Low-rent Public Housing Assistance to PHAS/IHAs

PROGRAM HIGHLIGHTS

SUMMARY OF BUDGET REQUEST

1. SUMMARY OF BUDGET REQUEST

   The fiscal year 2000 Budget request includes $40 million of mandatory budget authority for Treasury borrowings to provide funding for remaining Public Housing development and modernization activities reserved under the "Annual Contributions for Assisted Housing" (ACAH) appropriations approved through 1986. No appropriation is required.

2. CHANGES FROM 1998 ESTIMATES IN THE 1999 BUDGET

   Actual net outlays for 1998 were $42.2 million, which is $51.3 million lower than the level estimated for 1998 in the fiscal year 1999 Budget. It was assumed that the program would experience, at least during the first quarter of 1998, the continued acceleration of loan drawdowns of pipeline projects as was experienced in fiscal year 1997. This activity did not continue as anticipated in fiscal year 1998 because of the implementation of Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA).

3. CHANGES FROM 1999 BUDGET ESTIMATES

   There are no changes to the fiscal year 1999 Budget estimates.

EXPLANATION OF INCREASES AND DECREASES

The estimate of direct loan obligations to PHAs/IHAs and loan write-offs for fiscal year 2000 is $10 million lower than the estimate for fiscal year 1999. This decrease is due to updated information on the number of pipeline loans expected to be closed, canceled and/or written-off.

PROGRAM DESCRIPTION

The Public and Indian Housing Assistance Fund to PHAs/IHAs was used to provide direct Federal loans (capital funds) to support the completion of Public and Indian Housing construction, acquisition, and modernization activities reserved through fiscal year 1986 under the ACAH appropriation. These loans were made from Treasury borrowings.

The Fund was also used as a repository of appropriations provided in prior years to make interest differential payments to the Federal Financing Bank (FFB). Budget authority has been obligated in the Loan Fund to provide payments to the FFB to fund the difference in interest payments between what would have been charged if tax-exempt bonds had been sold to the public and the interest that actually was charged when instruments were sold to the FFB at a Federally taxable interest rate. A third purpose of the account, as a Corporate Fund, was closed during the first quarter of 1997 pursuant to Section 507 of the Congressional Budget Act of 1974. The Corporate Fund was comprised of collections from interest and principal payments of loans made for other than mainstream modernization and development purposes, such as loans for management, administration, and off-site facilities. Until it was closed, the corporate Fund was used as the first source of funds for drawdowns made by Housing Authorities throughout the fiscal year in payment of the modernization and development commitments approved through fiscal year 1986. To the extent the Corporate Fund collections were insufficient to meet the requirement for drawdowns, additional funding was provided through Treasury borrowings. Since borrowings from the Treasury are subsequently forgiven, collections resulting from direct loans obligated prior to October 1, 1991, were determined to be in excess of current needs. These funds are now transferred to the General Fund of the Treasury on a quarterly basis.