduce lead-based paint hazards in public housing. Specifics from the Committee report include:

 

ConnectHome.—While the Committee did not provide funds for the Administration-requested ConnectHome initiative—a platform for local governments, public housing agencies, Internet service providers, and other stakeholders to produce local solutions for narrowing the digital divide in communities across the country—the Committee did encourage HUD to help identify ways residents living in public housing can connect to broadband infrastructure, technical assistance, digital literacy training, and electronic devices that provide access to high-speed Internet.

 

Safety and Security in Public Housing.—“The Committee directs at least $5 million of the $21.5 million recommended for emergency capital needs for safety and security measures necessary to address crime and drug-related activity in public housing…The Committee notes that the demand for these funds continues to grow while the amount that HUD is awarding to PHAs is decreasing…The Committee also includes language this year clarifying that unused funds from the emergency set-aside shall be used to address safety and security needs of PHAs and the residents who live in these properties.”

 

Quality Assurance of Physical Inspections.—“The Committee is deeply troubled by reports of deplorable living conditions found in some HUD-subsidized properties across the country. The scope of this issue spans geographic regions, highlights systemic problems, and calls into question the effectiveness of HUD oversight, and the Real Estate Assessment Center’s [REAC] inspections of HUD-assisted housing….The Committee has been apprised of the action items developed by HUD’s inspection working group and is underwhelmed by the results….The Committee is particularly disappointed that despite acknowledging that issues impacting the health of residents, including mold, do not trigger a sufficient subtraction of points to the inspection score, and the need to adjust the scoring system, those actions have not been identified by the working group as issues to address…the Committee expects the Department to move swiftly to implement previously identified deficiencies in physical condition inspection protocols. The Committee further directs the Department to solicit comments from stakeholders, including tenants, to identify ways the Department can improve its inspection protocols and oversight.”

 

Flexibility To Meet Pressing Needs.—The Committee included a provision permitting housing authorities to establish and maintain replacement reserves, a common practice in real estate and required for projects in HUD multifamily programs. HUD is expected to move quickly to set up the rules and requirements for capital reserves to enable housing authorities to better address the significant backlog of capital needs and better plan for future capital requirements (Sec. 239 below).

 

Additionally, HUD created the Public Housing Mortgage Program (PHMP) as a result of Section 30 of the U.S. Housing Act of 1937 which allows housing authorities to place a mortgage or other encumbrance on

public housing properties where the property is owned by a housing authority. Since PHMP is not widely utilized due to HUD guidance that prohibits a first lien position on dwelling units, and may actually be preventing intended outcomes by limiting housing authorities’ ability to access capital markets, the Committee directs HUD to report within 90 days of enactment “regarding the utilization of PHMP, specifying existing program impediments, the Department’s plan to address those impediments, and if the PHMP can be a useful tool to address public housing capital needs.”

 

Also, the Committee noted that public housing is the only project-based rental assistance program HUD administers that provides capital and operating funds through separate funding streams and a merger of the two programs has the potential to simplify the public housing program and reduce the administrative burden on housing authorities that own and manage these properties. The Committee directs HUD to submit within 180 days of enactment an evaluation of the benefits and potential concerns of merging the operating and capital funds into a single public housing account.

 

Lead-Based Paint$25 million. This amount to be competitively awarded to PHAs to evaluate and reduce lead-based paint hazards in public housing units, which may include lead inspections, risk assessments, interim controls, and abatements. Noting that approximately 62,000 public housing units require lead-based paint abatement, the Committee directs HUD to establish and implement a process that improves data collection and analysis of actions housing authorities are taking to comply with lead-based paint regulations in public housing units by March 31, 2017, and report semi-annually to Congress.

 

HUD is directed to issue clarifying guidance explaining the importance of lead-safe housing and the changes being undertaken to align HUD standards with CDC standards and improve its processes. Recognizing some PHAs are already effectively applying lead-safe standards, HUD is directed to identify and disseminate best practices on making, and keeping, units lead safe; and to provide training on lead-safe housing issues targeted to housing authority maintenance and property management staff. Housing authorities are also strongly encouraged work closely with tenants to improve their awareness of lead-based paint hazards in the home.

