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The goal of the Department of Housing and Urban Development (HUD) is to provide affordable housing for all Americans and stimulate economic development in distressed communities. The FY2000 appropriation for HUD signals a renewed and reinvigorated commitment to meeting the country's housing and community development needs. This historic budget reflects the priorities of President Clinton's proposed HUD budget and will greatly contribute to the expansion of affordable housing and creation of new jobs for low- and moderate-income Americans. The budget is the result of hard work of the Administration and Senate and House Congressional leaders who worked together to reach this historic agreement.

This historic HUD budget-the smartest and strongest in over 10 years-builds on the successful efforts which have been underway for the last 2 years to improve the Department's management efficiencies and restore the public's trust. Last year, these efforts paid off with the addition of 50,000 new Section 8 vouchers for struggling renter families, following a period of 4 years in which Congress failed to fund this critical program. The landmark achievement of this year's budget is a testimony to the restored faith in the Department's ability to expand affordable housing and create jobs through innovative economic development initiatives.

HUD's historic FY2000 budget contains the following key provisions:

  • Landmark Legislation to Expand and Preserve America's Affordable Housing

  • A Major New Investment in Activities That Will Create Jobs in New Markets

  • New Authority and Funding to Protect the Nation's Elderly

    The adoption of these major provisions firmly puts HUD back in the business of providing new housing and job creation opportunities to empower America's communities. The bipartisan adoption of funding increases and new legal authority for HUD to preserve existing affordable housing, as proposed by the President, will place HUD on a firm foundation for still greater achievements in the new millennium.



    The Conference Report includes significant new resources which will put HUD back in the business of providing new affordable housing opportunities. Several major funding increases will help HUD reassert its historically strong role in helping low-income working families, the elderly, and the disabled to access decent, safe, and affordable housing.

    • 60,000 Families Will Receive New Section 8 Rental Assistance Vouchers

      The legislation provides funding for 60,000 new Section 8 vouchers to help address the continuing affordability crisis, which impacts too many struggling American families. This monumental achievement builds on last year's success in providing 50,000 new vouchers. The expansion in this critical program follows a 4-year period between FY1995 and 1998, when Congress failed to appropriate any funds for new Section 8 vouchers. The new HUD budget puts HUD back in the business of helping new families survive the current housing crisis-driven in part by the strong job economy and rent inflation twice that of the overall rate of inflation-that forces too many families to pay more than half their incomes for rent or live in severely substandard housing.

    • Modernize Affordable Housing

      The legislation follows the Administration's proposal to significantly increase public housing programs. Operating funds are increased from $2.8 billion to $3.1 billion, an effort made possible by Administration offsets. This increase will strengthen efforts to transform public housing by removing and replacing the worst units, restoring troubled public housing authorities to financial integrity, demanding household accountability, and promoting greater income diversity. The significant sums provided for public housing capital improvements will help support these transformation efforts.

    • Increases in Programs for Homeless People and Persons With AIDS

      The increase of $45 million for HUD's homeless assistance and prevention programs for a total of over $1 billion will help ensure the continued success of the innovative Continuum of Care strategy. The Continuum of Care program recently received the prestigious 1999 Innovations in Government award from the Harvard University's John F. Kennedy School of Government and the Ford Foundation. In 1993, HUD implemented this strategy that provides Federal resources to support locally-established comprehensive plans to combat homelessness. The additional funding for this continuum of programs will support coordinated community approaches to moving homeless persons and families to stable, permanent housing and into jobs and self-sufficiency.

      In addition, the $7 million increase in the Housing for Persons With AIDS (HOPWA) program will help to protect persons and families who are among the most vulnerable members of our society. The HOPWA program provides a broad range of housing and service options to State and local jurisdictions, which decide how they can best meet their local needs. States and cities have used HOPWA funds to develop a variety of innovative housing alternatives, including tenant-based rental assistance, rehabilitation of existing housing, and new construction of supportive housing with services.

    • Increases in Funds to Fight Housing Discrimination

      The budget provides $44 million for Fair Housing initiatives, a significant increase from last year's budget and close to the Administration's request. These funds will support the Fair Housing Assistance Program (FHAP) and the Fair Housing Initiatives Program (FHIP). FHAP provides Federal funds to support a network of State and local civil rights agencies who enforce laws that are equivalent to the Federal Fair Housing Act. FHIP provides funding for private, not-for-profit, fair housing groups who carry out enforcement (such as testing and private litigation) and education and outreach activities.

