HUD's FY 99 Budget
Congressional Justifications
Public and Indian Housing

Low-Rent Public Housing Assistance To PHAs/IHAs

PROGRAM HIGHLIGHTS

NA = Not Applicable SUMMARY OF BUDGET REQUEST 1. SUMMARY OF BUDGET REQUEST The 1999 Budget includes $50 million of mandatory budget authority for Treasury borrowings to provide capital funds for Public and Indian Housing development and modernization activity approved through 1986. No appropriation is required. 2. CHANGES FROM 1997 ESTIMATES IN THE 1998 BUDGET Funding requirements in 1997 for public and Indian housing projects in the development and modernization pipeline were $35 million higher than estimated in the 1998 Budget due to an acceleration in payments (loan drawdowns). The acceleration resulted from modifications to the Mutual Help contribution drawdown procedures for Indian Housing projects. These modifications were made to streamline the administration of Mutual Help contributions in anticipation of programmatic changes which became effective with the implementation of the Native American Housing Assistance and Self-Determination Act of 1996 (P.L. 104-330) on October 1, 1997. The substantial acceleration of Mutual Help payments in 1997 is considered a one-time event, although it is anticipated that there could be a slight increase in demand for these payments at the beginning of 1998. The increase in outlays is directly attributable to the significant increase in direct loan obligations. 3. CHANGES FROM 1998 BUDGET ESTIMATES The Current Estimate of direct loan obligations to PHAs/IHAs and loan write-offs is $10 million higher than the 1998 estimate in the 1998 Budget. This increase is based on the acceleration of loan drawdowns for pipeline projects experienced during fiscal year 1997. It is anticipated that this acceleration will continue into the first quarter of fiscal year 1998, though not at the same level as 1997. The $3.5 million decrease in outlays reflects updated data on loans that will be canceled, or will actually go to closing and be written off. EXPLANATION OF INCREASES AND DECREASES The budget authority and outstanding loan estimates for 1999 are lower than the 1998 levels because it is assumed that the program will return to its normal level of activity by 1999. PROGRAM DESCRIPTION The Public and Indian Housing Assistance to PHAs/IHAs Fund was used to provide direct Federal loans (capital funds) to PHAs/IHAs to fund the completion of Public and Indian Housing construction, acquisition, and modernization activities reserved through fiscal year 1986 under the "Annual Contributions for Assisted Housing" 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. The third purpose of the Low-Rent Public Housing Assistance Fund is the Corporate Fund. The Corporate Fund was closed during the first quarter of fiscal year 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.

Content Archived: January 20, 2009