Recent
Announcements

Administration Budget Proposes Cuts in
USDA Rental Programs

NOTE: On February 5, 2007 the Administration released its budget for fiscal year 2008. Details are available at http://www.ruralhome.org/infoAnnouncements_2008proposed.php.

On February 6, 2006 President Bush released the administration's proposed budget for fiscal year
2007, which begins on October 1, 2006. Complete budget documents are available at http://www.gpoaccess.gov/usbudget/ or http://www.whitehouse.gov/omb/budget/fy2007/ .

See HAC's report, Rural Housing in the Adminstration's FY 2007 Budget, released March 27, 2006, that analyzes selected portions of President Bush’s proposed Fiscal Year (FY) 2007 budget and discusses their implications for rural housing. The report includes a program-by-program review of funding requests for the Rural Housing Service (RHS) of the U.S. Department of Agriculture (USDA) and for the Department of Housing and Urban Development (HUD), as well as a few relevant programs in other departments. See also HAC's Feb. 14, 2006 press release in response to the Administration's budget.

U.S. Department of Agriculture Rural Development/Rural Housing Service

The budget for USDA is generally consistent with budgets of the last few years, but proposes more drastic changes for rental housing. Section 521 Rental Assistance (RA) contracts would be reduced to two years; a few years ago Congress cut the formerly five-year contracts to four years in order to lower the dollar total for RA, and this change would lower it further. Section 515 rental housing would receive no funding at all, and three congressional initiatives to help preserve 515 developments would suffer the same fate.

Funding for Section 542 vouchers for tenants displaced when Section 515 property owners prepay their loans would increase from $16 million in 2006 to $74.25 million in 2007. Of that total, $8 million is earmarked for administrative expenses. The budget includes language allowing the voucher funds to be used for other preservation and revitalization activities, including debt restructuring. It explains that the Administration expects such activities to be authorized by legislation sent to Congress by the Administration in July 2005 but not yet introduced.

The Section 538 guaranteed rental housing loan program would double, from $100 million in 2006 to $198 million in 2007. RHS officials have said in the past that they expect Section 538 guaranteed loans to be used to refinance Section 515 properties.

Most other USDA programs would receive level or almost level funding. Slight increases are proposed for Section 502 direct homeownership loans, Section 514 farm labor housing loans, and Section 523 Self-Help Technical Assistance grants. While Section 502 guaranteed loans for homebuyers would stay at about the same level as in 2006, the budget suggests limiting eligibility to applicants who are not otherwise able to obtain federally guaranteed homeownership loans - presumably a reference to FHA loans.

Department of Housing and Urban Development

The HUD budget proposes to cut the CDBG program substantially. Unlike last year's budget, it does not suggest moving CDBG to the Department of Commerce. The Rural Housing and Economic Development Program and HOPE VI would be eliminated.

The budget proposes cuts for public housing, Native American housing, programs for elderly people and those with disabilities, fair housing, and lead hazard control. Increases are proposed for rental assistance, HOME, programs for the homeless, housing for people with AIDS, and the Self-Help Homeownership Opportunity Program (SHOP).

(a) Includes $100 million for American Dream Downpayment Initiative.
(b) Funded as part of HOME.
(c) Funded as part of new account for Self-Help and Assisted Homeownership.

Updated: March 27, 2006; Originally Posted: February 6, 2006