HOUSE AND SENATE PASS VA-HUD APPROPRIATIONS BILL

The Senate passed its FY 1999 HUD Appropriations bill (S 2168) on July 17th. The House approved its version of the FY 1999 HUD Appropriations bill (HR 4194) on July 29th, after it had been removed from the House agenda several times. The House approved an amendment offered by Rep. Coburn (R-OK) that would increase VA medical care funding by $304 million in FY 1999 with the offset coming from HUD's FHA mortgage administrative expense line item. The House also approved an amendment by Rep. Hilleary (R-TN), on a close margin of 214-212, to take $21 million from the Housing Opportunities for Persons with Aids (HOPWA) program and provide the funding to the Veterans Administration to construct state care facilities. The President has voiced his displeasure with the attachment of public housing reform (HR2) to this bill, the lack of funding for his prized AmeriCorp program in the House, and restrictions in the bill to prevent the EPA from implementing the regulatory goals of the Kyoto global warming treaty. The Senate has included funding for AmeriCorp in its FY 1999 VA-HUD bill and the House is likely to go along with the Senate's recommended level to avoid a possible veto threat. Con-ferees to the VA-HUD-IA appropriations conference committee are expected to be named prior to the House and Senate recess, which is scheduled to begin on August 1 for the Senate and on August 10 for the House. The following Senate conferees have already been named to the appropriations conference committee: Senator Bond (R-MO), Senator Burns (R-MT), Senator Byrd (D-WV), Senator Campbell (R-CO), Senator Craig (R-ID), Senator Harkin (D-IA), Senator Lautenberg (D-NJ), Senator Leahy (D-VT), Senator Mikulski (D-MD), Senator Shelby (R-AL), and Senator Stevens (R-AK).

Since the House agreed to attach HR 2 -- public and assisted housing reform legislation -- to its FY 1999 HUD Appropriations bill, there likely will be two separate conference committees appointed (or at least a subcommittee of the conference committee appointed to work on public and assisted housing reform) -- one to iron out the appropriations differences and a second to iron out the differences in the House and Senate public and assisted housing reform legislation (HR 2/S 462). Even though the Senate did not attach its version of public housing reform (S 462) to its VA-HUD Appropriations bill, Senate Republican leadership agreed to have the S 462/HR 2 debate take place during the conferencing of HR 4194/S 2168.

Status of Appropriations

As the House and Senate near their August recess, only one appropriations bill (Military Construction) is ready to be sent to the President for his signature. With only a few weeks remaining in the Congressional year, when they return from recess, Congress will have little time to complete appropriations bills as well as any authorizing bills this year. In addition, the President has vowed to veto several of the appropriations bills for what he considers to be a lack of funding for some of his priorities. If so, Congress will have little time in which to pass bills that are more acceptable to the President. The appropriations bills are supposed to be completed by October 1, the beginning of the Federal fiscal year. However, with this being an election year for all of the House and some in the Senate, Congress may be more inclined to pass a continuing resolution rather than risk being away from their districts during an election period. A continuing resolution would allow the Federal government to continue operating with current year funding levels, until the appropriations bills are approved.

The Senate has passed eight of the 13 appropriations bills and the House has passed seven of the bills. The President has objected to what he considers the underfunding of programs in many of the appropriations bills, including those for Agriculture, Energy and Water, and the Treasury and Postal Service. House Appropriations Committee Chairman Robert L. Livingston (R-LA) has urged President Clinton to back off threats to veto several of the FY 1999 appropriations bills because they don't provide enough money for his priorities. "Congress cannot spend the kind of money Clinton wants unless he finds ways to offset the extra funding," says Livingston. Livingston has encouraged President Clinton to come up with new offsets, because the President's FY 1999 Budget, relied heavily on the enactment of a tobacco tax increase to offset most of his budget priorities. Enactment of tobacco legislation appears unlikely this year.

