MR. WOODSON: Hi, good morning. My name is Rob Woodson. I'm Deputy Chief of Staff for Policy and Programs here at the Department. I'd like to bring up a couple of my colleagues, and we'll be able to answer any of your detailed questions you may have. This is Joe Ventrone, Special Assistant here at HUD, Dave Gibbons, who is our budget director. We'll be happy to answer any other questions.

Q: As part of your budget, you want to increase the loan limits on multifamily housing, but at the same time, you're increasing the insurance premiums from, like, 50 basis points to 80 basis points. Do you guys have any idea -- like, is this going to increase housing production, or is the insurance cost going to make it so that some of these people aren't going to want to pay for --

A: Brian, I think you had two questions there. First, the premium increase for the multifamily. First of all, the multifamily mortgage limit increase of 25 percent. We estimate that the increase in the multifamily limits will generate approximately 300 million more in multifamily activity. That's an estimate as good as we can figure. The fiscal year 2002, our multifamily credit subsidy goes from 101 million to 15 million for the credit subsidy. And to meet that gap, the budget proposes increasing the premiums on certain of the General Insurance Special Risk Loans. And I believe the premium increase would be around 30 basis points, from .5 to .8. And that will make us less dependent on the credit subsidy annual appropriations that, over the last 5 or 6 years, has been somewhat problematic. We do not believe the increase in the premium will necessarily inhibit further activity under the program.

SPEAKER: Well, because currently, interest rates are very low. So, there shouldn't be a problem. Yes?

MR. SHERWOOD: Two questions. One, is the HUD budget -- my name is Wayne Sherwood. Is the HUD budget going to rely in any way on recaptures? And if so, how much and from where? And the second question is, the utility costs in public housing have gone up enormously. And as I understand it, looking at the operating fund, there's no recognition of that. So, how are they expected to cope with that?

A: Well, okay. On your first question. The budget does not rely on any kind of recaptures. Okay? If we get them, we get them. But they're not predicated upon them occurring. Second, regarding the --

MR. SHERWOOD: Operating fund?

A: Operating fund, yes.

MR. SHERWOOD: Actually, the operating fund was increased by $150 million, and that is 100 percent of our PFS.

A: Also, HUD released I believe it was $105 million earlier this year, so that -- and that's immediate relief. You know, normally, they'd have to wait till their appropriation next year -- or this year, rather. We gave them $105 million in immediate relief in March. I'm sorry. Yes.

Q: Yes, on the multifamily loan insurance increase, you said that you expect that will spur about 300 million. What does that mean in the sense of units? A: Hard to say. I don't have a figure. We can get you the figure. And I'm trying to reflect what our multifamily activity was in this last fiscal year. But we'll have to get you that information.

SPEAKER: Yes?

Q: According to the outlays by Agency table in the larger budget, actual outlays will drop 2.5 billion between 2001 and 2002. And I was just wondering what would account for that based on --

A: That's a -- excuse me. That's the spend out of prior year appropriations, which had built and is now coming down to the normal.

Q: Going back to the multifamily, because people are talking about on the credit subsidy for this year is probably going to maybe run out early summer, or something like that. Are you guys already asking for more of a credit subsidy this year to keep it going?

A: To the best of my knowledge, the administration is not going to be asking for any supplemental appropriation this year. Brian, it is right that our credit subsidy needs for this fiscal year are fast approaching. And we're kind of on a limited diet to get us through at least to the summer. But I believe we have a balance, Dave, of what? Twenty --

MR. GIBBONS: About 18 now. A: Eighteen million, and that was based on an 101 appropriation. And I think we've got to put it in perspective. When the new administration came here, most of -- a good 50 percent of that was already exhausted. There's also -- and if I could anticipate your follow-up question, Brian, you're going to probably ask that the previous Congress appropriate 40 million in emergency supplemental for credit subsidy? Okay. That was -- this administration does not view that 40 million for this credit subsidy program an emergency nature. And the way the Congress appropriated it, and the way it was enacted by the previous President, that money did not have to be offset. So, this administration does not acknowledge that 40 million as emergency. So, we've been dealing with our Office of Housing. We've been working with the industry to ensure that the money that we do have available, would be able to get us through this fiscal year.

Q: So, there's going to be rationing of commitments?

A: I don't know. We don't call it rationing. We -- Dave, what's the technical term?

MR. GIBBONS: We have allotted -- distributed the allotment through the rest of the year on a monthly year.

A: Right. OMB would apportion monthly the available credit subsidy. And I believe it's close to 2.8 million a month.

MR. GIBBONS: It started out to be two and a half. We're going to frontload some of that in to the next couple of months, because there's stuff in the queue that needs to get taken care of. And then there will be a little bit less. But there will be some funds in every month.

Q: Okay. Thanks.

MR. WOODSON: Anything else?

Q: Do you anticipate running out of credit subsidy authority to ensure reverse mortgages to seniors?

A: For this year? No, we don't. No.

MR. WOODSON: What he said.

A: No, we don't.

Q: Is there more detailed information available on the unspent funds in the Public Housing Capital Fund; i.e., where the bottlenecks are, what kind of programs are letting the money sit there?

A: I'm not sure I understood your question.

MR. WOODSON: Yes. There's a total of around --

A: Yes. $3.2 billion, plus 2001's funds that have yet to go out. They're going out very shortly. Those are all unobligated funds. There's another --

Q: It's all unobligated.

A: It's all unobligated by the PHAs. There's another $5 billion, which is -- PHAs have, and have assigned to projects, but the projects haven't been done yet.

Q: So it's3.2 unobligated, 5 billion obligated?

A: 3.2 in prior year appropriations. That's 19 -- basically, 1996 through the year 2000. Those are funds are out there, and they're with the PHAs, and they have not been assigned to projects yet.

Q: Okay.

MR. WOODSON: Anybody else?

Q: In the Senate budget resolution, I think there's a clause that says -- that would stop Congress from making advance appropriations. And I was wondering how that might affect HUD's budget. What happens if they make it retroactive somehow?

A: Well, they can't make it retroactive. But they -- for 2002, they are eliminating the advance appropriation. And for HUD, the advance appropriation would have been $4.2 billion. They paid for that by one-time cost on the mandatory side of the budget.

Q: That's in the budget resolution?

A: It's in our budget proposal, and I believe -- it should be in the Senate. And I haven't seen the Senate resolution, but it's definitely in the House and it should be in the Senate. There was a three-way agreement between OMB and the Congress and CBO and the House and Senate Budget committees to eliminate that advance appropriation.

Q: Oh, okay. Does it come from FHA, or from mandatory funds? Where does it
come from?

A: No. That advance appropriation occurred in the year 2000. And it was all Section 8. And they are now removing that. For HUD, that's very good news, by the way. Because it was very difficult to administer contracts with project owners when you had a split in when they could get their funds.

Q: Um-hum. Okay, thanks.

MR. WOODSON: Anyone else? Okay. If no further questions, I think that will conclude the press conference on the HUD budget.

Thank you very much for coming.