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HUD No. 98-23
Further Information:For Release
In the Washington, DC area: 202/708-1420Thursday
Or contact your local HUD officeJanuary 29, 1998

CUOMO TELLS MAYORS: "HUD IS BACK IN THE HOUSING BUSINESS" AND PRAISES PRESIDENTí S HOUSING INITIATIVES

WASHINGTON Ė "HUD is back in the housing business," Housing and Urban Development Secretary Andrew Cuomo told the U.S. Conference of Mayors today, announcing over $1.4 billion in increased funding for some of the HUD initiatives that President Clinton will propose in his 1999 Federal Budget.

"Millions of Americans and cities across the nation will benefit by the Presidentís urban agenda and its emphasis on creating new housing opportunities and expanding homeownership," Cuomo said. "The President will propose the best HUD budget in 10 years Ė not by creating new programs, but by reinventing and improving existing ones."

In announcing some of HUDís new housing and other initiatives, Cuomo said the Presidentís proposed budget will include:

  • $585 million in new funds for more than 100,000 new rental housing vouchers, compared with no funding for new vouchers this year. HUD has not received funding for new vouchers since 1994.
  • A $250 million increase for an improved Community Development Block Grant Program to help revitalize Americaís communities, bringing total funding to $4.7 billion.
  • $100 million in new loan guarantees for a HOME Bank to enable localities to finance large rental and homeownership developments. HUD would insure loans made to localities, enabling them to leverage up to five times their current HOME grant allocation.
  • $50 million of additional HOME grants for a total of $1.55 billion in resources to provide permanent housing to low- and moderate-income families.
  • $25 million in new funds for Homeownership Zones Ė new neighborhoods of single-family homes in inner cities.
  • $5 million in increased funds for housing counseling to boost homeownership, for a total of $25 million.
  • $20 million in new funds to help 13,000 families receiving Section 8 rental subsidies find new homes.
  • $25 million in increased funding to control lead hazards in and around housing, for total of $85 million.
  • $25 million in increased funding to redevelop contaminated industrial sites called brownfields Ė a doubling of this yearís $25 million funding.
  • $327 million in increased funding Ė to a total of $1.15 billion -- to help more homeless Americans get housing and become self-sufficient, a 40 percent increase over this year.
  • $22 million in increased funding to fight housing discrimination, for a total of $52 million Ė a 73 percent increase over this year.
  • Higher Federal Housing Administration home mortgage loan limits, at no additional cost to taxpayers.
Cuomo said the HUD budget will also include other initiatives to create jobs and revitalize cities, including a new Community Empowerment Fund that will use HUD funds to leverage far greater amounts of private investment to help create thousands of new jobs.

Cuomo told mayors it is vital that HUD increase the supply of affordable housing, reduce homelessness, increase homeownership, create jobs and help revitalize urban America.

"Today, an all-time high 66 percent of Americans own their own homes, but 600,000 Americans still sleep on the streets on any given night," Cuomo said. "Yes, we have created 14 million new jobs. But only 13 percent of those jobs are being created in cities, where people moving from welfare to work need them most. Yes, we have created millions of new businesses. But only 3 percent of those businesses have been created in central cities, where the poverty rate has increased 50 percent the past 20 years."

Cuomo said HUD will be able to increase its activities in housing and other areas under the budget President Clinton will propose, calling it "the best budget for cities in a generation."

"At HUD, the housing agenda is paramount to us," Cuomo said. "We have a housing shortage in America. With all our great success, there are still more than 5 million people who pay 50 percent or more of their income for rent because affordable housing isnít available. Yet, rather than confront the problem, we chose to retreat. Two years ago, the federal government got out of the housing business. Why? Because the 103rd Congress was more interested in eliminating HUD than building housing. But all that is going to change this year. Under the Presidentís budget, HUD will once again increase the supply of affordable housing. HUD is back in the housing business."

