Millennial Housing Commission Federal Housing Assistance Millennial Housing

Millennial Housing Commission Federal Housing Assistance Millennial Housing Commission Housing Program Tutorial, June 2002

Forms of Federal Housing Assistance • Direct Assistance – Block Grants – Categorical Funding • Tax Expenditures • Direct Loans and Loan Guarantees Millennial Housing Commission Housing Program Tutorial, June 2002

Others Forms of Federal Support and Intervention • Government Sponsored Enterprises (GSEs) • Regulation of Financial Institutions • Fair Housing • Consumer Protection and Disclosure Millennial Housing Commission Housing Program Tutorial, June 2002

Eligibility for Housing Assistance • Income eligibility—Gross annual household income defined as percentage of area median income (AMI). • Rent Calculation—Based on adjusted gross annual income. Income includes pre-tax income, periodic payments (insurance, alimony, etc), or payment in lieu of earnings. • Income adjustments include a dependent allowance, elderly or disabled deduction, as well as child care and medical expense allowances. Millennial Housing Commission Housing Program Tutorial, June 2002

Cost Burdens Fall Heavily on Those With Lowest Incomes (1999) Notes: Occupied units; includes no cash renters; Severe Cost Burden defined as households paying more than 50% of income for housing cost; ELI defined <30% of Area Median Income (AMI), VLI defined as 30 -50% of AMI; LI defined as 50 -80% of AMI; MI defined as 80 -120% of AMI. Share spending 50%+ defined as households paying more than 50% of income for monthly housing costs; Share spending 30 -49. 9% defined as households paying 30 -49. 9 of monthly income for housing costs. Subsidy defined by the AHS. Millennial Housing Commission Source: See Table 1 Housing Program Tutorial, June 2002

Existing Affordable Rental Housing Mismatch(1999) Notes: Vacant and occupied units; Demand defined as number of households that fall under AMI cutoffs; supply defined as number of units priced at under 30% of Income. Source: See Table 2 Millennial Housing Commission Housing Program Tutorial, June 2002

The Nation’s Directly Subsidized Housing Note: Units and households under assistance net of housing tax expenditures and block grant funded units without other subsidies. Owner Assistance includes Section 235 and Section 502 direct loans. Source: See Table 3 Millennial Housing Commission Housing Program Tutorial, June 2002

The Nation’s Direct Rental Subsidies Public Housing Tenant-Based 1, 274, 000 1, 581, 000 Total Rental Assistance 4, 820, 000 Source: See Table 4 Private Project. Based 1, 965, 000 Millennial Housing Commission Housing Program Tutorial, June 2002

The Nation’s Direct Rental Project Subsidies Total Direct PBA units— 1, 965, 000 Source: See Table 5 Millennial Housing Commission Housing Program Tutorial, June 2002

New vs. Existing Rental Commitments Source: See Table 6 Millennial Housing Commission Housing Program Tutorial, June 2002

Condition of Assisted Housing Stock Average Per Unit Un-Funded Backlog of Physical Needs Un-funded Backlog: (In Millions) $2, 858 $1, 255 $540. 3 $24, 600 In 1998 dollars Source: See Table 7 Millennial Housing Commission Housing Program Tutorial, June 2002

Beneficiary Characteristics—Income Household Income by Program Source: See Table 8 Millennial Housing Commission Housing Program Tutorial, June 2002

Beneficiary Characteristics—Families with Children Source: See Table 9 Millennial Housing Commission Housing Program Tutorial, June 2002

Project Locations Source: See Table 10 Millennial Housing Commission Housing Program Tutorial, June 2002

Incidence of Poverty and Project Location Distribution of Units by Area Poverty Rate Source: See Table 11 Millennial Housing Commission Housing Program Tutorial, June 2002

GAO Program Cost Estimates * Voucher costs adjusted to account for program location and average bedroom size. Source: See Table 12 Millennial Housing Commission Housing Program Tutorial, June 2002

Block Grants-CDBG • Now assists approximately 185, 000 incremental housing units annually. Most for rehab. with 6. 1% for homeownership assistance and 7% for new construction. • Since 1975 about 28% of CDBG funds have gone to housing. • In FY 2001, about 35% of CDBG funding went to housing. Millennial Housing Commission Housing Program Tutorial, June 2002

Block Grants-HOME • Since 1990 about 650, 000 housing units have been acquired, rehabbed or newly built and about 78, 000 tenants have received rental assistance. • About 55% of funds have gone to rental of which 46. 3% was for new construction and 48. 6% was for acquisition and rehab. • The remaining 45% of funds went to homeowner and homebuyer assistance. Millennial Housing Commission Housing Program Tutorial, June 2002

