FINAL APPROPRIATIONS UPDATE

President Clinton Signs HUD/VA Bill. The FY 1999 HUD/VA appropriations bill was passed in both houses and forwarded to the President on October 8 and signed on October 21. In order to appease the President and avert a veto, conferees provided $425.5 million to the President's prized AmeriCorps program (Corporation for National and Community Service), $283 million for incremental Section 8 vouchers for HUD's welfare-to-work voucher initiative, and deleted language that would have impeded the Kyoto global warming treaty. HUD's programs fared well under the measure in terms of allocation levels, but set-asides continued to deplete the CDBG program. CDBG received an allocation of $4.75 billion for FY 1999, an increase of $80 million over the FY 1998 funding level.

Congress continues to carve out set-asides under the program totaling $527.05 million in FY 1999. The following chart illustrates HUD's final budget for FY 1999.

* $80 Million in Lead-based Paint funds are a separate program outside of CDBG, which is what the administration requested.

^ Brownfields is a separate program

& Office of Rural Housing and Economic Development is a new office at HUD designed to specifically target the housing and economic development of rural areas, particularly in the form of capacity building for rural non-profits.

Still, the remaining formula allocation for cities, counties and states is up $30 million from last year's figure. Grantees should not look for any great increase in their CDBG allocations. There could be a slight decrease, depending on the number of new entitlement communities and urban counties added to the list. Allocations should be pretty much as they were for fiscal year 1998. The HOME Investment Partnerships Program received an increased of $100 million over its FY 1998 level, bringing the FY 1999 funding level for the program to $1.6 billion. Of this amount, $24.5 million will be set-aside for housing counseling activities and for improvements to HOME's information management systems. The conferees did not agree to the creation of a HOME Loan Guarantee Program, that was originally proposed by in HUD's FY 1999 budget request.

The bill included $975 million in FY 1999, $152 million over FY 1998 for HUD's homeless assistance programs. The bill also requires that 30% of the homeless funding be used for permanent housing for the homeless. It also requires a 25% match for all services and up to 1% of the funds to be used for technical assistance.

The Housing Opportunities for Persons with AIDS program (HOPWA) will receive an allocation of $215 million in FY 1999, $11 million over the FY 1998 funding level. The Section 202 program (elderly housing) received $660 million and the Section 811 program (disabled housing) received $194 million. The measure provides $8.168 billion to fully fund expiring tenant-based and project-based Section 8 rental assistance in FY 1999. Modernization for public housing increased to $3 billion in FY 1999, $500 million over FY 1998. Severely distressed public housing (HOPE VI) received $625 million in FY 1999.

CONGRESS APPROVES PUBLIC AND ASSISTED HOUSING REFORM LEGISLATION

After nearly three years of on again and off again negotiations, legislation transforming the nation's public and assisted housing programs has finally been passed by Congress and signed into law by the President. The measure was attached to HUD's FY 1999 spending bill, which was approved by Congress on October 8 and signed by the President on October 21.

The comprehensive measure, which is titled "The 1998 Quality Housing and Work Responsibility Act of 1998," makes some sweeping reforms to HUD's public and assisted housing programs. The sweeping overhaul of the nation's public and assisted housing is intended to deregulate public housing authorities and provide greater flexibility to them in administering public housing and Section 8 funds. It is also intended to encourage mixed-income communities, increase the accountability on the part of PHAs in administering effective programs, and remove any disincentives for residents to become self-sufficient.

Compromise was finally reached in the final hour on income targeting, perhaps the thorniest issue to be ironed by all sides in reaching final agreement on the legislation. In terms of the income targeting for public housing, not less than 40% of the public housing units made available in any fiscal year must be occupied by families whose incomes are less than 30% of the area median income. For Section 8 tenant-based assistance, not less than 75% of the vouchers made available in any fiscal year must be used by families whose incomes are less than 30% of the area median income. The legislation also allows public housing authorities to establish a minimum rent (not to exceed $50 per month) for residents of public and assisted housing. The legislation requires each PHA to develop a 5-year operating plan. The plan must be consistent with the jurisdiction's consolidated plan and can be submitted separately or as part of the jurisdiction's consolidated plan.

The bill also contains a flexible home rule grant demonstration program for local governments. Under the demonstration up to 100 local governments that are located in jurisdictions with poor performing public housing authorities will be given the option to receive public housing and Section 8 tenant-based funds directly. The demonstration program will last for five years. Each jurisdiction must develop performance standards that concentrate upon a variety of areas, which may include: moving families to self-sufficiency, reducing the per-family cost of providing assistance, improving program management, among others.

