Recent
Announcements

FY 2008 Administration's Proposed Budget

On February 5, 2007 President Bush released the administration's proposed budget for fiscal year 2008, which begins on October 1, 2007. Complete budget documents are available at http://www.gpoaccess.gov/usbudget/ or http://www.whitehouse.gov/omb/budget/fy2008/.

HAC's press release on the budget is available here and its detailed analysis, From Bad to Worse: Rural Housing in the Administration's FY 2008 Budget, is available here.

Download a pdf version of the information on this page.

USDA
HUD

USDA

Administration Proposes Eliminating Most Direct Loans for Rural Housing in FY 2008

February 5, 2007 – The Bush Administration’s proposed budget for fiscal year 2008, released this morning, would dramatically change the federal funding landscape for rural housing.  The budget pursues trends from past years, such as favoring loan guarantees over direct lending, but goes farther than previous proposals.

Lending:  Direct lending for single-family home purchases under Section 502 and for multifamily housing development under Section 515 would be eliminated.  The Section 502 single-family and Section 538 multifamily guarantee programs would be substantially increased.  Section 504 repair loans and Section 514 farm labor housing loans would be reduced as well, although those programs do not have parallel guarantee programs.

USDA plans to propose legislation to authorize subsidized guaranteed single-family housing loans for very low- and low-income rural residents, according to the budget. It explains that "funding requests for these new loans will follow authorization."

The budget also proposes increasing the fee on new Section 502 guaranteed loans from 2 percent to 3 percent. It explains that "this causes the loans to be less costly for the government without a significant additional burden to the borrowers, given that they can finance the fee as part of the loan."

Grants:  Direct loans cost the government more, per program dollar, than loan guarantees, and grants cost it even more.  It is not surprising, then, that funding would be cut for Section 516 farm labor housing grants and – despite the Administration’s support for self-help housing, as indicated by its proposal for HUD’s SHOP program – Section 523 grants to nonprofit organizations that administer self-help programs.  Funding would hold steady for Section 504 repair grants, which aid very low-income elderly homeowners, and Section 533 Housing Preservation Grants, used for rehabilitation of both owner-occupied and rental units.  (HPG is not targeted to preserve Section 515 rural rental properties, like the programs described below.) 

Rental Assistance:  Under the FY 2008 budget, Section 521 Rental Assistance (RA) contracts would be limited to one-year terms.  The Administration’s 2007 budget proposed to cut RA to two-year contracts instead of the four-year terms used in 2006.  Congress reduced RA to one-year terms in the Continuing Resolutions that funded most of the federal government from October 1, 2006 through February 15, 2007.  H.J. Res. 20, which has passed the House and is expected to govern federal funding from February 15 through the September 30 end of the fiscal year, provides for two-year contracts. 

Whatever contract length is used, RA will be costly in FY 2008.  Five-year contracts from 2003, four-year contracts from 2004, and one-year contracts from early 2007 will all be up for renewal.

Rental Preservation:  The FY 2008 budget treats rural rental housing preservation much the same way as the FY 2008 budget did, putting funding for revitalization in the line item labeled Section 542 vouchers and omitting funding Congress appropriated for other preservation initiatives.  This year’s budget would provide only $27.8 million for that voucher/revitalization line item, however, rather than the $74 million proposed for FY 2007.  As this year’s budget text points out, very little voucher funding was actually used in FY 2006.  On the other hand, in FY 2006 USDA received over 3,000 applications for revitalization funds through its preservation demonstration, and could fund only 78 of them with the $9 million available.  The budget zeroes out both that demonstration and the Rental Preservation Revolving Loan program created in FY 2005. 

a. Rental Assistance Contracts were for four years in FY 2005 and FY 2006. The FY 2007 budget proposed shortening them to two years. H.J. Res. 20 provides two-year contracts.

HUD

HUD Cuts and Increases Proposed

The Administration’s 2008 budget proposal for HUD includes eliminations and cuts in some programs and increases in others.  If enacted this budget would have substantial reductions for CDBG, public housing capital, Sec. 202 housing for the elderly, Sec. 811 housing for the disabled, and lead hazard control.  Increases are proposed for Section 8, HOME, public housing operating funds, homeless assistance, housing counseling, and the Self-Help Homeownership Opportunity Program (SHOP).  The budget again proposes to eliminate the small Rural Housing and Economic Development Program and Hope VI.  SHOP would receive $40 million, up from a likely $19.8 million in 2007. 

The table below compares the 2008 proposals to appropriated 2005 and 2006 levels and to the likely 2007 level.  The House has passed a year-long continuing resolution for 2007 (H.J. Res. 20), which the Senate will take up before mid-February.   

a. Figures shown for FY 2006 are before 1% acroww the board cut.
b. Includes $50 million proposed for American Dream Downpayment Act. 
c. In prior years was part of HOME.
d. Funded as part of account for Self-Help and Assisted Homeownership Opportunity Program.

Last updated: February 5, 2007