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HUD's Donovan Outlines 2014 Budget; 90% to Support Existing Programs

by devteam April 11th, 2013 | Share

U.S. Housing and Urban Developmentrn(HUD) Secretary Shaun Donovan has released details of the ObamarnAdministration’s proposed Fiscal Year 2014 HUD Budget.  The HUD portion of the budget seeks $47.6rnbillion, an increase of $4.2 billion or 9.7 percent more than the 2012 enacted budget.rn  </p

Donovan explained at a pressrnconference that the request represents the gross budget but increases inrnrevenue from GNMA and FHA recoveries and premium increases reduce the netrnbudget to $33.1 billion which represents a decrease from the previous fiscalrnyear.</p

More than 90 percent of the increasernin the gross budget is used to maintain current levels of rental andrnhomelessness assistance for vulnerable families.  The budget requests $37.4 billion that willrnbe used to assist 5.4 million families, the overwhelming majority of whom earnrnless than 30 percent of their area’s median income  The budget also makes investmentsrnto revitalize high-poverty neighborhoods, reduce blight in communities hardestrnhit by the foreclosure crisis, and support sustainable economic development. </p

Donovan said HUD’s portion of thernFY2014 budget was developed with housing specific versions of the Presidentsrnfour priorities for the budget as a whole: rn</p<ul class="unIndentedList"

  • Growing the Middle Class WhilernBringing Private Capital Bank to the Market</i- by reigniting economic growth by strengthening the housing market, speedingrnthe nation's economic recovery, and building a stronger middle class</li
  • Prioritizing Renewals – by maintaining a core commitment to protect familiesrncurrently receiving rental assistance by keeping them in their home</li
  • Creating Ladders of Opportunityrnfor Millions of Americans – byrncreating Promise Zones in some of the nation’s hardest-hit neighborhoods</li
  • Reducing Regulatory Burdens andrnIncreasing Efficiency – by improving the efficiency andrneffectiveness of HUD programs</li</ul

    The budget proposes an increase ofrn$20 million for both the 202 Supportive Housing for Seniors Program and the 811rnSupportive Housing for Persons with Disabilities Program, bringing the totalrnbudget request for the two to $526 million. rnBecause HUD has opted to use these fund to operate existing units ratherrnthan build new ones they have been able to produce an estimated 4,100 newrnhousing units. </p

    Other highlights of the budgetrninclude:</p<ul class="unIndentedList"

  • Nearly $2.4 billionrnin homeless assistance grants through HUD’s Continuum of Care and<iEmergency Solutions Grant (ESG)</li
  • $400 million for HUD’s ChoicernNeighborhoods Initiative to transform 30 neighborhoods withrnextreme poverty into opportunity-rich, mixed-income neighborhoods – to date,rnthe nine communities currently funded under this initiative leveraged $2 billion in other sources ofrncapital, more than eight times their grant awards</li
  • Expands the Movingrnto Work Program to test innovative, locally driven policies tornachieve positive outcomes for families, streamline program administration, andrnreduce Federal costs. To build evidence of what works, this expansion isrnaccompanied by rigorous reporting and evaluation requirements.</li
  • $726rnmillion to address the housing needs of NativernAmerican Tribes</li
  • $332 million for a modernized HousingrnOpportunities for Persons with AIDS (HOPWA) program that will target funds to areas with thernhighest need</li
  • Reduces funding for the HOME Investment Partnerships Program. The Budget mitigatesrnthis reduction by providing $1 billion torncapitalize the Housing Trust Fund</ito expand the supply of housing targeted to extremely low income families</li
  • Reduces costs in HUD’s core Rental Assistance programs by simplifying administration of thernmedical expense deduction, better targeting rental assistance to the workingrnpoor, and setting more equitable PublicrnHousing rents.</li</ul

    The budgetrnalso includes a request to fund 10,000 new rental vouchers through the HUD-VArnSupportive Housing (HUD-VASH)</iProgram to provide permanent housing to homeless veterans.  Donovan said that while veterans' programs arernexempted from Sequester cuts the spillover effect is going to affect veteransrnanyway.  Some 20 percent of recipients ofrnnon-VASH housing assistance are in other subsidized housing program that may berneffected.  Cutbacks in funding have hit localrnhousing authorities hard and that, even before the Sequester six authoritiesrnhad turned down VASH vouchers because they lacked the funds and staff to administerrnthe program.   Donovan said HUD was looking at ways theyrnmight increase funds to local authorities to help them administer the veteransrnprogram which has increased housing for homeless vets from 1200 units in 2009rnto 48,000 and reduced the lease-up time for vouchers by 15 percent.  </p

    Donovan declined to speculate aboutrnthe likelihood FHA would need to draw on Treasury funds to correct the deficitrnin its Mortgage Insurance Fund but said that much progress had been made inrnplugging the hole.  The Independent Auditrnconducted last fall found a $16 billion deficit but if comparisons were madernapples to apples it was actually more like $19 billion.  Changes FHA has made since then has reducedrnthis to $943 million.  These changes havernincluded concentrated efforts to increase recoveries from the 2007 and earlierrnloans through ramped up modifications and increased loan sales, suspending thernbulk draw payment option of the reverse mortgage program, and substantiallyrnincreasing premiums for both FHA and GNMA loans.  No decision will be made on the need for arnTreasury draw until October 1, Donovan said.</p

    Donovan said HUD believes stronglyrnin the importance of the HECM reverse mortgage program in assisting seniors tornuse their home equity to responsibly manage health care and other needs butrnthat more changes need to be made to the program and made quickly.  Because the types of reasonable changes HUDrnwants to make must go through notice and comment procedures it is necessary tornget them done and enacted by Congress before the end of the fiscal year or morerndrastic and less reasonable solutions will be necessary.  HUD is proposing changes such as requiringrninsurance and tax escrow accounts and limiting draws to mandatory obligations.</p

    Donovan spoke out strongly forrnreversing the Sequester.  He said it mustrnbe made absolutely clear that the effects of the Sequester on the mostrnvulnerable cannot be reversed by increasing efficiencies.  Hundreds of thousands of families are going tornbe impacted, he said, if the Sequester is not ended.</p

    “The President understands that inrntoday’s budget climate, we can’t build ladders of opportunity on a mountain ofrndebt,” said Donovan.  “As we work to strengthen our nation’s housingrnmarkets, we can’t lose sight of our commitment to house and serve millions ofrnextremely low-income families who live on the margins of our economy.”

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    • About the Author

    devteam

    Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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