Omnibus FY2018 Federal Spending Bill Contains Increased Funding for Affordable Housing
The final FY2018 omnibus spending bill, passed by Congress and signed by the President on March 23, includes significant increases in funding for affordable housing and community development programs at the U.S. Department of Housing and Urban Development (HUD). The legislation also expands and strengthens the Low Income Housing Tax Credit (LIHTC).
The bill provides HUD programs with $4.6 billion in additional funding overall compared to FY2017. This is more than $12 billion above the President’s FY2018 request, which would have cut funding for HUD by nearly 15% or $7.4 billion compared to FY2017.
The spending bill renews all Housing Choice Vouchers and provides new vouchers to veterans and people with disabilities, allocates nearly $1 billion in additional funding to repair and operate public housing, and boosts funding for the HOME and Community Development Block Grant (CDBG) programs. The final bill does not include rent increases proposed by the President in his budget request. See the federal budget chart prepared by the National Low Income Housing Coalition (NLIHC) for more details.
The U.S. House voted to approve the bill on Thursday, March 22nd. The U.S. Senate is expected to pass the bill by the end of the week. Congress must enact the spending bill before the current stop-gap spending measure expires on Friday, March 23rd, to avoid a government shutdown.
Housing and Urban Development
Tenant-Based Rental Assistance:
The spending package provides $22.015 billion for tenant-based rental assistance (TBRA), $19.6 billion of which is to renew previous contracts.
The bill allocates $40 million for Veterans Affairs Supportive Housing (VASH) and $5 million in new vouchers to serve Native American veterans. The bill also provides $20 million to support new Family Unification Program (FUP) vouchers and $505 million for Section 811 mainstream vouchers, a significant increase over the FY17 funding level of $120 million.
Project-Based Rental Housing:
The bill provides $11.515 billion to renew project-based rental assistance contracts for calendar year 2018, an increase of $699 million from the FY17 funding level.
Public Housing:
The bill provides significant new resources to public housing to help address the large backlog in capital repairs and to maintain operations. The capital fund received a $800 million increase in funding from $1.942 billion in FY17 to $2.75 billion in FY18.
Funding for the public housing operating fund also increased from $4.4 billion in FY17 to $4.55 billion.
Rental Assistance Demonstration:
The bill increases the number of public housing units that can convert under the Rental Assistance Demonstration (RAD) program from 225,000 to 455,000 and extends the program’s sunset date to 2024. Under RAD, public housing agencies are able to leverage public and private debt and equity, largely through the Low Income Housing Tax Credit, in order to rehabilitate public housing stock and make capital improvements.
Homelessness:
The bill increases funding for homeless assistance programs to $2.513 billion from $2.383 billion in FY17. The bill targets $80 million to address youth homelessness. The bill extends the authorization for the U.S. Interagency Council on Homelessness (USICH), which is set to expire this year, for two years.
Other Housing Programs:
The bill provides $678 million to the Section 202 Housing for the Elderly program, enough to renew all existing contracts and provide $105 million for capital advance and project-based rental assistance awards. The bill also increases funding for the Section 811 Housing for People with Disabilities program to $230 million, $84 million more than the FY17 level. Of that amount, $82.6 million would go to capital advance and project rental assistance awards. The bill includes language allowing Section 202 Project Rental Assistance Contract (PRAC) properties to convert under RAD.
The bill would increase funding for the HOME program by $412 million and the Community Development Block Grant program by $305 million. Overall, HOME would be funded at $1.362 billion, while CDBG would receive $3.365 billion. President Trump had proposed to eliminate both programs in FY18.
The bill also extends the suspension of the 24-month funding commitment deadline under the HOME program. Because of the additional requirements on project selection, underwriting standards, and developer capacity under the HOME program, many communities have struggled to meet the two-year commitment deadline, which led to funding being lost. This language removes this barrier while keeping in place other, more meaningful deadlines.
Funding for the Housing Opportunities for People with AIDS (HOPWA) program was increased to $375 million.
The Choice Neighborhoods Initiative saw a funding increase when compared to last year’s allocation, from $138 million to $150 million.
The bill provides $655 million to the Native American Housing Block Grant program, while the Native Hawaiian Housing Block Grant program received $2 million in FY18.
Fair Housing:
The bill flat-funds HUD’s office of Fair Housing and Equal Opportunity. The bill also prohibits HUD from directing local governments to change their zoning laws under the agency’s Affirmatively Furthering Fair Housing (AFFH) rule or with the AFFH assessment tool.
Low Income Housing Tax Credit
The omnibus includes a 12.5% increase in Low Income Housing Tax Credits for four years and the permanent authorization of income averaging, which could increase the ability of the tax credit to reach the lowest income households.
These changes could help offset the impact of the lowered corporate tax rate from 35% to 21%, which effectively reduces the value of Housing Credits to corporate investors.
For more information, visit NLIHC's website by clicking here.