 

Housing Choice Voucher (HCV) Renewals: $18.355 billion. This is $92 million billion below CLPHA’s and the Administration’s request of request of $18.447 billion, and $674 million above the FY16 enacted level.

 

Lead-Based Paint—Noting that HUD is unable to verify what actions the more than 700,000

private landlords and property owners who participate in the HCV program are taking to identify and address lead-based paint hazards in the more than 2 million housing units across the country, the Committee requires similar reporting and directs HUD to establish and implement similar processes for the HCV program as for public housing (referenced above).

 

HCV Administrative Fees: $1.769 billion. This is $353 million below CLPHA’s request of $2.122 billion, $308 million below the Administration’s request of $2.077 billion, and $119 million more than the FY16 enacted level.

 

Tenant Protection Vouchers (TPV): $110 million. This is $40 million below CLPHA’s request of $150 million, equal to the Administration’s request, and $20 million below the FY16 enacted level.

 

HUD-VASH Vouchers: $50 million. This is $25 million below CLPHA’s request of $75 million, $50 million more than the Administration’s request, and $10 million below the FY16 enacted level. Since veterans’

homelessness nationally has only declined by 36 percent since 2010, the Committee rejected the budget proposal to end funding for new VASH vouchers. The Committee also encourages HUD to recapture HUD–VASH vouchers from housing authorities that indicate they no longer have a need for the vouchers, and reallocate them to housing authorities with an identified need; and, as part of this reallocation, encourages HUD to prioritize housing authorities that project-base a portion of their HUD–VASH vouchers in high-cost areas.

 

Family Unification (FUP) Program: $20 million. This is new incremental voucher assistance and HUD is directed to prioritize the award of these new vouchers to housing authorities that have partnered with their local public child welfare agency and will target them to youth. Recognizing the current timeline of 18-months is inadequate and administratively impracticable, the bill includes a provision permitting FUP vouchers to be used by youth who have left, or will shortly leave, foster care, to be used for up to 36 months or longer if the youth is participating in a family self-sufficiency program; and includes a provision increasing the age range of eligible youth to those who are 18 to 24, and who have left foster care at age 14 or older, or will leave foster care within 90 days and are homeless or at risk of becoming homeless.

 

HUD is directed to work with the Department of Health and Human Services’ Administration on Children and Families [ACF] to develop guidance and training materials necessary to improve connections between local agencies, increase collaboration, improve programs, goals, and supportive housing models that align at the local level; and to identify specific statutory or regulatory barriers either within the FUP program or child welfare service programs that limit individuals’ access to services and case management that can help improve outcomes for at-risk youth, with a report due to Congress 180 days after enactment on the status and results of these efforts (Section 240 below).

 

HCV Mobility Demonstration: $11 million. This is new incremental voucher assistance to implement a housing mobility demonstration designed to help residents move to lower-poverty areas and expand their access to jobs, better schools, and economic opportunity. HUD is expected to use this demonstration to identify regulatory and administrative barriers to housing mobility and cost-effective strategies to facilitate and promote mobility. These funds may be used to deliver mobility services to families, including pre- and post-move counseling, rent deposits, as well as to offset the administrative costs of operating a mobility program (Section 243 below).

 

Family Self Sufficiency (FSS) Program: $75 million. This is $10 million below CLPHA’s request of $85 million, and equal to the Administration’s request and the FY16 enacted level. Expressing their strong support for FSS, the Committee also expects HUD to identify best practices that are successfully improving outcomes for residents and encourages HUD to consider best practices for how to increase participation, improve alignment between eligible uses of funding and milestones, and incorporate financial education into the program design.

 

Choice Neighborhoods Initiative (CNI): $80 million. This is $120 million below CLPHA’s and the Administration’s request of $200 million, and $45 million below the FY16 enacted level.  Up to $5 million of the funds may be provided as comprehensive local planning grants. Noting that the work to replace distressed public housing is far from complete, the Committee included language stipulating that not less than $48 million (60 percent) of the funding provided shall be awarded to projects where housing authorities are the lead applicant.

 

Also, believing it will incentivize communities to engage in robust planning efforts, while also ensuring the proposals that are most likely to result in successful implementation are funded, language is included directing that implementation grants may only be awarded to applicants who have previously been awarded planning grants.