In addition, Cuomo said, HUD will emphasize that " all housing roads should lead to homeownership. Whether itís public housing, homeless housing, or transitional housing, our goal is to get more people to own their own homes. Why? Because nothing develops a community, nothing develops stable neighborhoods, and nothing develops a stable tax base like homeownership." He said the homeownership gap separating cities and suburbs Ė 48.5 percent of central city residents owned homes, compared with 70.3 percent of suburban residents in 1997 Ė must be reduced.

Here are details of the initiatives Cuomo announced:

Housing Vouchers: The FY 1999 budget includes $585 million to provide more than 100,000 new rental housing vouchers. Of the 100,000 new vouchers, 50,000 would be provided through a new $283 million Welfare-to-Work initiative announced earlier by the President to provide stable housing to families struggling to move off welfare rolls and join the workforce. A second initiative would provide $192 million for 34,000 additional Section 8 rental assistance vouchers for homeless people moving from shelter care into permanent homes. This aid will help ensure that people leaving shelters and HUDís Continuum of Care homeless aid programs have stable housing to ease their transition into the mainstream. The 1999 budget also asks for $60 million to provide an additional 10,600 Section 8 vouchers and $50 million for 8,800 new vouchers targeted to elderly Americans.

Community Development Block Grants: The Community Development Block Grant Program has been for 25 years the principal source of relatively unrestricted federal assistance to local governments to carry out a wide range of community development activities that reflect locally-determined priorities. The new budget removes most set-asides, to enhance local government resources and discretion. This directly increases the total dollars available to local governments, either as entitlement communities or through state programs for smaller jurisdictions by $250 million. Equally important, the discretion available to local governments is enhanced by the reduction of federal earmarking and/or grant competitions.

HOME Bank: President Clintonís proposed new HOME Bank loan guarantee program builds on HUDís successful HOME program by allowing local jurisdictions to guarantee private loans to finance large rental or homeownership developments. Communities participating in the new program will be able to guarantee loans worth five times their HOME allocation -- up to $100 million in loans nationwide -- by pledging future home allocations. This total is expected to generate an additional $350 million to $400 million in other public and private investment for affordable housing. The new Bank is expected to generate the building or rehabilitation of tens of thousands of homes. Current HOME allocations are too small to finance large-scale homeownership or rental properties. The proposed HOME Bank will make those developments easier to finance by placing the full faith and credit of the United States government behind the loans, thus reducing the risk lenders would face if a developer defaults on the loan.

HOME Grants: The proposed $50 million funding increase for HOME grants would boost the total funding for the grants to $1.55 billion. This would produce substantial amounts of housing: 78,520 units of affordable housing for owners and renters through construction, rehabilitation and acquisition activities. In addition, 11,200 families would receive tenant-based rental assistance.

Homeownership Zones: In addition to the Home Bank, the President is requesting $25 million for Homeownership Zone funding to enable cities to build large-scale, single-family developments in inner cities. The proposal would support between five and seven Homeownership Zones, based on an average grant of $3 million to $5 million. This translates into major revitalization in those five to seven communities, while helping to create about 1,500 new homeowners. Last year, HUD awarded $30 million in grants and just over $60 million in Section 108 loan guarantees to start six Homeownership Zones Ė the first ever funded Ė in Baltimore, Buffalo, Cleveland, Louisville, Philadelphia and Sacramento.

Housing Counseling: The Presidentís 1999 budget request of $25 million for housing counseling funds represents a 25 percent increase over the 1998 enacted level of $20 million. Recent studies show that minority and immigrant households are the least likely to become homeowners because they lack knowledge about the homebuying process, lack credit histories to justify mortgage applications and lack information about financing. The increased funding level will be a major feature of the Presidentís commitment to increase the nationís homeownership rate. The funding would provide a wide variety of counseling assistance to clients on housing issues and help disadvantaged groups to become home owners.

