HUD Announces $31.3 Billion Budget for Fiscal Year 2005

RISMEDIA, Feb. 2-President Bush’s proposed budget for fiscal year 2005 includes $31.3 billion for the Department of Housing and Urban Development. The spending plan continues to emphasize HUD’s commitment to promote affordable housing, strengthen communities and increase homeownership across America.

In releasing details of the funding request, Acting Secretary Alphonso Jackson said the budget blueprint will continue to provide historically high levels of support to thousands of local programs that house and serve the nation’s homeless.

“These are times for hard choices, yet this budget shows just how committed this administration is to the people and places who need help,” said Jackson. “Whether it’s promoting homeownership and affordable housing or serving our most vulnerable citizens, the resources we are requesting signal a strong investment in neighborhoods throughout America.”

Increasing Homeownership and Affordable Housing Opportunities

Bush remains committed to increasing homeownership, particularly among minority families. Census data continues to shows that while nearly 70 percent of all American households own their own homes, less than half of African-American and Hispanic families are homeowners. Intent on closing this “homeownership gap,” Bush announced “America’s Homeownership Challenge,” committing the nation to adding 5.5 million minority homeowners by the end of the decade. In fact, more than 1 million new minority homeowners were created in the United States since June of 2002 when the challenge was issued. The president is proposing the following initiatives to increase homeownership and affordable housing opportunities for low-income Americans:

* Zero Down Payment Mortgage. HUD is seeking legislation to offer a new NO DOWN PAYMENT mortgage product to help an estimated 150,000 families a year to purchase their first home. Currently FHA requires at least a three percent down payment.

* American Dream Downpayment Initiative. For the third consecutive year, the President’s spending plan includes $200 million for the American Dream Downpayment Initiative to help tens of thousands of low-income families a year to become first-time homeowners.

* HOME Investment Partnerships Program (HOME). HUD is proposing more than $2 billion for the HOME program to be allocated to 630 state and local governments. HOME funds encourage the production of affordable housing by financing the cost of land acquisition, new construction, rehabilitation, downpayment assistance and rental subsidies.

* Housing Counseling. The President’s spending plan includes a record $45 million to support 550,000 families with home purchase and homeownership counseling and about 250,000 families with rental counseling. In the past three years, the Bush Administration has more than doubled funding to this program.

* Flexible Voucher Program. HUD is proposing sweeping reform of the nation’s rental assistance voucher program that will give local housing officials the flexibility they have long requested to better address their local needs and potentially serve more families. The new Flexible Voucher Program (FVP) will allow public housing authorities (PHAs) to set rents using local rental market data. Giving local officials the authority to use local rental market data will stop the spiraling cost of the Housing Choice Voucher Program. The Flexible Voucher Program will lead to significant cost savings to the voucher program and will provide performance-based incentives for PHAs to serve more families presently waiting for rental assistance.

* Freedom to House: Public Housing Reform Demonstration Program. HUD will introduce a demonstration program in 2005 designed to improve public housing. The Freedom to House Initiative will allow 50 public housing authorities (PHAs) the freedom to establish rents for their residents based on their local rental market, rather than on national rental estimates. Participating PHAs will also have the ability to combine their capital and operating funds to utilize HUD’s rental assistance more effectively, thereby significantly cutting their administrative costs and benefiting more families.

* HUD’s experience in the existing Moving to Work pilot program has shown that residents and local public housing authorities have benefited from increased flexibility. Participating PHAs prove that Moving to Work encourages residents to seek employment, work more hours and pursue opportunities to increase their incomes. Freedom to House will expand on the innovative experience of the Moving to Work Program.

* Public Housing Operating and Capital Funds. HUD seeks $3.6 billion to fund local public housing authorities in their daily operation. In addition, the FY 2005 budget will provide nearly $2.7 billion to help local public housing authorities fund major repairs and modernizations in their housing units. Also in 2005, up to $55 million will be targeted for the Resident Opportunity and Self-Sufficiency (ROSS) program that provides supportive services and assists public housing residents in becoming economically self-sufficient.

