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HUD, affordable housing programs get a boost in latest congressional spending bill

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After being hit by the Republican tax bill, the Low-Income Housing Tax Credit gets increased funding

The Department of Housing and Urban Development headquarters in Washington, DC.
The Department of Housing and Urban Development headquarters in Washington, DC.

Congressional leaders announced a $1.3 trillion omnibus spending deal Wednesday night that will keep the government funded through September, and it represents a rebuke to the Trump administration's slash-and-burn February budget proposal, particularly as it relates to affordable housing measures.

While Trump’s budget cut funding for the Department of Housing and Urban Development (HUD) by 18.3 percent and eliminated popular community development block grant programs in their entirety, the Congressional deal gives HUD $4.6 billion in additional funding compared to fiscal year 2017 levels. It’s also $12 billion more than Trump’s budget proposal.

The House of Representatives is expected to vote on the budget as soon as Thursday, and the Senate would follow soon after. The Trump administration has proposed two fiscal year budgets since taking office in 2017 and neither has been brought to a vote in the House or the Senate.

“With this favorable bill, Congress sends clear message that it is unlikely to support the President’s FY19 budget request, which doubled down on his proposal to slash housing benefits through funding cuts, increased rents, and work requirements,” the National Low Income Housing Coalition wrote in a statement.

The Low-Income Housing Tax Credit (LIHTC) program gets a much-needed boost in the budget. LIHTCs incentivize private investment in low-income housing in exchange for tax credits, but the value of those tax credits plummeted when the corporate tax rate was lowered from 35 percent to 21 percent by the recent tax bill.

The spending bill increases LIHTC allocations by 12.5 percent annually starting in 2018 and ending in 2021. Novogradac and Company, an accounting firm that specializes in LIHTCs, estimates the added allocation will produce 28,400 additional affordable housing units. The firm also estimates, however, the tax bill will lead to 235,000 fewer affordable housing units over the next 10 years. The firm believes if these temporary increases are extended, it would bring LIHTC funding back to levels prior to the tax bill passing.

The bill also boosts funding to block grant programs that the Trump budget eliminated. The Community Development Block Grant (CDBG) program, which provides money to local jurisdictions for community improvement projects, gets $305 million in additional funding compared to 2017 levels. The HOME Investments Partnership (HOME) program, which is similar to CDBG, gets $412 million in additional funding.

The Self-help Homeownership Opportunity Program and the Native Hawaiian Housing Block Grant, which were eliminated in Trump’s budget, are funded at current levels in the Congressional deal. The Choice Neighborhood Initiative, also eliminated in Trump’s budget, sees a $12 million funding increase.

The Public Housing Capital Fund, which is used to maintain and improve public housing units, sees a whopping $800 million increase in funding after the Trump budget eliminated the fund. Public housing has come under increased scrutiny of late, particularly in New York, for rapidly deteriorating conditions. The Public Housing Operating fund also gets a slight funding boost.

On the rental assistance side, Section 811 mainstream housing vouchers receive $505 million, a huge increase over the 2017 funding level of $120 million. Despite frequent criticism of the federal government’s handling of veteran’s affairs, Trump proposed eliminating housing vouchers for veterans in both his 2018 and 2019 budgets. The spending deal maintains the current $40 million in funding to the program.

While Trump’s budget was widely considered dead on arrival because of its extreme cuts to popular programs like CDBG, affordable housing advocates still got a huge win in the Congressional deal by not only fighting back Trump’s cuts, but also securing additional funding to programs that hadn’t been expanded in years.

“I am especially appreciative that the House and Senate leadership were able to come together after very difficult negotiations to reach a bipartisan compromise,” said David Dworkin, CEO of the National Housing Conference, in a statement. “Washington works best when it is working together on building our country. It’s gratifying that reconciliation and compromise are not the lost arts of political discourse.”