Showing posts with label opportunity. Show all posts
Showing posts with label opportunity. Show all posts

Wednesday, April 18, 2018

Using a Full Portfolio of Tools (Including Vouchers) to Expand Access to High-Opportunity Communities

by Barbara Sard
Center on Budget
and Policy Priorities
The three papers from the rich and provocative A Shared Future symposium that focused on what it would take for housing subsidies to overcome affordability barriers to inclusion in all neighborhoods provide a multi-faceted and nuanced set of approaches that would expand possibilities for lower-income, non-white families to live in higher-opportunity communities. While these are important approaches that should be part of the policy portfolio, efforts to expand opportunities should also recognize that tenant-based vouchers are, and will likely remain, the primary policy tool for enabling poor and near-poor families to live in higher-opportunity communities.

In his paper, Chris Herbert reminds us that, typically, the housing stock in high-opportunity communities is predominantly owner-occupied. So, as part of a comprehensive portfolio, it’s important to consider strategies to make it possible for low-income (and other) families of color to purchase homes in such neighborhoods, including those where rents are starting to rise. However, even a robust set of tools to overcome downpayment and credit barriers may not be sufficient to make for-sale homes in neighborhoods with good schools and other amenities in many regions within reach of low-income families.



Both Steve Norman and Margery Turner highlight the key role acquisition by committed owners of multifamily rental properties can play, both in keeping rents affordable in “emergent” (i.e., gentrifying) neighborhoods and in making more units available to families with housing vouchers in those and already higher-rent communities. Federal housing policy has neglected such acquisition strategies: grants are rarely available to reduce the amount of debt such purchases will require, and tax credits are restricted to new development or substantial rehabilitation. Like the King County Housing Authority, some other mission-driven organizations, such as the National Housing Trust, have patched together state or local assistance with private market debt (and potentially project-based vouchers) to make such acquisitions feasible. Facilitating loans and grants to purchase rental properties tied to long-term affordability restrictions – including obligations not to discriminate against voucher holders – should be a goal of federal housing policy, including housing finance reform.

While it’s important to include for-sale and multifamily acquisition strategies in a comprehensive strategy portfolio, tenant-based vouchers will likely remain the primary tool for enabling more poor and near-poor families to live in higher-opportunity communities. That’s true, given vouchers’ current scale — more than 2.2 million Housing Choice Vouchers are now in use and their flexibility to rent virtually any type of decent-quality dwelling at a wide range of price points.

Yet vouchers can do much more to expand housing choice. The implementation of HUD’s new Small Area Fair Market Rent (SAFMR) policy is a promising step, but other federal policy changes are needed to create stronger incentives for housing agencies to promote better locational outcomes. It’s also vital to make more funding available, from public as well as philanthropic sources, to meet agencies’ additional administrative costs of promoting voucher mobility. And federal policy should not only permit but encourage agencies to target vouchers combined with mobility assistance to families with young children living in the most severely distressed neighborhoods.

Such efforts to foster inclusion may cost more, though experience with SAFMRs shows this isn’t always the case. But if we really care about outcomes for families over the long term, we can’t wait until there are sufficient resources to make housing affordable to all before we start paying attention to the types of neighborhoods families live in. The desperation and long-term harm of homelessness and housing insecurity create understandable pressure to spread the limited subsidy resources to help as many families as possible. Yet mounting evidence demonstrates the real long-term harm of growing up in a very poor, violent neighborhood and attending low-performing schools. Affordable housing alone doesn’t improve life chances; where families are able to live must also be a first-order concern, not one that we’ll pay attention to if and when we remedy the shortage of subsidies.  

While housing practitioners work to do the best job possible with the available resources, we must also build the political will to expand investments in housing subsidies, so that more families have the chance to overcome affordability barriers and live in communities of their choice. The Center for Budget and Policy Priorities, along with the National Low Income Housing Coalition and others, has just launched the Opportunity Starts at Home campaign, a long-term effort to achieve this goal. 

