The Reagan administration's proposed 1989 budget calls for sale of more of the nation's public housing stock and would bar cities with rent control from receiving federal housing rehabilitation funds. Both are controversial proposals that Congress has rejected in the past.
The $12.5 billion budget for the Department of Housing and Urban Development would eliminate spending for other programs the administration has been trying, albeit unsuccessfully, to kill for years, including Urban Development Action Grants and rental housing development grants. Congress has already voted $15.4 billion in spending authority for HUD next year.
Proposals for HUD spending are part of a $1.104 trillion federal budget for fiscal 1989 that the Office of Management and Budget will send to Congress in mid-February. HUD officials said they will ask the president to reverse some of OMB's decisions that trimmed and rejected several program requests made by the department. They said they could not discuss specific items.
More than 200 cities, including the District of Columbia, impose some kind of limits on rents that landlords can charge. Administration officials and other critics say rent control leads to deterioration and abandonment of rental housing because owners cannot afford to maintain their property.
Congress voted $200 million in the fiscal 1988 budget for repairs to deteriorated rental housing. OMB lowered the figure to $150 million in the administration's 1989 budget proposal while authorizing funds only for cities that do not have rent control laws. The agency intends to impose the changes with regulations, which would be easier than changing the legislation covering the rental rehabilitation program, according to an advance copy of the HUD budget documents.
The documents say the administration plans an "expanded program" to sell public housing and HUD-owned apartment projects to tenants, tenant management organizations and nonprofit groups. The price would be pegged to what buyers could afford, but the deal would not include any federal subsidies or assistance once the sale is completed. Federally assisted apartment projects the department acquires when the private owners default on loans should be sold or given to nonprofit or other groups that provide low-income housing, again without continuing federal subsidies, according to the budget documents.
HUD implementation of these programs could "build upon" provisions in the housing authorization bill passed last month providing for sale of public housing to tenant management organizations, the documents said. OMB has asked HUD to determine whether new legislation is needed to sell more public housing.
The administration's budget proposal asks for $6 billion for low-income housing assistance, and requires that 100,000 of the 108,000 additional units provided be paid for with housing vouchers, rather than with the older so-called Section 8 assistance program. Another $1.5 billion is earmarked for operating subsidies to public housing authorities. OMB wants 90 percent of a $325 million authorization for handicapped and elderly housing to go into homes for the disabled. In the past, most of the money in this program has been used to build housing for the elderly.
OMB rejected HUD's request for $3 billion for Community Development Action Grants, proposing $2.6 billion instead.
The limit on the amount of home mortgages the Federal Housing Administration could insure during fiscal 1989 would be $75 million, down from the $96 million approved by Congress for 1988. The Government National Mortgage Association credit limit would be reduced to $100 million in 1989 from the $144 million limit set for fiscal 1988.