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Uphill battle lies ahead for community development.

Cities and towns can expect a tough battle in getting a reauthorization bill for municipal priority programs in housing and community programs. These laws expire September 30, 1992. A number of issues are very controversial and will require maximum effort on the part of local officials.

The Senate has begun its hearings on reauthorization and is looking to have a final bill in June. The House began hearings on reauthorization last week when it heard testimony from Jack Kemp, Secretary of the Department of Housing and Urban Development (HUD).

The Senate Appropriations Subcommittee on Veterans Affairs (VA)/HUD and Independent Agencies will begin its hearings in late April. The House Subcommittee on HUD/VA and Independent Agencies will hold its hearings April 7 thru April 9. The House is expected to appropriate no more than $500 million for HOME. The Senate has not committed to a figure yet.

There is agreement that securing the same $1.5 billion HOME received last year will be very difficult. Rep. Henry Gonzalez (D-Tex.), chair of the House Banking, Finance and Urban Affairs Committee, submitted a report to the House Budget Committee that called for a $3 billion authorization for HOME.

There appears to be a great deal of support for increased funding for the Community Development Block Grant (CDBG) program. Sen. Barbara Mikulski (D-Md.), chair of the Senate Appropriations Subcommittee on VA/HUD-Independent Agencies, has stated that she will propose increased funding for CDBG. CDBG was appropriated $3.4 billion last year. Gonzalez indicated in his report to the House Budget Committee that CDBG should be funded at $4 billion.

There is very little support in Congress for an extension of the waiver for another year. Members of Congress feel strongly that the match requirement is the single reason why the HOME program enjoyed bipartisan support in 1990. When the bill was drafted it included a provision that required local and state governments to match the federal funds they received under this program. Last year, Congress granted participating communities a one year waiver of the match requirement.

Rep. Marge Roukema (R-N.J.), the ranking minority member on the House Subcommittee on Housing and Community and Development, is supportive of creating a formula that would exempt those communities unable to meet the match requirement. The formula will also ensure that those communities capable of providing the match will do so.

Congress is considering a level match of 25 percent. (Currently, HOME calls for a three tiered match based on the type activity undertaken by the participating jurisdiction.) There has been some discussion project-based debt financing as an eligible match.

Mikulski has stated she will not seek an extension of the waiver for another year.

Nonprofits, specifically the Low Income Housing Coalition, the Enterprise Foundation, and Local Initiatives Support Corporation (LISC), oppose any use of debt financing as an eligible match, arguing that debt financing does not constitute a real commitment on the part of local government.

The nonprofits are supporting maintenance of effort as a substitute for a match or a floor for the match. This means that cities must maintain the same level of spending on housing in addition to receiving HOME funds. For example, if your city is using $10.00 of CDBG funds in 1991, maintenance of effort means you must continue spending those $10.00 on top of the $10.00 you receive from HOME. This provision would effectively eliminate municipal discretion in how local funds should be spent.

HUD submitted legislative language would give it the authority to withhold federal funds, loans, guarantees and/or revoke the authority of a municipality to issue tax-exempt municipal mortgage revenue bonds if it does not contain a "barriers removal strategy". HUD is requesting that the lack of a "barriers removal strategy" should be grounds for the denial of a Comprehensive Housing Affordability Strategy (CHAS).

The CHAS is the housing plan local communities must submit before receiving HUD funds. Currently, approval of a "barriers removal strategy cannot factor into the denial or approval of a CHAS.

Sen. Alan Cranston (D-CA) held his first hearing on S. 2341, the Residential Lead-Based Paint Hazard Reduction Act of 1992, March 19 (see NCW 3-15). The legislation would require local governments to develop a plan "to assess and reduce lead-based paint hazards" in housing built prior to 1978 and also calls for participating jurisdictions to provide a 10 percent match using non-federal funds.
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Author:Barreto, Julio
Publication:Nation's Cities Weekly
Date:Mar 30, 1992
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