Wednesday, December 6, 2017

Fostering Inclusion: Whose Problem? Which Problem?

by Xavier de Souza Briggs
Ford Foundation
Asking "what would it take"—about housing segregation or any other challenge— assumes, on some level, that we have adequate agreement that some condition or pattern is, in fact, a problem. But in America, we have never been able to take that for granted, not about most of our big challenges, not even about the things that strike many of us as profoundly inconsistent with fairness and equal opportunity as core American values. Moreover, we have shown a persistent and very particular indecision and impasse when it comes to acting on housing segregation. The political Left remains ambivalent about it, wondering whether it is urgent to address segregation per se, whether such effort comes at a cost to other urgent efforts, and whether segregation can be tackled in ways that do not stigmatize poor people of color in particular. Put another way, the seemingly natural allies for an agenda to tackle inequality by addressing segregation have mixed feelings about both the problem and at least some of the solutions. The political Right, on the other hand, has been generally hostile to the idea that segregation is a problem, even if most Americans, on both Left and Right, agree that discrimination in the housing market is not only illegal but morally wrong. And many who go further—who agree that segregation itself is a problem—are less convinced that it warrants government intervention.

These are some of the reasons that we, as a country, "rediscover" segregation and its enormous human costs every decade or so, only to conclude that it is too intractable or questionable to tackle with serious resolve. This rediscovering happened after the civil unrest in Los Angeles in 1992, again after Hurricane Katrina put concentrated black poverty and public outrage squarely on TV screens nationwide, and again as political and media attention to extreme inequality has gown in recent years. Among scholars and opinion leaders, the influential work of economist Raj Chetty and collaborators points to segregation as a key barrier to economic mobility in America—and one that varies sharply between more and less segregated regions of the country. This latest-generation work supports earlier conclusions, by sociologists Douglas S. Massey and Nancy A. Denton in American Apartheid: Segregation and the Making of the Underclass and by others, that housing segregation by race and income is, in fact, one of the lynchpins of American inequality. Along with mass incarceration, it is one of the structural patterns that differentiates America from other wealthy nations (though Europe faces growing challenges too). Segregated housing patterns are durable and enduring in part because they are sustained by forces that many view as legitimate and even unavoidable, if unfortunate. These patterns have been called out explicitly at least since lawyer and planning professor Charles Abrams's book, Forbidden Neighbors: A Study of Prejudice in Housing, and by national policymakers since the landmark Kerner Commission report on the riots that tore apart American cities 50 years ago. For now, there are no signs that we as a people are serious about changing segregation.

In this brief post, I'd like to offer a specific reading of the very thoughtful symposium framing paper and the larger project of which it is a part. I work at a grant-making foundation long committed to expanding knowledge about, and promoting solutions to, inequality, including solutions that center on housing and specifically housing segregation. I have also pursued these aims over several stints in federal government service and tackled them as a community planner at the local level. Finally, about sixteen years ago, when I was a researcher and educator, I organized a symposium and collection of papers—led by the Harvard Civil Rights Project and cosponsored by the Joint Center for Housing Studies and the Brookings Institution's Metropolitan Policy Program—focused on segregation, its causes and consequences, and "what it would take" to effect real change at scale. That produced an edited volume, The Geography of Opportunity: Race and Housing Choice in Metropolitan America. I want to briefly look back—asking what has or has not changed in our understanding of the problems and potential solutions over the past decade plus—and also look forward.



Starting Points

The 2001 symposium had several points of departure, and revisiting them now offers some perspective on how our national mood, key attention-getting trends, political leadership, and more have evolved. One starting point was the sharply increased attention, in the late 1990s, to America's dominant pattern of urban sprawl and the idea of pursuing more sustainable or "smart" growth alternatives. The interest in this issue sparked healthy debate, though mainly among scholars, planners and allied professionals, about the tradeoffs between environmental aims and values of equity, including housing affordability. The environmental justice movement also drew attention to spatial inequality, focusing on the highly disproportionate exposure of poor communities of color to toxins and other environmental risks.

