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Fiscal Year 2004 HUD Budget Executive Summary

The Fiscal Year (FY) 2004 budget proposed by President Bush for the U.S. Department of Housing and Urban Development (HUD) is a budget of opportunity. It offers new opportunities for families and individuals to lift themselves toward self-sufficiency and achieve the American Dream. It offers new opportunities for communities nationwide to generate renewal, growth and prosperity through their participation in programs that promote local decision-making. And it provides HUD with new opportunities to improve the Department's management and performance, ensuring that HUD is well run and results-oriented.

Reflecting HUD's role as the Federal agency responsible for addressing America's housing needs and improving and developing the nation's communities, the Administration is proposing $31.3 billion in funding for HUD for FY 2004. These funds will support HUD's broad, yet focused strategic goals:

  • Increasing homeownership opportunities
  • Promoting decent affordable housing
  • Strengthening communities
  • Ensuring equal opportunity in housing
  • Promoting the participation of faith-based and community organizations
  • Embracing high standards of ethics, management and accountability

HUD has achieved measurable success since 2001 in carrying out its mission and meeting the many challenges a Cabinet-level Department must confront. Today, HUD annually subsidizes housing costs for approximately 4.5 million low-income households through rental assistance, grants and loans. It helps revitalize over 4,000 localities through community development programs. The Department provides housing and services to help homeless families and individuals become self-sufficient. HUD also encourages homeownership by providing mortgage insurance for more than six million homeowners, many of whom would not otherwise qualify for loans.

Supported by the Administration's FY 2004 budget, this important work will continue.

Increasing Homeownership Opportunities

For many families, the American Dream means owning their own home. HUD is dedicated to helping more Americans - especially minorities  - realize the dream for themselves. The President has committed this nation to creating 5.5 million new minority homeowners by the end of this decade, and said last October, "We can put light where there's darkness, and hope where there's despondency in this country. And part of it is working together as a nation to encourage folks to own their own home."

To achieve this, HUD is working to break down the barriers that lock too many families out of homeownership. These barriers include high down payments and closing costs; the inability of would-be homeowners to access information about their rights, responsibilities and financing options; and a confusing and costly homebuying process. By eliminating these barriers, HUD is empowering families to know the security of self-sufficiency, and strengthening communities and the nation as a whole in many measurable ways.

Several new or expanded proposals in the FY 2004 budget will increase the availability and production of affordable homes, and help hundreds of thousands of families come to know the security of homeownership.

  • American Dream Downpayment Initiative. HUD proposes to fund the American Dream Downpayment Initiative, providing $200 million to help approximately 40,000 low-income families - for whom coming up with down payment cash is the most significant obstacle to homeownership - with the down payment on their first home.
  • New FHA Financing Option. The budget proposes a new FHA mortgage product that rewards credit-risk borrowers who make timely mortgage payments. This will help families with poor credit records who would otherwise be forced to rely on high-cost alternatives.
  • Housing Counseling. Helping families learn about the loan products and services available to them and how to identify and avoid predatory lending practices is critical to increasing homeownership. Housing counseling is an invaluable tool for not only prospective homebuyers, but for renters as well, and anyone struggling to keep their home amidst financial stress. The budget increases housing counseling by $10 million, providing $45 million to help take the mystery out of buying a home.
  • Housing Choice Voucher Homeownership. The FY 2004 budget proposes to help low-income families move into homeownership by allowing them to put up to a year's worth of their Housing Choice Voucher assistance toward a home down payment. Housing Choice Vouchers can also be used to subsidize the ongoing costs of a mortgage.
  • Self-Help Homeownership Opportunity Program (SHOP). The FY 2004 budget continues President Bush's commitment to SHOP, a key initiative of the Administration that reaches out to faith-based and other community organizations working to turn low-income Americans into homeowners. Funded at $65 million  - triple the funding level of 2002- the program will support the construction of 5,200 homes and reduce the cost of homeownership through sweat equity and volunteer labor.
  • Single-Family Affordable Housing Tax Credit. To promote the production of affordable single-family homes in areas where such housing is scarce - and to help revitalize distressed communities - a tax credit of up to 50 percent of the cost of constructing a new home or rehabilitating an existing home would be provided. This new tax credit targets low-income individuals and families; eligible homebuyers would have incomes of not more than 80 percent of their area median.

Promote Decent Affordable Housing

At the same time HUD pursues its mission of increasing the ranks of homeowners, the Department's work encompasses housing in every other form as well, from single-family rentals and multifamily developments to meeting the special needs of society's most vulnerable citizens. Improving the quality and accessibility of public and assisted housing remains a top priority.

The HUD FY 2004 budget proposal expands housing choice and opportunity by offering new flexibility to state and local governments.

