HAC’s Analysis of the FY 17 HUD Budget

The Administration’s FY17 budget request for USDA’s rural housing programs would largely maintain the status quo. It offers no program or policy changes – welcome news for tenants aided by the Section 521 Rental Assistance program, which was targeted for changes in recent Administration budgets, including minimum rents.

Access a recording and materials from HAC’s webinar on the FY 17 Budget.

Homeownership Programs

The budget would retain current funding levels for the Section 502 direct and guaranteed mortgage programs and for the Section 504 very low-income homeowner loan and grant repair programs. It would, however, decrease funding for Section 523 self-help contracts from $27.5 million in FY16 to $18.5 million in FY17. In some past years, the Section 523 program – which funds administrative costs for local nonprofits that run self-help building programs and for regional organizations that provide technical assistance to the local groups – has had more than enough funding and has carried over part of its appropriation from one year to the next. That appears to be the case for FY17 as well. [tdborder][/tdborder]

Two small pieces are zeroed out in the budget, as they have been for several years, although congressional appropriators have continued to fund them. First, the Section 533 Housing Preservation Grant (HPG) program would receive no funds because, the budget says, “preservation” is covered by other programs. HPG, however, does not fund the same kind of preservation as the Section 515 and Multi-Family Preservation and Revitalization programs. Instead, it provides grants to local nonprofits to help them make repairs to both owner-occupied and rental housing.

Second, the budgets regularly eliminate the $5 million set aside within the Section 502 direct program for participants in self-help programs, and Congress regularly restores it. As a practical matter, the set-aside makes little difference because self-help families receive a far higher proportion of Section 502 direct loan dollars ($121.5 million out of $900 million in FY15, or 13.5 percent).

Rental Programs

Unlike the FY15 and FY16 budgets, this one does not request changes to the Rental Assistance program. It does not suggest imposing minimum rents, limiting RA contract renewals, or making other administrative changes. It would increase RA funding slightly to $1.405 billion.

The budget proposes $33.1 million for Section 515, an increase over the $28.4 million FY16 level, but a decrease from the $42.3 million requested in the FY16. That FY16 request included a targeted effort to construct new rental properties in persistently poor areas and the FY17 budget does not renew that proposal.

Funding for Section 514/516 farm labor housing would be kept at current levels.

The Multi-Family Preservation and Revitalization (MPR) program would receive $19.4 million, lower than the $22 million FY16 level but higher than the $17 million appropriated in FY15. Rather than $15 million as was provided in FY16, $18 million would be available for vouchers for tenants living in a property where a Section 515 mortgage is prepaid, or “that is otherwise paying off the section 515 financing as based on prioritization as determined by the Secretary.”

As it has in the past, the budget requests permanent authorization for MPR.

Posted: February 9, 2016