Here in California we have gotten all too used to bad news coming from Congress when it comes to renewing annual funding of the remaining federal affordable housing programs. Thus, it comes as quite a relief that as Congress scrambles to complete its already delayed work on federal Fiscal Year 2016 funding, that the news is less bad than previously forecast.
Lest we get carried away into thinking that the anti-government forces currently in charge of our government have turned over a new leaf, we should keep in mind that the pending deal containing this less-than-terrible news is the result of election-year pressure on party leaders to demonstrate that they can in fact get something done other than shutting down the government.
Here’s a quick summary of the best parts of what Congress is poised to vote on and send to the President in the next few days (thanks to NLIHC and the ACTION Coalition for the facts, though I take responsibility for the impact analysis):
- HOME is now slated to receive a small increase of $50 million to $950 million for FY16. This should ensure no further cuts in 2016 in California, though don’t expect meaningful increases in what local governments have available to disburse.
- A permanent extension of the fixed 9% LIHTC rates retroactive to 2015 is part of the deal. This would be a far better outcome than what we have been expecting, which was a two year retroactive fix through next year, and suggests that strong support continues for the LIHTC program in Congress thanks to great work by our allies in DC and here in California as well.
- 25% increase in Section 521 Rural Rental Assistance funding, which should put renewal funding for these critical project-based contracts back at a level where all Section 515 apartment owners will have their contracts renewed, addressing the deep concern that arose this past year over USDA’s non-renewal of some contracts.
- No poison pill policy riders have been attached.
The less good news is:
- Housing Choice Voucher renewal funding appears short by $369 million, in part because Congress wants to continue adding VASH vouchers to the tune of $65 million in 2016. The impact of this would likely be that PHAs would take a hit of about 2% to their voucher programs, though some may be able to minimize the impact through creative uses of their small remaining reserves and adjusting payment standards downward (not good for CA PHAs).
- Section 8 PBRA contract renewal funding appears short by about $200 million for 2016. My take is that HUD may have to return to short-funding some renewal contracts, that is providing owners with less than 12 months of funding with their renewals. It may also increase pressure on HUD to be stingier on mark ups to market and mark ups to budget even though in theory there should be no causal relationship.
What Comes Next? The House will vote on the omnibus funding bill and the tax extender bill separately, likely tomorrow and Friday. The Senate will then likely take them up together as one package and vote to send it to the President soon thereafter. Stay tuned for the final tally for 2016 coming soon.
– Matt Schwartz, President & CEO