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HUD Archives: News Releases

David Egner (202) 708-06851:30 p.m. Thursday
February 6, 1997
Bill Connelly (202) 708-0685


WASHINGTON -- President Clinton's budget would increase funding for the Department of Housing and Urban Development by $5.6 billion to a total of $24.8 billion in the 1998 fiscal year, a nearly 30 percent rise, Secretary Andrew Cuomo said today. The increase was necessary to avert a crisis that could threaten 4.4 million Americans with homelessness.

The HUD budget initiates tough reforms to save outlay costs and sharply expands budget authority to renew all expiring Section 8 contracts, Cuomo said. The Section 8 program, under which contracts for 1.8 million affordable housing units would expire in FY 1998, subsidizes housing for low-income people, primarily disabled, elderly and families that work.

Other priorities in the President's proposed HUD spending plan would expand affordable housing opportunities, help make welfare reform work by creating new jobs, and take steps to restore public trust in HUD by making management improvements.

"This budget reflects the President's deep commitment to revitalizing America's communities by expanding housing and job opportunities," Cuomo said. "It meets the twin goals of balancing the budget and helping build strong communities. I look forward to working with Congress on a bipartisan basis to avert the threatened housing crisis and strengthen communities."

"The greatest challenge the Department and Congress will face in 1998 -- perhaps the largest challenge the agency has faced since its inception -- is the expiration of rental assistance contracts that provide housing for 4.4 million people, over 90 percent of whom are elderly, disabled, or families with children," Cuomo said. "Most of those families have at least one member who works, is in job training, or in school."

"For these families, Section 8 is more than a contract or subsidy," Cuomo said. "It is often the foundation from which they can build lifelong economic self-sufficiency."

"Renewing these contracts, within the framework of a balanced budget, is thus an essential, bipartisan task," Cuomo said. "If done right, renewing contracts will prevent many families from being put out on the street, averting an unprecedented explosion of homelessness nationwide."

The budget proposes a $5.6 billion increase in budget authority and generates $2.4 billion in outlay savings, which together ensure the renewal of the Section 8 contracts. The $2.4 billion in savings reflects a cut in the cost of renewing housing subsidy contracts under the Section 8 program by 12 percent from projected levels in the 1998 fiscal year. The reforms would reduce the overall growth in Section 8 outlays by more than $14 billion between 1998 and 2002.

The cost-saving Section 8 reforms would: cut excessive subsidies and lower rent increases permitted for private landlords; lower administrative fees to local housing authorities; tighten income verification procedures in assisted housing programs to ensure that tenants pay their required share of rent; and set the subsidy level for a single person based on the rent for an efficiency apartment rather than for a one-bedroom apartment, among other changes.

    Other key proposals in the HUD budget would:

  • Provide $100 million to fund a second round of Empowerment Zones and Enterprise Communities, which stimulate job creation in high-poverty areas where many welfare recipients live. The 1998 budget also includes $25 million to clean up and redevelop abandoned industrial sites in cities to attract new businesses.

  • Spend $50 million to remove and punish landlords who collect money from HUD assistance programs but fail to provide adequate housing under program requirements. In addition, HUD will ask Congress to change bankruptcy laws to make it easier to sue bad landlords.

  • Increase funding for Operation Safe Home, which fights drugs and crime in public and HUD-assisted housing, by 100 percent to $20 million next year. HUD's Inspector General works in partnership with the FBI, DEA and other national, state, and local law enforcement agencies on the program.

  • Create jobs by continuing funding at this year's level for the Community Development Block Grant program ($4.6 billion); Section 108 loan guarantees ($1.3 billion); and the Economic Development Initiative program ($50 million).

  • Establish that "HUD Means Business" by allowing the Department to "borrow" leading business executives to help implement financial and management reforms.

  • Fund construction of more than 110,000 units of affordable housing for some of the neediest and most disadvantaged Americans through HOME, the Housing for Special Populations program, and the Housing Opportunities for Persons With AIDS program, at a total cost of just over $1.8 billion.

  • Expand programs to help welfare recipients and other poor Americans become self-supporting, including: $10 million for the Bridges to Work program, which transports poor central city residents to jobs in the suburbs; $23 million in counseling assistance to help Section 8 recipients -- who often are on welfare -- find rental homes that are near jobs and needed support services; and $30 million for Youthbuild, a program that teaches construction skills to young dropouts while they work as apprentices to renovate affordable housing.

  • Fund 50,000 new Section 8 certificates at a cost of $305 million. The certificates are targeted to help welfare recipients move into the working world, thereby advancing the new welfare reform law.

  • Work to increase homeownership in several ways, including: providing $50 million to help cities transform abandoned land into neighborhoods of single-family homes called homeownership zones; funding Ginnie Mae's efforts to stimulate $1 billion in mortgage lending to inner cities; creating 75 new local homeownership partnerships around the country that unite all segments of the housing industry to help more people become homeowners; and creating additional FHA processing centers to help more first-time homebuyers and minorities buy homes.

  • Spend $524 million to continue HUD's transformation of public housing, which is designed to demolish and replace the nation's worst 100,000 units of public housing by the year 2000 with new low-rise public housing and Section 8 assistance. Operating subsidies for public housing authorities increase by $85 million and capital funds for the authorities increase by $162 million.

  • Maintain funding for HUD's homeless programs at $823 million -- the same as this year -- to continue helping homeless people become self-supporting and move into permanent housing through the "continuum of care" strategy.

  • Expand efforts to prevent illegal housing discrimination by increasing the Fair Housing budget by $9 million -- a 30 percent increase.

  • Spend $45 million to provide technical assistance and expertise to help improve operations of troubled public housing authorities.

    Content Archived: January 20, 2009

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