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HUD No. 02-019
(202)708-0685
For Release
Monday
February 4, 2002

$31.5 Billion HUD Budget Expands Homeownership Opportunities, Rental Assistance, and Economic Development

WASHINGTON - President Bush's proposed Fiscal Year 2003 budget includes $31.5 billion for the Department of Housing and Urban Development to help more Americans become homeowners, to provide additional rental assistance, to protect vulnerable people, and to stimulate economic development and job growth across the nation. This budget request represents an increase of $2.1 billion over HUD's initial FY 2002 budget.

The President's budget proposal includes $200 million for the American Dream Downpayment Fund to continue to help more Americans reach the dream of homeownership. Administered under HUD's HOME program, this fund will help an estimated 40,000 low-income families a year to become first-time homeowners. The Administration recognizes homeownership is not an option for everyone therefore the budget also provides 34,000 new incremental housing choice vouchers to provide rental assistance to assist millions of families struggling to find an affordable place to live.

"This budget will open the door of homeownership to more and more Americans and offer rental assistance to millions of other families struggling to find an affordable place to live," said HUD Secretary Mel Martinez. "We want to give every American the opportunity to become stakeholders in their community. The President's budget allows us to accomplish this while stimulating economic development and job growth at the local level and providing a continuum of care to the homeless and others with special needs."

The spending plan also includes resources to combat the practice of predatory lending, prevent housing discrimination and continue reforming the homebuying process to eliminate hidden fees paid by consumers.

Martinez also highlighted other parts of the Department's budget proposal:

Expanding Homeownership

During the President's first year in office, the national homeownership rate rose to an all-time high of 67.8 percent. Homeownership among minorities, while also rising to historic levels, continues to lag far behind the national average. In response, this budget will seek to expand homeownership among all Americans in the following ways:

  • Home Investment Partnership Program (HOME). The budget plan includes $2.1 billion for the HOME program, an increase of $238 million over current year funding. HOME grants to States and localities fund a wide range of activities that build, buy, and/or rehabilitate affordable housing for rent or homeownership or provide direct rental assistance to low-income people.
  • Renewing the Dream Tax Credit. To further promote homeownership opportunities, the Administration is proposing a $1.7 billion tax credit to support the rehabilitation or new construction of an estimated 100,000 homes for purchase by low-income households over a five-year period.
  • Self-Help Homeownership Opportunity Program (SHOP). Fulfilling a commitment to triple funding for HUD's "sweat equity" programs, President Bush is proposing to increase funding of the SHOP program to $65 million. SHOP grants support nonprofit organizations, like Habitat for Humanity International, which requires low-income families to help construct the homes they will eventually own.
  • Housing Counseling Assistance Program. The Administration is requesting a record $35 million, a $15 million increase, for a separate Housing Counseling Assistance Program to low-income families in the coming year. Once a set-aside within the HOME Program, these competitively awarded grants will provide comprehensive counseling services including pre-purchase, default and renter counseling to potential and current homeowners and tenants.
  • Section 8 Homeownership Program. HUD permits local housing agencies the flexibility to use HUD's rental assistance toward moving low-income families into homeownership. The housing agencies may either provide mortgage assistance in lieu of a rental subsidy or offer families a one-time downpayment grant equaling up to one-year's worth of their rental assistance.

Providing Affordable Rental Housing

  • Section 8 Incremental Vouchers. The FY 2003 budget includes funding for approximately 34,000 additional incremental housing choice vouchers. Although HUD currently assists nearly 2 million families under the Section 8 tenant-based program, the number of those in need of assistance remains far greater. To help reduce the backlog of families on the waiting list, HUD is requesting that Congress provide an additional $204 million to increase the number of tenant-based vouchers by 34,000. This increase is nearly double the 18,000 incremental vouchers provided in FY 2002.
  • Section 8 Contracts. As long-term Section 8 contracts expire, the number of contracts that need to be renewed each year (and the funding required to do so) increases. The cost of renewing the 2.9 million expiring Section 8 contracts in FY 2003 exceeds FY 2002 renewal costs by $1.1 billion.
  • Public Housing Operating Fund. The FY 2003 budget proposes to increase the Public Housing Operating Fund by $35 million to $3.530 billion, which will provide Public Housing Authorities with support for utility, administration, maintenance and repair costs in public housing facilities.

Stimulating Economic Development and Job Growth

  • Community Development Block Grant (CDBG) Program. CDBG provides funding to meet locally identified community and economic development needs. For FY 2003, HUD will increase CDBG formula grants by $95 million to $4.436 billion.
  • Faith-Based and Community Organizations. In FY 2003, HUD will examine its programs and policies to identify ways to strengthen the capacity of these nonprofit groups and to reduce any barriers that may impede their access to HUD funding.
  • Colonias Gateway Initiative. The 2003 budget proposes $16 million for a new Colonias Gateway Initiative (CGI). The CGI is a regional initiative, focusing on the 1,500-mile stretch of the U.S.-Mexican border where more than 12 million individuals live, often in severely substandard conditions.
  • Section 108 Loan Guarantee Program. In 2003, the Department will provide $6.3 million in credit subsidy to guarantee a total of $275 million in private sector loans.
  • National Community Development Initiative (NCDI). HUD participates in the privately organized and initiated NCDI. The 2003 budget will provide $30 million for the NCDI, in which HUD has funded three phases of work since 1994. A fourth phase will emphasize helping community-based development organizations build capacity in the economic arena and related community revitalization activities through the work of intermediaries, the Local Initiative Support Corporation (LISC) and the Enterprise Foundation.
  • The Brownfields Economic Development Initiative (BEDI). The BEDI program makes competitive economic development grants for the economic development, redevelopment and remediation of qualified Brownfields projects. Brownfields grants are required to be leveraged with private sector funds. In 2003, the Department will award $25 million in grants, the same level that has been made available since 1999.

Protecting Vulnerable Populations

HUD programs provide housing and other essential support to a wide range of people with special needs including homeless individuals, the elderly, persons with disabilities and people living with HIV/AIDS. Protecting children from the dangers of lead-based paint hazards in low-income housing is also a focus of the President's budget request. The following are highlights of HUD's FY 2003 budget in these areas:

  • Homeless Assistance Programs. President Bush is proposing to increase funding to HUD's homeless assistance programs to $1.13 billion in the coming fiscal year. In addition, President Bush is proposing to transfer the $153 million Emergency Food and Shelter Program (EFSP) that is currently administered by the Federal Emergency Management Agency (FEMA) to HUD.
  • Elderly Housing and Services. For FY 2003, HUD plans to continue support for the elderly by providing $783 million for the Department's Section 202 Program that supports elderly housing programs.
  • Persons with Disabilities. The FY 2003 budget provides $251 million under HUD's Section 811 Program that improves access to affordable housing for low-income persons with disabilities.
  • Persons with HIV/AIDS. In FY 2003, HUD will increase funding for the Housing Opportunities for Persons with AIDS (HOPWA) program by $15 million to $292 million. This will support an increase in the number of jurisdictions eligible for funding based on projections from the Centers for Disease Control and Prevention.
  • Lead Hazard Control and Healthy Homes Initiative. Protecting young children from the potential lifelong effects of lead poisoning is an important focus of this budget request. Funding for lead-based and other home health hazards will increase significantly in the President's budget, from $110 million this year to $126 million in FY 2003.

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