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Appropriations conferees cut HOME match.

House and Senate conferees have tentatively agreed to key provisions in a housing reauthorization bill that will include a reduced match and the use of debt financing for communities participating in the HOME state and local block grant programs.

As Nation's Cities Weekly went to press, conferees were continuing their negotiations on a two-year housing reauthorization bill that would extent the nation's housing and community development laws until 1994.

The Senate version, S. 3031, the National Affordable Housing Act Amendments of 1992, and H.R. 5334, the Housing and Community Development Act of 1992, each contained significant differences on a number of key issues for local officials. The conferees reached tentative agreement on a number of key municipal issues. Still unresolved is a mandatory lead testing and abatement provisions that could prove costly to local governments.

HOME match requirement

Conferees agreed to a 30 percent match for new construction and a a 25 percent match for all other activity. The HOME program called for participating communities to provide a match as a condition to participating in the program. Current law requires communities to provide a 50 percent match for new construction, 33 percent for substantial rehabilitation and 25 percent for moderate rehabilitation and tenant-assistance.

H.R. 5334 called for a 20 percent uniform match for all HOME-eligible activities, S. 3031 called for a 35 percent match requirement for new construction, and a 25 percent match for all other HOME eligible activities.

Debt financing

Conferees agreed to allow the use of publicly issued debt to account for 50 percent of the match requirement for multifamily housing and 25 percent of the match requirement for single family housing. The debt can only equal up to 50 percent of the total match required.

H.R. 5334 called for 100 percent use of cash obtained from publicly issued debt as an eligible match for HOME-assisted housing for both rental and homeownership housing.

Waiver from match requirement

Conferees agreed to a waiver of the match requirement based on four criteria: unemployment rate, poverty rate, per capita income and growth lag (details of each are unavailable at this time). Communities meeting two of the four criteria are granted a 50 percent waiver. Communities meeting three of the four criteria receive 100 percent waiver. Communities showing significant increases in any one of the four criteria, receive a 100 percent waiver.

Administrative expenses

The conferees agreed to allow communities to use 10 percent of HOME funds for administrative expenses. H.R. 5334 had permitted the use of 10 percent of HOME funds for administrative expenses while S. 3031 would have permitted the use of HOME funds for up to 7 percent of administrative expenses.

Lead based paint

This is one of the remaining provisions to be negotiated by the conferees. H.R. 5334 does not contain a provision on lead based paint, however, NLC has been told that the House will support the Senate provision mandating testing of all federally subsidized housing units for hazardous levels of lead based paint.

The Senate bill contains several provisions that could prove to be costly to municipalities. They are:

(1) The bill requires communities to "conduct risks assessments, inspections and interim controls, and abatement of lead-based paint hazards." Initial risk assessments must be completed by January 1, 1996.

(2) The bill prohibits municipalities from spending federal funds for building renovation or rehabilitation that may disturb painted surfaces unless an inspections for the presence of lead-based paint has been conducted.

(3) The bill requires the abatement of lead-based paint in the course of "substantial rehabilitation projects receiving more than $25,000 per unit in Federal funds."

(4) The bill does not contain funds to assist municipal efforts to comply with its testing and abatement provisions. The testing and abatement provisions are considered eligible activities under the HOME and CDBG programs. S.3031, however, does contains a new five years, $500 million grant program to assess and abate lead based paint in federally subsidized housing. To be eligible for a grant, communities must identify their lead based paint problem in their Comprehensive Housing Affordability Strategy (CHAS), provide a 10 percent match and maintain any current level of funding for lead-based paint activities.

NLC Position

NLC is urging the conferees to (1) to extend the date of completion of all testing requirements until three years after HUD has issued is regulations governing risk assessments, inspections and abatement activities, (2) delete the match requirement and the maintenance of effort provision; include report language that expresses a Congressional commitment to provide a dedicated funding source for mandated activities in 1993.
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Author:Barreto, Julio
Publication:Nation's Cities Weekly
Date:Oct 5, 1992
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