Congress slashes HUD’s construction fund for the poor

November 17, 2011

Lawmakers on Thursday slashed funding Thursday for the U.S. Department of Housing and Urban Development’s construction fund for the poor and demanded that the agency introduce a series of measures to root out stalled housing projects.

Housing advocates immediately condemned the nearly 38 percent cut to the HOME Investment Partnerships Program, which for two decades has provided grants to local governments for housing construction and renovation, home repairs and down payment assistance. Under a partial budget bill passed by the House and Senate on Thursday, the HOME program’s budget would drop to $1 billion, down from $1.6 billion last year.

“I’ve never seen anything else that steep,” said Sheila Crowley, president of the National Low Income Housing Coalition. “The impact is huge. It will have a ripple effect throughout the system.”

The $32 billion HOME program has come under scrutiny in recent months, with Congress holding two oversight hearings to try to gauge the status of thousands of HOME-funded construction projects and HUD’s monitoring of local housing agencies that receive the funding.

A Washington Post investigation in May found that HUD had routinely failed to track the progress of its affordable-housing projects and that hundreds of deals nationwide showed signs of delay or appeared to be in limbo. The Post recently confirmed an additional 75 construction projects that drew and spent $40 million in HOME funds with little or nothing built.

HUD officials have repeatedly defended the program, saying that most projects are successfully completed and that HOME has delivered 1 million units of housing since its inception two decades ago. This month, however, HUD submitted to Congress an overhaul of HOME regulations to strengthen standards for developers and require more timely construction of housing. If approved, it would be the first major rule change to the program since 1996.

Under the bill passed by Congress on Thursday, lawmakers demanded their own changes to what the conference report called a “mismanaged” HOME program. Local housing agencies will have to certify that developers have financial capacity and building experience. Construction must be completed in four years or the HOME money must be repaid. HUD must improve its tracking of projects and report back to Congress by March and annually after that on the status of all HOME funds older than five years.

HUD officials did not respond to a request for comment Thursday.

Housing groups nationwide had been bracing for cutbacks. In Charlotte, the nonprofit Charlotte Family Housing receives about $200,000 a year in HOME funding to provide rent subsidies for poor families. Private donors contribute hundreds of thousands more to pay for counseling and other support services. In four years, 120 families have been assisted by the program.

“I’m scared to death about what’s going to happen,” said Executive Director Darren Ash. “We’re taking a small amount of government money and utilizing it in a very efficient way for families to be on a two-year path out of the system.”

John E. Hall, the new director of the D.C. Department of Housing and Community Development, also raised concerns, saying, “Cuts that steep will affect the number of units produced or preserved.”

Crowley said that some “bad actors” in the HOME program need to be exposed but that the program is successful and the funding badly needed.

“This will severely limit the number of people who can be assisted by the people who are doing a good job,” she said.

The bill now goes to President Obama.

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