Taking the "UD" Out of HUD: President's Proposed Budget Kills Off Programs

The President’s FY 2019 budget was released last week, calling for a massive 18 percent cut to the Department of Housing and Urban Development and eliminating community development programs that are critical to planners.

It’s difficult to overstate how dramatically the President’s proposal changes the core functions of the Department of Housing and Urban Development. By eliminating all community development programs, the administration cuts the urban development component of HUD’s mission, removing the “UD” from HUD.

The budget also proposes a massive realignment of its rental assistance programs by cutting off all funding for the renovation and modernization of public housing, killing the program through conversion to the Section 8 platform or attrition through dilapidation while 1.2 million households occupy those units.

Community Development Programs

Much like the President’s FY 2018 budget, the FY 2019 proposal also calls for the elimination of the entire community development portfolio at HUD. Both the Community Development Block Grant (CDBG) program and the HOME Investment Partnerships programs are zeroed out, along with the Choice Neighborhood Initiative. The proposal goes a step further with Choice Neighborhoods and rescinds unobligated funding.

Also like last year, the justification for the elimination of these programs targets their supposed ineffectiveness and unproven track record. The administration claims community development is better handled at the local level, shifting the financial burden to state and local governments.

Though spending for FY 2018 has not been finalized, Congress has appeared to reject the proposed elimination of CDBG, HOME, and Choice Neighborhoods. Both the House and the Senate Transportation, Housing and Urban Development (THUD) spending bills provide funding for the programs.

However, the continued funding for community development programs is far from assured and the President’s budget gives Congress the approval to cut these programs; the House slashed the HOME budget by $100 million in its version of the THUD spending bill. APA will continue to fight for these programs, but as practitioners on the ground administering these programs, the voice of planners is critical.

Rental Assistance

In a dramatic realignment of the rental assistance programs at HUD, the administration proposes the total elimination of the Public Housing Capital Fund, the primary resource Public Housing Authorities (PHAs) have to modernize and rehabilitate their aging public housing stock.

Though planners do not administer public housing, the impact of the federal government completely abandoning the public housing platform would have serious repercussions for planners trying to revitalize neighborhoods and communities with public housing.

The proposal is dramatic and short-sighted, but the conversation of the future of public housing is overdue.

A HUD study in 2010 revealed a $26 billion backlog in deferred maintenance to public housing across the country. This backlog was found to grow at a rate of $3.4 billion per year and the FY 2017 enacted funding level for the capital fund was only $1.9 billion. In short, the problem is getting worse and Congress is not providing PHAs with adequate resources to address it.

Realistically, Congress is unlikely to ever provide PHAs with the full amount needed to renovate their public housing properties.

Rental Assistance Demonstration Program

Facing funding cuts and austerity from Congress, President Obama launched an innovative program, the Rental Assistance Demonstration program (RAD), to allow PHAs to convert their public housing properties to the section 8 platform and gain access to private financing for renovations. The current administration’s budget proposal calls for an expansion of the program and $100 million in funding to help agencies with conversions.

Converting publicly owned housing stock to privately owned section 8 units, even with long-term affordability contracts, could have huge ramifications down the line. This is particularly true in high-cost areas of the country.

Also, RAD isn’t a viable option for many PHAs, especially those with large public housing properties with extensive rehabilitation needs or smaller PHAS who may not have the capacity or resources to do a complicated RAD application. The program was designed as optional to give PHAs the flexibility to make the best decisions for their residents, agencies, and communities.

The President’s proposal, if enacted, would leave PHAs with a stark decision: convert their public housing through RAD or find the resources to improve their public housing at the state or local level.

If their properties are not a good fit for a RAD conversion or if they are unable to find alternative public funding, their residents will be stuck in public housing units that will become increasingly unfit for habitation. Lost in this conversation is those residents: 1.2 million families currently call public housing home.

Though much like the elimination of community development programs, Congress is unlikely to suddenly abandon public housing. However, the conversation of how rental assistance is delivered to families is not going away.

Planners with significant public housing stock or with high housing costs should be aware of this conversation and connect with their PHAs to ensure the right decision is made for their communities.

Top image: Public housing in New York City: the Drew-Hamilton Houses. There are estimated to be approximately 1.2 million units of occupied public housing in the U.S. Wikimedia image (CC0 1.0).

About the Author
Tess Hembree is policy manager at Advocacy Associates.

February 21, 2018

By Tess Hembree