Advancing this debate seemed important in light of evidence that economic inequality was increasing sharply in America, whether measured in wealth, income, or other dimensions. We wondered about more environmentally sustainable but increasingly unaffordable communities pulling away from distressed, built-up and—in some cases—highly polluted places.

Other starting points were even more tectonic, driven by large-scale demographic change. Much of the wealthy world has modest to zero population growth, but America is different: We are a large and still-growing nation, thanks mainly to immigration, which is, in turn, driving greater racial and ethnic diversity. In the 1990s, for example, the population of most American cities would have shrunk if not for immigration. What is more, as of the 2000 census, an estimated one-third of the built environment needed to accommodate population growth in America over the next generation did not yet exist. It represented projected new development. This underscored the huge stakes associated with how we grow, particularly the prospects for inclusionary growth. It also underlined the fact that our debates about persistent segregation cannot be limited to public housing in inner cities or to other long-established fixtures of our current spatial footprint. We always need to be asking about what's next too—about the course of new development, both infill and at the edges of urban regions. And of course, we need to pay attention to how these development trends influence each other and influence our politics and sense of what's possible.

To sum up, in 2001, for the intersecting reasons outlined above, we asked: Can an increasingly diverse nation hope to deal with growing economic inequality if the dominant growth model "on the ground" is one of persistent segregation by race and income? Do the parts of that equation add up?

By comparison, the framing paper for this year's symposium centers more squarely on the growth of inequality and the much greater political and even cultural salience of the issue now versus 15 or so years ago. That salience is encouraging. In terms of local trends, the American media and the public are even more aware now, than after the economic boom of the late 1990s, that "cities are back." Major cities that still showed substantial decline a decade ago—New Orleans and large sections of Detroit, for example—have seen their population trends reverse and have attracted enormous investment since, especially over the course of the recovery from the Great Recession. Housing prices are up, structurally, along with the job economy in those and other revitalizing cities. So, a debate about the drivers of segregation and responses to it today appropriately gives greater weight, than did earlier discussions, to urban redevelopment—and the need for "development without displacement," as advocates in revitalizing cities frame the need.

The sense of displacement, of being pushed out, is much sharper now than in 2001. But in point of fact, the pattern is nothing new, and some observers forecast this predicament long ago, linking it to the forces driving urban vitality after decades of decline. For example, in Dual City: Restructuring New YorkJohn H. Mollenkopf and Manuel Castells showed that New York's comeback from the low point of the bankruptcy crisis of the 1970s had made the city a global magnet for investment capital and high-income occupations, sharply inflating land values and housing prices. Over the 1980s, they reported, poverty had been pushed outward, "like a ring donut," from neighborhoods in the city's core to its outer boroughs as well as its more racially diverse, fiscally vulnerable inner suburbs. The subsequent decades have merely sustained and accelerated those trends, with New York City showing itself one of the canaries in the coal mine. What Detroit and other cities are seeing and debating now, New York, Boston and other "comeback cities" experienced a couple of decades earlier. And it is structural, not an artifact of one business cycle or another. These trends were barely interrupted by the Great Recession.

Finally, having thus far emphasized those durable, long-run structural trends, I want to acknowledge more recent developments. In addition to the growth of inequality, the framing and other papers in this year's symposium reflect the enormous impacts of the foreclosure crisis, which we had only dimly foreshadowed in the 2005 book's chapter on "The Dual Mortgage Market: The Persistence of Discrimination in Mortgage Lending," by William Apgar and Allegra Calder. Beyond a huge loss of housing wealth and greater regulation in the mortgage market, there is another important legacy of the crisis, and it is a healthy one: We are much more conscious now, than in the real estate boom of the early 2000s, about how profoundly the workings of the real estate industry, and its rapid evolution thanks to information technology, can hurt us. In that vein, one of the most ground-breaking sessions in this year's JCHS symposium focused on the present and future of housing searches in an era of platform apps, algorithms, and technology-mediated screening of many kinds. The session put housing scholars in direct exchange with senior analysts and strategists from online real estate search companies that dominate the housing marketplace. Housing searches were different, and our understanding of them much more limited, 15 years ago.


