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DODD CALLS FOR ROBUST FUNDING FOR HOUSING AND COMMUNITY DEVELOPMENT PROGRAMS

June 8, 2009

 WASHINGTON, D.C. — Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing and Urban Affairs, called on Senate Appropriations Committee members as well as members of the Subcommittee on Transportation, Housing and Urban Development to provide ample funding for housing and community development activities in the Fiscal Year 2010 Transportation and Housing and Urban Development appropriations bill.
 
“As you know, our nation is facing great housing and economic challenges. An estimated 8 million households may face foreclosure in the coming years,” the senators wrote. “The housing affordability crisis that has confronted lower-income families for years has not dissipated.  On average, a renter must earn $17.84 per hour in order to afford a modest, two-bedroom apartment in America, over twice the minimum wage.  Evidence from around the country indicates that family homelessness is on the rise.  Studies predating the current economic crisis found nearly 672,000 people experiencing homelessness on a single night.”
 
 In a letter to Appropriations Committee Chairman Daniel Inouye (D-HI), ranking Republican committee member Senator Thad Cochran (R-MS), Subcommittee Chairman Patty Murray (D-WA) and ranking Republican subcommittee member Senator Christopher Bond (R-MO), Dodd along with Senators Tim Johnson (D-SD), Jack Reed (D-RI), Charles Schumer (D-NY), Robert Menendez (D-NJ), Daniel Akaka (D-HI), Sherrod Brown (D-OH), Jon Tester (D-MT), Herb Kohl (D-WI), Mark Warner (D-VA), Jeff Merkley (D-OR), and Michael Bennet (D-CO) noted that President Obama’s FY 2010 budget contains proposals to preserve and increase the amount of affordable housing available and to help families facing foreclosures. The Senators urged the committee to provide funding for several initiatives, including Public Housing, Native American and Hawaiian Housing Assistance, Section 8 Housing Vouchers, Project-Based Rental Assistance, HOME and Community Development Block Grants, Homeless Assistance and Housing programs serving seniors, persons with disabilities, and persons living with HIV and AIDS among others.
 
The text of the letter appears below.
 
Dear Senators:
 
As you consider the FY 2010 THUD appropriations bill, we ask that you provide a robust budget for housing and community development programs. 
 
The President’s FY 2010 budget contains significant proposals to preserve and increase the supply of affordable housing and help families facing foreclosure. For example, in addition to preserving existing housing assistance for families, the budget also proposes to capitalize the Affordable Housing Trust Fund at $1 billion.  In addition, the President’s budget proposes several initiatives to provide strategic investments in sustainable communities.  Proposals also focus on rebuilding the capacity of the Department of Housing and Urban Development (HUD) to effectively monitor and implement its basic programs, as well as enabling the Department to offer national leadership in housing and community development policy and research.  We support these important goals.
 
As you know, our nation is facing great housing and economic challenges. An estimated 8 million households may face foreclosure in the coming years.  The housing affordability crisis that has confronted lower-income families for years has not dissipated.  On average, a renter must earn $17.84 per hour in order to afford a modest, two-bedroom apartment in America, over twice the minimum wage.  Evidence from around the country indicates that family homelessness is on the rise.  Studies predating the current economic crisis found nearly 672,000 people experiencing homelessness on a single night. The National Alliance to End Homelessness estimates that an additional 1.5 million people could experience homelessness over the next two years as a result of the recession. At a time when foreclosures and homelessness are on the rise, the economic crisis is also curtailing the efforts of many of our state, local, and non-profit partners in affordable housing and economic development.   Community development programs help our partners meet the community and economic development needs of low- and moderate-income families.
 
Housing programs assist millions of families around the country, including many of our nation’s most vulnerable, particularly the elderly, the disabled, and children.  Without housing assistance, many families would lack the stability to find and retain employment, and many children would be unable to adequately perform in school because of multiple moves or health problems resulting from inadequate housing, including asthma, poor nutrition, and lead poisoning. 
 
Given the importance of these programs to our families and the nation, we strongly support providing the full amount requested by the Administration for appropriated programs within HUD and related Independent Agencies.  Please also give consideration to additional support for critical priorities, such as public housing, incremental Section 8 Vouchers, and others as outlined below.      
 
