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Secretary Donovan Testifies on HUD’s FY 2015 Budget in House Appropriations Subcommittee Hearing (NCSHA)

(4/14/2014 5:35 AM, NCSHA)

On April 10, the House Transportation-HUD (T-HUD) Appropriations Subcommittee held a hearing to examine HUD’s FY 2015 budget request. HUD Secretary Shaun Donovan was the sole witness. Due to time constraints caused by votes on the House floor, Subcommittee Chairman Tom Latham (R-IA), Ranking Member Ed Pastor (D-AZ), and Donovan all decided not to provide an opening statement and they proceeded directly to questions.

Latham asked Donovan about the different scores produced by the Congressional Budget Office (CBO) and the Office of Management and Budget (OMB) for Federal Housing Administration (FHA) receipts expected in FY 2015. OMB, and therefore HUD’s budget request, assumes approximately $2.8 billion more in FHA receipts for FY 2015 than the most recent CBO score. If this difference remains in CBO’s final scoring of the Administration’s Budget, the Subcommittee will need more appropriated funding to meet the President’s requested spending level for HUD than the President’s Budget assumes because it will have less FHA revenue to offset that spending. Donovan said OMB’s projection includes two significant changes made to FHA premiums that CBO’s most recent estimate does not include. HUD is hopeful that CBO’s final estimate for FHA receipts will include those changes and be closer to OMB’s estimate.

Pastor highlighted the Community Development Block Grant (CDBG) program’s historically low funding level request and mentioned that CDBG was last reauthorized in 1994. Pastor asked what HUD can do to ensure the program is still responsive to the needs of communities. Donovan answered that HUD strongly supports reauthorization of CDBG. He added that HUD has been working on an initiative called Moving CDBG Forward and said proposed legislative changes for CDBG will be included in an upcoming package of legislative proposals that the Administration will offer in the next six to eight weeks. The language will include proposals to update the formula for and targeting of CDBG funds and measures to increase streamlining, flexibility, and accountability.

Continuing his questions about CDBG, Pastor commented that, for smaller rural communities, funding comes through the state and asked if HUD wants to change this. Representatives Jaime Herrera-Beutler (R-WA) and Charlie Dent (R-PA) also asked about the impact of HUD’s proposed changes to CDBG on smaller communities. Donovan replied that the state program is an important part of CDBG. He said HUD wants to provide more flexibility for localities to join together to reach a scale where they could qualify as an entitlement community. He added that HUD is also including a set of options for communities to team together on administration and oversight so they can keep direct access to funding.

Representative Nita Lowey (D-NY), the Ranking Member of the full Appropriations Committee, commented that the Rental Assistance Demonstration (RAD) has been a tremendous success in New York and asked for a program update. Donovan responded that HUD, as of December 2013, had received applications for 180,000 units, three times the 60,000 units allowed under the statutory cap. He added that converting 60,000 units under RAD will generate $1.8 billion in private funds and create approximately 34,000 jobs.

Representative David Joyce (R-OH) said vacant, abandoned, and foreclosed properties have been a serious problem in Ohio and other states and asked about funds available for demolition. Donovan said the Neighborhood Stabilization Program (NSP) has been enormously successful. He said given the end of funding for NSP and budget constraints, HUD has been looking for creative ways to continue to spur activities similar to those undertaken through NSP. One option HUD is exploring is using repaid NSP funds to reinvest in those activities. He said HUD is also working with CDBG and other traditional programs to provide flexibility to increase investment in foreclosed and abandoned properties, and in some instances to do demolition. Donovan also referenced the use of Hardest Hit Funds for blight removal. He added that HUD has also begun to use FHA resources in new ways to do targeted neighborhood stabilization.

Donovan also addressed questions about Hurricane Sandy recovery efforts and the Housing Opportunities for Persons with AIDS (HOPWA) funding formula.

Donovan also testified before this Subcommittee on April 2 and that hearing included discussions about the project-based Section 8, Housing Choice Voucher, RAD, and housing counseling programs. See NCSHA’s April 4 blog post for information about that hearing.