December 10, 2004

Appropriations

The FY 2005 omnibus appropriations bill (HR 4818) has been sent to the President and signed into law.

H.Con.Res. 528 was approved to correct the enrollment of the omnibus (the final text sent to the President). This resolution struck the offense tax provision (which would have given “agents” of the appropriations committees authority to inspect IRS facilities and individual tax returns. It also reduced the across the board spending cut for non-defense, non homeland security discretionary spending from 0.83% to 0.80%. Finally, it included provisions to help the Treasury Department collect delinquent non-tax debt by comparing information contained in the National Directory of New Hires.

Some Good News

U.S. Senator Charles Shumer (D-NY) has committed to introduce legislation tax-related affordable housing legislation. One proposal would double the Low Income Housing Tax Credit cap from $1.85 to $3.70 per capita. The second would provide exit tax relief to owners who sell properties to buyers who agree to keep them affordable for at least 30 years.

Finished!

The 108th Congress has wrapped up its business for the year. The new 109th Congress will be sworn in on January 4, 2005.

December 3, 2004

This comes as a brief update on the status of the FY 2005 Appropriations bill (HR 4818). Although the bill was approved by both the House and the Senate, a controversial provision allowing “agents” of the House or Senate Appropriations Committees to access IRS facilities and individual tax return information was discovered and led key Senators to object to sending the bill to the President for signature.

According to House Appropriations Committee Chairman Bill Young, the provision was misunderstood attempt to provide congressional oversight of the IRS. He explained the intention behind it in the November 24 Congressional Record,

“Mr. Speaker, I regret that some have misinterpreted section 222 in the omnibus bill. The administration had requested an unprecedented increase to hire additional staff for the IRS's processing and enforcement activities. Because of this more than $500 million increase in funds, the subcommittee felt it necessary to conduct proper oversight. The provision was simply an attempt to exercise our constitutional stewardship of the IRS's budget request, with no intention to review or investigate individual tax returns. This intent was clearly communicated in a colloquy with the chairman of Ways and Means Committee during Saturday's floor debate.

In order to allow oversight of these funds without infringing upon individual's privacy, the subcommittee requested that IRS draft the language. Two days prior to the bill being considered by the House, 17 staff members from the House and the Senate, Republicans and Democrats, read through every word of the subcommittee's bill and report. Clearly, there was never any desire to access personal information and it's unfortunate that some have misrepresented and exaggerated the purpose of this language. Nevertheless, I support the removal of the provision to end the confusion surrounding the issue.”

The omnibus remains in the Senate, “held at the Desk,” until the House approves separate language that will strike this provision from the omnibus. In his Nov. 20 speech to colleagues recorded in the Congressional Record, Senate Majority Leader Bill Frist explained,

“A lot of people have been wondering exactly what is going on with the Omnibus bill, which people expect to vote on later tonight, which we will be voting on shortly. We will lay out the unanimous consent request in a few moments.

The language we have been talking about over the last 2, 2 1/2 hours--I will refer to it as the Istook language--everybody agrees should not be in the underlying Omnibus bill. It was brought to people's attention when staff had looked at it late this afternoon, and everybody agrees it should not be in there.

The challenge we have had, from a procedural standpoint, is that the House has passed the Omnibus bill with that in it. Now we are to address it, and both Members of the House, including the Speaker, whom I have talked to directly, and our colleagues say it should not be there.

Procedurally, how do we accomplish that? Once we pass this bill, it would become the law of the land. It should not be there, but it would be there for a period of time. The potential for abuse would exist.

Mutually, we have agreed the only way to eliminate that is to send a correcting enrollment resolution back to the House of Representatives. The problem is they are not there. What we will do shortly--it will be in the UC--is we will pass that resolution, send it to the House. The House will receive that most likely on Wednesday. We also tonight will pass a continuing resolution, which we will comment on shortly, to allow business to continue tonight; and we will address the Omnibus and will vote on the Omnibus bill tonight and hopefully pass that bill. That bill will be sent to the desk, and it will be held there until the House acts, which will likely be Wednesday. At that point, and not until that point, this bill will actually be sent to the House or actually become law. Thus, there will be no window where this clause, this Istook language, will be law. It will not pass until it has been corrected in the bill, taken out of the underlying Omnibus bill…”

The Senate has already passed separate legislation (H.Con.Res.528) to make several corrections in the enrollment of HR 4818. A summary of the bill provided by the Library of Congress on the THOMAS website (Legislative Information on the Internet) notes the resolution,

“Directs the Clerk of the House of Representatives to make the following corrections in the enrollment of H.R. 4818 (Consolidated Appropriations Act, 2005): (1) remove provisions relating to the collection of State unemployment compensation debts and add provisions directing the Secretary of the Treasury to furnish information comparisons and disclosures to the Secretary of Health and Human Services to assist in the collection of delinquent nontax debt owed to the United States; (2) reduce from .83 to .80 percent the across-the-board rescissions applicable to the budget authority in specified appropriations Acts for FY 2005; and (3) remove a provision requiring the Internal Revenue Service (IRS) to provide designated agents of the House or Senate Appropriations Committee with access to IRS facilities and tax return information.”

It was the Senate’s expectation that the enrolling resolution to remove this language would be approved by the House during the Nov. 24th proceedings. Although there was discussion of this provision during debate on the continuing resolution, the House did not pass the correcting enrollment resolution, H.Con.Res.528. According to press accounts in National Journal’s Congress Daily PM, Congress will approve legislation that will void this provision from the omnibus bill when it returns for business next week.

We are still operating under a continuing resolution, which runs through December 8.

November 19, 2004

Back in Session

Congress is back in session this week for the lame-duck session. Work on the omnibus appropriations bill may be wrapped up this weekend.

Appropriations

Although there is no official documentation from the Appropriations Committees of what the Omnibus bill entails, and some final details were being addressed, there seem to be indications the bill will include cuts. In today’s edition of National Journal’s Congress Daily PM, reporter Peter Cohn wrote the omnibus bill will include a 0.75 percent across the board spending cut which will produce a $3.1 billion offset for spending. The article also noted that the VA-HUD provision to move PHAs to a calendar year budget, which saves $1 billion, is in the bill.

There are no official reports of spending levels or housing programs. However, several industry colleagues expect the across the board rescission will bring funding closer to the House VA-HUD numbers than the higher (in many cases flat-lined) Senate figures.

NAHMA will keep members informed when the final 2005 appropriations figures become available.

September 24, 2004

Appropriations

The Senate Appropriations Committee approved S 2825 its FY 2005 VA-HUD Appropriations bill. As previously reported:

The committee report (S. Report 108-353) includes language which strongly rejects the Flexible Voucher Program (tenant-based Section 8 block grant) proposed by the Administration.

The Committee delivered a scathing indictment of the FVP. The Committee noted the FVP fails because the proposal is inadequately funded, eliminates the current requirement to target 75% of all vouchers to extremely low income families, and would allow PHAs to set maximum payment standards that would likely result in higher rent burdens for families or reconcentration of the poorest families in the poorest neighborhoods.

