NAHRO Policy Team Blog

  • Jeff Falcusan April 13, 2011 09:08am EDT

    Our comprehensive overview of the year-long FY 2011 spending bill is now online.  

    Related: NAHRO CEO Saul Ramirez is quoted in this Wall Street Journal blog entry examining the impact of the budget compromise on housing programs.  

  • Jeff Falcusan April 08, 2011 04:45pm EDT

    Here's a video clip from HUD Secretary Shaun Donovan's recent appearance at our 2011 Legislative Conference here in Washington. The moderator is Jim Tankersley from the National Journal


  • Jeff Falcusan April 06, 2011 09:23am EDT

    With the FY 2011 appropriations process still unresolved (and a shutdown looking increasingly likely), House Budget Committee Chairman Paul Ryan (R-Wisc.) has been making the rounds in support of a Republican budget roadmap for FY 2012 and beyond.  Chairman Ryan argues that his budget resolution - titled "The Path to Prosperity: Restoring America’s Promise" - "tackles the existential threat posed by rapidly growing government and debt, applying the nation’s timeless principles to this generation’s greatest challenge."  

    So how would the House Budget Committee's plan affect various federal housing policies and programs?  Here are some key excerpts from summary documents issued by the committee:

    Reforming Fannie Mae and Freddie Mac

    Since the government creation of their duopoly, government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac have dramatically altered mortgage markets in the United States, ultimately contributing to their precipitous collapse in 2008. Fannie’s and Freddie’s core business is to increase the supply of mortgage credit by purchasing loans and packaging them into mortgage-backed securities (MBS) that carry the GSEs’ guarantee of principal and interest. They also issue debt securities in the capital markets to finance purchases of mortgages and MBS they hold in their portfolios.

    In the years leading up to the housing crisis, and with the help of some lawmakers in Congress, Fannie and Freddie abused their roles in stimulating homeownership. They began to replace prudent lending standards with a drive to guarantee and hold more mortgages, some of them risky, in order to maximize commissions. This squeezed much healthy underwriting out of the private sector, driving it increasingly to riskier, more exotic mortgage instruments. When the real estate market cooled in mid-2008, housing values began to nosedive, foreclosures rose sharply, and Fannie and Freddie experienced staggering losses as a result. The U.S. government was on the hook for the housing goliaths they had created and chartered.

    The GSEs’ losses were so severe that they were placed into conservatorship in September 2008, with the Department of the Treasury taking a major ownership interest in both. As a result, CBO made Fannie and Freddie an explicit part of the federal budget, accounting for their liabilities as liabilities of the government. CBO estimated a $248 billion cost of bringing their existing losses onto the government books in 2009. While under conservatorship, CBO estimates that Fannie and Freddie could cost taxpayers an all-in $370 billion through 2021. In contrast, the administration does not fully account for the taxpayer exposure of Fannie and Freddie, instead leaving them off-budget.

    So far, Treasury has bailed out Fannie and Freddie to the tune of $150 billion. Fannie Mae, Freddie Mac, and another government housing agency, Ginnie Mae, now own or insure 95 percent of the entire U.S. housing market. On their current course, the GSEs represent a failed experiment in corporate welfare and the largest bailout of financial institutions in recent history. Corporate welfare arrangements like the GSEs socialize risk by shifting losses to the taxpayers, but allow profits to accrue to management, bondholders and Wall Street institutions that trade mortgage-backed securities.

    This budget will put an end to the practice of corporate welfare and taxpayer bailouts in housing finance. It proposes eventual elimination of Fannie Mae and Freddie Mac, winding down their government guarantee and ending taxpayer subsidies. It supports increasing the guarantee fees Fannie and Freddie charge lenders in order to bring private capital back, shrinking their retained portfolios, and enacting various measures that would bring transparency and accountability to the GSEs. At the same time, it will put in place measures to discourage shifting of taxpayer risk to the Federal Housing Administration and other government-backed entities as Fannie and Freddie are dismantled.