Solution Set

If the unequal housing marketplace has evolved—dramatically in some ways—over the past 15 plus years, our sense of the best-available levers for changing segregation has not. Nor has our story about why acting on segregation is both legitimate and urgent, both big and structural and doable and achievable. To be fair, by some measures, our prescriptions today are not all that different from those championed by the "open housing" movement—the inheritors of the civil rights movement and the Kerner Commission warnings—in the early 1970s. This suggests at least three lessons over the long run.

The first is that we, as a country, lack will more than we lack imagination—let alone sophisticated analysis. The second is that we need new stories and ways to tell them. In recent memory, the very best case against segregation was made by comedian, John Oliver, who in 2016 used his satirical cable news program Last Week Tonight to explain three extremely important things about how America works: first, how school and housing segregation enable each other; second, why they guarantee that America will reproduce stark inequalities from one generation to the next; and third, how these closely linked forms of segregation stubbornly resist change.

The third lesson over the long run is that beyond lacking a compelling story to motivate change, we sometimes lack perspective as well. Take the persistent tendency to conflate discrimination, which the framing paper emphasizes, with segregation. People in America continue to experience housing discrimination, which is illegal, and continue to under-report it. As we analyzed in detail in the 2005 book, such discrimination, while inconsistent with public opinion in America, is challenging to detect and enforce against. But the larger and less acknowledged point was and is this: discrimination, whether conscious or unconscious, against particular kinds of consumers is far less important, as a driver of segregation, than is the avoidance of certain neighborhoods or localities by those with the best housing options, especially whites and higher skill, higher income people of color. This "self-steering" behavior has big social and fiscal costs, as scholars of segregation have pointed out for nearly half a century now. But it is not illegal. Moreover, as sociologist Camille Charles argued in her 2005 chapter on attitudes toward the racial make-up of neighborhoods, many of us balance what we think we owe our families with what we think might contribute, however modestly, to a fairer and more just society. And many of us experience these values as frequently in conflict, especially when faced with decision to move somewhere.

Laws against housing discrimination by realtors, lenders or others in the marketplace are important and should be enforced. But doing so would have limited effects on segregation. It is far more important to expand real housing choices, especially for lower income people of color, and to understand how people choose among the options available to them.

Finally, as the framing paper demonstrates, the Joint Center's 2017 symposium encompasses an extraordinarily rich and in-depth update of what I think of as the four enduring debates about segregation: the what (the descriptive patterns or shape of the problem), the why (causes), the so what (consequences), and the now what (solutions). And thanks to big data, mobile broadband, a more visible inequality debate, and other developments, it offers a very contemporary take on what's possible, in theory, when it comes to change. In the language of our 2005 redux, the solutions boil down to "curing" segregation (changing stubborn housing patterns) or "mitigating" it (making the patterns less socially costly, by shifting the relationship between where you live and the risks and resources you encounter). The former centers on relocation and inclusionary development strategies, the latter on reinvestment, connectivity, and access to institutions—sometimes life-changing ones—beyond one's segregated neighborhood.

This body of work and those solutions deserve an equally serious and committed story—a resonant narrative—joined to an advocacy and constituency building effort that's relevant in a changing, polarized, deeply unsettled American body politic. Without that, we seem consigned, in practice, to continue rediscovering segregation and also to continue lamenting that it is just too hard—or worse yet, un-American—to undo.



Papers from the A Shared Future symposium are available on the JCHS website

Monday, July 31, 2017

Why is Moving to a New Home Worse for African-American and Hispanic Children than for White Children?

by Kristin Perkins
Postdoctoral Fellow
Compared to children who do not move to a new home, children who move are more likely to do worse in school, have more physical and mental health problems, and are more likely to be delinquent and use alcohol and drugs. In recent research that uses detailed data from the Project on Human Development in Chicago Neighborhoods, I find that African-American and Hispanic children showed more signs of anxiety and depression after they moved. I also find that, on average, Hispanic children demonstrated more aggressive behavior after they moved (Figure 1). White children in this sample, however, did not appear to be negatively affected by a move.
Figure 1.  



