News & Events - Capitol Express - April 20, 2011

Congressional and Administration News

Funding for Remainder of FY 2011 Passes; Housing Spending Reduced

On April 15, President Obama signed into law the final continuing resolution for Fiscal Year (FY) 2011 (H.R. 1473). The continuing resolution represents the largest non-defense spending cut in U.S. history and reduces spending authority by nearly $40 billion below FY 2010 levels. In addition to direct cuts to specific programs, every domestic discretionary program was subject to an across-the-board 0.2 percent reduction (reflected in the numbers below). Overall, H.R. 1473 reduces the Department of Housing and Urban Development (HUD) budget by 6.4 percent below FY 2010 levels. H.R. 1473 contains funding for the following programs:

• $9.3 billion for Project-Based Rental Assistance (8 percent increase from FY 2010 levels)
• $18.4 billion for the Housing Choice Voucher program (1 percent increase)
• $2 billion for the Public Housing Capital Fund and $4.6 billion for the Public Housing Operating Fund (18 percent and  3 percent reductions, respectively)
• $3.5 billion for the Community Development Fund of which $3.3 billion is for Community Development Block Grant formula allocations (21 percent and 16 percent reductions, respectively). The account includes $99.8 million for the HUD Sustainable Communities Initiative (33 percent reduction).
• $1.6 billion for the HOME Investment Partnerships Program (12 percent reduction)
• $1.9 billion forMcKinney-Vento Homeless Assistance Grants (2 percent increase)
• $99.8 million for the HOPE VI and Choice Neighborhoods account (50 percent reduction). This account includes $64.9 million for the Choice Neighborhood demonstration program (0.2 percent reduction) and $34.9 million for HOPE VI grants.
• $226.5 million for the Department of the Treasury’s Community Development Financial Institutions Fund account (8 percent reduction)
• $69.4 million for the Department of Agriculture’s (USDA) Section 515 Rental Housing Direct Loan Program (0.2 percent reduction)
• $1.1 billion for the USDA Section 502 Single Family Direct Loan Program (0.2 percent reduction)

H.R. 1473 eliminates funding for HUD’s Brownfields Redevelopment program, Housing Counseling Assistance, the Rural Innovation Fund and the Energy Innovation Fund. NeighborWorks will continue to receive $65 million for the National Foreclosure Mitigation Counseling program, but these funds are restricted to foreclosure counseling and cannot be used for pre-purchase counseling. For a complete list of budget levels, view the Enterprise FY 2011 Housing and Community Development Budget Chart and Summary at the Budget and Appropriations webpage. In addition, the Senate Committee on Appropriations has posted a summary of the Transportation, Housing and Urban Development funding levels and the Congressional Budget Office has released its scoring estimate for H.R. 1473.

House Republicans, Administration Offer Competing Budget, Deficit Reduction Proposals

• Cut domestic, non-security spending to FY 2008 levels and institute a five-year spending freeze. The Center on Budget and Policy Priorities estimates that this would result in an 11 percent reduction in federal housing assistance and a 21 percent reduction in funding for community and regional development in FY 2012.  
• Impose time limits and work requirements on federal rental assistance recipients
• Take steps to eliminate the conservatorship of Fannie Mae and Freddie Mac
• Reduce the top corporate and individual tax rates while broadening the tax base by removing unspecified credits and deductions
• Create institutional barriers to increased spending, such as a binding cap on total spending as a percentage of the economy

This plan reduces taxation levels and calls for all deficit reduction measures to come from spending cuts and increased revenue from economic growth. The resolution is not expected to pass the Senate as a result of Democratic opposition. Details have not been released for an alternate plan being developed by a bipartisan group of Senators known as the “Gang of 6”.

President Obama delivered a speech on April 13 that responded to the Republican budget plan and provided the Administration’s framework for deficit reduction (view the Administration factsheet). The plan is intended to result in $4 trillion in deficit reduction, and contains the following proposals that would impact housing and community development:

• Make non-security discretionary spending cuts of $770 billion and defense cuts of $400 billion by 2023;
• Reduce tax rates while broadening the tax base by removing unspecified credits and deductions
• Institute a “debt failsafe” that triggers across-the-board spending reductions if the federal debt is not stabilized and declining as a percentage of gross domestic product (GDP) by 2014. The trigger would contain exceptions to protect those with low incomes and to respond to economic downturns.

The Administration plan calls for a three-to-one ratio of spending reductions to tax increases, the same ratio as called for by the President’s National Commission on Fiscal Responsibility and Reform (NCFRR).

