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How Does the FY 2015 Budget Affect Affordable Housing?
Our friends (and client) at CARH--Council for Affordable and Rural Housing--have a nice budget summary at: http://carh.org/index.php?option=com_content&task=view&id=672&Itemid=5
 
Here are the highlights--
 

For HUD:  a decrease overall, but reviewing some of the larger programs:  5%  increase in Section 8 vouchers to $18 billion; a 2% decrease in project based Section 8 to $9.7 billion; CDBG is proposed at $2.87 billion, down about 7%; HOME is proposed for a 5% cut to $950 million; Public Housing Capital and Operating funds see a small increase ($1.925 and $4.6 billion, respectively).  HUD's signature program, Rental Assistance Demonstration (RAD), continues as a demonstration but without a component 1 unit cap and with $10 million in additional funding.

 

For Rural Development at USDA:  Section 521 Rental Assistance, down about 2% to $1.089 billion; Section 502 direct loans would receive $360 million, about a 60% cut.  The guarantee programs would be stable: 538 at $150 million annual guarantee; and Section 502 guarantee at $24 billion.  The numbers for other programs are much smaller and are stable or a single digit reduction: $28.4 million for the Section 515 Rural Rental Housing Loan program;$23.9 million for the Section 514 Farm Labor Housing Loan program; Rural Housing Vouchers would receive $8 million; MPR would receive $20 million.  The budget has interesting new language for RD: prohibiting "re-renewals" of Section 521 contracts within within the same project budget year; instituting a resident paid $50 per month minimum rent.

The budget includes general authorizing provisions that, among other things, would authorize income verification of residents. 

 

The budget also seeks to raise revenue and addresses certain tax provisions.  The budget contains provisions to modify the Section 42 Housing Credit, including allowing states to increase Housing Credit authority by converting some private activity bond volume cap into tax credit allocations.  The budget also encourages mixed income occupancy by allowing Housing Credit projects to use an average income over  an entire property (i.e., at least 40 percent of the units are occupied with an average household income of no more than 60 percent of area median income). The budget, if enacted in its current form, would also change formulas for calculating 9% (70% present value credit rate) and 4% (30 % present value credit rate) credits.  The discount rate would be the average of the mid-term and long-term applicable Federal rates for the relevant month, plus 200 basis points. Preservation of federally assisted affordable housing would be added to allocation criteria. The budget clarifies general public use requirements to facilitate housing for victims of domestic abuse. Additionally, there is a proposal to increase investments through using REITs, as there was in last year's budget.

 

The budget also proposes to make the New Markets Tax Credit permanent at $5 billion annually.

 

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