1. CAPITOL HILL PERSPECTIVE Fitzhugh Elder, IV
Deputy Clerk
Senate Appropriations Committee
Washington, D.C.
As I said last year, there’s nothing like talking about rural housing at the Ritz-Carlton.
Bill Simpson left the subcommittee and went to the HUD subcommittee. Thankfully he’s going to do rural housing. But now you have probably the only person on the Senate side who understands both RHS and HUD issues. While the HUD subcommittee is lucky to have Bill, we miss his able interactions we had when he was solely on the Agriculture subcommittee.
Two issues we have been dealing with on Rural Housing have been the CPA report that came out last Fall and the Budget that came out this Spring.
We welcome that report. For a lot of us, or at least for me, it is the first comprehensive overview of what is going on in the 515 program. It gave us some good things to ponder and decide how we’ll go forward and what’s the role of multifamily housing in the future.
Increase in budget direction I was concerned when we got the report because the trend in our budget over the least couple of years has been downward. This report called for increased infusion of funding in the 515 portfolio. I was concerned. Here’s a report that has some ideas but I would be surprised if there’s any funding to go along with it; in February, the Budget came out and I was surprised with a proposed $200 million Voucher program. There were some others too: a sizable increase in Rental Assistance and in 538. That being said, we were surprised. I think that was a major testament to the need of the program.
The fact that we’re in our third year of declining budgets for USDA, and in a Budget that’s $100 million below last year’s, to have a new initiative of $200 million is actually quite an accomplishment. It demonstrates that there is an acceptance within OMB and the Administration that there is a series of structural issues in the multifamily housing portfolio. So I’d like to give RHS credit for pushing that, for being successful with OMB because I’ll tell you there are very few new initiatives this year in the Budget. As I said, HUD was $100 million below last year. As an Appropriator, that’s a pretty significant achievement.
The President’s Budget also canceled $100s of millions, probably about $300 to $400 million worth, of projects that are important to Members of Congress. These things compete obviously with the Rural Development title, RHS funding. It also included about $250 million of user fees that they assume would be enacted and count toward meeting the Budget. Historically, most user fees have never happened, so those will not. So we’ve got to come up with the difference — that $200 million.
So, actually we’re a little bit in the hole, probably $500 to $600 million in the hole just to get back to what we did last year. Which would be the second year of an increase in the Budget.
I guess I have a couple of concerns about what is in the Budget. The CPA called for a number of initiatives. Obviously there were Vouchers; there were incentives to maintain the portfolio. The proposal only called for Vouchers. Unfortunately, we don’t know exactly how this Voucher program is going to work. We’ve asked a number of times; hopefully they’re going to some news for us in the next couple of days. But it is hard for us, and I think the House is in this position, it is hard for people to appropriate dollars, especially hundreds of millions, when they don’t have any idea of how it is going to be spent.
That being said, the Senate recognizes it as an issue. Bill Simpson and I are working closely together to develop some demonstration projects that will meet the needs of Rural Housing. There could be some prepayments this year; we assume there could be some people who need a Voucher. They are also in desperate need for incentives for the portfolio. So we’re trying to develop those.
I’m concerned that there are probably about 35-40 legislative days left in the year. The Senate Banking Committee has not dealt with Rural Housing issues in seven, eight, ten years. There’s not a staff understanding of how RHS programs work and there’s certainly not a member understanding of how RHS programs work. When the legislation does come up, there’s a lot of work that has to be done to catch up staff and members on the issues on the 515 portfolio. And that’s going to take some time; these are complicated issues. There’s not been attention focussed on it in the past.
On top of that, the Banking Committee in the Senate has spent a lot of time on Fannie Mae and Freddie Mac. For them to switch gears late in the session and start focussing on Rural Housing is going to be a challenge. I hope they’re successful because the portfolio needs it. But you’ve got to understand there is a serious time crunch we’re facing just to get things accomplished this year, the 109th Congress.
I think we’re going to try to do some new construction in 515. I’d like to see some more money in 538 for this year — more than we did last year. We hopefully will be able to reach some agreements on how to proceed on incentives, Vouchers and such for the 515 portfolio.
Thank you.
Next: 2. Capitol Hill Perspectives
Remarks by William Simpson