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HUD No. 96-63FOR RELEASE
Further Information:Tuesday
In the Washington, DC area: 202/708-0685
Or contact your local HUD officeMarch 19, 1996

CLINTON PROPOSES FY 1997 HOUSING BUDGET:
SEEKS FUNDS TO CARRY OUT REINVENTION OF HUD;
ASKS CONGRESS TO RESTORE FUNDS CUT LAST YEAR

President Clinton today proposed a Fiscal Year 1997 budget for the Department of Housing and Urban Development aimed at furthering Secretary Henry G. Cisneros's efforts to reinvent HUD and asking Congress to restore critical funds cut during FY 1995 and 1996.

The $21.7 billion budget funds Clinton Administration priority programs -- including a second round of Empowerment Zones, public housing transformation, the National Homeownership Strategy, and homeless strategies -- while cutting some lower priority efforts. The Department reduces employment to 10,447 in FY 1997 -- putting it on a path toward just 7,500 employees in five years.

"In the past three years, HUD has become a leaner, more focused operation," Cisneros said. "Our mission is to help make American communities better places to live, and HUD is doing that as a more streamlined, performance-driven agency. This budget allows us to address the challenges we face and be responsive to local needs."

The proposed FY 1997 budget advances a multi-year process allowing HUD -- in partnership with community organizations, the private sector, and state and local governments -- to better serve America's communities. The Clinton Administration hopes to create a Department meeting the public's desire for a government that costs less, works better and is less intrusive in their lives.

Cisneros said that HUD's FY 1997 budget seeks to further President Clinton's urban policy goals by concentrating on four:

  • Giving communities more power over federal programs: Consolidating over 20 programs into three core funds that give communities flexibility in return for performance and reward results by allowing high performers to compete for bonus funding.
  • Changing the dynamic of public and assisted housing: Tearing down the worst projects and replacing them with smaller- scale developments that anchor neighborhood renewal efforts; changing rules to reward people who work and to promote self- sufficiency and responsibility; and cracking down on crime in central objectives: housing and mismanagement by owners and housing authorities.
  • Ensuring the opportunity of homeownership for all Americans: Revamping the Federal Housing Administration, helping public housing residents and Section 8 recipients buy their own homes, and ensuring that homeownership is accessible to record numbers of people.
  • Transforming HUD into a "right-side-up, community-first" Cabinet agency: Creating single points of contact for all major localities, relocating federal personnel from Washington to communities, and aggressively training HUD's staff and its partners so they have the expertise to help communities realize their visions.
These efforts have been a hallmark of Cisneros' tenure, and many of the goals are already being fulfilled through administrative actions and legislation pending in Congress.

In developing the FY 1997 budget, HUD has sought to restore funding to programs that were excessively cut during both the FY 1995 rescissions and the FY 1996 appropriations processes; to further the objectives of reinvention and program consolidation; and to address a growing demand for additional budget authority as Section 8 contracts providing affordable housing to hundreds of thousands of families run out of funds.

Among the proposed increases in funding:

  • $500 million increase in public housing capital funds;
  • $370 million increase in funding for demolition and replacement of severely distressed public housing;
  • $100 million increase in public housing operating funds;
  • $297 million increase in homeless assistance funding; and a
  • $40 million increase for Native American housing.
To further reinvention and program consolidation, the Administration is proposing to combine 20 separate community development programs into 3 streamlined, performance-based funds to give communities greater flexibility in exchange for greater accountability. In seeking additional resources for these targeted programs, HUD also proposes to create new "bonus pools" of funding for "high performing" communities that get good results with their HUD funds. HUD is requesting for the three funds:

$4.9 billion for Community Development Block Grants, an increase providing $200 million to fund a second round of Empowerment Zones and Enterprise Communities and $100 million in bonus funds for brownfields, economic revitalization of distressed communities, and to link residents of these communities to jobs.

$1.55 billion for the HOME Fund, a program to expand the supply of affordable housing through flexible public/private partnerships. This increase of $150 million would support a bonus pool allowing high performing communities to compete for grants to implement local homeownership strategies and establish of large- scale Homeownership Zones to reclaim abandoned urban neighborhoods.

$1.120 billion for a newly-consolidated Homeless Assistance Fund. The FY 1997 proposal would restore funds cut in FY 1996, consolidate separate homeless assistance programs into one, establish performance standards for programs, and set up a $110 million bonus pool for high performers -- 10% of the total fund.

In addition, HUD proposes to consolidate several public housing programs into one Public Housing Capital Fund by FY 1998. The Administration is requesting $3 billion for the capital fund, an increase of $500 million over anticipated FY 1996 appropriations. As with the CDBG, HOME and Homeless funds, a portion of this fund will be distributed to the highest performing public housing authorities.

Since the early 1970's, the Section 8 rental assistance program has been HUD's most effective and efficient tool for providing affordable housing opportunity. Despite the fact that more than 5.3 million households in 1993 either paid more than 50 percent of their income for rent or lived in substandard housing, the FY 1995 rescissions and the FY 1996 appropriations bills broke from a 20 year bipartisan commitment to support incremental Section 8 rental assistance.

For FY 1997, HUD proposes to reverse this new trend, allocating funds for 50,000 housing certificates, with at least 30,000 targeted to assist new households. In addition, the Department requests $4.26 billion for renewal of expiring Section 8 contracts and $800 million for amendments to existing Section 8 contracts.

The Department's FY 1997 budget includes a number of proposals generating significant outlay savings over the course of the President's seven-year balanced budget plan. These include proposals to restructure HUD's multifamily portfolio and reduce fair market rents and Section 8 administrative fees. Many reforms are included in the anticipated FY 1996 appropriations bill, and a number of others, including reductions in HUD's Section 202 elderly housing program and FHA's preservation program, are included in the FY 1997 budget proposal.

 

Content Archived: January 20, 2009

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