Remarks by:
Raymond K. James, Esq.
CARH Lobbyist
Coan and Lyons
Washington, D.C.
202.728.1070
Addressing CARH:
The Outlook
The big question in Washington these days is whether to keep the tax
cuts, defer them or cut back, to free up some money for our purposes and other
domestic spending. Don’t believe it. It’s not going to happen. The only way
it’ll happen is if President Bush changes his mind, and that doesn’t seem
likely.
The Congress is Republican in the House and barely Democratic in the
Senate. It’s not going to happen. Senator Kennedy said let’s postpone $350
Billion of the tax cut so we can fund education, health care and other
pressing domestic needs; it’s not going to happen. So we’re not going to get
rescued that way.
I know now why people refer to the “War” on Drugs, the “War” on Poverty—
because when it’s a war, you get all the money you can possibly need and use.
The War is taking up a lot of money; building up the military will take a lot
of money; rebuilding will take a lot of money. So, everyone has agreed— which
is good at least—that next year will be a deficit spending year. There will
be no attempt to balance the Budget in FY 2003, beginning October 1. I don’t
think the Budget is balanced in 2002, either. So we’re into deficit funding
for some time, which is good for us.
If we weren’t into deficit funding, we’d get zero. There’d be no money
left for the lower priorities like housing.
This past year was a stable year, neither up nor down. Next year we
expect the President’s Budget to have some cuts in the RHS budget. Just
because there are cuts in the President’s Budget does not mean that Congress
will accept the cuts. That will be part of our task to make sure that the
Congress doesn’t go along entirely with what the President proposes.
In terms of legislation, this past year was very scant. The only Housing
legislation that passed was an extension of the HUD Mark-to-Market program
for Section 8 Contracts. That was passed right at the end of the year as part
of the Labor, HHS appropriation. That’s something that CARH and other
organizations worked on because it was shaping up to be pretty bad
legislation. We got some provisions that were in it, which had gone through
the Senate, taken out. They would have been very detrimental to those with
Section 8 Contracts, including those with 515.
New Production Program?
This is the year, supposedly, for the new production program. Every time
HUD Secretary Martinez is asked at a Congressional hearing, “What do you
think about new production? What do you propose for new production?” he says,
“Let’s wait for the Millennial Housing Commission to report, and then we’ll
talk about new production.” Well, this is the year the Millennial Housing
Commission is supposed to issue its final report. It’s due May 30. The Staff
Director assures me they will, barely, make the date. The report will be done
before then, and there will be hearings and briefings on the Hill starting in
April. So the report is in the final stages right now.
It will contain many recommendations, including proposals for new
production programs. Nothing has been approved by the membership, but the
staff has put together some proposals. One proposal would create a thin
subsidy production program, much on the order of the old tax-exempt debt
program where 20% of the units had to be available to low income tenants at
80% of the median income, with the idea that it would produce housing. There
would be various other subsidy mechanisms, if necessary. The housing would be
primarily designed for the working class moderate income families.
HOME-like Program
On the other side, for the low income, they are thinking of proposing
another HOME-like program. It would keep HOME, but provide a deeper subsidy
that might cover the entire capital costs of the project, but not the
operating costs. Meanwhile, there are other task forces around town dreaming
up what they call a “Thrifty” project-based voucher that would subsidize
only operating costs. There could be a marriage if these proposals work out,
with the full capital cost subsidy and then the “Thrifty” voucher to
subsidize the operating cost.
Congressman Walsh (R-NY), who chairs the HUD Appropriations Subcommittee
that created the Millennial Housing Commission, is interested in holding
hearings. So is Senator Sarbanes (D-MD) in the Senate. I have no idea at this
time how these proposals will be greeted. I think they will be studied and
debated over a period of time. We would not get any action this year, if
there is any action.
There is another proposal that has been around, which a couple of you
have talked about with me. It was introduced by Senator Edwards (D-NC) along
with other Senators. It is designed just for rural areas and it is a grant
program sort of structured along the lines of HOME. It is very rudimentary.
When I raised it with the Staff Director in the Senate Banking Committee, he
had sort of forgotten about it, even though the Bill had been around for a
year and a half. He said, “Maybe we’ll have to have a hearing on that. What
do you think about that Bill?” I said, “Well, first of all I think it has
too much for non-profits. The non-profits could control who gets the money.”
So we talked a little about it, but he didn’t show much interest in it.
On rural housing with the Millennial Housing Commission, instead of any
particular recommendation for new programs, they are going to recommend that
any production program include a rural set-aside, just like the original
Section 8 had a 20% rural set-aside. The Millennial programs (thin subsidy
and deep subsidy) would have a rural set-aside, and pretty much leave alone
the existing rural programs. As was said to me, “They’re working okay,
aren’t they? We feel they’re working okay, so we’re not going to do much
with them. We’ll just give the rural areas a slice of the programs.”
There is also the National Housing Trust proposal. The Low-Income Housing
Coalition has been getting sponsors, much like what happened with the
expansion of the Low Income Housing Tax Credit a few years ago. Every year we
got hundreds and hundreds of sponsors of legislation to expand the Credit.
This is what is happening with the National Housing Trust production program
— there are many sponsors now who have been asked by groups around the
country. This is good grassroots lobbying by the Low-Income Housing Coalition
and its allies. There are a lot of sponsors, but I don’t think there’s much
hope on that kind of legislation. That would use what appear to be
substantial FHA surpluses from the FHA single family insurance fund— use that
money for subsidized rental housing. The Administration has changed; the FHA
insurance fund numbers can be manipulated so the surplus disappears. The
general feeling is that if there is a surplus in the FHA accounts, the people
who make that surplus possible (the homeowners who pay the insurance
premiums) should have their premiums reduced rather than having the money
either help reduce the budget or go into other uses.
That is the lineup for production for this year and next. We’re hopeful
that something comes out of this to get more money into a production program.
On prepayment, the Leadership of the House Financial Services Committee
is planning to introduce a Bill which will have Rural Housing in Title I,
which is the featured place in a Bill. It will have provisions that restore
prepayment rights to 515 owners in accordance with the rights they have in
their contracts. It gives what we’ve asked for the past 3 or 4 years; we had
a Bill to do that introduced a year and a half ago. But this would be a step forward because it is a Committee Leadership Bill, and when the Committee Chairman introduces a Bill, that has a much better chance of going through the process successfully than when just an ordinary Member introduces a Bill.
Thank you.
Next: RHS Nitty-Gritty