On Thursday, the Massachusetts Senate, as part of its FY 2005 budget debate, adopted amendment #352 that would extend the Massachusetts Low Income Housing Tax Credit for five years. The concept of extending this successful program that has helped to create 1,800 homes (1,100 affordable) received bipartisan support in the Senate earlier this year when 19 Senators agreed to cosponsor an extension bill. The language was not included in the House budget and is therefore subject to conference; however, the Senate amendment is the same language that passed the House on May 10 in H.4710. CHAPA will work with Senate and House members to urge that this language remains in the final budget when it is reported by the conference committee. We appreciate all of the support from House and Senate leadership and members.

In another vote on Thursday, the Senate adopted amendment #629 that made a variety of corrections and changes to the Municipal Incentives for Smart Growth Zoning sections of the budget. Senate leaders worked with the Commonwealth Housing Task Force, the Romney Administration, the Massachusetts Smart Growth Alliance, and many other interested groups to produce this compromise amendment. The amendment text can be found on CHAPA's web site at www.chapa.org.

The key changes from the Senate Ways and Means proposal include:

The Municipal Incentives for Smart Growth Zoning sections are not included in the budget that was approved by the House. They will, therefore, be subject to conference.

Housing Consumer Education Centers Amendment Passes

The Massachusetts Nonprofit Housing Association successfully advocated in the Senate to add $105,000 to its earmark in the Housing Services line item (7004-3036). The amendment would ensure that HCEC receives $505,000 in the next fiscal year. The House and the Senate language for this line item differ. The differences will be resolved by the conference committee.

More Communities Adopt Community Preservation Act

Conway, Groveland, Nahant, and Provincetown have all voted to adopt the Community Preservation Act. Out of the five towns that had the CPA on the ballot this spring, only Holden defeated it. That brings to 65 the number of communities that have adopted the CPA. As of now, nine more communities have agreed to place CPA on the ballot for consideration next Fall.

HUD Changes Interpretation of Section 8 Funding Formula; DHCD Will Not Terminate Vouchers for FY04

Earlier this week, the U.S. Department of Housing and Urban Development (HUD) announced that it has changed the way in which it will apply an inflation factor to Section 8 payments, which will result in the Department of Housing and Community Development (DHCD) being able to fully fund all its Section 8 vouchers for FY04.

DHCD had considered program terminations as a result of an unanticipated reduction in HUD funding in their current fiscal year budget, which ends June 30. During the first week of April, HUD informed DHCD that they would not receive $3.1 million in FY2004, which they had been anticipating to cover the cost of federal vouchers through June 30, 2004.

This anticipated funding shortfall had been due to HUD's interpretation of congressional budget language. HUD interpreted the language in a way that meant that not all of the increased renewal funding that had been appropriated would actually be made available to public housing agencies. Instead of covering actual voucher costs in 2004, HUD is still changing its policy to issue payments based on the cost of the vouchers under lease on August 1, 2003, adjusted for inflation.

The change announced this week would just change how HUD applies the inflation factor, and would still base the per unit amount on 2003 data. Instead of applying a prorated inflation factor for each quarter, HUD said it will apply the full inflation factor for the year over an agency's average cost per unit in May through July of 2003, and then pay that same level for each and every quarter of 2004.

Pressure on HUD came from major cities throughout the country, and many U.S. Senators and Congressmen signed letters and conducted hearings on Capitol Hill to convey their distress at HUD's intentions to underfund the Section 8 program. Governor Romney met with HUD Secretary Alphonso Jackson to tell him of the problem in Massachusetts. Three Massachusetts congressmen - Frank, Capuano, and Delahunt - testified at the Massachusetts State House at a hearing in April, which brought out 2,000 people in support of the Section 8 program. Congressman Frank also filed legislation to make it clear that Congress intends to provide full funding for all existing Section 8 vouchers based on a housing agency's actual costs.

Despite the adjustment to the inflation factor, many housing agencies will still find that they are being underfunded for FY04. Several local housing authorities in Massachusetts are facing immediate funding shortfalls, including Quincy and Hingham. In addition, Congress has not yet taken up the President's proposed FY05 proposal for Section 8, which would block grant the program and underfund it by an estimated $1.6 billion.