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HUD appropriation shifts funding priorities away from NLC agenda items.

President Bush submitted a budget proposal that called for an a $500 million cut in the Community Development Block Grant (CDBG) program and an $800 million cut in the HOME local and state block grant program.

He also requested Congressional approval to condition any CDBG, HOME, or other HUD housing assistance, loans or guarantees on preemption of land use and zoning ordinances and authority--a federal preemption of one of the most fundamental rights and responsibilities of municipal officials--on meeting a federal "barrier removal" strategy.

The president's budget request is a clear signal that the Department of Housing and Urban Development (HUD) will be moving away from priority programs of cities and towns and aggressively pursue initiatives supported by HUD Secretary Jack Kemp.

Included in the President's budget was a request for $1 billion for the Homeownership Opportunities for People Everywhere (HOPE), an increase of more than 200 percent. HOPE grants can bypass cities and towns.

The budget is also drafted in a way that is difficult to decipher. In past years, HUD was very clear in describing what programs were increased, decreased or slated for termination. This year's budget masked the manner in which HUD determined its budget figures. The budget does provide cuts in HOME, CDBG, Public and Indian Housing, Public Housing Modernization and Elderly and Handicapped Housing.

The president's proposal seeks to eliminate the Section 108 Loan Guarantee program, single room occupancy program, supplemental assistance for the homeless, the Section 8 Moderate Rehabilitation program, and Section 202 housing assistance program.

The $700 million requested for HOME in FY 93 is more than a 50 percent cut from the $1.5 billion appropriated for the housing block grant last year by Congress. In a significant victory for cities and towns, the $1.5 billion appropriated for HOME last year represented the first time in 10 years that new money was spent on housing.

Additionally, in response to the recession, Congress approved a one year waiver of the match requirement contained in the HOME program. (HOME requires local governments to provide a match as a condition to participating in the program.) The president expressed his displeasure with the waiver by stating that he will increase his request to HOME to $590 million if the matching requirement is maintained.

The White House said January 29 that it would strongly oppose any effort to reduce, modify, or waive the match requirement next year despite the severe fiscal stress in cities and towns facing the most serious housing needs.

The president requested $2.9 billion for CDBG a $500 million reduction from the FY 92 appropriation figure of $3.4 billion. The $2.9 billion equals the president's budget request rejected by Congress last year. The president is also proposing that $44 million of CDBG funds be siphoned off and used for a new comprehensive anti-crime program called "Weeds and Seeds."

In an effort to stimulate home sales, the president is proposing a $5,000 tax credit over a two year period for first time homebuyers and waived penalties for withdrawals from IRAs by first-time homebuyers to be used toward the down payment of a home. The president also supports extending the Low-Income Housing Tax Credit and Mortgage Revenue Bond programs for year and a half.

The president will submit a legislative proposal that includes a provision that will require HUD review and approval of local zoning and land use decisions as a condition to receiving HOME funds. Local communities are required to submit a Comprehensive Housing Affordability Strategy (CHAS) as a condition to receiving HOME funds. If the president's request is approved by Congress, HUD will have the authority to dictate to local governments what their land use policies should be.

The pre-approval of local zoning decisions was one of a number of recommendations of the Advisory Commission on Regulatory Barriers to Affordable Housing supported by the president in his budget requests. Last summer the commission released a report, Not in My Back Yard: Regulatory Barriers to Affordable Housing, stating that local government regulations increased the cost of housing making it unaffordable for low and moderate income households.

The $1 billion request for HOPE is part of the president's strategy to empower poor people. This represents a $637 million increase over the FY 92 funding level of $351 million. The president's initiative also calls for $1.2 billion for HOPE Prevention/Prepayment to preserve privately-owned, federally assisted housing.

His budget proposes homeownership vouchers for low income households to be used for either rent or a mortgage payment.

He is proposing a number of "new" initiatives:

The Perestroika for Troubled Public Housing: New Choices for Residents initiative provides $4.7 billion for public housing: $2.92 billion for modernization; $2.282 billion for operating subsidies to cover the gap between tenant rents and operating costs; and $165 million for grants to rid projects of drug dealers. $292 million of modernization funds will be set aside for two components: Choice in Management ($100 million) and Operation Take the Boards Off ($192 million).

Choice in Management would allow public housing residents to choose to turn projects over to a private entity for management or sell it to a private entity for continuation as a rental project. Nonprofits, including cities and states and for profits, would be eligible to manage the development.

In Operation Take the Boards Off vacant public housing developments could be sold to nonprofit organizations for rehabilitation, rental re-occupancy or tenant ownership.

Restore for Troubled Multifamily Housing is designed to improve the housing conditions of troubled projects insured by FHA that are in danger of defaulting on their mortgages. It maximizes resident involvement in managing and owning these projects. Safe Havens is a program designed to assist mentally ill homeless persons who are unable or unwilling to participate in transitional housing.

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Title Annotation:Department of Housing and Urban Development, National League of Cities
Author:Barreto, Julio
Publication:Nation's Cities Weekly
Date:Feb 3, 1992
Previous Article:'Regulatory budget' leaves unanswered questions.
Next Article:Economist Freund, journalist Gergen will speak at Congress of Cities.

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