CARH’s BROADCAST EMAIL—Legislative Alert
March 17, 2023
On Thursday, March 9, 2023, the Biden Administration unveiled the blueprint for its proposed $6.8 trillion budget for Fiscal Year (FY) 2024. Details of the proposed budget were then released on Monday, March 13, 2023. The proposed budget would provide $668 billion in funding for non-defense programs, up 7.3 percent from the current FY 2023 approved budget. The proposed budget also calls for $642 billion in funding for defense programs, up 3.3 percent from this year’s enacted budget.
On the revenue side, the budget proposes a so-called “billionaire” minimum tax aimed at imposing a tax of at least 25 percent on individuals whose income exceeds $100 million, corporate tax rates would be increased from 21 percent to 25 percent. The proposed budget would also include an additional $28 billion for the Housing Credit and Housing Bond programs over the next 10 years, which would be achieved by increasing the Housing Credit cap allocation and lowering the bond financing threshold from 50% to 25%.
All of the relevant Committees in both the House and Senate will soon hold hearings on the proposed budget so that work can be completed on full-year funding bills prior to October 1, the beginning of the new fiscal year. Much of the ambitious proposal faces a tough chance of passing the divided Congress, but many Democrats see the request as a framework for what the party plans to push in spending talks with Republicans later this year.
As we informed CARH members last year, the FY 2024 proposal is an extraordinary favorable budget again and the request mirrors many of the same funding requests for both the United States Department of Agriculture’s (USDA’s) Rural Development (RD) and the Department of Housing and Urban Development’s multifamily housing programs. Both agencies would see increases in funding for programs. (Click here for an RD chart and click here for a HUD chart that provides details on funding levels for specific programs at each agency. Within the RD budget are also statutory proposals that CARH has advocated for many years.
The Section 521 Rental Assistance (RA) program would be funded at $1.688 billion an increase from $1.487 billion in FY 2023. Of this $1.644 billion for existing RA contracts, $40 million would carry over until September 30, 2025 (this allowance had been permitted until the Consolidated Appropriations Act, 2023 eliminated the practice. CARH has supported allowing funds to carry over so that RA contracts funded in the first few months of a new fiscal year can be funded, should a full year appropriations not be completed.); $38 million for Section 542 rural housing vouchers; and $6 million for RA that would be available for new Section 515 housing. Language is included to allow RA contracts to be 20 years, subject to annual appropriations. This 20 year language has been in the last several funding bills passed by Congress. However, RD has not implemented this provision. CARH is pleased that RD has included the 20 year language in the budget for FY 2024.
The Section 515 program would receive $200 million versus $70 million in FY 2023. Funding would be allocated for preservation and new construction. The Multifamily Housing Preservation (MPR) program would be permanently authorized and funded at $75 million versus $36 million appropriated for FY 2023. As CARH members know, the MPR program has been a demonstration program since 2006. CARH supports the Administration’s efforts to make the MPR program a permanent program. The budget also requests a $400 million loan level for the Section 538 program, the same level as FY 2023.
The budget includes statutory language that would. if enacted, address some of the maturing mortgage issues facing the portfolio in the next several years. The language would provide RD with authority to decouple RA from the Section 515 program, allowing RD to continue offering RA to certain properties that no longer have a Section 515 loan. Currently, with RA tied to the Section 515 loan, in order to protect residents to the maximum extent, owners have to run through the complex processing of RD mortgage loan assumption, even when it makes little financial sense to maintain the Section 515 loan. Similar statutory language was included in the agency’s FY 2023 budget. Separate authorizing legislation is being drafted that would also allow for decoupling but on a permanent basis. CARH supports both efforts.
Another proposed statutory change would impact the Section 542 voucher program. According to the budget document, decoupling will lead to the preservation of the majority of USDA’s project-based assistance thus, decrease the number of tenant-based vouchers. The budget request for vouchers reflects just the funding needed for the legacy vouchers that will still be renewed by RD. To assist the remaining displaced residents going forward, RD has proposed these vouchers be done in tandem with HUD tenant protection vouchers (TPV) and which would then provide $20 million in TPVs for residents in RD properties that are unable to refinance, participate in the multifamily preservation and rehabilitation options, or decouple. This would both improve RD’s key preservation program – RA, and improve resident protections, assuring residents as much as possible that they can stay in their homes. At the same time, it has been known since the 2004 ICF Study that RD commissioned, that a relatively small portion of the multifamily portfolio has become functionally obsolete. This is a concept HUD has had to address for many years in public housing. This voucher processing would still ensure resident protection in such cases. And, again, while details are key, processing with TPVs allows residents to have a voucher that is more flexible and more portable than the current Section 542 vouchers, which have very different standards in certain regards.
All of these statutory changes would need to be debated by the House Financial Services Committee and the Senate Banking Committee if these provisions are to be made permanent. Otherwise, the Appropriations Committees could add language to their appropriations bills, but would need to then continue to do so on an annual basis.
For HUD, the proposed budget would fund programs at $73.3 billion, approximately $1.1 billion – or 1.6 percent increase over the agency’s FY 2023 budget. Several programs of interest to CARH members are proposed to be funded at the following levels: $1.8 billion for the HOME Investment Partnerships program; $32.7 billion for Section 8 tenant-based vouchers; $15.9 billion for Project Based Rental Assistance; $3.4 bil1ion for the Community Development Block Grant (CDBG); $1.023 billion for Section 202 housing for the elderly; $13 billion for vouchers for extremely low income veterans; $9 billion for vouchers to young adults aging out of foster care; and $410 million for the Office of Lead Hazard Control and Healthy Homes; and $90 million for Fair Housing and Equal Opportunity.
CARH will continue to update members regarding the status of the FY 2024 budget as it moves through the Congress. Members will be asked to reach out to their members of Congress at the appropriate time to outline the importance of funding, particularly the rural portfolio at the level proposed by the Administration. CARH’s board of directors will be meeting in Washington, DC on March 22-23. On Wednesday, March 22, the board will travel to Capitol Hill to meet with key members of Congress and their staff to discuss the issues outlined in this Broadcast Email.
Please contact the CARH national office at email@example.com or 703-837-9001 should you have questions or concerns. For other news and information affecting the affordable rural housing industry, please visit the Newsroom on CARH’s website, www.carh.org.