Funds the Section 8 Housing Certificate Fund at $20.7 billion--$1.4 billion above the '04 level, and $2.24 billion over the Administration's request for 2005; However, the Committee did reiterate it is "very concerned that the section 8 program is growing at a cost that is undermining its financial stability as well as undermining the amount of funds that are available for other programs within this bill."
HUD was directed to "review the mechanism used for determinig section 8 rents and the accountability requirements that ensure that these rents are reasonable and are no greater than the cost of comparable, unsubsidized units in the same market area."

The bill retains a budget-based renewal formula for Section 8 vouchers.
Costs are capped at the "cost of vouchers in use as of October 1, 2004 with rent adjustments based on an annual adjustment factor determined by HUD which can be appealed by a landlord based on the cost of comparable unsubsidized units in the same census tract or a larger market area if appropriate. All rents would still be subject to a rent reasonableness test."

S 2825 Provides a modest increase for HOME above last year's funding level

The Committee provided $2.05 billion for 2005-a $44 million increase above the "04 appropriation, but $34 million less than the Administration's request

It Does not include cuts to Section 202 and Section 811

Section 202 received roughly $774 million-- an increase of $72, 000 above the '04 level, and $500,000 above the 2005 budget request.
Of the total Section 202 funding:
$53 million is for service coordinators, up to $30 million can be used for assisted living conversion and for emergency capital repairs, $20 million is provided for the predevelopment grants (architectural and engineering work, site control, planning). Limited funds are provided for capital repairs of Section 202 properties. Section 811 received $250 million --$908,000 more than the 04 appropriation and $1.3 million above the 2005 budget request.

The Committee report also questions whether the project-based Section 8 contract administration saves money or improves resident services. Page 30 of the Committee Report states, "The Committee urges the Department to reconsider the decision to contract our Section 8 contract administration, and to conduct an appropriate benefit-cost analysis to determine whether the practice should be continued."

Tax Issues

Although not directly related to housing issues, members may be interested to know the House and Senate have sent HR 1308, the Working Families Tax Relief Act to the President. The bill passed with a bipartisan vote of 339 to 65. According to a press release issued by House Majority Whip Roy Blunt (R-MO), the bill reduces taxes an average of $530 for 94 million taxpayers, and specifically:

The bill extends the following tax provisions through December 31, 2010:
$1,000 child tax credit
Marriage penalty relief
10% income tax bracket

Additionally, the bill:
Extends individual AMT relief through the end of 2005
Accelerates to 2004 the refundability of the child tax credit
Includes combat pay in earned income for the purpose of the child tax credit and earned income credit
Creates a uniform definition of a "qualifying child" for tax purposes

September 17, 2004

Making a Difference!!!!

NAHMA’s persistence in raising the importance of the need for HUD to have sufficient funding through the end of FY 2004 (September 30) and during any period funded under a continuing resolution appear to have paid off! After learning about the additional funding complication caused by the 2004 appropriations language which prevented HUD from using recaptures to cover temporary shortfalls, NAHMA began aggressively working this issue on Capitol Hill. We made the case to key appropriations committee staff that it was essential to ensure HUD could fully fund Section 8 HAP contracts through September and during the expected CR period.

I am pleased to report our efforts have produced results. At yesterday’s industry meeting with Deputy Assistant Secretary Stillman Knight, HUD confirmed that following meetings Stillman has had with the Hill staff, they now believe Section 8 project based HAP contracts will be fully funded for the first quarter of FY 2005. This time period runs from October 1 through December 31. HUD will almost certainly be operating under a CR for at least part of the first quarter. The Department is now identifying needs for the second quarter, which runs from January 1 through the end of March. Please be assured we will continue to follow this issue closely.

Appropriations

The Senate Appropriations Committee will consider its 2005 VA-HUD bill on Tuesday, Sept. 21. Last week, the VA-HUD Subcommittee very quietly approved the bill thorough a procedural maneuver intended to expedite the process. No information has been made available about the details of the Subcommittee bill.

The key question is whether the Senate will find additional money for HUD programs to restore cuts made in the House version. Funding will undoubtedly continue to be tight. The Senate is basically working with the same level of funding for the VA-HUD Subcommittee has the House did. To complicate matters further, House Majority Leader Tom DeLay (R-TX) reportedly has refused to bring the House bill to a vote unless funding for NASA is restored. Please be assured that NAHMA will continue to be a forceful advocate for funding of affordable housing programs.

The Senate Appropriations Committee approved its Agriculture Appropriations bill (S 2803). It provided $90 million for Section 515. Rental Assistance received $586 million. Section 538 multi-family housing guaranteed loans received $86 million. NAHMA is seeking information about the status of the $6 million preservation loan funds which were included in the Subcommittee bill.

A point of clarification on the Senate Agriculture Appropriations bill: last week, Senate Agriculture Appropriations Subcommittee staff told NAHMA funding for the Section 515 and Rural Rental Assistance programs were “comparable” to the House levels. NAHMA has since learned funding was less than the levels provided by the House. The same staff person expressed skepticism that all of the $116 million for Section 515 provided by the House was actually available due to drafting problems with the bill. If amendments to increase funding are not offered during Senate consideration of the bill, differences will be resolved in conference.

September 10, 2004

With the conclusion of the August Congressional recess (a.k.a. “District Work Period”), Washington Update returns! Happy reading and enjoy your weekend!

Appropriations

In response to the devastation in Florida caused by recent hurricanes, Congress sent the President legislation providing $2 billion in emergency supplemental appropriations for disaster relief. However, press reports indicate an additional request for emergency funds could come next week.

The House FY 2005 VA-HUD appropriations bill (HR 5041) is now available for public viewing. Interested members will find a link to the Library of Congress website on our NAHMA’s Legislative News webpage, accessible thorough http://www.nahma.org/content/news.html. A vote on the bill by the full House of Representatives has not yet been scheduled.

The Senate Agriculture Appropriations Subcommittee has reported its FY 2005 Agriculture Appropriations bill to the full Committee. Although the text of the bill has not yet been released, Subcommittee staff has informed NAHMA that the bill’s funding levels for Section 515 and Rural Rental Assistance are comparable to the House levels (which were $116 million and $592 million, respectively). Unlike the House bill, the Senate version does allow the use of Section 515 funds for new construction. Staff also mentioned that the Senate bill includes a new revolving loan for preservation of rural multifamily housing. The program will be funded at not less than $6 million. The program will provide a 1 percent loan with the ability to defer interest and principal. The Senate Appropriations Committee is scheduled to consider the bill on September 14.

Section 8 Recapture Dilemma

NAHMA has been actively working this issue, and there is news to report.