Why might moving be worse for African-American and Hispanic children than it is for white children? Perhaps non-white children are more likely to be exposed to violence or have fewer social supports in their homes and neighborhoods, which would make them more susceptible to the disruptive effects of a move? Neither of those factors, however, explained the negative effect of moving for African-American and Hispanic children (as measured by the Child Behavior Checklist, well-established scales that are frequently used as indicators of child behavior). A variety of other factors, such as being renters instead of homeowners and, for Hispanic children, their immigration history, also failed to explain the differences.

Another factor could be the differences between the types of neighborhoods that people are leaving and those they are entering. In general, most of the children in my sample whose families left their neighborhoods moved to a new neighborhood with similar characteristics. This is consistent with other research showing that it is uncommon for families to move to new neighborhoods that are radically different (in terms of poverty level and other characteristics) from the neighborhoods they are leaving. Given this, it's not surprising that among those moving to similar (or worse) neighborhoods, African-American and Hispanic children showed more signs of anxiety and depression, on average, after they moved.

I do, however, have suggestive findings that indicate that African-American children who moved to much better neighborhoods, within or beyond the city of Chicago, did not experience increases in anxiety and depression, unlike African-American children who moved to similar or worse neighborhoods. This finding is consistent with research on the Moving to Opportunity program showing better outcomes in some domains for children who moved from neighborhoods characterized by concentrated poverty to lower poverty neighborhoods.

These and similar findings from other studies of residential mobility and neighborhood effects have several possible implications for policymakers. The data suggest that the children most likely to experience negative effects of moves seem to be similar to children that Matthew Desmond's work on evictions shows are more likely to experience forced moves. If this is the case, the findings underscore the importance of efforts to prevent and reduce evictions and other forced moves.

The findings also suggest that policymakers pursuing programs that aim to improve neighborhood contexts by relocating families need to acknowledge the potential disruptive effects of residential mobility that could undermine the benefits of those moves. If further research confirm the suggestive results showing that the disruptive effects of residential mobility may differ depending on the characteristics of the destination neighborhood, then mobility programs should be designed to focus on efforts to move families to more advantaged neighborhoods.

Beyond mobility programs, policymakers might consider the extent to which other programs and policies unintentionally increase the number of moves that children make and thus increase the possibility of negative outcomes. As one example, it would be useful to determine if the Housing Choice Voucher Program's time limits for finding a unit to rent with a voucher unnecessarily result in temporary moves before a household finds a permanent unit.

Taken as a whole, such measures could potentially reduce negative outcomes among African-American and Hispanic children whose families have to move, particularly those who have to move frequently.

Thursday, February 25, 2016

HUD Funding in the Presidential Budget Prioritizes Economic Mobility and Rental Assistance

Irene Lew
Research Analyst
Several weeks ago, President Obama released his final budget proposal to Congress. In it, the President requests $48.9 billion in gross discretionary funding for HUD—a $1.6 billion increase over the amount that Congress appropriated in FY 2016. With the exception of the Community Development Block Grant (CDBG) and the public housing capital fund, HUD’s FY 2017 budget maintains or requests increases for key programs over the levels that lawmakers approved in FY 2016 (Figure 1).

Source: US Department of Housing and Urban Development, FY 2017 Congressional Justifications; White House Office of Management and Budget FY 2017 President’s Budget 

Funding for Rental Housing Assistance

More than three-quarters (78 percent) of the funding request would support 4.5 million low-income households through HUD’s three largest rental housing assistance programs: housing choice vouchers, project-based rental assistance, and public housing (through its capital and operating funds) (Figure 2).



Source: US Department of Housing and Urban Development, FY 2017 Congressional Justifications.

After several years of uncertainty in the wake of sequestration in 2013, the request of $20.8 billion for the housing choice voucher program would fully fund all voucher renewals in calendar year 2016. The request includes a 26-percent boost in administrative fees to cover public housing agencies’ (PHAs) costs to administer the voucher program under a new formula based on the recommendations of a HUD-commissioned study released last year that highlighted the underfunding of PHAs.