  • Housing Assistance for the Needy. The Administration proposes converting the Section 8 Housing Choice Voucher program  - one of HUD's major rental housing programs - to a state-run block grant called Housing Assistance for Needy Families (HANF). By giving administration of the program to the states, the states could allocate resources to highest priority needs and assist more low-income households to locate decent and affordable housing in a timely and more effective manner.
  • HOME Investment Partnerships Program. Our proposed budget provides a five percent, or $113 million, increase in HUD's HOME program. HOME is one of HUD's major tools for helping communities meet housing-affordability needs, and offers maximum flexibility to ensure local decision-making. An estimated $2.2 billion in total funds will be provided through HOME to state and local grantees to help finance the costs of land acquisition, new construction, rehabilitation, down payments and tenant-based rental assistance.
  • Public Housing Reinvestment Initiative (PHRI). By giving public housing authorities (PHAs) a new ability to leverage private capital, the proposed Public Housing Reinvestment Initiative would substantially improve public housing conditions. A partial loan guarantee is included to increase the proposal's effectiveness.
  • Low-Income Housing Tax Credit. One of the major Federal programs that finances new and rehabilitated affordable rental housing is the Low-Income Housing Tax Credit. In 2002, the tax credit supported an estimated 90,000 units of completed low- to moderate-income rental housing. This number will increase in subsequent years as the recent 40 percent increase in the tax credit becomes fully effective.
  • Regulatory Barriers to the Development of Affordable Housing. HUD is committed to working with states and local communities to reduce regulatory barriers to the development of rental and affordable housing.

Strengthening Communities

State and local governments depend upon HUD and its system of grants to support community development projects that revive troubled neighborhoods and spark urban renewal. In FY 2004, HUD will support and strengthen these core programs by ensuring that grantees have even greater flexibility to address locally determined priorities and maintain long-term prosperity.

  • Community Development Block Grant (CDBG) Program. The CDBG program will provide $4.436 billion, including insular areas, in funding to meet locally identified community and economic development needs in more than 1,000 eligible cities, counties and states. In 2004, HUD will reform the program and make it more effective by studying ways to reward communities that commit to results-oriented, outcome-based performance plans.
  • Colonias Gateway Initiative (CGI). The FY 2004 budget proposes $16 million for a new Colonias Gateway Initiative. The CGI is a regional initiative, focusing on the rural communities and neighborhoods - the colonias - located in many border states.

Through its FY 2004 budget, HUD will strengthen its efforts to protect the nation's most vulnerable: those individuals and families who truly need government assistance. The FY 2004 budget provides services to adults and children from low-income families, the elderly, those with physical and mental disabilities, victims of predatory lending practices and families living in housing contaminated by lead-based paint hazards.

HOMELESSNESS. Homelessness remains a special focus of the Bush Administration, which made a commitment in 2001 to end chronic homelessness within a decade. The latest research suggests that persons experiencing chronic homelessness - a number estimated to be approximately 150,000 - may make up less than 10 percent of the homeless population, yet consume more than half of all homeless services. Meeting a goal as ambitious as ending chronic homelessness requires investing in permanent solutions that decrease the number of homeless men and women, not simply moving individuals off the street and into shelters. Highlights within the FY 2004 budget include:

  • The Samaritan Initiative. The new Samaritan Initiative is an important new element of the Administration's strategy to end chronic homelessness. The Samaritan Initiative includes a proposed competitive grant, to be administered jointly by HUD and the Departments of Health and Human Services (HHS) and Veterans Affairs (VA). For 2004, HUD provides $50 million for the housing component of this initiative, while HHS and VA will each provide $10 million for services such as substance abuse treatment and primary health care. Priority will be given to state and local grantees who seek to expand access to mainstream federal programs by those who experience chronic homelessness.
  • Consolidation of Homeless Assistance Grants. To increase the flexibility of communities in combating homelessness, the budget proposes to consolidate the current three homeless assistance programs. The move will provide more consistent funding and eliminate the burden of administering the current competitive programs.
  • Interagency Council on Homelessness. In the previous fiscal year, the Administration reactivated the U.S. Interagency Council on Homelessness and doubled its funding to $1 million. In recognition of the Council's effectiveness in coordinating the efforts of the 18 Federal agencies that support homeless men, women and families, the Department will provide $1.5 million to operate the Interagency Council, a 50-percent funding increase over FY 2003.