Contrary to years of actual practice, HUD’s lawyers have recently instructed the Office of Multifamily Housing that they may not use recaptured Section 8 funds from Fiscal Year (FY) 2004 to cover funding shortfalls on other Section 8 contracts. HUD has interpreted language in the 2004 VA-HUD appropriations bill to require the rescission of recaptured funds. Because of this language, the HUD attorneys do not believe the Department has the legal authority to use recaptured Section 8 funds as it has done in the past. Historically, the Department has used recaptured funds to cover temporary shortfalls in funding as the fiscal year ends and the programs are funded through continuing resolutions.

Based on their funding projections, HUD staff recently cautioned affordable housing operators that until HUD’s 2005 budget is resolved, project-based Section 8 rental subsidy Housing Assistance Payment (HAP) contracts are likely to be only partially funded. Furthermore, HUD officials have reportedly said that funding for these programs may even be exhausted.

NAHMA is very concerned that HUD will be unable to fully fund Section 8 contracts for the duration of FY 2004 (which ends on September 30) and any period for which HUD is operating under a continuing resolution (which is undetermined, but could conceivably run into January depending on the outcome of the November elections and the will of Congress to finish this year’s legislative business). Based on HUD’s interpretation of the 2004 appropriations language, the Department has one less option to address funding shortfalls. It appears a legislative solution is necessary to ensure HUD will be able to fully fund rental subsidy contracts until the 2005 budget is in place.

Based on conversations NAHMA has had with HUD’s Office of the Chief Financial Officer (where the appropriations attorneys work), HUD’s lawyers believe this problem is corrected in the House version of the FY 2005 VA-HUD bill, HR 5041. NAHMA is actively seeking confirmation of HUD’s assessment from key Appropriations Committee staff, as well as HUD’s Office of Congressional and Intergovernmental Affairs.

Please know that we are taking this issue very seriously. For your convenience, NAHMA has provided a draft text on our grassroots advocacy center which members can use to alert their senators and representatives about this problem. Please contact House VA-HUD Appropriations Subcommittee Chairman Jim Walsh (if writing to a Senator, substitute Kit Bond for Jim Walsh) and Ranking Member Alan Mollohan (if writing to a Senator, substitute Barbara Mikulski for Alan Mollohan) and urge them to ensure HUD will have sufficient appropriations and the necessary statutory authority to fully fund all Section 8 contracts for the remainder of FY 2004, any period funded through a continuing resolution, and throughout FY 2005. The text is available at http://www.nahma.org/content/grassroots.html.

GAO Late HAPs Study

The General Accounting Office (GAO), the investigative arm of Congress, has agreed to study the late HAPs issue, per the request of Representatives Oxley, Frank, Ney and Waters. Committee staff has informed NAHMA they will be meeting with GAO next week to determine the scope of the study. This is standard operating procedure.

Community Reinvestment Act (CRA) Meeting with the FDIC

This week, NAHMA participated in an industry meeting with the Director of the Federal Deposit Insurance Corporation (FDIC). The purpose of the meeting was to discuss the impact of the FDIC’s proposed rule, which would quadruple the asset threshold that makes banks subject to the CRA from $250 million to $1 billion.

This proposal is worrisome because CRA has provided valuable gap-financing for affordable housing development. In some states, there will be only one or no bank at all subject to the CRA if the proposed rule is adopted. Rural areas are especially likely to be hard-hit. With the uncertainly of federal funding for affordable housing development and the possibility of very real cuts to popular housing programs for FY 2005, this proposal comes at a critical time. This rule reduces incentives for private lenders to provide funds for affordable housing.

NAHMA will be filing comments registering our opposition to the proposed rule. Interested members may also file comments on their own behalf with the information provided on the grassroots advocacy center.

July 23, 2004

Preservation Hearing

On July 20, the House Financial Services Subcommittee on Housing and Community Opportunity held a hearing to examine the GAO study entitled ``Multifamily Housing: More Accessible HUD Data Could Help Efforts to Preserve Housing for Low-Income Tenants.''

In this study, the General Accounting Office (GAO), the investigative arm of Congress, examined preservation issues related to maturing mortgages. GAO recommend that HUD provide more accessible data to state and local housing agencies to help them better track properties with maturing mortgages, as a means to preserve affordable housing for low-income tenants. The report focused on pre-1990 Section 202s, Section 236, Section 221(d)(3) BMIRs, Section 221(d)(3) and (d)(4)s, and Section 231 properties. The study notes there are 11,267 HUD subsidized properties with 91,441 units under these programs. Two thirds of these mortgages, or 2324 will mature over the next 10 years. HUD does not offer incentives to the owners to keep properties affordable when mortgages mature.

According to a press statement issued by Subcommittee Chairman Bob Ney, “Properties subsidized under these programs represent a significant source of affordable housing across the country. Many of the commitment periods will be completed within the next 10 years. When owners pay off mortgages, in most cases the subsidized financing ends and so does the requirement to keep the units affordable; raising the possibility that rents will increase. In many areas, families simply can’t find an affordable place to live. We must look for ways to keep units affordable.”

The hearing also presented an opportunity for Rep. Barney Frank to discuss his legislation, the Displacement Prevention Act (H.R. 4679), which is intended to help preserve the affordable housing which may be lost upon mortgage maturity. It authorizes HUD to use $675 million in previously appropriated, but unused, housing funds which owners could use to renovate units, or in some cases, to receive annual payments covering the difference between subsidized rent the tenant is paying and comparable market-rate rent. The money could also be used to help non-profits purchase the properties and maintain them as affordable housing. Recipients would be required to maintain the property as affordable for low-income households for at least 10 years beyond the original date of mortgage maturity as a condition of the assistance. Also, HR 4679 requires owners who will be paying off a mortgage to notify tenants at least nine months prior to making any changes to the low-income affordability restrictions.

Testimony was heard from GAO’s witness, David C. Wood, Director, Financial Markets and Community Investment, GAO; FHA Commissioner & Assistant Secretary of Housing John C. Weicher; and public witnesses, including Bill Kargman. Bill offered his perspective of the impending mortgage maturations as an owner of Section 221(d)(3) and Section 236 properties. He also endorsed HR 4679 as a tenant-protection measure when the HUD mortgages mature. Witness’ testimony can be found at http://financialservices.house.gov/hearings.asp?formmode=detail&hearing=324&comm=5.

A copy of the GAO report is posted in the NAHMA member webpage, Government Oversight Agencies.

VA-HUD Appropriations

The House Appropriations Committee approved its 2005 VA-HUD spending bill. While the Committee has made an effort to fully fund the Section 8 program, it did so by cutting most other programs by 4%. Also, while the Committee did NOT authorize the proposed Flexible Voucher Program in the bill, it did direct HUD to continue a “budget-based” Section 8 voucher allocation to PHAs. In other words, the Committee is not interested in resuming the practice of reimbursing the PHAs based on cost. It also divided funding for project-based Section 8 and tenant based Section 8 into different accounts, “to provide better accountability and oversight,” according to a press release issued by the Committee.