Enhancing Mobility in the Section 8 Program: As part of HUDís anti-discrimination efforts, the 1999 budget requests $20 million to help 13,000 low-income families receiving Section 8 vouchers find homes in low-poverty areas through the Regional Opportunity Counseling program. Assistance may include education to families, outreach to landlords in low-poverty areas, help in paying security deposits and relocation expenses, and post-move problem solving.

Lead Hazard Reduction: HUDís 1999 request of $85 million represents a 40 percent increase over the 1998 appropriation of $25 million, for controlling environmental hazards in and around housing. Extra funds would go to the "Healthy Homes Initiative," that supports the Presidential initiative to reduce environmental health and safety risks to children, by testing new housing maintenance techniques, conducting lead-based paint inspections and compliance checks, assessing renovation and construction methods, and implementing a public education campaign to prevent diseases and injuries at home. The 1999 budget also includes $60 million to continue the lead hazard control program. The program would provide $50 million in grants to states to eliminate lead-based paint hazards and $10 million to fund technical research studies.

Brownfields: Brownfields are contaminated industrial or commercial sites Ė the legacy of an earlier, less environmentally-conscious era in America. In 1999, President Clinton proposes doubling funding for HUDís Brownfields Redevelopment program Ė from $25 million this year to $50 million next year Ė to target more of these sites for cleanup and reuse. There are an estimated 450,000 brownfields across the nation, with most located in urban areas. HUDís program is highly leveraged, and about $4 in loans and loan guarantees are expected for each $1 HUD awards in 1999 Ė for an additional $200 million investment in these communities. Because of the high dollar leverage, HUDís grant awards are expected to create about 28,000 construction and other related jobs.

Homelessness: President Clinton will request $1.15 billion to fight homelessness in 1999, an increase of almost 40 percent over the 1998 enacted level of $823 million. If enacted, the funding level will be the highest in history, providing $958 million to continuum of care grants. An additional $192 million would support 34,000 new vouchers to help homeless families and individuals leave the shelter system, graduate from transitional housing, and return to permanent housing. Besides providing housing, continuum of care grants also pay for education, training, and substance abuse treatment programs. Proposed 1999 funding would create 15,000 beds linked with services for people moving from homelessness to permanent housing and 3,500 beds for people with serious mental illness requiring permanent shelter. The funds would renew funding for a significant portion of the 125,000 transitional and 59,000 permanent beds already funded.

Housing Discrimination: In keeping with President Clintonís call for "One America," the FY 1999 budget contains a significant increase in anti-discrimination funding. HUDís $52 million request represents a 73 percent increase over the $30 million enacted in 1998. The Administration wants to spend $29 million -- more than doubling 1998 funds -- for the Fair Housing Initiatives Program, which helps private nonprofit groups enhance compliance with fair housing laws. If approved, the funding will allow the Office of Fair Housing and Equal Opportunity to double fair housing enforcement by spending $10 million to fund housing discrimination testers in selected areas. Additional funds will be used to investigate, litigate or conciliate pressing cases of discrimination. Another $23 million is requested for the Fair Housing Assistance Program to certify state or local fair housing enforcement agencies and reimburse them for handling complaints filed in their jurisdictions.

Higher FHA Loan Limit: President Clintonís budget calls for a major new initiative to help millions more hard-working middle-class American families qualify to become homeowners, by raising the loan limit now covering Federal Housing Administration-insured home mortgages. The higher ceiling on FHA mortgages would open the door of homeownership to millions of American families currently locked out of the housing market. For example, a family with an income of about $46,000 could qualify for an FHA mortgage of $150,000 (the expected average of new loans insured under the new initiative). In all, about 3 million more families could qualify for FHA mortgages over the next five years -- and millions more in future years Ė if Congress approves the Presidentís proposal. In most communities, FHA mortgages are limited to $86,317. In some high-cost communities, FHA can now insure mortgages up to $170,362. The President is seeking to set a new nationwide limit of $227,150.

Content Archived: January 20, 2009

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