Low-Income Housing Tax Credit • GAO estimates 752, 000 LIHTC units were produced. • NCSHA estimates about 67% of allocated Tax Credit units receive other subsidies. Source: See Table 13 Millennial Housing Commission Housing Program Tutorial, June 2002

Private Activity Bond Housing Programs • Mortgage Revenue Bonds (MRBs) • Assisted over 2 million households through 2000. • Annual originations now average over 100, 000 loans. • Multifamily Bonds • Funded about 780, 00 units through 2000. • Annual originations now average 48, 000 units with an average value of $2. 7 billion. Source: See Table 14 Millennial Housing Commission Housing Program Tutorial, June 2002

Tax Expenditures Low Income Housing Tax Credit-$3. 2 Depreciation of rental housing-$5. 2 Exception from passive loss rules-$4. 8 Deferral of Income from installment sales$1. 0 Exclusion of Capital Gains-$19. 1 Exclusion of Bond Int. for Owners-$0. 8 Exclusion of Bond Int. for Rentals-$0. 2 In billions FY 2001 Housing Tax Expenditures $121. 2 Real Estate Tax Deduction-$22. 4 Source: See Table 15 Mortgage Interest Deduction-$64. 5 Millennial Housing Commission Housing Program Tutorial, June 2002

FHA-Single Family Insured Loans Number of Loans Originated Source: See Table 16 Millennial Housing Commission Housing Program Tutorial, June 2002

FHA-Multi-Family Insured Loans Number Units Originated Source: See Table 17 Millennial Housing Commission Housing Program Tutorial, June 2002

Veterans Loan Guarantees Number of Loans Originated Source: See Table 18 Millennial Housing Commission Housing Program Tutorial, June 2002

RHS Single-Family Loan Guarantees Number of Loans Originated Source: See Table 19 Millennial Housing Commission Housing Program Tutorial, June 2002

Federal Housing Assistance-FY 2001 Source: See Tables 15, 21, and 22. Millennial Housing Commission Housing Program Tutorial, June 2002

Federal Housing Spending for Housing, 1976 -2006 In Billions of 2001 dollars Source: See Table 20 Millennial Housing Commission Housing Program Tutorial, June 2002

HUD Budget Outlays-FY 2001 Other--$2, 061 HOME--$1, 734 CDBG--$4, 826 Section 8 -$16, 579 In millions Public Housing$7, 435 Special Pop. --$1, 014 Source: See Table 21 Total Program Outlays (FY 2001) $33, 649 Millennial Housing Commission Housing Program Tutorial, June 2002

RHS Budget Outlays-FY 2001 Other*--$24 S. 515 --$59 S. 502 (Direct) $147 S. 521 --$634 In millions Total FY 2001 Program Outlays $1, 052 Source: See Table 22 S. 502 (Guarantee) $186 S. 538 --$2 Millennial Housing Commission Housing Program Tutorial, June 2002

Budget Process • Discretionary spending is capped and budget authority annually appropriated • Budget authority to cover long-term costs of credit programs must be appropriated upfront • OMB estimates long term costs of credit programs • Subsidy rate is expressed as a share of loan volume • Positive subsidy rate programs constrained by budget authority • Negative subsidy rate programs constrained by enacted loan volume limits Millennial Housing Commission Housing Program Tutorial, June 2002

Budget Process • Program changes that add to collections allow equivalent spending increases elsewhere • Tax expenditures and cuts are capped • Revenue loss estimates must be included in budget • Fannie Mae, Freddie Mac, and FHLB system are outside the federal budget system Millennial Housing Commission Housing Program Tutorial, June 2002

Housing Budget Issues • Funding expiring S. 8 long-term contracts – budget authority from $4. 2 billion to $5. 4 billion by 2005– approx 800 k expired headed to approx 900 k • Switching from 15 -20 year commitments to 1 -year and some to 5 -year renewal “subject to availability of the funds” • FHA not a dedicated trust fund—cannot reinvest receipts or get a lock on program changes that raise revenue • Subsidy rate assumptions and fund structures • Exit tax expenditure assumptions Millennial Housing Commission Housing Program Tutorial, June 2002

Subsidy Rates and Loan Volume Source: FY 2003 Federal Credit Supplement, Congressional Budget Office, April 2002. Millennial Housing Commission Housing Program Tutorial, June 2002

Additional Information • This information as well as additional baseline information is available on the Commission’s website (www. mhc. gov) Millennial Housing Commission Housing Program Tutorial, June 2002