HOUSE HOLDS HEARING ON THE AMERICAN HOMEOWNERSHIP ACT

The House Subcommittee on Housing and Community Opportunity held a hearing on HR 3899, The American Homeownership Act of 1998, on July 23. The legislation includes far reaching provisions aimed at expanding homeownership. Major provisions of the bill include:

• The creation of a HOME Loan Guarantee Program which would allow communities to tap into their future HOME Program funds for affordable housing development.




• A provision that requires any Federal agency that issues a rule expected to have a significant impact on the availability of affordable housing to also conduct a housing impact analysis, which describes the impact of the rule on the availability of affordable housing.




• The establishment of a Regulatory Barrier Clearinghouse within the U.S. Department of Housing and Urban Development.



• A requirement that HUD submit a report to Congress within 3 months after enactment of HR 3899 which analyzes whether lease-to-own provisions can be effectively incorporated within the HOME program, the public housing program, the Section 8 tenant-based rental assistance program or any other HUD program in order to facilitate homeownership by low- and moderate-income families.



• A provision that requires pre-purchase inspections of FHA-insured properties.



• A provision to make the FHA-insured reverse mortgage program permanent.



• The establishment of uniform standards and codes for manufactured housing.



• A provision that allows families receiving Section 8 rental assistance vouchers to use those funds -- within the context of a properly structured homeownership program -- to help them buy their own homes.



• A provision to raise the minimum low-mod criteria in CDBG and HOME above 80 percent of the median. [This was done to provide for greater income mixing in housing projects, and to allow more "moderate" income persons to take advantage of these housing opportunities. Many Public Interest Groups including are strongly opposed to this provision]



• The House hopes to mark-up this bill next week and pass it in September. Even with passage of the bill in the House, the Senate has not introduced -- nor is expected to introduce -- similar legislation this year.

IRS ISSUES MARK-TO-MARKET RULING

The Internal Revenue Service issued a recent ruling that will make HUD's Mark-to-Market program more easily implemented. The need for the IRS ruling arose from the controversy stemming from opposing viewpoints on whether owners of HUD-subsidized housing would have to pay taxes when their mortgages are split into two separate mortgages -- bifurcated. As a result of this ruling, HUD can restructure the owner's first mortgage based on market level rents and hold a second below market interest loan. Under the rule, owners of HUD-subsidized housing developments will not have to pay taxes on the difference between market-rate loans and the below-market rate HUD second mortgage loans that enable owners' current mortgages to be written down. Normally, the IRS would consider the difference between the market interest rate and the below-market interest rate to be taxable income.

LIHEAP IS ZEROED OUT BY THE HOUSE APPROPRIATIONS COMMITTEE

The House Appropriations Committee, completing its FY 1999 Labor/HHS Appropriations bill on July 14, voted to terminate the Low Income Home Energy Assistance Program (LIHEAP). The House plans to use the $1.1 billion in savings to fund health research and various preventive health programs. LIHEAP has been instrumental in providing energy assistance to low-income families across the United States. The Senate has not yet began work on its FY 1999 Labor/HHS Appropriations bill.

STATE AND LOCAL OFFICIALS ERUPT OVER EXECUTIVE ORDER 13083

On May 14, President Clinton signed Executive Order 13083 during his trip to Britain to attend the summit of industrialized nations, without consultation with state and locally elected officials. This Executive Order was intended to update government policy in light of recent Supreme Court decisions and recent legislation. Executive Order 13083 combines and clarifies previous Executive Orders 12875 (Enhancing the Intergovernmental Partnership) and 12612 (Federalism). The following is a synopsis of E.O. 13083.

Executive Order 13083 reflects President Clinton's belief that striking the proper balance between state and federal power is essential to protect individual liberty.

• "Federalism reflects the principle that dividing power between the Federal Government and the states serves to protect individual liberty. Preserving State authority provides an essential balance to the power of the Federal Government, while preserving the supremacy of Federal law provides an essential balance to the power of the states."

 
• Directs [federal] agencies to closely examine the constitutional and statutory authority behind any federal action that would limit the policy-making discretion of States and local governments, and to carefully assess whether that action is necessary.

 
• Builds on earlier orders and recent legislation to protect states from expensive and onerous unfunded mandates.

 
• Instructs agencies to streamline their processes under which State and local governments apply for waivers of statutory requirements.