Highlights of the bill follow (figures have been rounded):

Total HUD funding: $37.7 billion, $108 million below last year's level ($37.9 billion) and $1 billion above the President's 2005 Request ($36.8 billion)

Section 8 programs:

--Tenant-Based Rental Assistance: $14.7 billion, $491 million over last year ($14.2 billion) and $1.56 billion over the request ($13.1 billion)

Included in this figure is $13.3 billion for Section 8 voucher renewals, which represents $581 million, or 5% over 2004 funding and $1.5 over the request.

--Project-Based Rental Assistance: $5.3 billion, $270 million over last year ($5.1 billion) and $10 million below the request ($5.4 billion)

HOME: $1.9 billion, including $1.8 billion for HOME formula grants and $85 million for the American Dream Downpayment program. This figure for total HOME funding is a reduction of $86 million below the 2004 appropriation ($2 billion) and falls $164 million below the 2005 request ($2.1 billion)

Section 202: $741 million, roughly $33 million below the 2004 level ($774 million) and $32 million below the 2005 budget request ($773 million). The allocation appears to be:

$654,550,000 for new capital grants and PRACs
$3 million for one-year PRAC renewals
$48 million for service coordinators
$20 million for assisted living conversion
$15 million for predevelopment grants
at least $450,000 for the Working Capital Fund

Section 811: $238 million, an $11.1 million reduction below 2004 ($249.1 million) and about $11 million below the President’s request ($248.7 million). The allocation appears to be:

$196 million for new capital grants and PRACs
$2 million for PRAC renewals
$10 million for incremental tenant-based 811 assistance
$29 million for amendments to tenant-based voucher contracts entered into before FY 2004
$450,000 for the working capital fund

Highlights of the committee bill can be found at http://appropriations.house.gov/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=416.

July 16, 2004

Appropriations

The House passed the 2005 Agriculture Appropriations bill (HR 4766) by a vote of 389-31. Highlights related to rural housing follow:

Section 515: $116, 063,000 (the President’s 2005 request was $60 million and 2004 figure was $115,857,000)

Section 538 loan guarantee: $100,000,000 (equal to the President’s 2005 request and 2004 figure was $99,410,000)

Section 521 Rural Rental Assistance: $592,000,000 (equal to the President’s 2005 request, 2004 figure was $580,554,000)

New RHS Administrator

Mr. Russell T. Davis has been selected to be Administrator of the Rural Housing Service. A press release issued by the agency describes his background as follows:

“ Davis, originally of Kennewick, Wash., is currently senior policy advisor in the Office of Sallie Mae Oversight of the U.S. Department of the Treasury. He began his career in public financing in 1983 working for a private bond firm in New York, where he structured over 25 tax-exempt bond issues supporting public authorities. During the previous Bush Administration, Davis served as the Acting Deputy Assistant Secretary for Housing Operations at the U.S. Department of Housing and Urban Development, managing over 600 employees and the operations of the Federal Housing Administration’s $350 billion insurance portfolio. “

June 18, 2004

Appropriations

The House Appropriations Subcommittee on Agriculture, Rural Development, FDA & Related Agencies approved its 2005 spending bill. Highlights of this legislation can be found at http://appropriations.house.gov/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=389, although not much useful information is listed for RHS programs. The full Appropriations Committee must approve the bill before it will be considered on the House floor.

Flood Insurance

The Senate approved a 5-year reauthorization for the National Flood Insurance Program (S. 2238). The bill also includes a loss mitigation pilot program to help mitigate flood risks for properties that have been flooded numerous times and have received multiple flood insurance payments.

Why Change Now?

The Senate has confirmed Alan Greenspan to another 4 year term as Chairman of the Board of Governors of the Federal Reserve System. Does anybody even remember who chaired the Fed before Greenspan?

June 11, 2004

There is no significant housing-related news to report this week. It is worth noting, however, that the House Appropriations Committee has already begun to mark-up bills in the absence of a finalized budget resolution. Interested members may view the House Appropriations Subcommittee allocations on the Library of Congress’ website (THOMAS), http://appropriations.house.gov/_files/302b1.pdf.

June 4, 2004

Late HAP Payments

Last March, NAHMA spearheaded an industry coalition seeking congressional attention to the late HAP payment problem. NAHMA drafted a letter to House Financial Services Committee Chairman Mike Oxley (R-OH), Ranking Member Barney Frank (D-MA), Housing and Opportunity Subcommittee Chairman Bob Ney (R-OH) and Ranking Member Maxine Waters (D-CA), asking these key members to seek a study of this issue by the U.S. General Accounting Office (GAO). (GAO is the investigative arm of Congress). Other industry colleagues who signed our letter included AASHA, CARH, IREM, NAA, NAHB, NAHC, NAR, NLHA, and NMHC.

In a huge victory for NAHMA, Congress has taken notice of our concerns about late HAP payments. On June 2, the four key housing principals asked GAO to:

determine the extent to which HUD makes HAP payments in a timely and predictable manner;
identify the factors that affect the timely provision of HAP payments;
assess the impact that the timing of HAP payments might have on the availability of affordable housing; and
to the extent warranted, describe options for ensuring timely HAP payments.

HUD Nominations

President Bush has nominated Carin M. Barth of Texas to serve as HUD’s Chief Financial Officer.

Other News

The House Financial Services Committee approved legislation introduced by Rep. Pat Tiberi (R-OH) to create a zero-downpayment FHA mortgage. This legislation was proposed in the President’s 2005 budget request. NAHMA takes no position on homeownership legislation; this information is provided solely as an FYI.

May 14, 2004

Section 8 Renewal Formula

A coalition of 13 housing and community development organizations, including NAHMA, signed a letter to all members of the House of Representatives asking them to support and cosponsor HR 4263. HR 4263 would restore the practice of renewing vouchers based a housing agency's actual per unit costs in the prior quarter, adjusted by inflation for the intervening months. It also provides that this method be used for all renewals funded with FY 2004 money -thus undoing the retroactive cuts that HUD is now imposing. The bill was introduced by Rep. Barney Frank (D-MA).

If you have not yet done so, please ask your congressman to cosponsor this important legislation.

May 7, 2004

Section 8 Housing Choice Voucher Renewal Formula

Early this week, a coalition of 12 concerned stakeholders, including NAHMA, issued a joint press release. The release explains the short-term and long-term danger to the voucher program posed by the renewal formula. It also calls on HUD to work with Congress and the affordable housing sector to resolve this problem. The link to this press release is available on NAHMA’s homepage, www.nahma.org.

On Tuesday, Rep. Barney Frank (D-MA) introduced a bill, HR 4263, which ensures full funding of the voucher program. As explained in the Dear Colleague letter Rep. Frank sent to his fellow House members (and also available on NAHMA’s website), the bill “would restore the practice of renewing vouchers based a housing agency's actual per unit costs in the prior quarter, adjusted by inflation for the intervening months. It also provides that this method be used for all renewals funded with FY 2004 money -thus undoing the retroactive cuts that HUD is now imposing.” Members are strongly urged to ask their congressmen to cosponsor this bill.