Along with the public and assisted housing reforms, several other provisions were tacked on to the legislation that makes changes to other HUD program areas. The legislation includes a provision that requires HUD to grant exceptions to up to 10 jurisdictions located in metropolitan cities or urban counties to allow these jurisdictions to use up to 80% of the area median income as the eligibility criteria for HOME and CDBG rather than using HUD's national median income ($45,300) as the criteria. The legislation also includes a provision which prohibits use of CDBG funds to assist in the relocation of any industrial or commercial facility or operation, from one area to another, if the relocation is likely to result in a significant loss of employment in the area from which the relocation occurs. The legislation also contains a provision that requires any State or local government in which a troubled PHA is located to include a description of the manner in which the State or local government will provide financial assistance to the agency in improving its "troubled" status. An overview of the bill has been attached to the Washington Report. If you have any questions, please contact Vicki Watson at 202-887-5532.

CONGRESS MANAGES TO APPROVE A SMALL TAX REFORM MEASURE

With time running out, Congress included a $9.2 billion tax reform measure to the omnibus spending bill. Included in the legislation is an increase in the tax-exempt private activity bond volume cap. The increase will be phased-in beginning in FY 2003 and ending in FY 2007. At the end of the phase-in period, the cap will be the greater of $75 per capita or $225 million. The measure does not include an increase in the Low-Income Housing Tax Credit.

HOUSE APPROVES AMERICAN HOMEOWNERSHIP ACT

In a somewhat surprising move, the House passed H.R. 3899 -- The American Homeownership Act -- on October 13. House Democrats had wanted a full committee mark-up of the bill before a final vote on the measure. But Rep. Lazio (R-NY), sponsor of the bill, wanted to move the measure quickly through the House. The bill reauthorizes the HOME program for five years at an appropriation level of $1.5 billion (lower than the $1.6 billion level in HUD's FY 1999 appropriations bill). It also includes a HOME Loan Guarantee Program (similar to the CDBG Section 108 Loan Guarantee) to enable grantees to leverage up to five times their annual allocation. The legislation also contains provisions relating to homeownership, reverse mortgages for seniors, and manufactured housing, among others. Nonetheless, the measure is dead because the Senate does not have a counterpart.

EMPOWERMENT ZONE PROGRAM PASSES AS PART OF A TAX-EXTENDER BILL

A small Empowerment Zone program was included in the tax extender bill that provided $60 million for 20 zones and 20 new enterprise communities. Forty-five million went to the 15 urban zones, $10 million is targeted to the five rural zones and the 20 enterprise communities will share $5 million. These funds are targeted for year one of the ten-year program. It is the intent of HUD and the Department of Agriculture to seek the balance of funding during next year's (FY 2000) budgetary season.

ECONOMIC DEVELOPMENT ADMINISTRATION REAUTHORIZED

One of the very last things that Congress did before they finally left town was to reauthorize the Economic Development Administration through 2003. The first reauthorization of the agency since 1982 allows up to $398 million in spending for FY 1999, $338 million in FY 2000, $306 million in FY 2001, and $277 million in FY 2002 and 2003. It is not clear at this time whether the appropriators approved these funding levels, particularly the FY 1999 levels, which are contained in the gigantic omnibus appropriations bill that was passed on Thursday, October 22. Along with the new reauthorization, a transformation of the agencies policies and practices will ensue. Proposed agency improvements include better targeting of funds to economically distressed communities, decentralizations of the grant application process and an overall 30% reduction in staff. EDA's network of 320 economic development districts are expected to provide more efficient central planning and service delivery and do a better job at coordinating resources with other federal programs including job training, housing, emergency management, small business aid and environmental protection

FEDERAL AGENCIES TO SELECT ONE OF THREE CASH MANAGEMENT SYSTEMS FOR FUNDS DISBURSEMENT

The U.S. Department of the Treasury is requiring all federal agencies to streamline their cash disbursement systems. In an effort to make the most of federal revenues and shorten the time it takes for agencies to distribute funds, as of January 1, 1999 Treasury will allow a total of three, and only three, cash management systems to be used throughout the government. Each agency shall have selected which of the three systems it will use and provide a detailed plan to Treasury detailing how it will implement the change. The Department of Housing and Urban Development has at least as many different cash management system as it has offices, and in some of the offices different systems for the myriad programs. Each agency will be allowed to maintain its individual systems, but all those systems must interface with the one primary cash disbursement system, the bank.

Each division in each federal agency will have to coordinate the change so that disbursements for all programs can be channeled through the primary cash management systems. It should be a challenge for the agencies, however it could force them to operate more efficiently and thereby get funds to communities more timely. This effort will also save the federal government billions in lost interest every year, due to inefficient cash disbursements.

INSPECTOR GENERAL'S OFFICE EXPANDS HOUSING FRAUD INVESTIGATION

After causing an uproar from black mayors across the nation, with a proposed probe of urban fraud in the cities of Baltimore, New Orleans, and San Francisco, Susan Gaffney, the Inspector General responsible for housing programs, has retargeted her investigation on rural, suburban and urban areas in five states, California, Illinois, Maryland, New York, Texas and the District of Columbia. New Orleans and San Francisco have been dropped from the list. Cities that made the new list include, Chicago and Rockford, Illinois, Los Angeles, Dallas-Fort Worth. Siting the flood of complaints in singling out only three black-led cities for the inquiry explained the change in focus of the probe. Gaffney explained, "... we had to rethink the plan...otherwise our ability to conduct the investigation would have been curtailed; people would have been suspicious of every move." Gaffney said the focus will be on both public and private sectors in looking for fraud. Congress has provided $18 million over two years, with $9 million to be expended during fiscal year 1998.

