On February 13, President Obama presented his FY 2013 budget request to Congress and the public. The National Affordable Housing Management Association (NAHMA) was extremely disappointed that the budget DID NOT request full-funding for all 12-months of project-based Section 8 contracts in FY 2013.
President Obama’s FY 2013 HUD budget requested $8.7 billion for the project-based Section 8 account. Of that total, $8.44 billion was for contract renewals and $260 million was for contract administration costs. The budget also requested an advanced appropriation of $400 million for FY 2014. The contract renewal funding is $611 million BELOW the FY 2012 appropriations levels and the FY 2012 budget request.
HUD believes the $8.44 billion will be enough to fund all project-based Section 8 contracts through September 30, 2013, i.e. the end of the federal fiscal year. Many project-based Section 8 properties would NOT receive full 12-month funding obligations under this budget proposal, depending on when the property’s contract renews. The Department claims this move “will not reduce or delay payments to landlords or impact the number of families served by the program.” However, NAHMA is skeptical due past experiences with funding shortfalls in the project-based Section 8 program. Secretary Donovan said he wanted to work to avoid cuts to this program.
Prior to FY 2009, HUD previously requested enough funding to cover the project-based Section 8 program for the length of the fiscal year rather than full-funding for all 12 month contracts. This resulted in the growth of a $2 billion funding gap in the program. Property owners received partial and/or delayed housing assistance payments (HAP) because of the funding shortfalls. As a result, owners had to defer payments on property operations-including mortgages, maintenance, staff salaries, and utilities-which jeopardized the financial and physical health of the properties. It was not until 2009, when the $2 billion gap was funded by the American Reinvestment and Recovery Act, that HUD began requesting funding for the full 12-month contract terms at the time of renewal, and funding for HAPs stabilized.
As a result, NAHMA strongly opposes the FY 2013 budget request for the project-based Section 8 program. In fact, earlier today, during the Q&A period with the HUD Secretary Shaun Donovan on the FY 2013 HUD Budget, NAHMA publically opposed the cuts to the project-based Section 8 program and the return of “stub” or “incremental” HAP contracts. We reminded the Secretary that the short-funding is contrary to the Administration’s previous position for the project-based Section 8 program. NAHMA staff read a quote from HUD’s FY 2010 budget summary which stated, “Annual renewal funding should be predictable, timely, and sufficient to fund rental contracts for a full 12 months, a sharp contrast to the short funding of contracts that occurred in recent years.” Likewise, NAHMA emphasized that returning to the failed, reckless policy of short-funding contract renewals only three years after stabilizing the program funding, HUD hurt its credibility with the owner/agent community.
As early as tomorrow, the archived webcast of the FY 2013 budget briefing will be available online by clicking here: http://portal.hud.gov/hudportal/HUD?src=/press/multimedia/videos
NAHMA will work actively with Congress and industry colleagues to ensure the project-based Section 8 account receives full funding for all 12-month contract renewals in the FY 2013 appropriations. Over the course of the year, we will let members know about opportunities to contact their Congressional representatives to advocate for full-funding of all 12-month project-based Section 8 contract renewals.
NAHMA members may review the FY 2013 HUD budget request by visiting: http://portal.hud.gov/hudportal/documents/huddoc?id=CombBudget2013.pdf