NAHMA has updated our website with the latest information you need to get involved and register your interest in this important issue. Please visit NAHMA’s Grassroots Advocacy Center at http://www.nahma.org/content/grassroots.html to find a draft letter NAHMA members can send to their congressional delegation expressing concern about the renewal formula.

House Financial Services Housing and Community Opportunity Subcommittee News

Although NAHMA does not take positions on homeownership bills, members may be interested to know the Subcommittee has approved H.R. 3755, the Zero Downpayment Act of 2004, which was introduced by Rep. Patrick Tiberi (R- OH). A Subcommittee press release explains, “H.R. 3755 would eliminate the downpayment requirement for families and individuals who buy homes with Federal Housing Administration (FHA)-insured mortgages. The Zero Downpayment Act would create opportunities for first-time homebuyers who: do not hold enough savings for downpayments; meet FHA’s underwriting requirements; and can easily afford monthly mortgage payments.”

April 30, 2004

HUD Nominations

Yesterday (April 29th), the Senate Committee on Banking, Housing, and Urban Affairs approved the nominations of: Romolo (Roy) A. Bernardi, of New York, to be Deputy Secretary of HUD; Dennis C. Shea, of Virginia, to be Assistant Secretary for HUD's Office of Policy Development and Research; and Cathy M. MacFarlane, of Virginia, to be HUD's Assistant Secretary for Public Policy. The nominees must now be confirmed by the full Senate.

Mr. Bernardi is currently Assistant Secretary of HUD's Office of Community Planning and Development, which administers HOME and CDBG. Once confirmed, he will replace Alphonso Jackson, who has been promoted to Secretary of HUD.

Section 8 Vouchers

Late last week, HUD issued a notice explaining how it will implement the Section 8 Housing Choice Voucher renewal formula, pursuant to the 2004 appropriations bill. The notice can be found at http://www.hud.gov/offices/pih/publications/notices/04/pih2004-7.pdf. HUD announced the voucher renewal formula will fund PHAs vouchers based on costs of units under lease in August 2003, with an adjustment for inflation. Historically, the program has been funded based on costs. The origin of this policy is HUD's interpretation of language in the 2004 appropriations bill. The effect of this new policy is likely to leave some PHAs unable to cover the costs of their voucher programs.

The problem is playing out differently in different parts of the country. HAP terminations and reduced subsidies to landlords are among the options being considered by PHAs. In some cases, states are examining whether HOME funds can be used to supplement shortfalls. (I am aware of one small PHA in NW Oregon that has already sent HAP termination notices).

HUD's public statements about this issue essentially blame PHAs for creating their own problems through mismanagement and overleasing. However, there are indications that HUD is quietly and privately examining remedies.

On Monday, April 30, the DC trade associations representing owners and agents, as well as National Low Income Housing Coaltion, will be issuing a joint press release to raise public awareness about the problems with the renewal formula and to call for a solution. The groups met this afternoon to draft the release.

We will have some updates for the grassroots page and corresponding calls for action early next week. Congressman Frank (D-MA) will be introducing legislation to address this issue on Tuesday. Once that bill is dropped, we will be reaching out to the grassroots to generate support.

This notice has sent panic thorough the affordable housing community. If you have received notice from your PHA that your HAP contract is at risk or that you will be asked to accept a reduced subsidy, please consider sharing this information with NAHMA.

Tax Cuts

NAHMA does not generally track tax-related information unless there is a housing component. Nevertheless, some members may be interested to know that the House passed legislation this week to permanently extend the standard deduction and the 15-percent individual income tax rate bracket expansion, for married taxpayers filing joint returns, by a vote of 323 to 95. The bill number is HR 4181.

April 9, 2004

There is no significant legislative activity related to multifamily housing to report this week. The House was not in session this week. The Senate spent this week debating tax legislation intended to avoid trade retaliation by the European Union, the Jumpstart Our Business Strength (JOBS) Act, and a medical tort reform bill, the Preg nancy and Trauma Care Access Protection Act.

Budget Update

Congress has recessed without having approved the FY 2005 Budget Resolution. The statutory deadline for approving the budget is April 15. However, the resolution (S.Con.Res. 95) seems to be stuck in the conference committee.

Recess (a.k.a. “District Work Period”)

The House and Senate each will be in recess next week. NAHMA members are encouraged to call their senators’ and representatives’ district offices and to attend any scheduled town hall meetings. The House and Senate will return for legislative activity the week of April 19th.

April 2, 2004

New HUD Secretary

Alphonso Jackson has been confirmed as Secretary of HUD. The Senate confirmed Jackson on March 31.

NAHMA Testifies on HUD Budget

On March 25, NAHMA Vice President and Federal Government Affairs Committee Vice Chair Michelle Norris testified before the House Appropriations VA-HUD Subcommittee on the importance of federal funding for multifamily housing programs. In her testimony, Michelle urged the Subcommittee to:

* Reject the "Flexible Voucher Program" block grant proposed in the President's 2005 Budget;

* Provide full funding for all authorized Section 8 vouchers;

* Increase funding for the Section 202 and Section 811 programs above the 2004 appropriation levels at least at the rate of inflation;

* Place a higher priority on affordable housing preservation;

* Relieve affordable housing operators of the unfunded mandate and potential fair housing / civil rights liabilities imposed by HUD's guidance for providing meaningful access to housing programs for Limited English Proficient (LEP) persons;

* Be willing to explore possible solutions to late Housing Assistance Payments (HAPs) problem; and

* Reject proposed cuts to federal multifamily housing programs.

Additional Appropriations Hearings

RHS Administrator Arthur A. Garcia testified before the House Agriculture, Rural Development, FDA and Related Agencies Appropriations Subcommittee on March 25. His testimony noted:

* Most of RHS' multifamily budget ($592 million of $822.5 million) will be directed to renewal of 4 year rental assistance contracts;

* The Comprehensive Program Assessment report on physical condition and market analysis is expected "by this spring;"

* The automation forecasting tool for rental assistance is expected "to be available by March of FY 2004;

* RHS is working on drafting the final 3560 rule;

* Phase 4 of the Multi-Family Information System (MFIS) is scheduled for implementation in May 2004; it will provide "electronic debiting and crediting of borrowers' accounts" and a website to locate all the MFH properties;

* The Management Agent Interactive Network Connection "is scheduled to become mandatory this summer" with the publication of the Final 3560 Rule (emphasis added). This system allows management agent to transmit tenant and property information to RHS over the Internet.

* In discussion prepayment and preservation, the Administrator noted, "Key factors that affect many owners when selling their property is the effect of exit taxes and expectations for equity." (Emphasis added.)

* RHS is developing a "revitalization tool kit" to offer alternatives to RHS borrowers "in financing, debt write-offs and subordination, third party financing, and transfer approvals."