 
• Directs agencies to consider waiver applications with a "view towards increasing opportunities for utilizing flexible policy approaches at the state or local level."

 
• Lays out fundamental federalism principles that should guide federal policy-making. These include:

Sets forth federal policy-making criteria that agencies shall consider, along with fundamental federalism principles, in formulating or implementing policies that have federalism implications.

Over the past eight-to-ten years, state and locally elected officials were consulted on the impact of pending Executive Orders, which implements Executive Order 12875. It was quite the surprise of almost everyone to learn that E.O. 13083 had been signed. Of course when it became known the "big seven" signed onto a letter to the President voicing their concern. On July 28, President Clinton promised to start with "a clean slate" and negotiate a mutually acceptable executive order on federalism to replace 13086.

According to Acting Deputy Director of the Office of Management and Budget, G. Edward DeSeve, who was summoned to testify before the House Government Reform and Oversight Committee at a hearing after two hours of complaints by state and local officials on the executive order, "Everything is on the table...We want to consult with them and get this done and go on to other things." The elected officials said the new executive order reversed the thrust of those that had guided federal regulators for the past decade as they considered actions with potential impact on states and local communities. Instead of demanding justification for federal preemption, for instance, the new order offered multiple, subjective justifications for federal intervention, they said. The officials demanded that the new order be withdrawn. The White House has refused to do that, but has offered to delay its effective dated from mid-August until mid-November to let the states and locals have their say. Mickey Iberra, Special Assistant to the President for Intergovernmental Relations, confirmed in an interview that the state and local groups' conditions would be met. He said, "We hope to begin talks as early as next week. We will listen to our partners and begin wherever they want."

To most in Washington, it is still unclear what prompted this new order and why the "big seven" was not consulted before it was signed. An order of this magnitude would at least deserve a notice of impending publication. During a hearing held yesterday, Utah Gov. Michael O. Leavitt (R) said that issuing Executive Order 13086 without consultation was "wrongheaded and unacceptable" and that the new language "is inconsistent with the principles of balance on which this nation was founded."

SENATE TABLES PROPERTY RIGHTS LEGISLATION

In the July 13 issue of the Washington Report, we reported that the Senate was set to vote on the Citizens Access to Justice Act, the "Takings Bill," S 2271. On July 13, the Senate voted to end debate on this controversial bill, signaling a victory for state and local governments in the area of local land use and zoning laws. The vote fell eight votes short of the 60 needed for a veto override that was sure to come if this bill made it to the President for signature. This bill, sponsored by Senator Orrin Hatch (R-UT), claimed that it is needed to give property owner's their day in court on land use and zoning disputes. This bill which also strongly supported by the National Association of Home Builders, contend that in many instances local planning and zoning boards make decisions that amount to "takings" without just compensation which violates the fifth Amendment to the U.S. Constitution. The Home Builders believe that the process for appealing a land use request could take as long as ten years before a final decision is made. This bill would allow developers and property owners to by-pass the local appeals process and take their cases directly to federal courts. Currently these types of cases get to the federal courts only when all administrative and local/state appeals courts have been exhausted. Senator Patrick Leahy (D-VT), the ranking Democrat on the Judiciary Committee, led the opposition against this bill on behalf of state and local governments. He said the bill would virtually "strip the authority of state and local governments and make for an unprecedented reach of the federal government into local affairs."

HEARING ON TITLE VI ISSUES IN DETROIT FORCES EPA TO AMEND ITS GUIDANCE

In February, when EPA issued its guidelines for applying civil rights laws to large scale infrastructure permits, particularly those permits that could cause an environmental hazard to low-income and minority persons, Detroit -- as well as people in most other large industrial cities-- officials saw no reason for alarm. In fact, many were pleased that EPA was finally dealing with the environmental justice issue. After all, these guidelines were aimed at limiting the concentration of environmental hazards in minority areas. Too long have poor people and minority populations been forced to endure the noxious fumes and contaminated living environments due to the siting of polluting industries because land in their neighborhoods and communities is and continues to be less expensive. Now people, particularly locally elected officials are very concerned.