* Flexible Voucher Program – Homeownership. HUD is also encouraging local housing agencies to use rental assistance vouchers toward moving low-income families into homeownership. The housing agencies may either provide mortgage assistance in lieu of a rental subsidy or offer families a one-time down payment grant equaling up to one-year’s worth of their rental assistance.

* Single-Family Affordable Housing Tax Credit. To stimulate the production of affordable homes in distressed communities where such housing is scare, the Administration will again propose a tax credit of up to 50 percent of the cost of new construction or rehabilitation. This tax credit targets low-income households earning less than 80 percent of an area’s median income.

* Self-Help Homeownership Opportunity Program (SHOP). President Bush is renewing his request for $65 million to fund so-called “sweat equity” homeownership programs. This proposal would provide grants to support nonprofit organizations like Habitat for Humanity, which requires low-income families to help construct the homes they will eventually own. These funds will help produce approximately 5,200 new affordable homes nationwide.

* Targeting Housing Discrimination. The FY 2005 budget will provide nearly $21 million in grant funds for non-profit Fair Housing Initiatives Program (FHIP) agencies nationwide to directly target discrimination through education, outreach and enforcement. The FHIP program for FY 2005 is structured to respond to the finding of the three-year National Discrimination Study and related studies, which reflect the need to expand education and outreach efforts nationally as a result of continuing high levels of discrimination.

Serving the Needs of Homeless Individuals and Persons Living with HIV/AIDS

* The Samaritan Initiative. For FY 2005, HUD seeks $50 million in housing assistance for those experiencing chronic or long-term homelessness. As a part of the Administration’s concerted effort to end chronic homelessness, HUD's permanent housing funding would be combined with assistance from the Departments of Health and Human Services (HHS) and Veterans Affairs (VA) for supportive services such as substance abuse treatment and primary health care.

* Consolidation of Homeless Assistance Grants. To increase the flexibility of communities in combating homelessness, HUD will propose legislation to combine three existing homeless assistance programs into one consolidated program providing uniform requirements for all applicants seeking homeless assistance. HUD is also seeking to transfer the Emergency Food and Shelter Program (EFSP) from the Federal Emergency Management Agency (FEMA) to HUD. Taken together, HUD’s homeless assistance programs would continue the Department’s record commitment of $1.5 billion to help homeless families and individuals escape homelessness.

* Housing Opportunities for Persons with AIDS (HOPWA). For FY 2005, HUD seeks $295 million to provide housing and supportive services to low-income persons with HIV/AIDS and their families. HOPWA funding helps prevent homelessness and provides a comprehensive system of care for those living with HIV/AIDS. A stable home environment is a critical component for low-income persons managing complex drug therapies and potential side effects from their treatments.

Strengthening Communities

* For 30 years, HUD’s Community Development Block Grant (CDBG) Program has provided flexible funding to more than a thousand state and local governments to undertake needed community development, to increase affordable housing, to promote economic development, and to stimulate job growth. For FY 2005, HUD is seeking $4.3 billion in formula grants to be allocated to states, cities and urban counties, as well as $71.6 million to be competitively awarded to Indian tribes.

* Faith-Based and Community Organizations. In FY 2005, HUD proposes a $5 million pilot program designed to increase participation of faith-based and grassroots community organizations in five cities’ community development strategies. Meanwhile, HUD will continue to work towards identifying ways to strengthen the capacity of these nonprofit groups and to reduce any unnecessary regulatory barriers, allowing them to compete on an equal footing for HUD funding.

* National Community Development Initiative (NCDI). HUD participates in the privately organized and initiated NCDI. The FY 2005 budget will provide $25 million for the NCDI and Habitat for Humanity, in which HUD has funded three phases of work since 1994. A fourth phase will emphasize helping community-based development organizations build capacity in the economic arena and related community revitalization activities through the work of intermediaries, the Local Initiative Support Corporation (LISC) and the Enterprise Foundation.

* Youthbuild. The FY 2005 budget requests $64.6 million to continue the important work of HUD’s Youthbuild Program which targets at-risk young people (ages 16-24), providing them with education and employment skills necessary to start them in careers in the building trades. The housing constructed and rehabilitated by these young people will result in more affordable rental and homeownership opportunities for low-income and homeless persons. The proposed funding is expected to train more than 3,728 young adults.

More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.

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