Housing and Urban Development

House and Senate Move Housing Stimulus Legislation

April 15, 2008 -- On April 10, the Senate approved legislation (HR 3221) providing tax incentives to support the housing industry and reduce foreclosures. The bill would provide nearly $11 billion in incentives over the next 10 years. The House passed its version of the legislation last August, but it is significantly different from the amended version adopted by the Senate. The House Ways and Means Committee passed its own on April 9.

The Senate bill, which passed by a vote of 84-12, initially received a cool reception from the White House. However, given the strong bipartisan support for the measure, the administration may be softening its stance.

The Senate-passed bill contains a number of tax-credits designed to stimulate the Housing market including:

  • A tax credit of $7,000 spread out over two years to individuals that buy homes in or near foreclosure
  • Taxpayers who do not itemize their deductions but pay property taxes would receive an additional standard deduction of $500 ($1,000 for married couples) in 2008
  • An additional $10 billion in mortgage revenue bonds would be made available – the bonds could be used to refinance some sub-prime loans
  • Homebuilding businesses losing money in 2008 and 2009 would be able to count those losses against four years of past profits and claim refunds – current law only allows losses to be carried back two years
  • Local governments would receive $4 billion in additional funding for the Community Development Block Grant (CDBG) program, which could be used to purchase and rehabilitate foreclosed properties. Any profits generated from the CDBG funds that are not reinvested must be repaid within five years

The bill also extends for one year renewable energy and energy efficiency tax credits that expire at the end of this year.

The package approved by the House Ways and Means Committee also provides $11 billion in tax incentives, but unlike the Senate bill, the cost of the House legislation is fully offset.

The House measure does not contain additional CDBG funds or deductions for homebuilder losses. The bill does contain a number of similar provisions including:

  • First-Time Home Buyer Tax Credit: would provide assistance in making a down payment with a refundable tax credit that is equivalent to an interest-free loan equal to 10 percent of the purchase price of a home (up to $7,500)
  • Deduction for Real Property Taxes: Similar to the Senate provision, but only $350 for individuals and $700 for joint filers.
  • Low-Income Housing Tax Credit: a temporary increase to $2.20 through 2009 of the per capita limit of tax credits that can be allocated to each state
  • Mortgage Revenue Bonds: similar to the Senate provision
  • Municipal Bonds: municipal bonds guaranteed by Federal home loan banks are eligible for treatment as tax-exempt bonds

The House measure now awaits floor consideration. For additional information, contact NADO Legislative Director Jason Boehlert at 202.624.8590.

NADO Joins CDBG Funding Effort

March 18, 2008 -- On March 6, NADO joined with 16 national organizations urging leaders of the House and Senate Appropriations Committees to provide no less than $4.1 billion for the Community Development Block Grant (CDBG) program.

The letter states that national organizations are “concerned about the impact past cuts have had on the program and continued impact the proposed cuts will have on the communities that rely on this funding to serve their most vulnerable residents, principally low- and moderate-income persons.” The letter further adds that “CDBG housing projects assisted 151,107 households in FY2007, including financial assistance to new homeowners and rehabilitation assistance to the elderly and other existing homeowners. In addition, the program helped create and retain 42,231 jobs in FY2007 and provided vital public services to over 24 million persons.”

The administration budget request contains $2.93 billion for the CDBG formula program in FY2009. If enacted, this would represent a cut of 33 percent since FY2003.

Organizations signing the letter include American Federation of State, County and Municipal Employees, Council of State Community Development Agencies, Local Initiatives Support Corporation, National Association of Counties (NACo) and U.S. Conference of Mayors. For a copy of the letter, contact NADO Legislative Director Jason Boehlert at 202.624.8590 or jboehlert@nado.org.

CDBG Program Slated for Cuts Under Budget Proposal

February 12, 2008 -- The administration's budget request provides $38.5 billion in discretionary spending for HUD, nearly three percent over the amount currently provided.

The administration's budget again proposes a significant cut for the Community Development Block Grant (CDBG) program. CDBG would be reduced more than $600 million to $2.93 billion. If enacted, the proposal would represent a cut of nearly 33 percent since FY2003. In addition, the budget re-proposes the CDBG Reform Act, which adopts an improved formula to better target funds to communities with the greatest economic need and holds communities accountable for results. The budget adds that legislation implementing these reforms will be transmitted to Congress in early 2008.

Congress has not acted on previous budget requests to revise the CDBG program’s distribution formula. This is the fourth consecutive budget request containing a proposal to overhaul the program.

The budget rescinds $179.8 million from the FY2008 appropriations for Economic Development Initiative (EDI) grants and $25.9 million from neighborhood initiatives. Both accounts consist almost exclusively of congressional earmark priority projects.

Similar to last year’s budget proposal, funding for HUD’s Brownfields Economic Development Initiative (BEDI), Community Development Loan Guarantee program (Section 108) and Rural Housing and Economic Development program are slated for elimination.

The HOME Investment Partnership program is provided with $1.9 billion, an increase of $212 million. Of this amount, $9.9 million is for technical assistance. An additional $50 million is provided for the American Dream Downpayment Act within the HOME program, an increase of $40 million.

An increase of $50 million is provided for Homeless Assistance Grants, bringing total funding to $1.6 billion. The majority of the funding is to be available through fiscal year 2011. Of the funds provided, $25 million is set aside for a demonstration program for the rapid re-housing of homeless families.

