PROGRAM HIGHLIGHTS

SUMMARY OF BUDGET ESTIMATES

1. SUMMARY OF BUDGET REQUEST

   No appropriation is requested for the Rent Supplement program in 2001. No new commitment activity has taken place under this program since 1973. The obligation estimate for 2001 of $5 million represents amendments to State-financed projects and foreclosed State-aided projects.

2. CHANGES FROM 1999 ESTIMATES INCLUDED IN 2000 BUDGET

   The 1999 estimates in the 2000 Budget were accounted for on a reservation basis; however, actual data for 1999 have been revised to reflect the change to an obligation basis. The 2000 Budget assumed that $7 million would be needed during 1999 for amendments to State-aided projects. Actual funding totaled $8.1 million. Funding for amendments is requested by States on an "as needed basis."

3. CHANGES FROM 2000 ESTIMATES IN THE 2000 BUDGET

   Current estimates for fiscal year 2000 have been revised to reflect obligation basis reporting, instead of the previous reservation basis reporting.

EXPLANATION OF INCREASES AND DECREASES

Approximately $5 million of budget authority is estimated in 2001 for amendments to State-aided projects. This program is demand-driven, making precise estimates of activity difficult.

PROGRAM DESCRIPTION

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.

PROGRAM ACTIVITY

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: