Remarks by:
Raymond K. James, Esq.
CARH Lobbyist
Coan and Lyons
Washington, D.C.
202.728.1070
Addressing the Council for Affordable and Rural Housing:
There have been some tremendous changes in Congress since we last met.
In areas that involve our
interest nine out of ten Committee or Subcommittee Chairmen are different this year. I don’t remember last when there was so
much change. There were changes on the two Banking Committees in the House
and the Senate. In the House, the new Chairman is Congressman Oxley (R-Ohio).
He represents south-central Ohio. The previous Chairman, Congressman Leach
(R-Iowa), fell victim to the rule that the Republicans adopted when they took control of the House in
1995 that Chairmen could only serve for
six years. The House Subcommittee on Housing also has a new Chairman:
Marge Roukema (R-New Jersey). She took the place of Rick Lazio of New York,
who ran for the Senate and lost to Hillary Clinton. Both key positions on
the Authorizing Committee in the House are new.
Oxley came over from the Commerce Committee and had never served on the
Banking Committee. Roukema is a moderate Republican, and is very friendly on
Housing issues.
In the Senate Banking Committee, where the Democrats took control a few
days ago, the new Chairman is a very big friend of Housing — Paul Sarbanes
(D-Maryland). The Chairman of the Housing Subcommittee is probably going to
be Jack Reed (D-Rhode Island). The previous Chairman, Phil Gramm (R-Texas),
was not a friend of Housing at all; the previous Subcommittee Chairman, Wayne
Allard (R-Colorado), was not much of a friend, either. So this is a very
advantageous change in the Senate Banking Committee.
Appropriators
In the Appropriations Committee in the House, we have a new Chairman,
Henry Bonilla (R-Texas) of the Agriculture, Rural Development, Food and Drug
Administration and Related Agencies Subcommittee, replacing Joe Skeen (R-New
Mexico). Bonilla has a District in Texas which is probably larger than all of
New England; it runs along almost the entire border with Mexico. He is now
the guy to talk to about Rural Housing appropriations.
The full Appropriations Committee Chairman is the only one that hasn’t
changed: Congressman C. W. Young (R-Florida).
On the Senate side, the Democrats are now in charge of Appropriations.
Senator Byrd (D-West Virginia) is now the full Committee Chairman. The
Subcommittee Chairman is Herb Kohl (D-Wisconsin).
The tax writing Committees also got new Chairmen. In the House,
Congressman Thomas (R-Illinois) replaced Bill Archer (R-Texas), which is a
good change for us; Archer was an arch foe of the Tax Credit. On the Senate
side, we have Max Baucus (D-Montana), a nice rural state, replacing Chuck
Grassley (R-Iowa).
We have a whole new cast of leaders in the relevant Committees. If any of
you know them, please make yourself known to them and contact them.
Tight Budget Limits
The other big distraction in Washington is taxes versus spending. We
appear to be losing on that debate. The Tax Bill passed, and part of the
premise of the Tax Bill in the President’s Budget is a very miserly spending
program. The President’s Budget requested more money than last year’s
appropriations, but only about four percent more, which is keeping up with
inflation.
We’re going to do worse than that because the President has a number of
initiatives that he wants funded. These will come out of that total amount of
money. In order to fund his initiatives, we have to cut other programs, some
of which may be at the Department of Agriculture.
With respect to Rural Housing, the President’s Budget continues the
stagnant budget situation of about the same amount year after year. So it does not really cut Rural Housing; Rural Housing is kept at about the
same level without any inflation adjustment.
Balancing Budget Demands
The Appropriators in Congress are very resilient. They’ve been doing this
every year, living with very tight Congressional Budgets and
then finding a way to appropriate more money. Their first stab at it occurred
last Friday (June 8). The Chairman of the House Appropriations Committee said,
“We’re going to speak to the Congressional Budget. We’re going to take some
of the money in that Budget for the President’s Defense and Education
initiatives and set that aside for the future. Then we’re going to use the
entire Congressional Budget to fund the rest of the programs.”