      Importantly, this increase in funding will be used in support of HUD's groundbreaking nationwide audit of housing discrimination around the Nation. This important audit, which is part of President Clinton's One America Initiative, will provide an in-depth examination of discriminatory barriers and create a detailed understanding of the patterns of discrimination in housing rental and sales nationwide. This is the first such effort to include all of America's major racial/ethnic groups and to cover urban, suburban, and rural communities. The results of the study will be used to target future enforcement efforts more effectively, to direct legislative action needed to reduce discrimination, and to create the first-ever "Report Cards" on housing discrimination-both for the Nation and for each community studied-by which to measure progress towards a goal of "One America."

    • Other Critical Funding Provisions

      The Administration is pleased that significant funding was included for a number of other critical HUD programs, many of which would have been severely cut by earlier Congressional proposals. These funding provisions include the following: $575 million was included for the HOPE VI program, an initiative aimed at replacing distressed, obsolete public housing with attractive, mixed-income communities; $1.6 billion was included for the HOME program, allowing HUD to continue to utilize this important tool for enhancing the capacity and experiences of the Nation's affordable housing producers; $43 million was included for the Youthbuild program, which provides educational and job skills training for at-risk youth while expanding the supply of affordable housing; $80 million was provided for efforts to reduce health hazards from lead-based paint, including $10 million for the HUD Healthy Homes Initiative; $25 million was included for HUD's Office of Rural Housing and Economic Development for affordable housing, economic development, and capacity building efforts in rural and Native American tribal areas; and $2.9 billion for public housing capital improvements.

    • Preserving Existing Affordable Housing

      In addition to the increases in funding for essential HUD programs, the budget supports a key priority for the coming millennium by providing HUD with several new tools for preserving existing affordable housing. In recent years, HUD has made tremendous progress in reforming and expanding the Section 8 program, the Nation's largest affordable housing resource, serving nearly three million families. Two years ago, historic legislation created the Mark-to-Market program, which preserves project-based Section 8 housing (where rents are above market levels) while bringing costs in line with the private market. Last year, HUD won the first new Section 8 housing vouchers in 4 years. This year, the budget completes these achievements with legislation that will preserve project-based Section 8 housing where rents are below market levels-that is, developments that will not benefit from the Mark-to-Market program.

    During the past year, communities across the country have experienced the loss of affordable housing from "opt-outs," which occur when long-term Section 8 contracts between private owners and HUD expire and the owners choose to leave the Section 8 program, converting their housing and raising rents to market rate. This opting out results in potential displacement of vulnerable residents. In April, Secretary Cuomo joined with members of Congress from both parties to announce a two-part strategy to preserve this housing. First, Secretary Cuomo announced an Emergency Initiative that HUD would implement immediately using its existing authority. This Initiative has worked, cutting opt-outs in half. To better preserve this stock of affordable housing, however, HUD required additional legal authority. The second part of Secretary Cuomo's strategy called on Congress to work with the Administration on comprehensive legislation to preserve below-market Section 8 housing. After extensive bipartisan cooperation to craft a proposal, this legislation was passed as part of HUD's budget.

    Highlights include:

    • Support for HUD's Approach. Congress ratified the approach HUD took in April by incorporating the Emergency Initiative into law. The Initiative provides market rents to below-market properties most likely to opt out, giving this high-quality housing an incentive to remain in the Section 8 program.

    • Other Market-Based Incentives. Opt-outs of a different kind occur when properties pay off HUD mortgages that ensure affordable housing. The law makes a number of changes to HUD mortgage programs to ensure that good properties have incentives comparable to the incentives offered by the open market in exchange for continued affordability.

    • More Secure Renewals. Since Section 8 contracts began expiring in the middle of this decade, budgetary pressures have limited renewal periods to 1 year at a time, undermining the ability of residents and owners to feel secure about whether their property will remain affordable. This legislation expands HUD's ability to offer longer-term contracts, providing increased reliability while respecting current budgetary realities.

    • New Resources and Owners. Now that the Section 8 program has reached its twenty-fifth anniversary, many properties will need new resources or ownership to carry them through the next 25 years. This law provides new resources for recapitalization of properties and new incentives to transfer properties to strong, non-profit owners who will keep them affordable over the long term.

