HOUSING

RENT SUPPLEMENT PROGRAM

SUMMARY OF BUDGET ESTIMATES

1. SUMMARY OF BUDGET REQUEST

No appropriation is requested for the Rent Supplement program in 2000. No new commitment activity has taken place under this program since 1973. The obligation estimate for 2000 of $5 million represents amendments to State-financed projects and foreclosed State-aided projects.

2. CHANGES FROM 1998 ESTIMATES INCLUDED IN 1999 BUDGET

The 1999 Budget assumed that $9 million would be needed during 1998 for amendments to State-aided projects. Actual funding totaled $15.1 million. Funding for amendments is requested by States on an "as needed basis."

3. CHANGES FROM 1999 ESTIMATES IN THE 1999 BUDGET

Current estimates for fiscal year 1999 are adjusted for actual carryover.

Approximately $5 million of budget authority is estimated in 2000 for amendments to State-aided projects--$2 million less than in 1999. Recaptures from prior years are estimated at $11 million, $814 thousand less than in 1999, and the estimate of the amount that will lapse in fiscal year 2000 is $11 million or $1.5 million less than in 1999. This program is demand-driven, making precise estimates of activity difficult.

Section 101 of the Housing and Urban Development Act of 1965, as amended, authorized rent supplements on behalf of needy tenants living in privately owned housing. This program also was used to provide additional "piggyback" rental assistance to a portion of the units in Section 236 projects, including State Agency developed, non-HUD-insured projects. Eligible tenants pay 30 percent of the rent or 30 percent of their income toward the rent, whichever is greater. The difference between the tenant payment and the economic rent approved by the Department is made up by a Rent Supplement payment made directly to the project owner.

Rent supplement contracts were the same length as the mortgage. As rents escalated in the 1980s, contract funds were insufficient to subsidize contract units for the full term of the contract. Most insured and 202 projects were able to convert their rent supplement assistance to Section 8 assistance during the 1980s in order to avoid contract amendment problems.

Amendments to State/Agency-sponsored, non-insured projects are supported utilizing the set- asides of contract authority provided for this purpose in the 1983 Supplemental Appropriations Act.

The following is the status of the set-aside of contract authority established for non-insured Rent Supplement assisted projects:

USE OF CONTRACT AUTHORITY