Public Housing
 
Public Housing provides a home to over 1.1 million low-income American families, over half of which are headed by the elderly or persons with disabilities, and many of which include children.  From FY04 – FY 08, local public housing agencies received less than 90 percent of the funding necessary to cover basic operations, including maintenance and security. This underfunding puts at risk the ability of housing agencies to provide safe and decent housing to the families living in public housing.  We ask you to provide full funding for housing agency operations through the Public Housing Operating Fund in FY 2010.
 
Despite the large historic federal investment in public housing, and considerable effort on your Committee’s part to overcome inadequate budget proposals, the Public Housing Capital Fund has been cut by hundreds of millions of dollars over this decade.  This underfunding threatens the long-term viability of this important housing stock.   As a result of declining federal support, the public housing inventory faces an estimated $32 billion backlog of capital repairs.   The American Recovery and Reinvestment Act (ARRA) made an important downpayment on eliminating this backlog.  ARRA provided $4 billion for major capital repairs and energy efficiency retrofits in public housing.  We urge the Committee to continue to improve and preserve public housing by restoring funding for the Capital Fund in FY2010.
 
Native American and Hawaiian Housing Assistance
 
Indian country presents unique and persistent challenges in providing affordable housing.  These include high rates of poverty, to remote locations, to inability to use land as collateral for loans.  As a consequence, an estimated 200,000 housing units are needed immediately in Indian country.  HUD offers both grants and loan guarantee programs to provide necessary capital and liquidity to create and improve housing in tribal areas. Please continue your support for housing assistance to Tribes and Hawaiian Homelands. 
 
Section 8 Housing Vouchers.
 
            The Section 8 housing voucher program is a public-private partnership that has successfully allowed millions of families to live where they choose in stable, safe housing.  Over half of the 2 million families currently receiving voucher assistance are families with children.  The President’s budget requests funding to continue assistance for current families and continue to restore the estimated 150,000 vouchers lost nationwide due to harmful formula changes promoted by the previous Administration from 2004 to 2006.  In 2007, Congress reinstated a predictable and efficient funding formula based on recent cost and utilization data, and these changes have encouraged local agencies to restore lost vouchers. 
 
Vouchers are critical to connecting families with stable housing.  Please provide sufficient funding in the FY2010 budget to support the ongoing restoration of the voucher program and assistance to struggling families.  In addition, we request that you provide additional incremental vouchers for FY 2010 to address the tremendous need for additional affordable housing and prevent homelessness. 
 
Finally, please provide full funding for voucher program administration and Family Self-Sufficiency (FSS).  Administrative fees are necessary to ensure that local housing agencies have adequate staff to quickly lease up new families, maximize available federal funds, conduct housing quality inspections, prevent fraud, and provide support services to families.   FSS program coordinators and rent incentives provide participants critical support in achieving self-sufficiency goals that benefit their families, children, and communities.
 
Project-Based Rental Assistance.
 
            The Project-Based Rental Assistance program funds 1.3 million units of affordable housing.    The Administration’s budget proposes increased funding to preserve all 1.3 million rental assistance in FY 2010.  Through the Recovery Act and FY 2009 Appropriations Acts, you were able to end the program funding shortfall that had forced HUD to sign partial-year, rather than full-year, contracts with the owners of this housing.  “Short-funding” of contracts had the effect of eroding private owners’ confidence in the federal government as a partner and threatening owners’ long-term participation in the program. This program must be stabilized to help preserve thousands of units of affordable housing in coming years. 
 
For FY 2010, please continue to fully fund Project-Based Section 8 Rental Assistance contracts on a full-year basis. Given that some of these contracts extend beyond the fiscal year, an advance appropriation for FY 2011 for a portion of the funding as suggested by the Administration may continue to be necessary.
 