Detroit Mayor Dennis Archer invited mayors from around the nation to come to Detroit for a hearing on this issue. Detroit is a prime example of mayors' frustration. EPA's "guidance" requires penalties on any project that would have a disproportionate impact on minority populations such as suspension of the project, more in-depth scientific analysis on the polluting impact of the project. "Penalties" also include addressing methods to ameliorate the polluting source and the investigation of the cost in selecting alternate sites. In Detroit, just about any neighborhood in the predominantly black city would suffer such an impact. In implementing these guidelines, EPA would be authorized to nullify permits even after construction had begun. For the city of Detroit this action would threaten $5 billion in redevelopment. What business would choose to build where it faced such risks? This was the question that Mayor Dennis Archer asked EPA officials.

After hearing from many overwrought mayors who were in opposition of these guidelines, EPA agreed to back away from the implementation of these controversial guidelines. It promised the mayors that it would do whatever it could to work with local officials, industry and community advocates to develop a policy they could live with. All the mayors agree that "environmental racism" should not be tolerated, however, to further burden this same group with an economic disadvantage is also intolerable. This happy medium may be difficult to achieve. EPA does not have a good track record in understanding how widespread the environmental justice problem really is. Some studies indicate that this issue occurs more in areas with already existing situations of siting polluting industries, and others show that it is a nationwide problem, not limited existing corridors of polluting industries. Whatever the case, poor and minority populations suffer disproportionately when it comes to polluting industries in their neighborhoods. EPA and locally elected officials will have to come up with guidelines that restrict environmental hazards as well as ensure that development and job creation are available in minority and lower income neighborhoods.

HUD NOTICES

HUD SLOW TO RELEASE FY 1998 CPD FUNDS

Many of you are aware of the slowness at which HUD is releasing FY 1998 funds to grantees. Congress appropriated the funds in October and HUD released actual programmatic dollar amounts in December. Many grantees who have completed and received approval of their action plans within the required format and time-line, have not received their grant agreements before the official beginning of their program year. Sheila Maith of Senator Kennedy's office contacted NCDA to get a clearer understanding of just how widespread the problem is. After contacting members via e-mail to request information on the status of grant agreements, we discovered that every region is having some difficulty. According to HUD's Office of Intergovernmental Relations, the problem has been caused by a new computer system that was supposed to speed up the process of Congressional notification of impending grant awards. Unfortunately the system seems to crash at will. However, after NCDA, the U.S. Conference of Mayors, the National League Cities and the National Association of Housing and Redevelopment Officials, and many members of Congress made inquires, it seems that funds should start flowing by early next week.

IDIS UPDATE

Presently, there are no training sites for IDIS after September. If your region has a great need for IDIS training, please contact your field office and Tonya, Inc. If enough people request training, HUD may be able to accommodate you. For more information on the IDIS training schedule, please contact Tonya, Inc. at 202-289-8100.

PERFORMANCE GUIDELINES FOR FY 1997 AVAILABLE

If you have not received your guidelines for reporting on CPD funding, you can access them through HUD's website. If you are "online," the Boston HUD website has the guidelines uploaded. NCDA members who are online have access to the camber list can get these guidelines through the New England Regional members.
 

NCDA NOTES

THE 1999 NATIONAL COMMUNITY DEVELOPMENT WEEK POSTER COMPETITION HAS BEEN EXTENDED

As the first step of this year-long effort, we invite NCDA's members to participate in the poster design competition. If you, or someone you know, would like to submit a design for the 13^th annual celebration of National Community Development Week and the 25^th anniversary of the CDBG program campaign, please provide a color rendering of your poster concept to Chandra Western, no later than September 3, 1998. This deadline is hard and fast, as staff will be leaving Washington for Newport, Rhode Island for the Executive Symposium on September 9, 1998. For more information on the poster design competition, please contact Chandra Western at NCDA.