    The housing-finance system of the future will allow private-market secondary lenders to fairly, freely and transparently compete, with the knowledge that they will ultimately bear appropriate risk for the loans they guarantee. Their viability and profitability will be determined by the soundness of their practices and the value of their services.

    Protecting Assistance for Those in Need

    Major proposals

    • Convert the Supplemental Nutrition Assistance Program (SNAP) into a block grant tailored for each state’s low-income population, indexed for inflation and eligibility beginning in 2015 – after employment has recovered. Make aid contingent on work or job training.
    • Encourage recipients of federal housing aid to lead lives of increased self-sufficiency by decreasing disparities between assisted and unassisted renters and by making aid contingent on work or job training.

    The welfare reforms of the late 1990s are a success story of modern domestic policy, but they did not go as far as many think. Reformers were not able to extend their work beyond cash welfare to the other 77 means-tested programs that the federal government operates. Notably, programs that subsidize food and housing for low-income Americans remain dysfunctional, and their explosive growth is threatening the overall strength of the safety net. If the government continues running trillion-dollar deficits and experiences a debt crisis, the poor and vulnerable will undoubtedly be the hardest hit, as the federal government’s only recourse will be severe, across-the-board cuts...

    Spending on Federal Housing Assistance... isn’t growing due to flawed state formulas or even because of the recession – it is growing because policymakers are choosing to grow it, and because there are no time limits or work requirements that encourage recipients to lead lives of increased self-sufficiency. Federal rental subsidies have increased by 33 percent since 2006, and the President’s budget would increase them even further. This is taking the nation’s welfare policy in the wrong direction – America needs a strong safety net, not one that is strained to the breaking point.

    As it does with regard to Medicaid, this budget would extend the successes of welfare reform to food aid and housing by implementing reforms that give states more flexibility to meet the needs of low-income populations and to make sure that the truly needy receive the assistance they need to live meaningful, independent lives...

    With regard to housing, this budget calls for federal time limits and work requirements to extend the successes of welfare reform to rental assistance programs. It reduces incentives for dependency by narrowing the gap between assisted renters and unassisted renters with the same income levels, while continuing to provide a safety net to make sure that those with very low incomes can afford housing. Finally, it stops the explosive growth of this program so that aid can be focused on the truly needy.


  • Jeff Falcusan March 24, 2011 02:08pm EDT

    Busy week here at NAHRO headquarters as we prepare for our 2011 Legislative Conference.  If you haven't seen our 2011 Legislative and Regulatory Agenda yet, check it out.

    Along with my counterparts from other community development industry groups, I attended a meeting yesterday at HUD headquarters with senior Community Planning and Development officials.  I'll provide a more detailed report at a later date but wanted to provide two quick takeaways. 

    First, you may recall that NAHRO and our partners sent a letter to Secretary Donovan in December regarding HUD's determination that PHAs and Redevelopment Authorities may not act as developers under the Neighborhood Stabilization Program.  Our letter requested that the Secretary exercise the waiver authority provided for under both the Recovery Act and the Housing and Economic Recovery Act of 2008 in order to place PHAs and Redevelopment Authorities on equal footing with for-profit and private nonprofit developers.

    During yesterday's meeting, I was told to expect a response soon.  I was also told that NAHRO will most likely not like the response we receive, which I take to mean that our request will be denied.  However, CPD officials assured me that the Department will make an effort to present workable solutions to at least some of the concerns raised in the letter.  Stay tuned. 

    Senior CPD officials also informed those in attendance yesterday that concerns raised by state and local housing and community development agencies and PHAs regarding the SAFE Act will be resolved in a satisfactory manner.  It now appears likely that PHAs and state and local CD agencies will be exempted from the more onerous SAFE Act requirements, but nothing is set in stone until we see the final rule. 