Ms. Gaffney also explained the selection criteria for a probe. First, for each judicial district, the number of housing fraud complaints, open cases, indictments and convictions handled by her staff was totaled. Then from that the top 16 districts on that list, comparable figures for FBI housing fraud cases were added. The districts with the most cases were selected for investigation.

HUD NOTICES

October 14, 1998. FR 98-11, Annual Performance Report (APR) for the HOPE for Homeownership of Single Family Homes Program (HOPE 3) and Instructions for Return of Resale Proceeds. The purpose of this notice is to provide HOPE 3 Implementation Grant recipients with updated instructions for submitting the Annual Performance report for the HOPE 3 Program. This notice supersedes prior APR instructions contained in CPD Notice 97-12, issued on October 10, 1997, but makes no substantive amendments to CPD Notice 97-12. This notice also provides instructions for returning HOPE 3 resale proceeds to HUD for remittance to the U.S. Treasury.

Apparently there is an allocation of $250 million in CDBG funds for disaster relief contained in the Omnibus Appropriations bill. As of this writing, NCDA staff has not gone through the entire bill yet, and has not discovered where this provision is. According to Jan Opper at HUD, these funds are there. These funds are similar to the $127 million in funding provided in the Supplemental Appropriations bill signed by the President during the summer. These funds are granted to states which have to submit distribution plans to HUD and FEMA before monies will be forthcoming. (See the Federal Register Notice pertaining to this issue)

NCDA NOTES

CAMPAIGN FOR HOUSING AND COMMUNITY DEVELOPMENT FUNDING SEEKS ORGANIZATIONS TO SIGN-ON TO FY 2000 BUDGET LETTER

NCDA, along with over 100 other national organizations, is part of the Campaign for Housing and Community Development Funding. The Campaign is continually advocating in support of HUD's programs and in support of the largest aggregate funding for HUD's budget possible. As part of this effort, the Campaign has drafted a grassroots sign-on letter in support of a strong budget for HUD in FY 2000. A copy of the letter is included in this newsletter. We encourage you to sign on to the letter and fax it back to the Campaign by November 19. The fax number to send the letter to is: 202-785-3092.

NCDA Regional Conferences

Region 1 Fall Meeting: October 28-30, 1998
Burlington, VT
Contact: Nancy Remington 401-435-7535
E. Providence, RI

Region 9 Fall Meeting: December 3-4, 1998
San Francisco, CA
Contact: Steve Young 209-577-5247
Modesto, CA

NCDA Winter Meeting

The NCDA Winter Meeting will be held on January 27-30, 1999 at the J.W. Mariott Hotel in Washington, DC. At the request of members, we will not schedule the program committees (CD, ED, and Housing) concurrently. We have included one-half day for committee meetings beginning at 12:00 p.m. and ending the Board of Directors meeting on Wednesday, January 27, 1999. Please see the attached Draft Agenda.

NCDA TECHNOLOGY NEWS

As we continue to improve the system, NCDAonline will provide more services and links to other sites and allow members to communicate more effectively with each other and NCDA staff. Our investigation into how we can provide members with membership dues discounts if they use the NCDAonline to receive NCDA mailings and publications, indicates that only about 25-30 percent of NCDA members are taking advantage of the website. At this time, it is not cost effective for us to provide those members with a discount if they use NCDAonline exclusively to receive mailings and other publications. As more members get online, we will address this issue then.

The Board of Directors have approved several modifications of the website to make the entire system more user friendly. The technology committee will assist NCDA staff with modifications suggestions and scheduling. We will also look to discontinue the PAL system. To maintain the PAL and chat rooms and the member e-mail list is redundant. We will keep you informed of our progress.

POSTING JOB ANNOUNCEMENTS

NCDA staff is ever willing to include position vacancies of member communities in the NCDA Washington Report. To better assist members as well as staff, we ask member communities to e-mail position vacancies to Carla Sauls,carla@ncdaonline.org, whenever possible. If you are not set up for e-mail, please fax them to Carla. An electronic copy makes it easier to post the position on NCDAonline.

FEDERAL REGISTER NOTICES

October 9, 1998. Regulations Revision of Manufactured Home Procedural and Enforcement Regulations. HUD plans to update the procedural and enforcement regulations of the Manufactured Home Construction and Safety Standards program. In preparation for this update, HUD is soliciting suggestions, with an emphasis on innovative and streamlined procedures, form interested members of the public.

Job Opportunities