HOME TECHNICAL ASSISTANCE FUNDS AVAILABLE THROUGH NCDA

NCDA recently received funding from HUD to fund its highly successful HOME Refresher Course within its regional membership areas. Up to $1,500 is available to assist four NCDA member regions sponsor a HOME Refresher Course. If you are interested in sponsoring a HOME Refresher Course, please contact Vicki Watson at 202-887-5532. Funds must be spent by December 1998.

NCDA COMMUNITY DEVELOPMENT STAFF SURVEY

The compilation of the surveys is complete. NCDA appreciates all 94 respondents and their willingness to provide us with this information. One of the attached compilations is based on all respondents, and three others are based on title of respondent.

These four charts are the first iteration of the information compiled from the surveys. We would appreciate comments on the information provided and suggestions for additional tabulations that can be derived from the information already gathered.

NCDA TECHNOLOGY NEWS

Please find attached committee minutes from the Committee Meetings held at the NCDA 1998 Annual Conference for the CD/ED Committee Meeting, the Housing Committee Meeting and the Technology Committee Meeting. A briefing on the rest of the Annual Conference will be included in the next issue of the Washington Report.

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 Karen Means, michael@ncdaonline.org, whenever possible. If you are not set up for e-mail, please fax them to Karen. An electronic copy makes it easier to post the position on NCDAonline.

FEDERAL REGISTER NOTICES

July 27, Super Notice of Funding Availability for Economic Development and Empowerment Programs; Economic Development Initiative (EDI) Program Funding. The purpose of this notice is to (1) announce HUD's intention to establish a Community Development Risk Reduction Pool demonstration, as first discussed in the Economic Development Initiative (EDI) Program section of SuperNOFA II, published on April 30, 1998; and (2) notify the public that HUD intends to use $10 million of the $38 million in FY 1998 funds available for the EDI Program to fund the CDBG Risk Reduction Pool demonstration. As a result, $28 million will be available for FY 1998 EDI grants under SuperNOFA II. HUD will issue a future notice that describes the details of the CDBG Risk Reduction Pool demonstration.

July 23, Notice of Funding Availability for Title VI Loan Guarantee Capacity-Building Grants. This NOFA announces the availability of $4 million for assistance to organizations providing capacity-building technical assistance to Indian tribes or Tribally Designated Housing Entities (TDHE) that have been granted a loan guarantee under the Title VI Demonstration Program. Under the demonstration program, HUD will guarantee the financial obligations issued by Indian tribes and TDHEs to finance affordable housing activities authorized by the Native American Housing Assistance and Self-Determination Act of 1996.

July 23, Notice of Title VI Loan Guarantee Demonstration Program. The FY 1998 HUD Appropriations Act provided a $5 million appropriation for the funding of a demonstration program which could guarantee up to $45 million in Title VI loan guarantees. This notice announces HUD's loan guarantee demonstration program under Title VI of the Native American Housing Assistance and Self-Determination Act of 1996. Through the demonstration program, HUD is seeking to develop models which will provide innovative ways to enhance development of affordable housing in Indian areas, while increasing access to private capital, economic growth, and the investment and participation of traditional financial institutions not customarily serving Indian reservations and other Native American areas.

July 22, Guaranteed Rural Rental Housing Program. The Rural Housing Service is issuing new regulations for the Guaranteed Rural Rental Housing Program. The program is intended to increase the supply of affordable rural multifamily housing through partnerships between the Rural Housing Service and major lending sources, including banks, state and local housing finance agencies, and bond issuers.

July 22, Identification of Dangerous Levels of Lead. EPA is extending the comment period for a proposed rule to establish standards for lead-based paint hazards in most pre-1978 housing and child-occupied facilities. The proposed rule also establishes residential lead dust cleanup levels and amendments to dust and soil sampling requirements and amendments to State program authorization requirements.

July 17, 1998, Notice of Funding Availability for the HUD Colonias Initiative.
This NOFA announces the availability of $5 million for assistance to organizations serving colonia residents. Of this amount, up to $4 million will be provided to carry out development projects in colonias. One grant of $1 million may be provided to one or more private intermediary organizations that would provide capacity-building loans, grants, or technical assistance to local nonprofit organizations serving colonias' residents.

Job Opportunities

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