  • Tamar Greenspan March 18, 2011 05:13pm EDT

    The Department has obligated additional funding for Operating Fund subsidies for the month of April 2011.  HUD's explanation can be found here.  This funding is expected to be available in eLOCCS before April 1, 2011. The fourth round of funding will be provided by May 1, 2011.  As with the second distribution, HUD has adjusted 2010 eligibility to estimate 2011 eligibility.  It also maintains a 92% pro-ration.  NAHRO’s coverage of the initial distribution, including the eligibility adjustment, can be found here.

    NAHRO members: We will provide additional coverage on the Operating Fund in the March 31st edition of the NAHRO Monitor.

  • Jeff Falcusan March 16, 2011 09:18am EDT

    NAHRO staff, along with our industry partners, met yesterday with PIH Assistant Secretary Sandra Henriquez and nearly every member of PIH's senior leadership team to discuss issues related to the Department's proposal to imposed a $1 billion offset against public housing operating reserves for 2012.  The bulk of the meeting was spent discussing the Assistant Secretary's assertion, communicated through a February 22 letter to all PHA executive directors, that "Operating Reserve balances may only be used for Operating Fund purposes and cannot be used for capital or modernization activity as defined within the United States Housing Act of 1937 (the 1937 Act)."

    Ahead of yesterday's meeting, NAHRO on March 11 transmitted a memorandum on operating reserves to PIH staff.  The memo summarizes and provides representative examples of feedback from our members regarding their reasons for accumulating reserves that the Department now considers “excessive.” The memorandum also presents feedback from NAHRO members regarding past and planned uses of operating reserves for capital expenditures.  The memo includes the following passage:

    As HUD is aware, PHAs have long used operating reserves for capital improvements in their properties. These expenditures have been recorded in HUD’s annual budget justifications to the Congress dating back at least to the Clinton administration and as recently as 2007 under the administration of George W. Bush. These justifications have been informed by data submitted by PHAs, in accordance with 24 CFR 990.280 and the Supplement to Handbook 7475.1 REV attached to PIH Notice 2007-9, which includes “non-routine or capital expenses.”

    Combined with statutory language that provides only a partial list of eligible expenses, including “the cost of repaying… debt incurred to finance the rehabilitation and development of public housing units,” under the Operating Fund, HUD’s guidance has long served to assure PHAs that capital improvements were an eligible use of operating reserves. Despite indications to the contrary in the Department’s February 22 letter to PHA Executive Directors, NAHRO maintains that both statute and regulation as currently constituted plainly permit these uses. For HUD to now disallow these uses would be not only a significant departure from past custom, practice, and rhetoric, but a change that we believe would have to be reflected through statutory change and the revision of existing regulation.

    As PHAs continue to look to HUD as a partner in their joint mission to provide safe, decent, and affordable housing, this shift is deeply disappointing. Because this departure from long-standing policy relating to the eligible uses of operating funds coincides with HUD’s efforts to portray $1 billion in carefully accumulated reserves as “excessive,” PHAs are naturally alarmed.

    During yesterday's meeting, NAHRO staff reiterated our members' firm conviction that operating subsidy and reserves may be used for capital improvements, including, but not limited to, extraordinary maintenance and property betterments.  As the regulations at 24 CFR 990.280(4) clearly state, "Project-specific operating expenses shall include, but are not limited to, direct administrative costs, utilities costs, maintenance costs, tenant services, protective services, general expenses, non-routine or capital expenses and other PHA or HUD-identified costs which are project-specific for management purposes." (emphasis added)

    NAHRO staff also encouraged PIH to formally clarify that small PHAs with less than 250 public housing units have since the enactment of QHWRA enjoyed full flexibility (under statute) to use operating subsidy (and by extension operating reserves) for eligible Capital Fund activities, including development.  (See our March 1 Direct News item on small PHAs for more information on this topic.) 