OTHER VULNERABLE POPULATIONS. The following are highlights of those HUD programs that provide essential support to a wide range of populations with special needs:

  • Elderly Housing and Services. For FY 2004, HUD will continue its support for older Americans by providing $783 million for the Section 202 supportive housing for the elderly program.
  • Persons with Disabilities. The FY 2004 budget provides $251 million under HUD's Section 811 program to improve access to affordable housing for persons with disabilities.
  • Persons with HIV/AIDS. In FY 2004, HUD will fund the Housing Opportunities for Persons with AIDS (HOPWA) program at $297 million.

The budget also increases funding to $17 million for the Manufactured Housing Standards program and provides $136 million for the Lead-Based Paint program, of which $10 million is for the Healthy Homes initiative. In addition, the budget provides $25 million for a new, innovative lead hazard reduction demonstration program, to be funded within the HOME Investment Partnerships program budget request.

PROGRAMS THAT PROMOTE SELF-SUFFICIENCY. Activities that help low-income working families acquire skills that will increase their earnings and move them toward self-sufficiency are central to HUD's mission. HUD also seeks to help low-income families accumulate assets so that they can achieve homeownership, pursue education opportunities, start new businesses and reach other important goals. HUD has a number of programs that contribute to this objective by providing families with the housing stability they need in order to secure a job and increase their earnings.

Key initiatives for FY 2004 include:

  • Housing Assistance for Needy Families (HANF). By overhauling the voucher program to allocate vouchers to the states rather than PHAs, HUD will provide a unique opportunity to improve the coordination of self-sufficiency efforts between the voucher program, the Temporary Assistance for Needy Families program and other state-run self-sufficiency initiatives. State control of both the housing and welfare programs, along with additional flexibility in the housing program to allow local needs to be addressed, should result in more effective self-sufficiency efforts and better support of the families involved.
  • Family Self-Sufficiency (FSS) Program. In FY 2004, the Department will provide $72 million (within the Housing Assistance for Needy Families account) to continue and expand the FSS program. The FSS program is designed to link families with local opportunities for education, job training and counseling while they receive housing assistance. Over a 5-year period, as the earnings of a participant grow, an amount equal to the increased rent attributable to the participant's increased earnings is deposited into an escrow account to purchase a home, pay for higher education or even start a business. Currently, the FSS program serves more than 55,000 families in the tenant-based Section 8 and public housing programs.
  • Resident Opportunity and Self-Sufficiency (ROSS) Program. As it has since 1999, the Department will provide $55 million in funds to support the ROSS program for residents of Public and Native American Housing. The main purpose of the funds is to provide a link between residents and services that can help them achieve self-sufficiency. ROSS is funded from both the Public Housing Capital Fund and the Public Housing Operating Subsidy Account.

Ensuring Equal Opportunity

HUD's commitment to creating equal housing opportunities for all Americans regardless of race, color, religion, sex, national origin, age, disability and familial status has never been stronger. Within the FY 2004 budget, HUD will have the tools it needs to help Americans receive fair and equal access to housing, without fear of discrimination or intimidation.

  • Fair Housing Assistance Program (FHAP). The FY 2004 budget allocates $29.7 million for the Fair Housing Assistance Program. The program provides funding to state and local jurisdictions that have entered into cooperative agreements with HUD and whose housing discrimination laws are substantially equivalent to the federal fair housing laws. The funds support enforcement, education and outreach.
  • Fair Housing Initiatives Program (FHIP). The Fair Housing Initiatives Program supports non-profit agencies that directly target discrimination through education, outreach and enforcement. The HUD budget proposes funding of $20.3 million for FY 2004.

Promoting the Participation of Faith-based and Community Organizations

The Administration is committed to knocking down the barriers that faith-based and community organizations face in acquiring federal grants. In 2002, HUD conducted an exhaustive review of its internal regulations to identify barriers to faith-based participation in its programs. Following this review, the President proposed eliminating federal regulations that unnecessarily limit the ability of religious organizations to access grant programs administered by HUD.

HUD's proposed budget for FY 2004 builds on the Administration's commitment to place faith-based and community organizations on an equal footing with other programs that serve low-income Americans and revitalize distressed neighborhoods. Through HUD's Center for Faith-Based and Community Initiatives, the Department is eliminating the barriers to participation and substantially strengthening its partnership - and its communication and information sharing - with faith-based and community groups.

Embracing High Standards of Ethics, Management and Accountability

HUD has made great progress over the past 2 years in implementing the President's Management Agenda and making the Department work better for the taxpayers and for every American who seeks a place to call home. HUD today is insisting on completion, performance and results. The steps the Department has taken have gone a long way toward restoring the confidence of Congress and the public in HUD's management of its financial resources.

In accordance with the President's Management Agenda, HUD is embracing the highest standards of ethics, management and accountability in carrying out its work. This commitment will continue in FY 2004.

Content Archived: January 20, 2009

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