    • Better Protection of Residents. Even with the changes made by this historic legislation, there will still be some properties that opt out of the Section 8 program. The law gives HUD authority to offer "enhanced vouchers" to residents in properties that opt out, which will better protect these residents from substantial rent increases and possible displacement.


    The final budget agreement includes major investments for innovative economic development initiatives, which will create new job opportunities in some of America's most distressed urban and rural communities. $4.8 billion was provided for the Community Development Block Grant (CDBG) program, the mainstay of HUD's economic development activities-a significant increase from earlier proposals, which contained deep cuts in the program. CDBG provides local communities with flexible tools and resources to meet local community development priorities and objectives.

    In addition, the budget includes the following economic development highlights:

    • $20 million for America's Private Investment Companies

      HUD is greatly encouraged by the inclusion of funding for President Clinton and Vice President Gore's proposed America's Private Investment Companies (APIC) program. APIC is a bold new vehicle for expanding the availability of investment capital in distressed urban and rural areas. The $20 million investment provided in the legislation will stimulate the investment of over $540 million in privately issued, government guaranteed loans and an additional $275 million in private equity capital.

      Funding for APIC will help tap emerging markets here in America by closing the equity capital gap that often undercuts growth and business opportunity.

      This new program will provide capital for larger-scale businesses in inner cities and rural areas. It will fund large investment partnerships formed by private investors-such as banks, insurance companies, pension funds, individuals, etc.-for this purpose. APICs will be organized as for-profit private capital funds with minimum equity capitalization of $25 million. APICs will be eligible for twice that amount in Government guaranties on loans obtained from private sources. For example, a $50 million initial equity commitment would leverage $100 million in government-guaranteed debt, creating a $150-million fund.

      These significant pools of investment capital will be available to take advantage of the opportunities described above and will help to create quality employment opportunities in inner cities and rural areas. APICs could make a wide variety of investments, for example establishment of a call center or data processing facility, development of a retail center, development of an incubator or industrial park, expansion and upgrading of an existing manufacturing facility, and more. APICs could also invest in other business development funds, acting as a "fund of funds."

      The APIC program will create jobs and expand business opportunities in areas where they are needed most-inner cities and distressed rural areas. These jobs and business opportunities will help ensure that all Americans share in the Nation's unprecedented economic expansion.

      The authorizing legislation that will create a framework to guide APIC's operations has been introduced in both Houses of Congress by Senator Paul Sarbanes and Representative John LaFalce. The Administration is confident of this legislation's timely consideration and is committed to working with Congress to secure the full promise of this extraordinary and unprecedented new economic development tool.

    • $70 million for Round II Urban and Rural Empowerment Zones

      The renewed commitment to the Empowerment Zones Initiative enhances HUD's ability to comprehensively support distressed communities in their efforts to ensure economic opportunity.

      The Empowerment Zones are designated areas that receive important Federal tax incentives as well as direct Federal, local, and private funding for economic development and social services. The $70 million investment in the second round of EZs builds on the experience of the program's first round, which has resulted in more than $8 billion in private-sector investment to the designated communities and unprecedented public-private partnerships around the country.

      Of the total funding commitment, $55 million will be provided for the Round II Urban Empowerment Zones. Earlier this year, HUD designated the following cities as Round II Empowerment Zone participants: Boston, MA; Cincinnati, OH; Columbia/Sumter, SC; Columbus, OH; Cumberland County, NJ; El Paso, TX; Gary/East Chicago, IN; Huntington, WV/Ironton, OH; Knox County, TN; Miami/Miami-Dade County, FL; Minneapolis, MN; New Haven, CT; Norfolk/Portsmouth, VA; Santa Ana, CA; and St. Louis, MO/East St. Louis, IL. In addition, $15 million will be provided to Round II Rural Empowerment Zones. The U.S. Department of Agriculture has designated the following rural Empowerment Zones: Cordele, GA; Fargo, ND; the Oglala Sioux Reservation in Pine Ridge, SD; Riverside County, CA; and Ullin, IL.

      Empowerment Zones create successful partnerships among all levels of government, the private sector, community groups, and local residents by offering connections to tools and resources which improve their lives and communities. Although the EZ/EC Initiative is a 10-year effort, visible change in zone neighborhoods is already taking place in the form of business start-ups and expansions, new jobs, commercial and housing development, and improved services for community residents. The FY2000 funding will allow HUD to build on these tangible successes.