That resulted in several billion dollars of additional spending available
to the Appropriations Committee. So that tightened the Budget a considerable
amount. In the Agriculture area, the increase from the President’s request
was only $110 million, and most of that is the result of the Congressional
Budget and the higher pay for Federal workers in the President’s Budget. So
we’re still looking at a pretty stagnant Agriculture Budget; in fact, the
House Agriculture Appropriations Subcommittee marked up the Bill last
Wednesday and provided the same amount of funds as in the President’s Budget.
So 515 got its $114+ million; 538 got its almost $100 million; 502 got its
funds; the Single Family Guarantee program got $3.1 billion. The only program
that got an increase was Farm Labor Housing.
Increased 515 Funding?
The only trouble with urging an increase in funding for 515 is that
everything is subject to Budgetary Allocations or Cap. The Agriculture
Subcommittee appropriated up to the full amount of what they have available.
So there are only a few ways to get one account increased. One way to
increase an account is to take it from somebody else in the Agriculture
Appropriations — that’s not very likely. Another way to do it is to take
another Subcommittee’s Allocation — that has happened a good number of times. But that’s not terribly likely unless it is a very popular program and people
are trying to get more funding for it. The third way is through gimmickry,
which is also kind of common — ways to offset Appropriations through
receipts that might be developed or creating categories of emergency
spending.
There are a variety of techniques, but so far, none of these has worked for programs like 515. I don’t anticipate them not working. But if
someone asks for more money, it’s not impossible at this stage that the
Congress could provide more money for the program. So those are the three
ways of doing it: take it from another program, increase the allocation to
the Agriculture Subcommittee, or find another gimmick.
There’s a new regime in the Banking Committee, and they’re moving very
slowly this year, feeling their way. Chairman Oxley, who has not done any
Banking before, is changing the staff almost completely. We don’t expect a
Housing Bill in the House to be introduced until maybe December for action
next year. We’re looking at a two-year process. I know some of you are very
anxious about Prepayment, and we almost got something last year, and we’re
working on it this year. But if we do get something, it will not be until
next year because there won’t be a Housing bill until next year; at least
that’s the plan or the anticipation right now.
GAO Prepayment Study
I’ve talked to the Republicans on the House Committee about Prepayment.
We’re very strong with them; they’re in favor of helping us. They asked the
GAO (General Accounting Office) to make a study and make recommendations with
the hope that the GAO study will help our efforts to get Prepayment rights.
As you know, you can never predict for sure what the GAO will come up with.
We’re hoping they will come up with something that is helpful, but there’s
always the chance they might not.
The point of the study is to suggest that there would be benefits to
the government in allowing prepayment, and that there are mechanisms in place
to take care of the tenants (including legislation to take care of the
tenants). I’m hoping that’s what the GAO report will say. That will allow us
to focus on what we expect will be opposition from the Democratic side and
various interests groups who are very reluctant to see that housing lost from
the stock.
HUD Prepayment Rights
One of our main arguments is that Congress did that for HUD five years
ago, Congress let the HUD projects that were assisted under 236 programs and
several others to prepay their mortgages; HUD protected tenants with enhanced
Vouchers. Why can’t Congress do the same for 515? If that doesn’t get us
anywhere with the Democrats, it still makes a nice argument to the
Republicans, who see the equity in it, don’t believe that the housing stock
should be maintained on the basis of involuntary servitude of the owner, and
who agree that it’s only fair that the original contract be honored between
the owner and the government.
There’s no problem with many Members, but on the other side are those who
hold that the desirability of keeping the housing in the stock for as long as
possible has a higher value.
HUD Prepayment History
Where were these groups when the HUD deregulation occurred five years
ago? It was a different situation then. The long and short of it was that
the government ran some incentive programs to give owners money in lieu of letting them prepay.
These programs generated a good bit of bad publicity because some of the
rents were very high and the owners were pocketing large amounts of money,
even though it might have been justified. Non-profit buyers of these properties were
gold-plating the properties and using up a lot of the grants for rehab
expenditures that maybe were not the most prudent.
Anyway, the programs got a bad name and the Appropriations Committee
decided to end them. When they decided to end the programs, and at
the same time were not giving owners any money to stay in the program,
Congress said, “We’ll just let them go.” That’s how, five years ago, we got
the HUD projects to be able to prepay. We don’t have quite the same situation
here. That’s our main legislative thrust.
Thank you very much.
Next: Remarks by Richard Michael Price, Esq.