    We will provide additional coverage of the March 15 meeting through Direct News and in the March 31 NAHRO Monitor

  • Jeff Falcusan March 07, 2011 10:25am EST

    Passing along information regarding a few upcoming CPD web seminars aimed at CDBG grantees:

    The Office of Block Grant Assistance (OBGA) announces a series of four economic development webinars during the month of March.  These webinars, primarilydesigned for CDBG grantee staff, will provide training on how the CDBG and Section 108 Loan Guarantee programs can be used to support economic development and job creation.  Grantees are invited to participate.  Each webinar is unique and you can sign up for one or all four of thesewebinars.   We suggest that grantees pre-register as HUD expects a high volume of participants and space is limited.  Participants should follow the link to pre-register.   After you register, you will receive an e-mail that has a link to connect to the webinar. OBGA has established an e-mail address for participants to submit their questions for the March 30 webinar:  Should you be unable to participate in the webinars, the sessions will be recorded and materials posted on web.


    Eligible activities, including special economic development activities, technical assistance to businesses, microenterprise activities, commercial rehabilitation, community based development organizations, infrastructure to assist businesses, and job training

    • National Objectives
    • Underwriting Guidelines
    • Public Benefit Standards  
    • Other Requirements, including eminent domain and job relocation restrictions


    Wednesday, March 9, 2011, 2:00 – 3:30PM EST: CDBG Economic Development for States

    Wednesday, March 16, 2011, 2:00 – 3:30PM EST: Section 108 Program, Economic Development (for states and entitlements)

    Wednesday, March 30, 2011, 2:00 – 3:30PM EST: Open Forum/Question and Answer Discussion on CDBG and Section 108 Economic Development (for states and entitlements)

  • Jeff Falcusan February 28, 2011 02:28pm EST

    Note: See update at the bottom of this post.

    Consider this a quick follow-up to last Thursday's Direct News item summarizing the administration's proposal to offset PHAs' operating reserves for 2012. 

    By now you are probably aware of the letter sent to PHA Executive Directors by PIH Assistant Secretary Sandra Henriquez on February 22.  In the letter, the Assistant Secretary writes, "PHAs are also reminded that Operating Reserve balances may only be used for Operating Fund purposes and cannot be used for capital or modernization activity as defined within the United States Housing Act of 1937 (the 1937 Act)."   Many in the industry believe that certain capital improvements have long been eligible uses of operating subsidy (and by extension operating reserves), and thus the Assistant Secretary's statement to the contrary represents a policy change.

    The Department has provided NAHRO with a copy of a relevant legal opinion dating from 2005.  The opinion concludes that, "because of the more restrictive nature of operating subsidy, PHAs cannot use operating reserves for development activities."  However, the opinion concedes that "the eligible uses for operating subsidy have increased over time" and cites (in a footnote) section 9(g)(2) of the 1937 Act.  (We are working to obtain an electronic copy of this opinion.)

    As amended by the Quality Housing and Work Responsibility Act of 1998 (QHWRA), section 9(g)(2) of the 1937 Act refers to sections 9(d) (Capital Fund) and 9(e) (Operating Fund) and reads as follows:

    FULL FLEXIBILITY FOR SMALL PHAs.Of any amounts allocated for any fiscal year for any public housing agency that owns or operates less than 250 public housing dwelling units, is not designated pursuant to section 6(j)(2) as a troubled  public housing agency, and (in the  determination of the Secretary) is operating and maintaining its public housing in a safe, clean, and healthy condition, the agency may use any  such amounts for any eligible activities under subsections (d)(1) and (e)(1), regardless of the fund from which the amounts were allocated and  provided. This subsection shall take effect on the date of the enactment of the Quality Housing and Work Responsibility Act of 1998. (emphasis added)

    On February 18, 1999, HUD issued guidance informing the public of the changes to public and assisted housing programs made by QHWRA that were effective immediately.  Included in the guidance is the following passage:

    Subtitle B of the QHWRA—Public Housing

    Section 519—Public Housing Capital and Operating Funds. Section 519 amends section 9 of the USHA to provide for the establishment of capital and  operating funds with new formulas. Only a few parts of this statutory section are effective immediately. They are as follows:

