Economic Recovery Act Passes House, Senate


Capitol Hill
Memo to Members: Vol 14, No. 6, February 13, 2009

With House and Senate negotiators having reached an agreement on the giant economic recovery package, the House passed H.R. 1, the American Recovery and Reinvestment Act, by a vote of   246 - 183 on Friday, February 13. The Senate also voted on February 13, and passed the measure by a vote of 60 - 38. Republican Senators Susan Collins (ME), Olympia Snowe (ME), and Arlen Specter (PA) joined the Democrats in voting for the bill (Senator Ted Kennedy [D-MA] did not vote). The President is expected to sign the bill on February 17.   

 

Housing advocates worked hard to urge policymakers to include resources in the bill to stimulate the economy that simultaneously provide communities with housing affordable to the lowest income households and thwart the expected increase in homelessness due to the worsening economic crisis. In the end, the bill does not include resources for the National Housing Trust Fund or for new rental assistance vouchers.

 

Advocates were especially pleased that the Senate’s $35 billion homeownership tax credit, an affront to low income households, (see Memo, 2/6) was significantly scaled back in the conference report. The conference agreement would amend the current $7,500 first-time homebuyer tax credit. The bill increases it to be an $8000 tax credit and repeals the current tax credit’s requirement that it be repaid to the federal government. The benefits of the current tax credit, available to people who have not owned a home during the last three years, phase out for higher income households. The credit will apply to eligible homes purchased before December 1, 2009.

 

NLIHC had sounded an alarm that the Senate’s $35 billion, $15,000-per-home-buyer tax credit was not balanced by similar resources for housing programs for the lowest income households. On February 10, NLIHC sent an open statement, signed onto by 547 national, state and local organizations to the White House and House and Senate conferees asking for balance in the recovery package’s resources for higher vs. lower income housing.

 

Access the letter here: www.nlihc.org/doc/What-We-Mean-By-Housing-2-10.pdf

 

H.R. 1 does include significant resources for housing programs:

 

$1.5 billion for homeless prevention and rapid re-housing. The bill provides $1.5 billion through HUD’s Emergency Shelter Grant program for the provision of short-term or medium-term rental assistance, housing relocation and stabilization services including housing search, mediation or outreach to property owners, credit repair, security or utility deposits, utility payments, rental assistance for a final month at a location, moving cost assistance, case management or other appropriate activities for homelessness prevention and rapid re-housing of persons who have become homeless. Both the House and Senate versions of the bill contained this item from the beginning.

 

Beginning early in 2007, NLIHC worked with a broad coalition of groups to advocate for emergency funds to prevent homelessness due to foreclosure. This item in the economic recovery bill is the direct result of this campaign. The suggested amount from the campaign for the economic recovery bill was $2 billion.

 

$4 billion for the Public Housing Capital Fund. Of this, $3 billion will be distributed by the capital fund formula within 30 days of enactment and $1 billion will be distributed by competitive grants for ‘priority investments’ including those that leverage private sector funding or financing for renovations and energy conservation retrofit investments. This $1 billion must be distributed by HUD by September 1, 2009. Public housing agencies must give priority consideration to the rehabilitation of vacant units and to those capital projects already underway or identified in the PHA’s five-year capital plan. The funds cannot be used for operating or rental assistance. Until the House and Senate bills went to the conference committee, both contained $5 billion for the Public Housing Capital Fund, but $1 billion was cut to make room for either Senate or House priorities that the other chamber had not included.

 

$2.25 billion for Project-based Housing. Of this amount, $2 billion is for full-year renewals of Project-based Section 8 rental assistance contracts. This action corrects a longstanding problem of underfunding in the project-based Section 8 account that caused HUD to have to enter into contracts for less than a year with property owners creating great instability in the program. The remaining $250 million is for HUD to provide grants and loans to upgrade its Section 202 elderly, Section 811 disabled and Section 8 project-based stock to increase energy efficiency. Owners participating in this $250 million grant or loan program must commit to at least an additional 15 years of affordability. The House bill originally had $2.5 billion for the green retrofitting of the assisted stock, but did not address the funding shortfall. The original Senate bill had $1.37 billion for greening and $2.132 billion for the shortfall.