Strategic Investments in Sustainable and Healthy Neighborhoods
 
The Administration’s budget request calls for several initiatives aimed at building sustainable communities that offer increased opportunity to all residents, including those of low incomes. These include the Sustainable Communities Initiative, a joint HUD-DOT initiative aimed at catalyzing comprehensive regional planning to promote affordable housing, energy independence, and environmental sustainability.  Also included is an Energy Innovation Fund aimed at spurring investment in energy efficiency in both the private and publicly-assisted sectors.   Finally, the budget proposes funding for a $250 million Choice Neighborhoods Initiative to build on the lessons learned thus far from HUD’s HOPE VI program.  This new effort seeks to comprehensively transform high-poverty neighborhoods with redevelopment of existing housing and services for residents.
 
These initiatives cut across HUD program and other agency silos.  With jurisdiction over both HUD and Transportation programs, both the Banking, Housing and Urban Affairs and Appropriations Committees can appreciate the need to confront current and future challenges holistically. While details on these proposals are still emerging, we strongly support funding for strategic investments in our communities and environment. 
 
Community Development and HOME
 
HOME and CDBG are important, flexible programs through which communities are able to build housing for people across a range of incomes, provide rental assistance, rehabilitate housing and public facilities, create jobs, and provide homeownership opportunities.  Unfortunately, years of proposed HUD budget cuts under the prior administration have taken their toll on the funding for these programs. CDBG formula funding fell 17 percent from FY 2004 to FY 2008, while HOME funding fell 12 percent over the same period.  
 
We support the Administration’s request for $4.45 billion to help restore Community Development Block Grant funding in FY 2010. We urge you to include increased resources in the FY 2010 budget so that communities can continue to meet their urgent housing and community development needs through the HOME and CDBG programs, while addressing the current foreclosure and housing crisis. 
 
We also ask you to support HUD’s capacity building programs, which provide critical support to community-based organizations nationwide.  HUD’s Section 4 Capacity Building program provides critical working capital to national nonprofit community development organizations supporting 2,500 local community development organizations in urban and rural places across the country.   These organizations are able to leverage Section 4 funding with significant private and public investments. In FY 2008, approximately $24.7 million in Section 4 resources leveraged more than $1.5 billion in additional investment for community and economic development activities.  Please also support the Administration’s budget request for the Neighborhood Reinvestment Corporation.  This corporation provides financial and programmatic support for NeighborWorks organizations nationwide to further their work in housing rehabilitation, homeownership counseling, and broader community-based development efforts.  Finally, please include funding for the Housing Assistance Council (HAC) in your bill.  HAC supports capacity building and operations in rural communities.  Since 2001, HAC has provided over $130 million in grants and loans to support the development of almost 11,000 homes. Since 1972, HAC’s revolving loan fund has provided more than $240 million in below-market rate financing to develop approximately 60,000 modest, affordable housing units.  HAC’s authorized funding for FY 2010 is $10 million.
 
Homeless Assistance
 
On any given night in America, an estimated 744,000 people are homeless.  Nationally, 34 percent of families experiencing homelessness are families with children; an estimated 1.5 million children experience homelessness in the course of a year.  Research suggests that that the effects of homelessness on children are lasting, indicating that today’s homelessness will be with children, their families, and society for years to come.   Disturbingly, these statistics predate the current economic crisis, with its growing unemployment and displacement brought on by foreclosures.  
 
For FY2010, please fully fund HUD’s homelessness program, including sufficient funding to renew existing programs and to continue make progress toward ending homelessness.   HUD’s Homeless Assistance Grants program provides funding for temporary, transitional, and permanent supportive housing solutions for homeless individuals and families. Funding awards pay for both new housing and renewal of existing housing resources. To begin to meet the challenges of the current economic crisis, ARRA provided $1.5 billion to help local communities prevent homelessness or shorten its duration. Congress and the President recently reauthorized the HUD McKinney Vento programs with a FY 2010 funding level of $2.2 billion.
 
Combating the Foreclosure Crisis
 
            The United States is experiencing the most severe housing crisis since the Great Depression.  Industry sources project that home foreclosures will total 2.4 million in 2009 and come to 8.1 million foreclosures over the next four years.   Our Committee has and will continue to work with the Administration to ensure that the Making Home Affordable and HOPE for Homeowners programs help address such problems.
 