    Use of capital or operating funds by small PHAs. New subsection 9(g)(2) of the USHA, added by section 519 of the QHWRA, allows a PHA with less than 250 dwelling units (small PHAs), to use capital or operating funds for any eligible capital or operating expense if: (1) the PHA is not designated troubled; and (2) the  HA operates its public housing in a safe, clean and healthy condition, as determined by HUD. Until enactment of the QHWRA, these PHAs have been  receiving capital funds for specific purposes under the competitive Comprehensive Improvement Assistance Program (CIAP). New subsection 9(a) of the USHA, however, provides for a merger of remaining CIAP funds into the Capital Fund on October 1, 1999. With the enactment of new subsection 9(g)(2) and the pending merger of  funds, HUD construes Congressional intent to be that small, non-troubled PHAs may immediately use any CIAP or operating funds for capital or operating  purposes. (emphasis added)

    We have asked HUD officials how they reconcile section 9(g)(2) of the 1937 Act with the Assistant Secretary's letter as it pertains to small agencies.  We will let you know as we learn more.

    UPDATE: Shortly after this post was published, a senior HUD official emailed me to say that "small PHAs retain their flexibility as identified by 9(g)(2)."  This official has informed me that HUD will clarify this in forthcoming guidance. 

  • Jeff Falcusan February 25, 2011 09:59am EST

    NAHRO's comprehensive rundown of the administration's proposal to impose a $1 billion offset against PHAs' operating reserves for 2012 is now available online.  A few highlights, including our request for assistance: 

    The President’s FY 2012 budget proposal released on February 14 estimates 2012 operating subsidy eligibility at $4.962 billion, yet the budget requests only $3.962 billion in appropriations for the Operating Fund.  To make up the difference, the budget includes suggested statutory language that would, if accepted by Congressional appropriators, authorize the HUD Secretary to “take into account PHAs’ excess operating reserves” when determining PHAs’ 2012 funding allocations. According to the FY 2012 HUD budget appendix, this authority would allow the Department “to reduce funding allocations to PHAs that have more than sufficient (i.e., excess) reserve levels.”

    NAHRO opposes the administration’s proposed offset of $1 billion against PHAs’ operating reserves.  NAHRO members have been unambiguous in their written and verbal reactions to the proposal:  The offset would unfairly punish the responsible, strategic, and entrepreneurial stewardship of federal public housing resources.  NAHRO will advocate vigorously for a direct appropriation sufficient to provide 100 percent of operating subsidy eligibility under the current Operating Fund rule. At the same time, NAHRO will insist that the Department be completely transparent regarding its plans for implementing an offset.  Having a clear sense of HUD’s intended methodology is the only way that NAHRO and its industry partners will be able to minimize the damage to the public housing program should the Congress (over the industry’s strenuous objections) ultimately accept the administration’s proposal.

    * * *

    As NAHRO seeks to illustrate the potential consequences of the administration’s offset proposal within the Department and on the Hill, we will need your help.  Please consider sharing with NAHRO staff two types of information related to operating reserves:

    • First, if your agency has strategically accumulated a significant level of reserves, we are interested in learning about the types of activities, projects, and initiatives your agency planned to fund using these resources – and what a reduction of your agency’s reserves to a level equal to four or six months’ expenses would mean for those plans. 
    • Second, if your agency has previously used Operating Funds subsidy or operating reserves to support capital improvements (other than to pay the debt service for the cost of financing improvements), we are interested in receiving information on such transactions as well as your experiences, if applicable, related to securing HUD approval. 

    If you would like to share the information requested in the referenced Direct News item, please contact me at

  • Jeff Falcusan February 18, 2011 04:08pm EST

    NAHRO's FY 2012 funding recommendations are now online at at  You may also directly access the PDF version of the chart by clicking here

    NAHRO members are encouraged to review our Direct News item explaining each recommendation in detail.