The Revitalization of Severely Distressed Public Housing program (HOPE VI) is again slated for elimination in the President’s budget. The program is currently funded at $100 million. As in previous years, the administration justifies the elimination by arguing that the program “has completed its goal of contributing to the demolition of 100,000 severely distressed public housing units.” In January, the House adopted legislation (HR 3524) reauthorizing the HOPE VI program for eight years.

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HUD Spending Increases Under Final 2008 Spending Package

January 16, 2008 -- The final fiscal 2008 spending package provides HUD with $37.6 billion in discretionary budget authority, $1.4 billion above FY 2007 and $2.4 billion above the President's request.

Community Development Block Grant (CDBG) formula grants are provided with $3.59 billion, roughly $117 million under 2007 spending. The administration proposed cutting CDBG funding by $822 million. The measure also provides $179.8 million for individual projects funded under the Economic Development Initiative (EDI). However, the measure includes a provision cutting each individual EDI grant by two percent.

The measure provides $1.7 billion for the HOME Investment Partnerships program, $53 million less than FY 2007 and $263 million under the President's request. This includes $50 million for housing counseling and $10 million for the American Dream Downpayment Initiative

Funding is provided for a number of programs that were zeroed out in the administration's proposal, including $17 million for Rural Housing and Economic Development (equal to FY 2007), $10 million for brownfields redevelopment (equal to FY 2007) and $100 million for HOPE VI public housing revitalization assistance ($1 million over FY 2007).

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House Moves to Establish Housing Trust Fund

October 10, 2007 -- On October 10, the House of Representatives adopted legislation (HR 2895) to establish a national housing trust fund. The goal of the fund would be to finance the construction, refurbishment and maintenance of 1.5 million affordable housing units.

The trust fund would be financed by Federal Housing Administration (FHA) lending surpluses and by a portion of Fannie Mae’s and Freddie Mac’s portfolios. It is estimated that roughly $900 million per year would be generated from these mechanisms.

The trust fund would distribute grants to state and local governments to finance low-income housing units or to provide down payment assistance for low-income buyers. The measure has been supported by the National Association of Home Builders, National Association of Realtors and the US Conference of Mayors.

Senate Banking Committee Chairman Christopher Dodd (D-CT) is said to be supportive of the concept and is considering adding a similar mechanism to larger FHA-related legislation.

The White House is opposed to “diverting” resources from FHA, Fannie Mae and Freddie Mac, and has threatened to veto the measure.

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RHED Authorization Bill Introduced

May 7, 2007 -- On April 20, Representative Rubén Hinojosa (D-TX) introduced legislation (HR 1982) authorizing HUD's Rural Housing and Economic Development program. Under the legislation, the program would be authorized at $30 million in FY2008 and $40 million annually from 2009 until 2013.

The bill has four additional cosponsors: Reps. Barney Frank (D-MA), Emanuel Cleaver (D-MO), Bennie Thompson (D-MS) and Rick Renzi (R-AZ). There is no companion legislation in the Senate.

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HUD Unveils CDBG Reform Proposal

May 30, 2006 -- On May 25, the Department of Housing and Urban Development (HUD) submitted to Congress a proposal to reform the Community Development Block Grant (CDBG) program. The measure changes CDBG’s existing dual formula structure to a single formula that would distribute funds based on five variables, including:

  • The number of households living in poverty, excluding full-time dependent college students;
  • The number of overcrowded housing units;
  • The number of female head of households with minor children;
  • The number of homes 50 years or older occupied by a low-income family; and
  • The per capita income of the community relative to the per capita income of its metropolitan area.

The legislation establishes a minimum grant threshold for entitlement communities to be eligible for an annual allocation. In its release, HUD states that “smaller grants allocated to hundreds of communities dilutes CDBG’s impact.” The measure would set the minimum grant threshold at $518,000. Based on the formula above, communities that do not meet the threshold would not be eligible to receive an annual allocation. HUD states that “[S]maller grantees that do not meet this new threshold may receive larger grants by prevailing on their CDBG-funded program at the state level or by joining with their urban county to create a new combined entitlement community.”

In addition, the legislation creates a $200 million challenge grant program that would award funds to “certain entitlement communities that target their CDBG funding to areas of concentrated need.”

The measure eliminates HUD’s Brownfields Economic Development Initiative, Rural Housing and Economic Development program and Section 108 Loan Guarantee Assistance program. Funding for these activities would be consolidated within the greater CDBG program.

It is unknown if Congress will take any action on the measure. Currently, no Member of Congress has offered to sponsor the bill. To view the proposal, visit www.hud.gov/content/releases/2006-05-25cdbg.cfm. For additional information, contact NADO Legislative Director Jason Boehlert at 202.624.8590 or jboehlert@nado.org.

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HUD Clarifies Brownfields Cleanup Eligible under CDBG

May 30, 2006 -- On May 24, the Department of Housing and Urban Development (HUD) published a final rule clarifying and updating Community Development Block Grant (CDBG) program regulations to include brownfields cleanup, development and redevelopment as an eligible program activity. In its notice, HUD states that “[A]lthough cleanup and redevelopment of brownfields can already be accomplished using numerous categories of eligible activities, qualifying an activity under the existing criteria has often been confusing and problematic.” The rule expands the “slums or blight” national objective to include environmental contamination and expands “clearance” to include remediation of contamination.

To access the rule, visit http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/pdf/06-4795.pdf.

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