Tax reform that reduces or eliminates corporate credits and deductions could mean the elimination of the Low-Income Housing Tax Credit (LIHTC) and New Markets Tax Credit (NMTC) programs. Enterprise previously submitted a comment letter in support of the LIHTC and NMTC to the NCFRR that details the programs’ efficiency and effectiveness in leveraging private investment to meet the nation’s affordable housing and community development needs. In addition, Enterprise Senior Director, Public Policy and Government Affairs, Peter Lawrence emphasized the importance of the NMTC program in the April 2011 edition of his Policy Points column in the Novogradac Journal of Tax Credits.

Enterprise, NHC Submit Comments on Promoting Affordable Housing Near Transit

• adding affordable housing rating criteria to the New Starts transit funding program
• clarifying rules pertaining to transit agency joint development
• eliminating the restriction on selling excess transit-agency property at a discount (or donating it) for a public purpose

For more information, view the full Enterprise-NHC comment letter (Docket Number DOT-OST-2011-0025).

DOE Issues Updated List of Multifamily Properties Eligible for Weatherization Assistance

EPA Announces Recipients of Sustainable Community Building Blocks Program

Federal Register Update

• Final Rule on Federal Home Loan Bank Liabilities (RIN 2590-1270), Federal Housing Finance Board and Federal Housing Finance Agency
• Requests for Expressions of Interest to Administer Fellowship Placement Pilot Program (Docket Number FR-5514-N-01), HUD
• Notice of Additional Allocations, Waivers Granted to, and Alternative Requirements for 2010 CDBG Disaster Recovery Grantees (Docket Number: FR-5452-N-02), HUD

Hearings/Events

House Subcommittee Advances GSE Reform Bills

On April 5 and 6, the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises (GSE) marked up and advanced eight bills regarding the operations of Fannie Mae and Freddie Mac (collectively, the GSEs). If enacted, the bills would reduce the GSE's role in the housing finance market and end government conservatorship of the organizations (for more information on the GSE reform legislation, read the April 6 edition of Capitol Express). In advancing the legislation, Republican committee members asserted that immediate action was necessary to protect taxpayers, eliminate government involvement in the housing finance market and spur the return of private capital into the market. Democratic members resisted some of the measures, stating that for private capital to return, all elements of the new housing finance system (including the role of the federal government) must be carefully established before significantly reducing the role of the GSEs in the still-fragile market. For more information, visit the subcommittee markup website.

Congressional Committees Schedule Budget, GSE Hearings

Budget and Appropriations

• Markup of the Concurrent Resolution on the Budget for FY 2012 (April 6), House Budget
• Perspectives on Deficit Reduction (April 13), Senate Finance
• FY 2012 HUD Budget Hearing on Public and Indian Housing (postponed), House Appropriations Subcommittee on Transportation, Housing and Urban Development (THUD Subcommittee)
• FY 2012 Federal Transit Administration Budget Hearing (postponed), THUD Subcommittee
• FY 2012 Federal Housing Administration (FHA) Budget Hearing (postponed), THUD Subcommittee
• FY 2012 HUD Community Planning and Development (CPD) Budget Hearing (postponed), THUD Subcommittee

Financial Regulation

• Understanding the Implications and Consequences of the Proposed Rule on Risk Retention (April 14), House Financial Services Subcommittee Capital Markets and GSEs

Rural and Native American

Tax Reform

• How Tax Complexity Hinders Small Businesses: The Impact on Job Creation and Economic Growth (April 13), House Small Business
• How the Tax Code's Burdens on Individuals and Families Demonstrate the Need for Comprehensive Tax Reform (April 13), House Ways and Means

Research and Reports

Housing and Community Development Reports Released

• The 2011 Community Preference Survey: What Americans Are Looking For When Deciding Where to Live, NAR
• The Dynamics of Economic Well-Being: Fluctuations in the U.S. Income Distribution: 2004-2007, Census Bureau
• How to Evaluate Choice and Promise Neighborhoods, The Urban Institute
• The Perils of Privatizing the U.S. Mortgage Finance System, CAP
• Recovery Act: Energy Efficiency and Conservation Block Grant Recipients Face Challenges Meeting Legislative and Program Goals and Requirements, GAO
• Should I Stay or Should I Go? Exploring the Effects of Housing Instability and Mobility on Children, CHP
• State and Local Governments' Fiscal Outlook: April 2011 Update, GAO