FY 2018 Budget Proposal: Community Development

On May 23, the Trump administration officially released the President’s budget request for FY 2018. The proposal, which largely mirrors the budget preview released in March, makes steep cuts to housing and community development programs, slashing the overall HUD budget by $6 billion. The bulk of the cuts are to community development programs, which are largely eliminated and would be devastating for communities across the country.
NAHRO strongly opposes the President’s budget request and will work to provide necessary and responsible funding for critical housing and community development programs. NAHRO will also fight for long-overdue program and regulatory reforms that can reduce costly administrative burdens. It is important to note that this budget is not in effect; it only lays out a blueprint that Congress may choose to follow.
If you have questions, please contact Jenny Hsu, NAHRO Community Development Policy Analyst, at jhsu@nahro.org.
Community Development Fund
For FY 2018, the President’s budget proposes to devolve community and economic development to the state and local level by eliminating the Community Development Fund, the account that the Community Development Block Grant (CDBG) and Indian Community Development Block Grant (ICDBG) programs are funded from. Instead, funding for these programs would be redirected to other unnamed activities. For FY 2017, Congress appropriated $3.06 billion for the Community Development Fund, with $3 billion provided to CDBG and $60 million to the ICDBG. According to the budget’s accompanying language, the CDBG program “has not demonstrated results…and many aspects of the program have become outdated.”
NAHRO strongly opposes the Administration’s request to eliminate CDBG since this would strip vital community development dollars away from over 1,200 grantees that receive an annual allocation, and an estimated additional 7,250 local governments that have access to the funding. NAHRO disagrees with the Administration’s position that CDBG has not demonstrated results – between 2005 and 2013, CDBG has created or retained 330,546 jobs, assisted over 1.1 million people with homeownership and improvements, benefitted over 33 million people nationwide through public improvements, and provided public services to over 105 million people.
Since 1974, CDBG has been a main source of federal revenue for communities and their partners to use in devising flexible solutions to assist the most vulnerable among us, and to prevent physical, economic, and social deterioration in neighborhoods. Eliminating CDBG would severely hinder the ability of states and local governments to engage in community development activities at the local level – counter to the intent of the President’s budget request.
HOME Investment Partnerships Program (HOME)
The President’s budget request would eliminate the HOME program, citing that “[h]ousing for low-income families is currently funded by multiple funding sources, including Federal, State, and local governments, as well as the private and nonprofit sectors. The result is a fragmented system with varying rules and regulations that create overlap and inefficiencies, as well as challenges to measuring collective performance.” For FY 2017, Congress provided $950 million for the HOME program.
Under this proposal, HUD would continue to administer the HOME program until all existing grant funds are disbursed and closed. HUD would also oversee HOME projects until the end of their affordability periods (up to 20 years from the date of completion). Currently, the budget estimates that there is $2.9 billion in HOME funds from FY 2016 and earlier grants that have yet to be disbursed, and there are approximately 25,400 rental projects and 11,500 homebuyer units that are under regulatory compliance. Under the budget proposal, new projects that are currently underway would still be placed in service over the next few years.
NAHRO strongly opposes the Administration’s proposed elimination of the HOME program. At a time when there is a shortage of 7.2 million affordable and available rental units for America’s 11.4 million extremely low-income households, and there is no U.S. state where a full-time working earning minimum wage can afford a modest, one-bedroom apartment, this elimination is wholly inappropriate. The President’s budget itself states that HOME dollars are often used to leverage private dollars and used as gap financing in conjunction with the Low-Income Housing Tax Credit (LIHTC), CDBG, and local funds. To eliminate HOME would only serve to severely handicap the ability of communities (and the private sector) to preserve and develop affordable housing for years to come.
Self-Help and Assisted Homeownership Opportunity Program (SHOP)
The President’s budget request would not fund SHOP, the account that includes funding for the SHOP program, Capacity Building for Community Development and Affordable Housing (Section 4, which fund technical assistance activities through organizations like Enterprise, Habitat for Humanity and the Local Initiatives Support Corporation), rural capacity building, and a pilot home modification and rehabilitation program for disabled and low-income veterans. The budget cites “the greater role for State and local governments and the private sector in addressing community development and affordable housing needs.”
Homeless Assistance Grants
The President’s FY 2018 budget proposes to fund HUD’s Homeless Assistance Grants with $2.250 billion, $133 million below FY 2017 enacted. Of that amount, at least $1.98 billion would be reserved for the Continuum of Care (CoC) and Rural Housing Stability Assistance programs, at least $250 million for the Emergency Solutions Grants (ESG) program, and up to $7 million for the national homeless data analysis project. The budget request does not set-aside funding to continue implementing pilot projects to demonstrate comprehensive approaches to serving homeless youth.
The President’s budget request would continue to use language that requires HUD to allocate CoC grants based on a CoC’s system performance, and to prioritize funding for CoCs that strategically reallocate to high performing projects. The budget also proposes a legislative change to the CoC program that was first made into law through the FY 2017 omnibus, allowing HUD to award one-year transition grants to program grantees that are transitioning from one program component to another. The budget would also carry forward a provision allowing CoC grant recipients to count program income towards meeting their match requirement.
United States Interagency Council on Homelessness (USICH)
The President’s budget would eliminate funding for USICH. The FY 2017 omnibus extended the sunset date of this agency to October 2018.
Housing Opportunities for Persons With AIDS (HOPWA)
The President’s budget would provide $330 million for the HOPWA program, $26 million below what Congress enacted for FY 2017. According to the budget language, HUD is “continuing its partnership with Federal agencies through the HIV Care Continuum to  improve outcomes that promote greater achievements in viral suppression through the coordination and alignment of housing support with medical care for people living with HIV” and that HUD is “placing greater emphasis on coordinating local planning and service delivery of HOPWA housing resources with local homeless Continuums of Care.”
National Housing Trust Fund (HTF)
The HTF was authorized by Congress through the Housing and Economic Recovery Act of 2008, which directed the account to be funded from assessments on Fannie Mae and Freddie Mac (GSEs). In FY 2016, the inaugural HTF allocations made available $173 million to all 50 states, the District of Columbia, and U.S. territories. For FY 2017, it is estimated that $219 million will be made available to grantees through the HTF. The President’s FY 2018 budget proposes to eliminate the GSEs assessment and eliminate the HTF entirely, once again citing the current fragmented system of federal, state, and local government housing programs.
NAHRO deeply opposes the administration’s proposal to eliminate the first new federal affordable housing resource that Americans have seen in decades, particularly since the HTF is the only federal affordable housing program that targets extremely low-income households and persons experiencing homelessness and since this program has a dedicated source of funding that is not vulnerable to cuts from the annual appropriations process.
Section 108 Community Development Loan Guarantee Program
Again citing the need to devolve community and economic development activities to the state and local level, the President’s budget does not request any new loan guarantee authority for the Section 108 Loan Guarantees program account.
May 31 2017
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