To read Administrator Garcia's 20-page testimony in its entirety, see http://appropriations.house.gov/index.cfm?Fuseaction=Hearings.Testimony&HearingID=322&WitnessID=604.

On April 1, the Senate Appropriations Subcommittee on VA-HUD and Independent Agencies held a hearing on the FY05 HUD Budget. Witnesses included FHA Commissioner John Weicher; Assistant Secretary for Public and Indian Housing Michael Liu; and Assistant Secretary for Community Planning Development Roy A. Bernardi.

Budget Resolution

On March 25, the House narrowly passed its version of the FY 2005 Budget Resolution by a vote of 215-212. Briefly, this budget would extend parts of expiring tax laws which expanded the 10 percent tax rate, provided "marriage penalty" tax relief, and increased the child tax credit. According to House Budget Committee Chairman Jim Nussle, the budget calls for "holding the line on all nondefense discretionary spending and called for a reduction of ½ of 1 percent from the President's requested increase of 9.7 percent of homeland security." It cuts the deficit in half in 4 years. It requires additional oversight by requiring authorizing committees to identify "waste, fraud and abuse." It also freezes funding for programs that have not been authorized. Finally, it includes $50 billion for the war in Iraq.

Differences between the House and Senate versions of this legislation are being resolved in a conference committee. By law, the budget resolution is supposed to be approved.

March 12, 2004

Appropriations

Big News! NAHMA has been invited to testify before the House VA-HUD Appropriations Subcommittee on March 25. Generally speaking, NAHMA's testimony will likely highlight the importance of funding for: Section 8 vouchers and project based assistance; Section 202 & 811 (and their various sub-accounts); HOME funds; express strong opposition to the Administration's Flexible Voucher Program-the open ended "flexibility" which would eliminate enhanced vouchers and the huge budget cut. We will also be likely to urge the subcommittee to think globally about the preservations issues in light of the disappearance of enhanced vouchers under the FVP and the upcoming maturation of mortgages on 236, BMIR, 221(d)(3) and (d)(4) properties. This may also present an opportunity to ask for increased scrutiny of the late HAP issue and to request relief on the Limited English Proficient issue. More information will be available next week.

Budget

The Senate approved its 2005 budget resolution (S.Con.Res. 95) early this morning by a vote of 51-45. Official information from the Senate Budget Committee about the details of this bill was not available at press time. Details on S.Con.Res. 95 will be provided in next week's report.

The House Budget Committee has begun to consider its budget resolution, but is not expected to finish its work until next week. Additional information will be provided to members in next week's report.

Limited English Proficient

At the NAHMA meeting this week, considerable interest was expressed in pursuing legislative relief from the Limited English Proficiency guidance issued by HUD FHEO. Specifically, members expressed interest in seeking legislative language to prohibit HUD from using their funds to enforce the FHEO guidance. The basis of this guidance was Executive Order 13166.

Rep. Peter King (R-NY) has introduced a bill, HR 300, which appears to abolish the government-wide mandate. HR 300 nullifies Executive Order 13166 "Improving Access to Services for Persons with Limited English Proficiency." Furthermore, this legislation prohibits the use of appropriated funds to "promulgate or enforce any executive order that creates an entitlement to services provided in any language other than English." NAHMA has placed a call to Mr. King's office to express our interest in this legislation-especially as it pertains to HUD multifamily programs. Mr. King is a member of the House Financial Services Committee.

NAHMA will run this legislation through the normal public policy approval process.

HUD Nomination

Roy Bernardi had been nominated as Deputy Secretary of HUD. Mr. Bernardi currently serves as HUD's Assistant Secretary for Community Planning and Development. In his current capacity, Mr. Bernardi heads the office in charge of HOME and CDBG. If confirmed, he would replace Alphonso Jackson as the Department's Deputy Secretary. Mr. Jackson has been nominated to become Secretary of HUD.

The timeframe for moving these nominations is uncertain. Jackson's nomination has been complicated by public opposition from the Chairman of the Housing and Opportunity Subcommittee, Wayne Allard (R-CO).

Senate District Work Period (AKA Recess)

The Senate stands in Recess until Monday, March 22. This means members will be back in their districts for the week. NAHMA recommends that you call your Senators' district offices to make an appointment and to check to see whether they have any town meetings you might be able to attend.

March 5, 2004

VA-HUD Subcommittee Hearing

On Wednesday, March 3, the House VA-HUD Subcommittee held a hearing on HUD's budget request. Assistant Secretary for Public and Indian Housing Michael Liu and FHA Commissioner John Weicher were the witnesses.

Section 8 was the primary focus on the hearing. It is fair to say there is a bipartisan concern about the substantial increases in the voucher program over the past couple of years.

Most questions pertained to the Flexible Voucher Program (FVP). The FVP would cut Section 8 voucher funds by more than $1 billion, block grant the funds to PHAs, and change the unit-based allocation to a dollar-based allocation, and remove the targeting requirements to extremely low income families. Mr. Liu stated under questioning that the FVP assumed 5 percent annual growth in the program and was necessary to control costs.

Democrats hammered Liu on the potential unintended consequences of the FVP and the accompanying cut to the Section 8 voucher program. Democrats contended that under a fixed dollar allocation which would not receive substantial increases, PHAs would be forced to serve higher income families, require more than 30 percent for the tenant's contribution to the rent, serve fewer families, or some combination thereof. Liu denied that these were inevitable outcomes. Citing a study by the New York Times, he claimed HUD could save $500 million if PHAs were allowed to set the rents in line with the local markets His point was Section 8 rents did not decrease to reflect the softened rental market. Liu claims Section 8 rents are actually driving rents in some markets and the subsidies are too high. He said additional savings would result from giving the PHAs increased flexibility. Furthermore, he dismissed the $1.6 billion shortfall in the budget request for renewal of all vouchers; he argued this figure was based on over-generalized assumptions for the current voucher program, but that additional savings would result from the dollar based block grant through increased flexibility, more accurate rents, and increased incentives for the PHAs to be efficient with their money.

Despite the public opposition to the FVP stated by House Subcommittee Democrats and the Senate VA-HUD Subcommittee Chairman Kit Bond, we should not take for granted the proposal is dead. Republican Subcommittee member Anne Northrup (R-KY) stated the PHA in her district has repeatedly asked for flexibility, and the subcommittee "should at least consider" the proposal. Subcommittee Chairman Jim Walsh (R-NY), while not specifically taking a position on the proposal, made several statements which I believe give cause for some concern. Walsh discussed concerns about the increases in Section 8, which in itself is not surprising. But, he also said changing Section 8 to a dollar-based program is not a bad idea because all discretionary programs are dollar based, and this is not a mandatory program, its discretionary. Likewise, Walsh rebutted Ranking Member Alan Mollohan's (D-WV) objections to HUD's deliberate bypassing of the authorizing committees, saying, "all major housing legislation has been done on appropriations bills" for the last couple years, including the targeting to extremely low-income families. After the hearing, I asked Chairman Walsh's staff, "Should we take from the Chairman's remarks that the Chairman is keeping an open mind about the Flexible Voucher Program, or is he supporting it?" The staff person would not answer my question. Her response was, "The Chairman speaks for himself. [She is not going to] paraphrase what he said. It was a long hearing. You were here, and you heard him." (Which by the way, was exactly why I asked the question!)