    • $25 million for Brownfields Redevelopment

      HUD applauds Congress' continuing recognition of the importance of Brownfields reclamation and redevelopment. Redeveloping Brownfields-moderately contaminated, formerly commercial or industrial sites-is central to the task of tapping markets in distressed communities, especially in inner cities and "graying" suburbs. Since 1993, the Clinton Administration has taken a series of actions to clean up and redevelop Brownfields and return them to productive use for a community. The HUD Brownfields Economic Development Initiative is an integral part of the Administration's efforts to reclaim the nearly 450,000 sites that qualify as Brownfield sites.

      This funding will allow HUD to continue working with community organizations, the private sector, local and State governments, and other Federal agencies to stimulate reinvestment in communities by restoring Brownfields to productive use.


    The budget agreement makes an enhanced commitment to the housing needs of our Nation's elderly through the enactment of the Housing Security Plan for Older Americans. This important new initiative, paired with funding increases in existing programs, will ensure greater housing opportunities for all Americans.

    • The Housing Security Plan for Older Americans

      In the next millennium, America will undergo a tremendous demographic shift as our older citizens become a larger and larger part of the Nation's population. By 2050, the elderly population will more than double to 80 million, with the "oldest old" (85 and over) making up almost one quarter of that population. This "graying of America" confronts seniors and their adult children with difficult housing choices-should our elders stay at home or move away to get the housing and related care they need? Building on the Administration's pledge to preserve Social Security and Medicare, Vice President Gore announced a Housing Security Plan for Older Americans in January of this year. This Plan, now enacted into law as part of HUD's budget with funding of $710 million, will provide a full range of options-a "Continuum of Care"-to meet the changing needs of our Nation's elders.

    • Helping Seniors Stay in Their Own Homes. The first priority of the Plan is to help seniors remain in their current homes. To accomplish this, HUD will refine and expand its "Reverse Mortgage" program, which provides income to seniors based on the equity built up in their homes. This money can be used for a range of needs, such as home-based services or to build ramps, that allow our elders to stay in their own homes.

    • Building More Affordable Elderly Housing. For those seniors who choose not to remain at home, there must be affordable options nearby. This budget increases their options with continued funding of HUD's highly successful Section 202 elderly housing program at last year's level of $660 million.

    • Providing Seniors the Services They Need. To ensure that HUD's elderly housing provides the services that seniors need, the budget includes $50 million to dramatically expand the Service Coordinator program, which currently gets far more applications than it can fund.

    • Ensuring Access to Assisted Living. Finally, for those lower-income seniors who need more intensive services than traditional elderly housing can provide, the Housing Security Plan for Older Americans will give them access to assisted living facilities for the first time. Assisted living has become a tremendously popular option for higher-income elderly, but until now lower-income seniors could not afford this choice. Ironically, this often meant these seniors were forced into more institutional and expensive facilities like nursing homes. This legislation provides $50 million to convert existing HUD senior housing to assisted living and allows seniors already receiving assistance through housing vouchers to use them in assisted living facilities.


    The HUD budget reflects the strong commitment by both the Congress and the Administration to providing decent, safe, and affordable housing to all Americans. The budget supports HUD programs, which have proven to be effective resources for our neediest populations. The budget also recognizes the many ways HUD is diligently working to fulfill its mission, such as the continuing implementation of management improvements and providing necessary resources to support local government in their efforts to rebuild communities.

    Through this budget, Congress and the Administration equally acknowledge how vital HUD's activities and professionals are to communities throughout the country. Community Builders have assisted in the streamlining of HUD's service delivery system by bringing HUD programs to an increasing number of Americans in need of assistance. They have also served as change agents within HUD, ensuring the responsiveness of Federal initiatives to local communities and their needs. Community Builders will become a permanent part of the Department's organization. The positions currently held by fellows will be converted to permanent, career slots.

    This budget agreement distinctly puts HUD back in the business of housing Americans and creating opportunities for economic development in communities throughout the Nation. Taken as a whole, this new budget provides HUD with the tools to revitalize economically distressed communities with new jobs and business growth, to aid welfare recipients and others to become self-sufficient, to increase and preserve the supply of affordable housing, to expand the commitment to end discrimination, and to care for elderly Americans. Today, HUD is poised to lead communities and citizens into the new century.

    Content Archived: January 20, 2009

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