HUD must also have the resources to provide additional assistance to provide liquidity and protect homeowners from scams.  We urge you to provide sufficient resources to support the Federal Housing Administration (FHA), which is now playing an important countercyclical role by proving single family mortgage lending. During the last quarter of 2008, FHA provided nearly one fourth of single-family lending.  Funding should also support HUD’s efforts to strengthen and modernize administration of FHA to combat mortgage fraud and ensure high-quality data and accounting systems. In addition, the HUD budget proposes $37 million to combat mortgage fraud and predatory practices to ensure that people do not fall prey to mortgage scams.
 
Finally, we must ensure that consumers have access to information they need to save their homes.  Housing counselors play a key role in reaching out to delinquent borrowers and guiding them through the complex process of dealing with their loan servicer in the hope that they may be able to get a loan modification, thereby keeping their homes.  In light of the depth of the current crisis, we strongly urge the Committee to sustain our increased commitment to housing counseling in the FY 2010 HUD budget and National Foreclosure Mitigation Counseling funds provided through the Neighborhood Reinvestment Corporation.
 
Housing for Special Populations
 
We urge you to provide full funding for housing programs serving our nation’s seniors, persons with disabilities, and persons with AIDS.  The Section 202 program creates and maintains affordable housing for the elderly. As the senior population grows, we must ensure that more seniors can remain in their homes or find suitable alternative living arrangements.  The growing senior population presents a challenge to our Nation, and we must ensure that today=s budgets and policies do not undermine our ability to meet this challenge.  Please continue your strong commitment to these activities for FY 2010.
 
Similarly, the Section 811 program creates critical affordable housing for persons with disabilities. People with disabilities have great difficulty in finding and paying for stable supportive housing.  The national average rent is higher than the average SSI payment, so a disabled person receiving SSI benefits is unable to afford housing without substantial additional income.  Please maintain full funding for Sec. 811 activities for FY 2010.
 
The Housing Assistance for Persons with AIDS (HOPWA) program provides critical housing support for citizens living with AIDS.   Approximately 72 percent of people living with HIV/AIDS need some form of housing assistance.  A growing body of research suggests that stable housing provides affected persons with both better health outcomes and reductions in risky behaviors. We urge you to continue our commitment to   HOPWA for FY 2010.
 
Fair Housing
 
The need for HUD to ensure fair and equal access to housing and prevent discrimination has become even more clear in the current mortgage crisis.  A recent study found that borrowers of color were approximately 30 percent more likely to receive higher cost loans than similarly situated white borrowers. HUD’s budget requests increased investment in the Fair Housing Assistance Program and Fair Housing Initiatives program, which assist state and local and non-profit fair housing organizations process fair housing claim and additional efforts to combat predatory practices.     We request your support for this important goal.
 
Safe and Healthy Homes
 
We also request your strong support for HUD’s Office of Healthy Homes and Lead Hazard Control programs, which combat lead poisoning and other unhealthy housing conditions. Approximately 240,000 children under the age of six have blood lead levels high enough to cause irreversible neurological damage and learning disabilities.  Demand for these programs far outstrips supply; in the most recent grant round, only 47% of eligible lead hazard control and 20% of healthy homes initiative applications could be funded. Please continue to support these important programs.  
 
Renewing HUD Leadership in Housing and Community Development
 
With so many housing and community development challenges before us, the country needs a strong, capable Department of Housing and Urban Development. But with outdated data systems and many in its workforce poised for retirement, HUD faces many obstacles.  The budget contains a number of proposals to strengthen HUD’s basic management of its core programs through improved data systems and other management tools.  In addition, the Department proposes increases to HUD’s research and evaluation budget to better inform federal, state and local policymakers. Please provide sufficient funding to support HUD’s execution and evaluation of HUD programs and federal policies.
 
We know that you face many difficult decisions as you develop the FY 2010 budget for the Department of Housing and Urban Development.  Earlier this year, your committee worked hard to ensure that ARRA included funding for critical programs to alleviate homelessness and invest in our nation’s stock of affordable housing.  We thank you for these efforts.  We look forward to working with you to ensure that the FY 2010 budget continues to meet the housing and community development challenges before us.
 
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