 

$2 billion to fund the Neighborhood Stabilization Program. These funds can be used to redevelop foreclosed and abandoned homes. Unlike the existing NSP program, the new NSP funds will all be distributed by a competitive process. States, units of general local government and nonprofit entities or consortia of nonprofit entities are eligible to submit proposals. Eligible applicants can partner with for-profit entities to submit proposals. The Secretary must publish grant competition criteria within 75 days of enactment and applications will be due to HUD no later than 150 days after enactment. The House bill had $4.19 billion for NSP and $2.25 billion was in the Senate bill.

 

None of the NSP funds can be used to demolish public housing and, overall, demolition activities are limited to 10% of a grantee’s funds.

 

NLIHC and a coalition of other organizations worked successfully to include a number of renter protections in the NSP program. These include provisions that no housing assisted with NSP funds can refuse to rent to someone with a Section 8 housing choice voucher. For any home purchased after the date of enactment, any tenant in that home must be provided at least 90 days’ notice to vacate and, for tenants with leases entered into before the notice of foreclosure, their right to occupy their home through the tern of their lease (this provision can be waived if the home will be the primary residence of the new owner, after the 90 days’ notice is provided). Homes purchased with NSP funds will not instigate the termination of assistance for units that have state- or federally-subsidized tenants in them.

 

Funds and Fixes for Low Income Housing Tax Credits. The bill provides $2.25 billion for capital investments in low income housing tax credit projects. The funds will be distributed to state housing tax credit allocating agencies based on the formula of HUD’s HOME program. The state agencies will then distribute them competitively to owners of projects who have received or receive simultaneously an award of low income housing tax credits. Projects awarded housing tax credits in 2007, 2008 and 2009 will be eligible for these funds.

 

In addition, the bill includes the House bill’s provision to allow state housing credit allocating agencies to elect to use a portion of its housing tax credits as grants instead of credits. The maximum low income housing grant amount for a state may not exceed 85% of 40% of the state’s 2009 allocation.

 

Other HUD provisions in the bill include:

·       $1 billion for the Community Development Block Grant program. These funds will be distributed using the normal CDBG formula.

·       $100 million for HUD’s lead hazard control and healthy homes program for applicants that were eligible for a grant from HUD’s lead hazard reduction program in FY08 but were not awarded because of insufficient funds.

·       $510 million in Native American Housing Block Grants (had been $500 million in the House; $510 million in the Senate). Of this amount, $255 million will be distributed by the current block grant formula and $255 million will be distributed by a grant competition.

·       $15 million for HUD’s Inspector General to ensure that the bill’s funds are used in an effective and efficient manner.

·       The bill raises the Federal Housing Administration Loan limits for calendar year 2009 at the 2008 level. The bill also raises the Government Sponsored Enterprise (GSE) and Home Equity Conversion Mortgage conforming loan limits for calendar year 2009.

 

The bill does not include funds for the Self-Help and Assisted Homeownership Opportunity (SHOP) program; the House bill included $10 million for this program.

 

Rural Housing Programs. The bill provides $200 million in funding to support $1 billion in section 502 direct rural homeownership loans and $10.4 billion for RHS’ section 502 guaranteed homeownership loans. The bill also provides funds to support $1.2 billion in loans and grants from the rural community facilities program. No funds were included for rural multifamily projects.

 

Other Programs. The Emergency Food and Shelter Program within the Federal Emergency Management Agency receives $100 million in the conference agreement; the Low Income Home Energy Assistance Program receives nothing (the House had funded it, the Senate did not); the Social Services Block Grant program will receive no funds (the Senate had funded it, the House did not); and the Census Bureau will receive $1 billion. The bill provides $100 million for Community Development Financial Institutions and $3 billion in New Markets Tax Credits.