Meanwhile, the budget would provide a full 12 months of funding for all contracts under the project-based rental assistance program, including public housing units and privately-owned units that were converted to long-term project-based Section 8 contracts under the Rental Assistance Demonstration (RAD) program. For the second straight year, HUD is seeking $50 million to expand the RAD program and remove the 185,000 unit cap on the number of public housing conversions under the first phase of RAD. Since it received Congressional authorization in 2012, RAD has been a key part of HUD’s strategy to access private capital to rehabilitate and preserve the aging public housing inventory, which has experienced a net loss of 139,000 units since 2000. Until RAD’s authorization, HUD’s public housing program was largely prohibited from accessing non-federal funding sources for making critical repairs to the stock. As of December 2015, HUD estimates that PHAs and their partners have raised over $1.7 billion through RAD to convert more than 26,000 public housing units.

With an increased emphasis on public housing RAD conversions, the request for the public housing program in FY 2016 was a marginal increase—less than 1 percent—over the FY 2016 enacted level. The budget proposes a 2 percent reduction for the public housing capital fund, which is troubling given that the public housing stock has an estimated capital needs backlog of about $26 billion, and that adequacy issues among public housing units are much more common than among other types of federally assisted and unassisted units. While RAD will help address adequacy issues in the public housing inventory, there is no guarantee that RAD funding will continue, and the ongoing disinvestment in the public housing capital repairs fund may offset gains made under RAD.

Meanwhile, the President’s budget also requests funding increases for key multifamily rental housing assistance programs administered by the US Department of Agriculture (USDA) that serve roughly 403,000 low-income households annually in rural communities, including $33 million for the Section 515 Rural Rental Housing Loans program, up 18 percent from $28 million enacted in FY 2016, and $1.4 billion for the Section 521 Rural Rental Assistance program, a modest increase (1 percent) from the FY 2016 enacted level.

Commitment to Ending Homelessness

Funding for homelessness prevention remains a priority in the President’s budget, which includes an 18 percent increase in discretionary funding over the FY 2016 enacted level for Homeless Assistance Grants. The increase will fund $25 million in new projects for homeless youth in coordination with the Department of Health and Human Services (HHS), an additional 25,500 new units of permanent supportive housing targeted at the chronically homeless, and 8,000 new rapid rehousing units for homeless families. Overall, in contrast to many other HUD programs whose funding levels have declined sharply over the past decade in real terms, funding for homeless assistance grants is now 43 percent higher in FY 2016 than in FY 2006 (Figure 3).

Note: Percent change is based on dollar values that have been adjusted for inflation using the CPI-U for All Items.
Source: White House Office of Management and Budget; US Department of Housing and Urban Development FY 2017 Congressional Justifications.

Building on the findings in HUD’s recent Family Options report highlighting the effectiveness of vouchers in improving the housing stability of homeless families, the budget is seeking $88 million in discretionary funding for 10,000 new vouchers for this population. In addition to this request, the budget has also proposed $11 billion in mandatory funding for an ambitious new 10-year initiative to end homelessness among families with children. This initiative, which would be exempt from the annual Congressional appropriations process, aims to assist 555,000 families over the coming decade through a significant expansion of housing choice vouchers and rapid rehousing assistance. As I noted in a blog post last year, the reduction in family homelessness has been much smaller than among veterans and chronically homeless individuals. In fact, as of the 2015 Point-in-Time count, which estimates both the sheltered and unsheltered homeless populations on a single night every January, the number of homeless persons in families in shelter is actually 4 percent higher than in 2007.

