The Biden Administration’s budget for fiscal year 2023 proposes substantial investments in existing Department of Housing and Urban Development (HUD) programs (details are in the table below) and new initiatives targeted to:

• Increasing affordable housing supply;
• Expanding rental assistance and increasing its impact on households experiencing homelessness and family mobility; and
• Addressing climate change.

The March 28 budget release is only the first step in the process of developing federal appropriations for the fiscal year that begins on October 1, 2022. HAC held a webinar to review the budget’s contents and what to expect over the coming months; view the slides and recording here.

— HAC’s analysis of USDA’s rural housing budget is available here —

Increasing Affordable Housing Supply

The budget proposes $50 billion in mandatory spending to increase and streamline affordable housing production. HUD would administer $35 billion of this total as a Housing Supply Fund, consisting of two elements:

• $25 billion in formula grants to be distributed to “State and local housing finance agencies and their partners, territories, and Tribes” to support streamlined financing tools for multifamily and single-family units, producing housing for both renters and homebuyers. The funding is intended to facilitate the production and preservation of smaller developments that struggle to obtain financing in the current housing finance system. The budget specifically notes that “many rural and midsize jurisdictions need a path to development that includes smaller building footprints to better integrate with existing communities.”
• $10 billion in grants to: 1) support state and local jurisdictions that adopt policies that remove barriers to affordable housing and development; and 2) incentivize funding of housing-related infrastructure such as environmental planning, transportation, and water/sewer infrastructure.

The remaining $15 billion in mandatory funding is to be administered by the Department of the Treasury, divided into:

• $10 billion in additional Low Income Housing Tax Credits (LIHTC); and
• $5 billion in grants to Community Development Financial Institutions to support financing for construction, acquisition, rehab and preservation of rental and homeownership housing, with an emphasis on increasing the participation of small-scale developers and contractors. The grants will seek to:
  • increase the climate resiliency and energy efficiency of affordable housing;
  • focus on underserved markets, including single-family, small properties (1-4 units) and small multifamily properties with fewer than 100 units;
  • expand homeownership opportunities by targeting single-family properties for individuals and families with incomes up to 120 percent of the Area Median Income (AMI) and up to 150 percent of AMI in high cost areas (including acquisition and rehabilitation); and
  • preserve affordable housing that is at risk of conversion to market rate.

Additional investments in existing HUD programs designed to complement the Housing Supply Fund grants include $2 billion in funding for the HOME Investment Partnerships program ($150 million above the FY 2022 enacted level), $100 million in funding for 1,100 new units in the Section 202 Supportive Housing for the Elderly Program, and 900 new units in the 811 Permanent Supportive Housing Program for Persons with Disabilities.

Rental Assistance, Homelessness, and Family Mobility

In addition to renewing all existing project-based rental assistance (PBRA) contracts and Housing Choice Vouchers (HCV) currently in use, the budget proposes $1.6 billion in funding to expand the Housing Choice Voucher program by 200,000 subsidies – the largest one-year expansion since the program’s inception – with the incremental subsidies targeting individuals fleeing domestic violence and persons experiencing homelessness. This effort to combat homelessness is coupled with a $576 million increase in the Homeless Assistance Grants account to $3 billion. The budget also includes $445 million in mobility services connected to use of HCVs in a broad range of communities.

Addressing Climate Change

In addition to the sustainability and resilience incentives in the Housing Supply Fund, the HUD budget includes:

• $300 million to increase energy efficiency and climate resilience in public housing;
• $150 million in funding for housing initiatives on Native American lands to increase energy efficiency and climate resilience and improve water conservation; and
• $250 million to rehabilitate HUD multifamily properties to be healthier, more energy efficient, and climate-resilient.

 

HUD Program (dollars in millions)	FY21 Final Approp.	FY22 Admin. Budget	FY22 Final Approp.	FY23 Admin. Budget
CDBG	$3,475	$3,770	$4,841*	$3,770
HOME	1,350	1,850	1,500	1,950
Self-Help Homeownshp. (SHOP)	10	10	12.5	10
Veterans Home Rehab	4	4	4	4
Tenant-Based Rental Asstnce.	25,778	30,442	27,370	32,130
VASH setaside	40	0	50	0
Tribal VASH	5	5	5	5
Project-Based Rental Asstnce.	13,465	14,060	13,940	15,000
Public Hsg. Capital Fund	2,942	3,678	3,388	3,720
Public Hsg. Operating Fund	4,864	4,917	5,064	5,060
Choice Neighbrhd. Initiative	200	250	350	250
Native Amer. Hsg.	825	1,000	1,002	1,000
Homeless Assistance Grants	3,000	3,500	3,213	3,576
Hsg. Opps. for Persons w/ AIDS	430	450	450	455
202 Hsg. for Elderly	855	928	1,033	966
811 Hsg. for Disabled	227	272	352	287
Fair Housing	72.6	85	85	86
Healthy Homes & Lead Haz. Cntl.	360	400	415	400
Housing Counseling	57.5	85.9	57.5	65.9

* The substantial increase in CDBG funding was driven nearly entirely by the return, after a 10-year absence, of $1.5 billion for the Economic Development Initiative for the purpose of funding Community Projects/Congressionally Directed Spending (popularly known as “earmarks”).