The natives are getting restless on Capitol Hill about the House and Urban Development Department's failure to issue rules for a new formula to compensate builders of subsidized housing for the high cost of money. Without this incentive, construction of low- and moderate-income units has been drastically reduced, charges Rep. Margaret S. Roukema (R-N.J.). In fiscal 1979, when interest rates were lower, HUD reserved $657 million for Section 8 housing projects; work on 119,005 new units was started. In 1980, when the cost of money climbed but HUD rules set a financing adjustment factor committing the government to increased rent subsidies, $520 million was reserved and 94,740 units were started. In the first nine months of this fiscal year, with high interest rates and no financing adjustment, only 21,630 units have been started; $108 million has been reserved.
Earlier this year, the Office of Management and Budget sent a proposed rule creating a new version of the financing adjustment back to HUD for review. The rule was yet to resurface. "A lot of things impact on a decision to implement a [financing adjustment]: general costs, a higher subsidy for the units, and the impact on the BOND MARKET," SAID HUD's George Hipps last week. "Housing needs are one consideration among many." A decision on the rule is expected this week.