FY18 Spending Bill Increases Affordable Housing Funding, Rejects Trump Proposals

By Chris Holden on March 27th, 2018

Affordable housing programs saw funding increases in the FY 2018 Consolidated Appropriations Act, which was passed by Congress and signed by President Trump on Friday. The $1.3 trillion measure funds federal programs through September 30, the end of the federal fiscal year. HUD programs received $4.7 billion more than in FY 2017, and $12 billion more than the Trump Administration’s request for FY 2018. Individual program allocations can be found in this chart compiled by the National Low Income Housing Coalition. The legislation also includes changes to the Low-Income Housing Tax Credit (LIHTC) program to offset program losses caused by tax reform. Congress rejected large cuts to HUD and USDA affordable housing programs proposed by the Trump Administration for FY 2018. Congress also rejected the Administration’s administrative proposals that would have allowed HUD Secretary Ben Carson to raise tenant rent contributions. HUD Funding Low-income renters will benefit from an increase in tenant-based rental assistance (TBRA), which funds the Section 8 Housing Choice Voucher (HCV) program. TBRA received $22 billion, more than $2 billion above the Trump Administration’s request of $19.3 billion. It also sets aside $40 million for Veterans Affairs Supportive Housing (VASH) vouchers. The Trump Administration proposed eliminating this program in both its FY 2018 and FY 2019 budget proposals. The spending package also increased funding for the Public Housing Operating Fund and Public Housing Capital Fund. The operating fund pays the costs of Public Housing Authorities (PHAs) to operate public housing, and the capital fund helps PHAs do major repairs and renovations to public housing. The capital fund received $800 million more than in FY 2017, while the operating fund increased by $15 million. In addition, funding was increased for Section 8 Project-Based Rental Assistance (PBRA), which will allow all PBRA contracts to be renewed for 2018. Community Development Block Grants (CDBG) and the HOME program received funding increases. These programs provide flexible funding to states, counties and large municipalities to support affordable housing, community development and economic revitalization. Although the Trump Administration proposed to zero out these programs in both its FY2018 and FY 2019 budget proposals, CDBG received $3.365 billion, which is $305 million more than in FY 2017. The HOME program increased from $950 million in FY 2017 to $1.362 billion in FY 2018. Other HUD programs serving populations with special needs also received funding increases. These include Section 202 Supportive Housing for the Elderly, Section 811 Supportive Housing for Disabled Persons, and the Housing Opportunities for Persons with AIDS (HOPWA) program. USDA Funding USDA Rural Rental Housing programs were mostly level-funded. Section 515 Rural Rental Housing Direct Loans received $40 million, an increase of $5 million over FY 2017. Section 521 Rental Assistance, used to lower rents in Section 515 properties, was funded at a level that will renew all existing rental assistance contracts. The Section 514 Farm Labor Housing Loan program received $24 million and the Farm Labor Housing Grant program received $8 million, both the same as in FY 2017. Congress increased funding for Multifamily Preservation and Revitalization to $47 million, or $6 million more than in FY 2017. These funds help keep properties affordable that may leave the program, and provide vouchers to protect tenants in properties that opt out of the Section 515 program. Other Program Changes Congress also made changes to increase LIHTC funding. The LIHTC program was hurt by changes in the tax reform bill recently passed by Republicans. Tax reform included lowering corporate tax rates to 21%. LIHTC provides tax credits to investors who provide capital for low-income housing developments. The lower corporate tax rate means that LIHTC is less valuable and generates less investment. The FY 2018 appropriations increased the amount of tax credits available to each state for the next four years by 12.5% each year. It also allows an income averaging approach that will likely promote more units being available to renters with the lowest incomes. Senators Cantwell and Hatch have been leading the efforts to include the LIHTC changes for some time. Congress also rejected Trump Administration administrative proposals that would increase rents for low-income tenants. In its FY 2018 and FY 2019 budget proposals, the Administration requested that HUD’s Secretary be allowed to raise tenant rent contributions in order to reduce the federal burden. The Administration proposed that tenants receiving federal housing assistance pay 35% of their gross monthly income for rent instead of the 30% of adjusted monthly income standard used now. This removes the childcare and medical income deductions that help young families, seniors and disabled persons afford their rents. It would also impose a new floor rent of about $150, unaffordable to many low-income renters. In addition, the Administration proposed implementing work requirements for Public Housing residents and Section 8 voucher holders. The FY 2018 appropriations legislation did not authorize any of these measures. The increases in affordable housing funding were made possible by the two-year budget deal recently enacted by Congress. The deal lifts federal spending caps for 2018 and 2019 that were imposed by Congress in 2011. Congress will now be turning to work on the FY 2019 appropriations. The Trump Administration proposed greater cuts to HUD and USDA housing programs in its FY 2019 budget proposal than for FY 2018. It also proposed the tenant rent increases and work requirements again. Low income renters will need to keep reaching out to their members of Congress and urge them to reject Administration proposals that place greater burdens on tenants and reduce the supply of affordable housing. Please take a minute to tell your local legislators to fully fund affordable housing by completing our easy-to-use form here. Click the blue button titled “Contact Congress.”