HOUSE AND SENATE COMPLETE WORK ON BUDGET RESOLUTIONS-- CONFERENCE BEGINS AFTER SPRING RECESS

Last week, before adjournment for the Easter/Passover break, both houses of Congress finished work on their respective budget resolutions. Both bills are similar in that they adhere to the imposed domestic discretionary budget caps of the Balanced Budget Agreements, and they reduce function line 450, which contains the Community Development Block Grant Program (CDBG), the Economic Development Administration (EDA) and programs from the Rural Development Administration (RDA), by $3.5 billion. In FY 1999 function line 450 was funded at $8.8 billion, for FY 2000 that line is proposed at $5.3 billion. The two resolutions differ in the years from 2001-2009. The Senate proposes significant cuts in this line to $2.0 billion in the out years, whereas the House of Representatives leveled funding at $5.3 billion through 2009. Still that is a significant cut which would eliminate community development programs and agencies.
 
What precipitated these cuts? If you recall, the Balanced Budget Agreement of 1997 requires mandatory cuts in domestic discretionary of approximately $26 billion for FY 2000. If programs were to remain at current levels, the budget caps would need to be raised by at least $20 billion. The Republican-lead Congress want to increase education spending by $10 billion and increase defense spending by $10 billion, and, provide a tax cut of $900 billion over the next ten years.

What about the surplus? The Congressional Budget Office is scheduled to make an estimate on the level of the surplus and how much of it will come from social security taxes. Republicans want to reserve all the social security generated surplus for shoring up the social security system and perhaps fixes to Medicaid. The remainder of the surplus which would come from general income tax revenue would be targeted for the $900 billion tax cut.

During the Senate debate on their resolution, an amendment sponsored by Senator Jack Reed (RI) was defeated on a procedural vote 49-50. The procedural vote was to waive the budget act point of order because of the way the amendment was being paid for, by reducing the amount of the proposed tax cut. Four Republican Senators, Chaffe (RI), Jeffords (VT), Collins (ME) and Snowe (ME) joined all 45 Democrats in voting for the amendment. To waive a point of order requires 60 votes. Although the point of order was defeated, it shows strong support for the CDBG program.

What happens next? When Congress returns from recess the two resolutions will be conferenced and then sent to the appropriators. The Appropriations Committee will determine funding levels for each of the 13 subcommittees. It will be up to the chairs and the leadership of the subcommittees to determine program and agency funding levels.

How much time do we have? The full Congress will return on April 12. The two budget resolutions must be conferenced. The Appropriators will determine subcommittee funding levels, there is the Memorial Day recess, July 4 recess, August recess, Labor Day recess, as well as all the other legislation that is on the docket for FY 1999. We have some time. Last year the President signed HUD's budget until the middle of September. NCDA and its partners are still pushing for increases in CDBG and HOME funding. The letter that was sent to the member in March is still the format we are using, $5 billion for CDBG and $1.8 billion for HOME.

According to our sources on the appropriations side, budget caps will have to be increased just to ensure level funding. They believe that the Republicans had to come out strongly against increases because they want their tax cut. Our strategy is go for as much as we can get. Perhaps set-asides will become these two programs saving grace.

See our sample letter regarding the caps.
 

SENATE BANKING COMMITTEE APPROVES BILL THAT WOULD GUT CRA

The Senate Banking Committee approved S. 576, to modernize the financial services industry which would virtually gut the community reinvestment act. The House Banking Committee also passed a financial services modernization bill, HR 10. These two bills are designed to repeal depression-era legislation, the Bank Holding Company Act and the Glass-Steagall Act which established barriers between the banking, securities and insurance industries. The Senate bill, S.576, contains two provisions that would substantially weaken the Community Reinvestment Act's requirements that financial institutions extend credit to all parts of the community in which they conduct business, but lacks an important provision contained in the House version that would require a bank or thrift to have at least a satisfactory rating to engage in securities or insurance activities. The provisions are:

• A safe harbor provision whereby banks and savings institutions that have received a satisfactory or better rating from federal regulators for the previous three years and wish to merge or acquire another institution, would be protected from comments by community groups about the merger or acquisition. Community groups would have to prove that the rating was less than satisfactory before their comment would be considered by regulators.
  
  
• An exemption from CRA requirements from banks with assets of $100 million or less. This provision, offered by Senator Shelby (R-AL) and accepted by Banking Committee Chairman Phil Gramm (R-TX), would exempt more than 6,000 institutions representing approximately 60 percent of all depositories and would be particularly damaging in rural areas.

Senator Gramm believes the Senate bill will reach the floor by mid-May, although many Democrats oppose any rollback of CRA. The House bill has been referred to the Commerce Committee which has 60 days to review and amend. President Clinton has vowed to veto the Senate version of the bill and any bill that attempts to weaken CRA.
 

CENSUS UPDATE

CENSUS BUREAU ANNOUNCES TWO-PART STRATEGY FOR 2000 CENSUS

The 2000 census will be conducted using two methods, a traditional head count and statistical sampling. This approach is partly in response to the recent Supreme Court ruling that bars using statistical sampling as means of apportioning seats in the House of Representatives, but could be used for other purposes. From April 1 to December 31, 1999 the Census Bureau will use traditional methods to count individuals. Then it will conduct an accuracy and coverage evaluation, including sampling of 300,000 housing units and regional groupings to generate corrected counts. These counts can help to determine the allocation of nearly $200 billion in federal funds, including the tax-empt bond volume cap and the low-income housing tax credit volume cap.