Budget Resolution

The Budget Resolution is a blue print which establishes the parameters and limits for taxes and spending. It is not approved by the President, and it does not become public law. However, it is an important guide for Congress in making determinations about taxes and spending. Each chamber considers its own version. Differences are resolved in a conference committee, and then a final document is approved by each chamber.

The Senate Budget Committee approved its 2005 Budget Resolution this week. As reported by the committee, the resolution cuts the deficit in half by 2007, expedites consideration of certain tax measures due to expire, increases defense spending by 5 percent, increases homeland security spending by 10 percent, and assuming a freeze in most discretionary programs at 2004 levels.

Interestingly, the summary of the resolution states "sufficient budget authority and outlays are provided to renew all utilized section 8 housing contracts. The [Chairman's] Mark does not reflect the Administration's block grant proposal (consistent with Congressional action in 2004 appropriations on a similar proposal in 2004 budget request." The resolution does, however, assume HOPE VI will be terminated. Furthermore, the resolution proposes targeting CDBG entitlement grants to lower income communities. The Appropriations Committee receives its funding allocation from the resolution, but the appropriators are not required to follow the assumptions when making allocations to the appropriations subcommittees.

The House Budget Committee began holding hearings on its Budget Resolution, and will vote on a measure "soon."

February 27, 2004

Confirmation Hearing

On February 26, the Senate Banking Committee held the confirmation hearing for Alphonso Jackson. Jackson, nominated to be HUD Secretary, faced intense questioning from Committee members about the funding cuts for Section 8 vouchers, the proposed Flexible Voucher Program (FVP), and the Real Estate Settlement Procedures Act (RESPA) regulation. The most shocking moment in the hearing came when the Chairman of the Housing and Transportation Subcommittee, Senator Wayne Allard (R-CO), stated that HUD's handling of RESPA "demeaned" the Congress, and for that reason he would not support Jackson's nomination at this time.

Senator Sarbanes (D-MD) and Senator Carper (D-DE) pressed Jackson on Section 8 issues. Senator Sarbanes pressed Jackson on the Administration's requested cuts to Section 8 voucher funding. Jackson responded that HUD returns between $1.2 - $1.8 billion in unused Section 8 each year. The nominee also stated he does not believe current vouchers are being "denigrated. Senator Carper raised questions about the Flexible Voucher Program, and whether a block grant would meet the needs in program and serve new people, Jackson admitted the FVP is a "block grant" to public housing agencies (PHAs). He believes funding will be adequate because the allocations will be based on what PHAs are receiving now. Jackson admitted there "will not be substantial increases" in the block grant because there was already been a 23 percent increase in Section 8 costs. Finally, Jackson believes the FVP will allow new people to receive assistance, although he admitted there is only 8 to 9 percent annual turnover in the current Section 8 program.

Budget News

On Wednesday, the House Financial Services Committee approved its "Views and Estimates [of the Committee]…On Matters to Be Set Forth in the Concurrent Resolution on the Budget for Fiscal Year 2005" In other words, the report states the Committee's opinion about what the budget resolution Congress approves should look like, and what the Committee thinks of the President's budget request.

In a victory for affordable housing advocates, the Committee approved a Section 8 amendment offered by Ranking Member Barney Frank (D-MA). The amendment notes that the Administration's request for Section 8 funding is $1.633 billion short of the level necessary to renew all current Section 8 assistance, which "could result in the elimination of funding for up to 250,000 vouchers." With respect to the FVP, the amendment states, "the main feature of this proposal is the elimination of the right housing authorities now have to rent to a specified number of families, and to receive funding to cover the full cost of such assistance." It notes the program starts out underfunded by $1.633 billion, and because of the block grant, "would let funding spiral downward in future years." The amendment also details the choices PHAs would to have make to make due with presumably static funds. PHAs would have to serve less people (since there is no maintenance of effort requirement), reduce the subsidy level, or serve more higher-income families.

Unfortunately, extremely disappointing language was included as regards rural housing. The Committee acknowledged the requested cut for Section 515 new construction. It also commended RHS for prioritizing funds for repair and rehab of the existing portfolio and "working to develop better strategies for managing the existing portfolio of projects before adding to future costs by funding new projects." Equally disappointing was the Committee's endorsement of the 2004 appropriations language which reduces Rural Rental Assistance contract length from 5 years to 4 years.

Hearings on the HUD budget will begin next week. The House VA-HUD Appropriations Subcommittee will hear testimony from HUD on March 3.

Finally, as regards the professed commitment by various Administration officials and members of Congress to cut the deficit by reducing non-defense discretionary spending, the February 2 statement on the President's 2005 Budget by House Appropriations Committee Chairman C.W. Bill Young (R-FL) is most interesting:

"…While I am dedicated to developing fiscally conservative budgets, no one should expect significant deficit reduction as a result of austere non-defense discretionary spending limits. The numbers simply do not add up. Non-defense discretionary represents less than one-fifth of the federal budget and freezing this spending reduces the deficit by a marginal amount. With a 1% growth or freeze in non-defense programs, everyone should have realistic expectations and be prepared to make sacrifices. We will be carefully scrutinizing the Administration's new initiatives and proposed funding increases to see if we can afford them in a lean budget year. They will have to be reconciled with proven programs and traditional Congressional priorities."

Exit Tax Relief Legislation

The Executive Council's recommendation to the Board of Directors regarding HR 3485, the Affordable Housing Preservation Tax Relief Act, is "Take no position on the bill itself, support the concept of exit tax relief, and work with industry partners and congressional sponsors to improve the bill."

As a reminder, HR 3485 creates a federal "Affordable Housing Preservation Credit" which would alleviate the "exit tax" disincentive for owners to sell their properties to buyers who would preserve the property as affordable housing. Unfortunately, the bill in its current form subjects the original owners to a recapture of the credit if the buyer is deemed out of compliance with program requirements.

This Executive Council's recommendation will now be forwarded to the Board of Directors for concurrence.

With 22 Executive members responded, the votes were as follows:

--Take no position on the bill itself, support the concept of exit tax relief, and work with industry partners and congressional sponsors to improve the bill: 17 votes;

--Strongly Support the bill: 4 votes; and

--Support the bill: 1 vote.

Taking the Lead on Advocacy

Earlier this week, NAHMA launched a new Grassroots Advocacy Center webpage, http://www.nahma.org/content/grassroots.html . Be sure to check this page often!

