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March 25, 2018

FY 2018 Omnibus Appropriations Bill In-Depth: Public Housing

NAHRO News
Direct News – Washington Update
FY 2018 Omnibus Appropriations Bill In-Depth: Public Housing
Mar 22, 2018

Congress has passed and the President has signed the FY 2018 omnibus spending package, which contains $63 billion in additional funding for domestic programs and a 10 percent increase in spending for the Department of Housing and Urban Development.

Overall, the Transportation-HUD (T-HUD) appropriations bill did very well, with a 24 percent increase. The increase in T-HUD spending was reflected in the HUD budget, which received a 10 percent increase compared to FY 2017. The additional funding resulted in funding increases for nearly every single program in the HUD portfolio.

This Direct News item is intended to provide NAHRO members with a comprehensive summary of the fiscal year (FY) 2018 omnibus as it relates to Public Housing programs. It covers the Public Housing Operating Fund, the Capital Fund, the Rental Assistance Demonstration, Choice Neighborhoods Initiative, Family Self-Sufficiency, Executive Compensation, and other proposals and initiatives. It also highlights important language included in the omnibus report. Report language included in the Senate and House FY 2018 spending bills also continue to apply, unless superseded by language in the omnibus report.

If you have questions on any of the items in this Direct News, please contact Eric Oberdorfer, NAHRO’s Policy Advisor for Public and Affordable Housing at eoberdorfer@nahro.org.

Public Housing Operating Fund

The omnibus provides $4.55 billion to support the operation and management of public housing. This is $150 million more than funding for FY 2017, $50 million more than what was proposed by the Senate, $150 million more than the House bill and $650 million more than what was proposed by the Presidents FY 2018 budget request. According to HUDs Congressional Justifications, funding provided by the Senate bill would be sufficient to fund 94 percent of public housing agencies (PHAs) anticipated formula eligibility – although this may change as the year progresses and HUD provides PHAs with true-ups to account for underfunding in January, February, and March.

The Senate bill recognizes the challenges of operating a calendar year program with fiscal year appropriations; as a result, the bill would continue to extend the period of availability of Operating Funds from one year to two years.

The omnibus does not include any of the policy proposals contained in the Presidents 2018 budget, including the implementation of mandatory minimum rents, elimination of utility reimbursements, or rental increases.

Report language from the Senate notes the Committees concern that HUDs methodology for calculating formula income and utility expenses for PHAs does not reflect local trends and conditions for many PHAs. NAHRO, along with our industry partners, brought this concern to the attention of HUD in 2017. The Committee directs HUD to report to the House and Senate Committees on Appropriations within 30 days of enactment of the Act on alternative methodologies for calculating PHA formula income for the purposes of Operating Fund eligibility.

Exemption from Asset Management

As in past years, the omnibus contains language exempting PHAs that own and operate 400 or fewer public housing units from asset management requirements in connection with the Operating Fund rule. Congress has elected to continue this exemption each year since the language was first introduced.

Public Housing Capital Fund

The omnibus provides $2.75 billion for the Capital Fund, $808.5 million more than FY 2017 funding. The omnibus includes $2.122 billion more than the Presidents 2018 budget, $805 million more than the Senate bill, and $900 million more than the House bill. NAHRO has long worked to see increases to the Capital Fund and is pleased that the omnibus provides such a significant increase compared to 2017 funding levels. That said, funding for the Capital Fund still remains lower than the $3.4 billion annual accrual baseline established by HUDs 2010 Capital Needs Assessment.

The omnibus once again includes the hard-fought language requiring HUD to notify PHAs of their formula allocation within 60 days of enactment. In years past, the processing and awarding of Capital Fund Program grants was significantly delayed relative to the timing of the appropriations acts. Starting with the FY 2014 appropriations cycle, NAHRO has urged Congress to require timely distribution of these funds.

The omnibus report language directs HUD to provide a report to Congress within 180 days of enactment of the omnibus that details policy and regulatory changes that would allow for increased use of the public housing mortgage program.

Capital Fund Set-Asides

Emergency Capital Needs: The omnibus provides $21.5 million for grants to PHAs for emergency capital needs resulting from unforeseen or unpreventable emergencies and natural disasters, excluding presidentially declared emergencies and natural disasters under the Robert T. Stafford Disaster Relief and Emergency Act. This includes a set-aside of $5 million reserved for safety and security emergencies. This is level with FY 2017 funding.

