HUD FY2011 BUDGET FOCUSES ON FISCAL DISCIPLINE, INVESTING IN PEOPLE AND PLACES

U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan today unveiled the Department’s fiscal year 2011 budget proposal, following President Barack Obama’s presentation of his Administration-wide budget. The HUD budget focuses on fiscal discipline, creating jobs and builds on the administration’s first year accomplishments by proposing reform in HUD’s housing and community development programs to make them more streamlined, efficient, and accountable.

HUD’s budget proposal seeks to make targeted investments in people and places – instead of policies and programs –to effectively support HUD’s mission while being accountable to the American taxpayer. $6.9 billion in projected FHA and Ginnie Mae receipts contribute to the FY 2011 proposed $48.5 billion budget total and to the administration’s deficit reduction plans. Net of the $6.9 billion in projected FHA and Ginnie Mae receipts the Budget proposes overall funding of $41.6 billion, 5% below fiscal year 2010, and makes difficult decisions to cut funding for a number of programs.

“After a year of progress, we no longer confront an economy or a Department in crisis,” said Secretary Donovan. “But much work remains, in much changed fiscal circumstances. Now that the economic crisis has begun to recede, President Obama has committed to reducing the federal deficit. HUD’s fiscal year 2011 budget reflects that fiscal discipline. With the Recovery Act and fiscal year 2010 funding having stabilized HUD’s programs after years of slow starvation, the time has come to begin transforming them—to make HUD’s housing and community development programs more streamlined, efficient, and accountable.”

The carefully targeted investments in the Budget will enable HUD programs to:

• House over 2.3 million families in public and assisted housing (over 58% elderly or disabled);
• Provide voucher assistance to 78,000 additional families (over 47% elderly or disabled);
• Assist nearly 5.5 million households, over 200,000 more than at the end of fiscal year 2009.
• More than double the annual rate at which HUD assistance creates new permanent supportive housing for the homeless;
• Create and retain over 112,000 jobs through the Department’s housing and economic development investments in communities across the country.

HUD’s FY2011 Budget will help strengthen the Nation’s housing market to bolster the economy and protect consumers. The budget will reflect $6 billion in profit for the FHA, generated thanks to the FHA reforms announced last month by FHA Commissioner Stevens. Those policy changes will strengthen the FHA’s capital reserves, while enabling the agency to continue to fulfill its mission to provide access to homeownership for underserved communities and support the nation’s housing market recovery. Thanks to the FHA and Ginnie Mae receipts the total HUD budget will be $48.5 billion, compared to $46.9 billion in FY2010.

The Budget also proposes long term fundamental reforms including launching a new initiative called Transforming Rental Assistance (TRA) to bring HUD’s twentieth century rental assistance programs into the twenty first century. TRA will preserve public housing by enabling its owners to address the current and future capital needs of their properties, especially by leveraging private capital, provide more choice to residents and begin to streamline the thirteen separate rental assistance programs run by HUD. The FY2011 budget will provide $350 million to preserve approximately 300,000 units of public and assisted housing, increase administrative efficiency at all levels of program operations, and enhance housing choice for residents. The funding will have three purposes: converting rental assistance to a new funding stream; off-setting costs of combining voucher programs; and tenant mobility. The budget also makes hard choices to ensure reform. For example, HUD proposes to suspend funding for Section 202 Capital Advance Grants in FY 2011 to evaluate and re-design the program in a thoughtful, purposeful way with input from a variety of stakeholders; The Department is proposing $90 million in FY 2011 for Project Rental Assistance Contract (PRAC) Renewals/Amendments and no additional funding for expansion activities in FY 2011.

The Budget reflects a strong administration commitment to preventing and ending homelessness. To support implementation of the Homeless Emergency Assistance and Rapid Transition to Housing (HEARTH) Act signed into law last year by President Obama, the Budget proposes a nearly $200 million increase in homeless assistance funding compared to fiscal year 2010 to increase investment in evidence-based practices, support the shift of local homeless assistance systems to a performance-based orientation, and to better meet the unique needs of rural communities. These investments in prevention will create long term savings in the costs of caring for the homeless. HUD has requested $2.055 billion for Homeless Assistance Grants in its FY2011 budget. $107 million of the new funding would focus on providing up to 10,000 new units of permanent housing for homeless families and individuals and implementing a new rural homelessness program.

As part of the commitment to reforming HUD’s community development programs, and helping to create jobs, the FY2011 Budget proposes funding for the new Catalytic Investment Competition Grants program to provide $150 million in competitive grants under the Community Development Block Grant (CDBG) Program. These grants will create jobs and spur game changing economic development opportunities. The budget fulfills President Obama’s campaign pledge to fully fund CDBG. CDBG is the Federal Government’s largest community development grant program and will be funded at $4.83 billion.

The Budget includes $150 million for a second year of the Sustainable Communities Initiative, which will expand upon HUD’s partnership with the Department of Transportation and the Environmental Protection Agency to stimulate more integrated regional planning to guide state, metropolitan, and local decisions to link land use, transportation and housing policy. The budget proposes to expand Choice Neighborhoods from its $65 million funding level in 2010, for a demonstration of this important initiative, to $250 million in 2011. This will enable HUD and our local partners to transform distressed neighborhoods and public and assisted housing into functioning, sustainable mixed-income neighborhoods by linking housing improvements with appropriate services, schools, transportation, and access to jobs. The Budget also provides $60 million for a revamped Capacity Building program, which seeks to expand HUD’s funding capabilities and encourage open competition through mainstream and consistent program funding for these activities. Increasing capacity at the local government level is critical as jurisdictions partner with the Administration in implementing key initiatives such as Choice Neighborhoods, Sustainable Communities, and the Catalytic Investment Competition Grants and work to restore the economic vitality of their communities.

The budget also makes investments to ensure that HUD can successfully implement the ambitious changes being proposed. As in the FY2010 budget HUD is again requesting that up to one percent of program funding be transferred to the Transformation Initiative Fund. But this year, HUD is also requesting the creation of a Salaries and Expenses Central Fund to enable the department to provide targeted, temporary infusions of resources to any of HUD’s program offices. This Fund will improve HUD’s ability to respond to unanticipated crises and new challenges – and help the department hire staff with appropriate expertise.

“This budget promotes innovative and comprehensive approaches to the nation’s ongoing affordable housing crisis by making targeted investments to help grow the economy, create jobs and keep people in their homes,” said Donovan. “I look forward to the consideration and approval of this budget in Congress.”