President’s FY 2016 HUD Budget Asks for $49.3 Billion

On Feb. 2, the White House issued its proposed fiscal year (FY) 2016 budget, a wish list of the administration’s funding priorities that will face some obstacles in the new Republican-controlled Congress. Within that massive budget is the funding President Obama seeks for HUD.

The budget provides $49.3 billion in gross discretionary funding for HUD, $4 billion more than the FY 2015 enacted level, to expand the number of rental assistance vouchers; increase homeless assistance for vulnerable families; and make targeted investments in communities to help revitalize high-poverty neighborhoods. The budget places an emphasis on housing assistance and affordable housing priorities. This latest request is the highest the agency has requested since the start of the Obama administration. Here are a few of the highlights:

Rental Assistance Demonstration. The FY 2016 budget proposal offers major support behind HUD’s Rental Assistance Demonstration (RAD) program, which allows PHAs and owners of affordable rental properties assisted under the Public Housing, Moderate Rehabilitation (Mod-Rehab), Rent Supplement (Rent Supp), and Rental Assistance Payment (RAP) programs the opportunity to convert their properties to long-term, project-based Section 8 contracts while leveraging private financing for capital improvements.

The budget proposal requests $50 million for targeted expansion of RAD, targeted to Public Housing properties in high-poverty neighborhoods, including designated “Promise Zones.” The budget also proposes to eliminate the 185,000 cap on the number of units eligible for RAD and clarifies that the sunset date for conversations of Rent Supp, RAP, and Mod Rehab properties under the second component of RAD has been eliminated.

HUD has requested $1.425 billion for FY 2016 Salary & Expenses (S&E), approximately $110 million more than FY 2015 enacted, part of which will be used to add staff in order to address an anticipated increase in RAD program volume.

Project-Based Rental Assistance. The 2016 budget requests $10.76 billion for the Project-Based Rental Assistance (PBRA) program, which represents about 10.6 percent more than the FY 2015 enacted levels. HUD expects that this funding level will fully fund all PBRA contracts for at least 12 months from January to December 2016. Beginning in 2016, all PBRA contracts would be on the same calendar-year funding cycle.

The 2016 budget proposes several policy changes to the PBRA program, including establishing a pay-for-success demonstration program (Multifamily Performance-Based Energy Conservation), allowing HUD to enter multi-year agreements to repay private investors who provide up front funding for energy and water conservation improvements of HUD-assisted housing with the intent of reducing utility costs. The demonstration, proposed through 2018, would provide the authority to make improvements in up to 20,000 assisted multifamily housing units. The term for payments made under agreements would last up to 12 years and includes a provision for energy savings audits.

The FY 2016 budget proposal also suggests amending the Low-Income Housing Preservation and Resident Homeownership Act (LIHPRHA) to align prepayment and owner distribution policies in properties governed by LIHPRHA with other PBRA-assisted properties in order to facilitate preservation transactions, and proposes to make PBRA property owners eligible to compete for funding through the Family Self Sufficiency (FSS) program.

Tenant-Based Rental Assistance. The 2016 budget proposes $21.12 billion for the Tenant-Based Rental Assistance (TBRA) Program, which is about 9.43 percent more than the FY 2015 enacted level. HUD expects that this funding level will provide housing assistance to about 2.4 million extremely low- to very low-income families, and provides sufficient funding to fully fund all contract renewals.

The proposed FY 2016 budget proposes new special-purpose voucher initiatives modeled on Veterans Affairs Supportive Housing (VASH) successes:

• $177 million to create 22,500 new vouchers specifically for families, veterans, and tribal families experiencing homelessness;
• $37.5 million in funding for approximately 5,000 new vouchers for victims and survivors of domestic or dating violence, sexual assault, and stalking requiring an emergency transfer from their current assisted housing. These vouchers would be administered in a centralized fashion to address occurrences as they arise;
• $20 million for 2,500 Family Unification Program vouchers, which would ease and facilitate children’s transition from foster care to independent adulthood as well as assist families who have children in foster care due to lack of safe and adequate housing; and
• $277 million for approximately 37,000 vouchers distributed to PHAs via an allocation method based on relative need.

In total, HUD expects that the incremental need-based assistance combined with special-purpose vouchers will restore the approximately 67,000 vouchers lost as a result of sequestration cuts in 2013.

Public Housing Capital Fund and Public Housing Operating Fund. The budget proposes $1.97 billion for the Public Housing Capital Fund, which represents a 5 percent increase in funding over the 2015 enacted levels. Of the amount requested, over $1.8 billion is intended to fund capital grants to PHAs; an additional $100 million is requested to scale up the Jobs-Plus Pilot; up to $20 million is requested for emergency capital needs resulting from disasters or emergencies; and $3 million is slated for financial and physical assessments of public housing/HUD-assisted properties.

The proposed FY 2016 budget provides $4.6 billion for the Public Housing Operating Fund, which is about 3.6 percent more than the FY 2015 enacted amount.

Similar to previous years, the FY 2016 budget recommends two new policy proposals including allowing PHAs to use operating funds for capital fund activities as well as the creation of a Utilities Conservation Pilot to encourage PHAs to undertake energy and water conservation measures and subsequently reduce federal costs. The budget would increase funding for the Jobs-Plus Pilot Initiative to $25 million from $15 million for FY 2016.

HOME Investment Partnerships Program. The FY 2016 budget requests $1.060 billion for the HOME Investment Partnerships Program (HOME), which is about $160 million more than FY 2015 enacted. HOME maybe used by participating local governments to increase the supply for affordable housing and expand homeownership opportunities.

Section 202 Housing for the Elderly Program. The FY 2016 budget would provide $455 million to the Section 202 program, about 8.33 percent more than the FY 2015-enacted levels. Ten million dollars is designated to extend and expand the Section 202 Demonstration authorized by the FY 2014 Appropriations Act, and $3 million for property inspections and related expenses. HUD’s budget requests renewed authority to make better use of existing resources—namely, to identify residual receipts collections, recaptures, and other unobligated balances to redirect as additional investments in housing for the elderly.

Section 811 Housing for Persons with Disabilities Program. The president’s FY 2016 budget request proposes $177 million in Section 811 funding, including $25 million for new Project Rental Assistance (PRA) awards to state housing agencies, which is about 31 percent more than the FY 2015-enacted level.