Jobs-Plus Initiative: The omnibus provides $15 million directly for Jobs-Plus, level with FY 2017. The direct funding is not limited to providing incentives to participants, meaning that it can also be used to support the service component of the program.

Resident Opportunities and Self-Sufficiency (ROSS): The omnibus provides $35 million for ROSS, level with FY 2017 funding. The Presidents 2018 budget proposed eliminating funding for the program.

REAC and Receiverships: The omnibus provides $8.3 million for Public Housing Financial and Physical Assessment activities, $1.7 million less than FY 2017 funding. The Senate bill would also provide $1 million for the cost of administrative and judicial receiverships.

Public Housing Subsidy Flexibility

The omnibus carries forward the FY 2015 Appropriations provision increasing the limit on fungibility for PHAs with 250 or more units of public housing to transfer up to 25 percent of their annual Capital Fund grant to operations. Through the Housing Opportunity Through Modernization Act of 2016 (HOTMA), PHAs are also allowed to transfer 20 percent of their operating subsidy to their capital fund grant. The omnibus does not include the provision that would allow all PHAs to have full fungibility between Operating and Capital Funds that was included in the Presidents 2018 budget.

As in previous years, the omnibus provides HUD the authority to waive the transfer limit to fund activities related to anticrime and antidrug activities, including the costs of providing adequate security for Public Housing residents such as above-baseline police service agreements.

Small agencies retain their flexibility to make fungible 100 percent of their annual grants.

Physical Needs Assessments

As in previous years, the omnibus prohibits HUD from requiring or enforcing the Physical Needs Assessment for all PHAs.

Report language included in the House bill requires HUD to submit a report to Congress on potential changes to the Public Housing Assessment System (PHAS) for PHAs that operate 550 or less combined public housing units and Section 8 vouchers, taking into consideration physical inspections and an annual financial assessment based on current assets and liabilities.

Small Agency Relief

Report language from the Senate directs HUD to report to the House and Senate Committees on Appropriations with recommendations for statutory and regulatory relief for small- to medium-sized PHAs within 120 days of enactment of the Act. Furthermore, report language notes that the Committee urge[s] HUD to eliminate excessive paperwork and administrative requirements and develop opportunities that achieve new efficiencies in management and operations for small public housing agencies. NAHRO has long advocated for regulatory relief for all PHAs, including small- and medium-sized agencies. NAHRO is pleased to see this report language included.

Family Self-Sufficiency (FSS)

The omnibus maintains level funding for the FSS program at $75 million, and like previous Appropriations Acts, allows owners of multifamily Section 8 project-based rental assistance (PBRA) to fund coordinators out of their residual receipts.

Rental Assistance Demonstration (RAD)

The omnibus expands the current 225,000 unit cap on Public Housing conversions to 455,000 units and changes the September 30, 2020 deadline for submission of RAD applications under the first component to September 30, 2024, in essence doubling the RAD program. Both the Senate bill and the presidents 2018 budget proposed eliminating the cap on conversations as well as the deadline for the submission of RAD applications under the first component. The House bill did not propose raising the cap.

Choice Neighborhoods Initiative

The omnibus provides $150 million for the Choice Neighborhoods Initiative, $12.5 million more than FY 2017 funding, $100 million more than the Senate bill and $130 million more than the House bill. The Presidents budget would have eliminated funding for Choice Neighborhoods.

Importantly, the omnibus also includes language that requires not less than $75 million of the total Choice Neighborhoods funding to be awarded to PHAs. The omnibus also allows for no more than $5 million to be provided as grants to undertake local planning with input from residents and the community.

Language also allows HUD to obligatedany available unobligated balances made available under Choice Neighborhoods until September 30, 2018.

PHA Employee Compensation

The omnibus once again includes language prohibiting PHAs from using any Tenant-Based Voucher, Operating Fund, or Capital Fund dollars to pay any amount of salary above the base rate of pay for level IV of the Executive Schedule for FY 2018, or $164,200. This restriction includes salary as well as bonuses or other incentive pay. This provision affirms a policy which is already in place, since the FY 2015 bill extended the restrictions to all future appropriations acts.

Inspections of Public Housing Dwelling Units

The omnibus includes language that prohibits any funding provided through this Act to be used toward interfering with State and local inspections of public housing dwellings.

Affirmatively Furthering Fair Housing

Like the 2017 Appropriations Act, the omnibus would prohibit HUD from using any funds to direct grantees to undertake specific changes to existing zoning laws as a part of the Affirmatively Furthering Fair Housing (AFFH) Final Rule or the Assessment of Fair Housing (AFH) Tools.

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