 

Rental Assistance Demonstration (RAD): $4 million. This is $46 million below CLPHA’s and the Administration’s request of $50 million. The $4 million is only available to properties converting their assistance under Section 202 housing for the elderly. It should be noted, this is the first time funding in  any amount, by either the Senate or the House, for any purpose, has been proposed for RAD. The bill also modifies the enabling legislation to increase or raise the unit cap to 250,000 units (Sec. 244 below).

 

The Committee’s recommendation does not include HUD’s request for additional staff for RAD.

 

General Provisions

 

Sec. 210. Exempts Los Angeles County, Alaska, Iowa, and Mississippi from the requirement of having a PHA resident on the board of directors for fiscal year 2017. Instead, the public housing agencies in these States are required to establish advisory boards that include public housing tenants and section 8 recipients.

 

SEC. 218. Allows housing authorities with less than 400 units to be exempt from asset management requirements in the operating fund rule.

 

SEC. 219. Restricts the Secretary from imposing any requirement or guideline relating to asset management that restricts or limits the use of capital funds for central office costs, up to the limit established in QWHRA.

 

SEC. 226. Restricts the amount of Section 8 (under the tenant based rental assistance program) and Section 9 funding that public housing agencies can use to pay employees above the annual rate of basic pay for a position at level IV of the Executive Schedule in FY17. 

 

SEC. 227. Extends the HOPE VI program until September 30, 2017.

SEC. 229. Prohibits funds to be used to require or enforce the Physical Needs Assessment (PNA). 

 

Sec. 238. Modifies the Lead-Based Paint Poisoning Prevention Act to remove the ‘‘zero-bedroom dwellings’’ exclusion and amends the Residential Lead-Based Paint Reduction Act to include ‘‘zero bedroom dwellings.’’

 

Sec. 239. Capital Fund Replacement Reserves - Allows PHAs to establish replacement reserves to address capital needs. Housing authorities may deposit funds from their Capital Fund into a replacement reserve at any time when 1) funds originate from additional sources; 2) no minimum amount transferred is required; 3) a housing authority does not hold in its replacement reserve more than the amount determined necessary to satisfy its properties’ capital needs as outlined in the agency’s 5-year plan or comparable plan. HUD may allow housing authorities to transfer more than 20 percent of its Operating Funds into a replacement reserve account when first establishing the account. 

 

SEC. 240. Extends the period of use of family unification vouchers by youth from 18 to 36 months and makes modifications to the authorizing statute.

 

SEC. 241. Establishes a demonstration program that incents public housing agencies to implement  measures to reduce energy and water consumption and allowing the savings to be reinvested in their projects and operations.

 

SEC. 243. Establishes a Housing Choice Voucher Mobility Demonstration to encourage families to move to lower-poverty areas and expand access to opportunity areas.

 

SEC. 244. Increases the unit cap to 250,000 under the Rental Assistance Demonstration, and makes other authorizing modifications for public and assisted housing properties.

 

 

Other Selected HUD Programs

 

Project-Based Rental Assistance: $10.501 billion. Of this amount, $235 million is set-aside for Performance-Based Contract Administrators (PBCA).

 

Community Development Block Grant: $3 billion.

 

HOME: $950 million.

 

Homeless Assistance Grants: $2.33 billion. Of this amount, set-asides include $250 million for emergency solutions grants program; $7 million for a national homelessness data analysis project; and $40 million for comprehensive approach to serving homeless youth in up to 11 communities including  at least 5 rural communities.

 

Section 202 Housing for the Elderly: $505 million. Of this amount, up to $75 million is set-aside for service coordinators and existing congregate service grants.

 

Section 811 Housing for Persons with Disabilities: $154 million.

 

Information Technology Fund: $273 million. This is $13 million less than the budget request and $23 million more than the FY16 enacted level.

 

Next Generation Management System [NGMS] - The recommendation includes $10 million for development, modernization, and enhancement activities to deploy a replacement for the Voucher Management System and the Public Housing Information Center systems.NGMS is part of a systematic approach to improve existing business processes in the areas of program and financial management, and budget execution for PIH’s housing choice voucher and public housing programs… and will end PIH’s reliance on an annual $1.3 million contract with a third-party vendor to process more than 7,000 applications, with continual cost increases.”