Emphasis on Economic Mobility and Fostering Inclusive Communities

With increasing evidence that neighborhood quality matters for child development and economic prospects, including a 2015 analysis of HUD’s Moving to Opportunity demonstration program, the President’s budget has requested a $75-million funding increase for Choice Neighborhoods, and has proposed a new three-year $15 million Housing Choice Voucher Mobility Counseling Demonstration program to help HUD-assisted families move and stay in higher-opportunity neighborhoods. In a similar vein, the budget has proposed the Upward Mobility Project, a new place-based initiative that will allow states and localities to blend funding across four existing block grant programs—HHS Social Services Block Grant and Community Services Block Grant, as well as HUD's HOME and CDBG programs—to implement evidence-based policies focused on poverty reduction and neighborhood revitalization. The budget maintains HOME funding at the FY 2016 enacted level of $950 million, which is an encouraging sign for many advocates who had rallied against FY 2016 Congressional proposals calling for severe cutbacks to the program, an important source of gap financing for tax credit projects and other local affordable housing initiatives. The budget also includes a request of $300 million in mandatory funding for a Local Housing Policy Grants program to help localities and regional coalitions fund policies and programs that minimize barriers to housing development and expand housing supply and affordability.

Reflecting the impact of the Supreme Court’s decision regarding low income housing tax credit (LIHTC) allocations in Texas Department of Housing and Community Affairs vs. Inclusive Communities Project and HUD’s Affirmatively Furthering Fair Housing ruling last summer, the President’s FY 2017 budget has also proposed that Qualified Allocation Plans (QAPs) for state housing finance agencies be required to include Affirmatively Furthering Fair Housing (AFFH) as an explicit preference for awarding tax credits. Additionally, part of the $69 million increase requested for the public housing operating fund in FY 2017 would go toward supporting increased PHA administrative expenses associated with implementation of the new AFFH regulations.

Serving the Lowest-Income Households

According to HUD’s 2015 Worst Case Housing Needs report, just 39 affordable units are available for every 100 extremely low-income renter households (those with income no higher than 30 percent of AMI). To incentivize developers seeking tax credits to provide deeper affordability for the lowest-income households—those who often cannot afford to live in LIHTC units without additional rental assistance—the President’s budget has once again proposed an income-averaging rule for LIHTC eligibility in which the average income for a minimum 40 percent of the units in a project does not exceed 60 percent of AMI.

The National Housing Trust Fund would also help address the shortfall in units that are affordable to the lowest-income households. Originally authorized in 2008 under the Housing and Economic Recovery Act, the Housing Trust Fund is a mandatory program funded by GSE contributions that will allocate funding to states and state-designated entities for the development, rehabilitation, and preservation of housing targeted at extremely low-income households. HUD predicts that it will collect $170 million in fee assessments from Fannie Mae and Freddie Mac for the fund in 2016, and an additional $136 million from the GSEs in 2017.

Preserving the Affordable Rental Stock

Despite an expansion of the voucher program, the budget included a $20 million reduction in tenant protection vouchers, which provide critical protection to residents at risk of displacement because they live in HUD-assisted units with expiring or terminating contracts. HUD notes that it will need to provide partial funding to approximately 33,500 vouchers in FY 2017 because the proposed amount of $117 million is insufficient to fund them for a full 12 months. Although HUD plans to request the full amount necessary for these voucher renewals in 2018, there is no guarantee that HUD will receive the funding it needs, putting families living in HUD-assisted units with expiring affordability contracts at risk for rent increases, eviction, or homelessness.

In addition to a requested expansion of the RAD program in order to preserve affordable stock, the President’s budget has also proposed that Section 202 Project Rental Assistance Contracts (PRACs), providing affordable rental housing to adults aged 62 and over, should also be eligible for conversion. While not part of the FY 2017 discretionary funding request, the budget has also recommended adding the preservation of federally assisted affordable housing to the other 10 criteria that state housing finance agencies are required to include in their QAPs for awarding LIHTC allocations.

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What happens from here? As the Center on Budget and Policy Priorities (CBPP) notes in a recent memo, the House and Senate will likely begin working on their own budget resolutions earlier than usual this year because an agreement is already in place on overall Congressional funding limits for fiscal year 2017. However, final decisions on FY 2017 appropriations will likely occur after the November elections.