In our first posting to this site, NAHMA has prepared a draft text for members to send their U.S. Senators and Representatives in support of a strong budget for federal multifamily housing programs. Please help us in this effort! Congress needs to hear from their constituents that these programs are important. Make your opinion count!

February 6, 2004

2005 Budget

The big news this week was the release of the President’s FY 2005 Budget Request. All budget-related information can be found on NAHMA’s Legislative News webpage http://www.nahma.org/content/news.html . Once again, housing programs in the HUD budget are essentially flatlined or reduced. The upcoming NAHMAnalysis, which will be available soon, will take a thorough look at the budget. In this meantime, a brief overview follows:

Housing Certificate Fund

The “Flexible Voucher Program” was proposed as a new way to reinvent the Section 8 voucher program. The FVP would be administered by the PHAs as is the current practice with Section 8 vouchers. According the HUD budget summary, it would be a “dollar-based grant program that will control the growth in costs and provide a more efficient and effective program.” The current unit-based funding the Section 8 vouchers would be abandoned.

Total Funding For the Housing Certificate Fund, as overhauled by the FVP the FY ‘05 request is $18.466 billion, a reduction from this year’s final appropriation of $19, 257 billion.

Funding for Project Based Section 8 anticipated increased renewals; $5.1 billion is requested, a $330 million increase over this year’s level.

Section 202

The request for this program has hovered at $773 million for the past couple of years. The request represents a reduction from last year’s appropriated level of $778 million.

Within the request, $4 million are for PRAC renewals, $30 million is for rehab grants / assisted living conversion, and $53 million is provided for service coordinators

Section 811

$249 million is requested; $2 million of this will be directed toward PRAC renewals, and $50 million is for mainstream voucher renewals. Section 811 received a final appropriation of $250.57 million for ’04.

HOME

A slight increase is requested for HOME, to help offset the homeownership downpayment assistance initiative. The 05 request is $2,084 billion; the ’04 enacted level was $2,006 billion.

FHA Multifamily Insurance

The budget notes premiums will be reduced on the Section 221(d)(4) program from 50 basis points to 45 basis points.

Section 515

Once again, the budget proposes to limit funds for repair and rehab only. $60 million is requested, whereas Congress provided $116.5 million for ‘04.

Rural Rental Assistance

The Administration requested $592 million, an increase above this year’s $584 million appropriation

Section 538 Multifamily Housing Loan Guarantees

Flatlined request for $100 million, same as the ‘04 appropriation.

Ricin Scare in the Senate

The toxic substance ricin was found in the mailroom of Senate Majority Leader Bill Frist. Ricin is deadly and there is no known antidote. This incident is being treated as another bioterrorism attack, and a criminal investigation is underway. At this time, there are no reported deaths or illnesses resulting from the poison. However, the Senate office buildings were closed for most of this week to allow hazmat teams to work.

NAHMA strongly recommends that members use electronic means to communicate with Congress. Mail to the House and Senate members has always been slow, and irradiation procedures following the anthrax attacks in 2001 further slowed the processes. Following another apparent attempt to poison by mail, additional delays should be expected for any letters send through the U.S. Postal System. NAHMA strongly recommends that members who wish to send mail to their members of Congress use e-mail as a faster alternative. Most members of Congress have e-mail accounts which are accessible through their websites. You can find your Representative’s website through http://www.house.gov/. Email accounts of Senators’ are listed at http://www.senate.gov/general/contact_information/senators_cfm.cfm .

January 30, 2004

Budget Issues

Washington is anxiously awaiting the President’s 2005 budget proposal. This massive document will be released to Congress on Monday, February 2.

In the meantime, members interested in reading an extremely detailed overview of federal budget projections for the next decade, should see the testimony of Congressional Budget Office (CBO) Director Douglas Holtz-Eakin before the Senate Budget Committee. Holtz-Eakin discussed the CBO projections for the federal deficit, economic growth, and growth in entitlement outlays. The testimony can be found at http://www.senate.gov/~budget/republican/hearingarchive/testimonies/2004/01.04.outlook_testimony_senate.pdf .

Relevant excerpts from his testimony regarding “The Budget and Economic Outlook Fiscal Year 2005 to 2014” follow:

“CBO projects that under current laws and policies, the federal government will incur a total budget deficit of $477 billion this year and $362 billion in 2005…Such a deficit for this year would set a record in dollar terms, but at 4.2 percent of the nation’s gross domestic product (GDP), it would represent a smaller share of the economy than the deficits of the mid-1980s and early 1990s. In the absence of further legislative changes, deficits would diminish after their peak in 2004, although outlays would continue to exceed revenues for most of the next 10 years. Deficits are projected to total $1.4 trillion for the five years after 2004 and $1.9 trillion for the 2005-2014 period.”

“The baseline projections reflect CBO’s forecast of robust economic growth for the next two years. By late 2003, stronger investment by businesses, a weaker dollar, and a rising stock market—augmented by expansionary monetary and fiscal policies—were spurring economic activity. CBO forecasts that real (inflation-adjusted) GDP will grow by 4.8 percent in calendar year 2004 and by 4.2 percent in 2005 and that the unemployment rate will fall to 5.8 percent in 2004 and 5.3 percent in 2005. Between 2006 and 2014, the annual rise in real GDP will average 2.7 percent, CBO projects.”

“Even if economic growth turns out to be greater than projected, however, significant long-term strains on the budget will start to intensify within the next decade as the baby-boom generation begins to reach retirement age. Federal outlays for the three largest retirement and health programs—Social Security, Medicare, and Medicaid—will consume a growing share of budgetary resources even under moderate assumptions about the programs’ growth, rising from over 8 percent of GDP in 2004 to more than 14 percent in 2030. Such increasing demands on spending will exert pressure on the budget that economic growth alone is unlikely to alleviate.”

In my opinion, all of this means we will continue to hear Congress and the Administration call for restraint on don-defense, non-homeland security, discretionary programs—like housing.

Bankruptcy Reform

The House took advantage of an opportunity to revive the bankruptcy reform bill, the Bankruptcy Abuse Prevention and Consumer Protection Act. (HR 975). After substituting the text of HR 975 for that of a more limited bill which the Senate approved to extend expired bankruptcy protections for farmers (S 1920), the House passed its version of S 1920 and requested a conference with the Senate to resolve differences between the bills.

NAHMA supports the House bankruptcy reform bill because it closes a legal loophole which allowed some tenants to avoid eviction by filing for bankruptcy. Specifically, it reforms the application of the automatic stay provisions of bankruptcy laws to tenants facing eviction. Generally, evictions may proceed if the judgment was obtained before the tenant filed for bankruptcy. Such judgments can be based on non-payment, illegal drug use or property endangerment. In the cases of illegal drug abuse and property endangerment, the bill also allows for commencement of eviction actions after the tenant has filed for bankruptcy. NAHMA also believes this language upholds the "one-strike" rule, which permits eviction for illegal drug use in subsidized properties.