SENIOR CITIZENS HOUSING PROTECTION LEGISLATION INTRODUCED

In response to the outcry being heard around the nation from concerned senior citizens and their advocates regarding the affect expiring Section 8 contracts will have on senior citizens, three House legislators have introduced a bill to provide more protection to senior citizens in this area. Introduced by representatives Leach (R-AI), Lazio (R-NY), and Walsh (R-NY) on March 26, H.R. 1336 -- The Emergency Residents Protection Act of 1999 -- mandates that seniors and persons with disabilities who reside in projects with expiring contracts be provided flexible rental assistance to allow them to remain in their units. The legislation targets nonprofit-sponsored housing built before 1990. It is estimated that more than a quarter million seniors are threatened with expiring contracts.

HUD NEWS

CPD ASSISTANT SECRETARY COOPER ACKNOWLEDGES THAT SOME OF THE PROBLEM WITH DRAW-DOWN RATES IS DUE TO GRANTEES RECEIVING THEIR ALLOCATIONS LATE FROM HUD

In discussions with public interest groups, Assistant Secretary Cardell Cooper acknowledged that at least part of the problem in some communities is due to HUD not getting letters of credit available to grantees. As you may know, Assistant Secretary Cooper sent approximately 300 letters to the chief elected officials of communities whose draw-down rate exceeded the 1.0/1.5 ratio prescribed in the regulations. NCDA and others have approached HUD for funding to conduct at least two workshops for communities to help them improve their draw-down rates. NCDA staff are aware, after polling many of its members, that there are any number of reasons a community might have that would slow down their rate of expenditure. We have elected to look at the situation from a "chronic offender" perspective. If we are funded we intend to employ NCDA members with outstanding draw-down rates as instructors to help those communities with improving their rates. NCDA will keep the membership informed with our progress.

NCDA SEEKS COMMENTS FROM MEMBERS ON PHA PLAN REGULATION

On February 18, HUD released an interim rule which implements the requirement for a Public Housing Agency five-year and annual plans. The rule was issued in response to public housing reform legislation that was enacted by Congress in October 1998 (The Quality Housing and Work Responsibility Act of 1998). The legislation required PHAs, for the first time, to develop five-year and annual plans describing their mission, goals, operations, and resources. The rule outlines the time line and process for completion of a PHA five-year and annual plan. The rule also requires that the PHA annual plan must be consistent with its jurisdiction's Consolidated Plan. Specifically, the Annual Plan must contain a certification by the local official that the plan is consistent with the Consolidated Plan and provide a description of the manner in which the plan is consistent. NCDA is seeking comments from its members on what constitutes "consistency;" how do members define "consistency" between the PHA annual plan and the consolidated plan. The rule also seeks comments from local governments on combining the five-year and annual plan with the submission of the consolidated plan, either in whole or in part. Please call Vicki Watson at 202-293-7587 by April 16 with your comments on these two points. NCDA would like to submit a letter to HUD by the April 19 submission date.

NCDA NOTES

CDBG 25^th ANNIVERSARY/NATIONAL CD WEEK PRODUCTS INFORMATION

Attached to the Washington Report is an updated flyer on the products available to assist communities with their celebrations of the 25^th anniversary of the CDBG program. Please note that 25^TH ANNIVERSARY LOGO STICKERS ARE NOW AVAILABLE for purchase at the cost of $100 for a roll of 1,000 stickers.

PLEASE SEND US YOUR CD WEEK/CDBG 25th ANNIVERSARY ACTION PLANS

We have been asked by HUD to help them make decisions on getting personnel to your events. If you have already made plans, please let NCDA staff know and perhaps we can facilitate a key HUD speaker at your event.

NCDA ASKS MEMBERS FOR HOME PROGRAM TECHNICAL ASSISTANCE NEEDS

In an effort to better serve its membership, NCDA has prepared a one-page survey on the HOME program. The survey is intended to gather feedback from members on their HOME TA needs and administration of the HOME program. If you administer the HOME program, please complete the survey and return it to Vicki Watson by April 15, 1999.

NCDA TECHNOLOGY NEWS

NCDAonline UPDATE!!!   If you have not logged on to NCDAonline.org with your permanent passwords, you will not be able to log on to the member only section of the website. Please contact Chandra Western at NCDA or e-mail her at chandra@ncdaonline.org. She will provide you with the information necessary to get into the "Members Only" section as well as how to personalize and make permanent your passwords and user ID. NCDA staff have discovered that members are not personalizing their passwords, they continue to use the temporary passwords to get to the members only section. PLEASE CONTACT Chandra Western TO LEARN HOW TO GET YOUR PERMANENT PASSWORDS. In response to your requests NCDAonline.org has been enhanced. As part of these ongoing enhancements, we will eventually discontinue the PAL system. We hope you will let us know what you think of the improvements and offer suggestions for further enhancements. There is also some confusion on entering in e-mail addresses directly online. Once you are in the members only section, click on the appropriate e-mail link and type in your name in the "subject" area. In the e-mail message area, type in "subscribe memberlist" and your e-mail address. Don't forget to put a space between memberlist and your e-mail address. This should get you on the listserv.

Community Development Committee Minutes

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