Texas failing to spend federal funds for foreclosure-impacted communities

New report finds that millions are at risk of being returned to the federal government

Austin, TX – Texas may be forced to return an estimated $42 million in unspent federal funds meant to stabilize foreclosure-impacted communities, unless state and local agencies begin properly utilizing the funds, according to a report released today by the Texas Low Income Housing Information Service (TxLIHIS). The Texas Department of Rural Affairs alone may be forced to return $16 million.

Much of the funding allocated to Texas through the Neighborhood Stabilization Program (NSP) is still not committed, with just three months left in the program. The NSP program is designed to help local communities turn foreclosed, abandoned, or blighted housing around to low- and moderate-income families for affordable purchase or rental and to create construction jobs. Uncommitted funds must be returned to the federal treasury.

“It would be a huge shame if Texas loses out on a source of millions of dollars and hundreds of jobs when the economy is struggling and cities and counties all over the state are trying to survive huge budget crises,” said John Henneberger, TxLIHIS co-director. “It’s not too late, but if the agencies in charge of these funds don’t take quick and drastic action, Texas will lose out.”

Texas received $178 million in NSP funds, which was parceled out to 15 different agencies. According to TxLIHIS’ report, the largest recipient of funds — the Texas Department of Housing and Community Affairs (TDHCA) — is ranked 43rd in committing funds, out of the 50 state-administered programs. Part of TDHCA’s program is administered by the Texas Department of Rural Affairs (TDRA) and is performing even worse, with only 4 percent of their funds for rural communities committed to foreclosure relief projects, which puts $16.2 million at risk of being returned to Washington.

Moreover, according to TxLIHIS’ study, poor reporting has put in doubt whether many agencies are meeting the federal requirement that 25 percent of the funds benefit the very poor: those who make below 50 percent of the area median income. “Foreclosure stricken communities are suffering while agencies sit on money, and compounding this tragedy is the very real possibility that the spent funds aren’t helping the families that need help the most,” Mr. Henneberger said.

The TxLIHIS report details how improper utilization or failure to spend funds is affecting local communities. In Dallas, the very poor are losing out, as the city is falling far short of its obligation to serve Very Low-Income families. The greater Austin area is on track to lose $4.1 million because localities are not committing funds. In the Houston area, which received the most funds of any region, the city is perilously close to losing $11.8 million in funds and Fort Bend County has so far only committed the 10 percent allowed for administrative overhead, while not providing any actual housing.

The potential benefits of NSP program, and the missed opportunities of underutilizing the funds extend beyond housing: new construction-related jobs created through the program can stimulate the economy, and federal rules stipulate that low-income people should receive preferential hiring for this work. Yet when funds aren’t spent, these job possibilities are lost.

TxLIHIS is the state partner of the National Low Income Housing Coalition and the only nonprofit research and advocacy organization in Texas devoted exclusively to affordable housing issues.

The report is available for download here.

6 thoughts on “Texas failing to spend federal funds for foreclosure-impacted communities

  1. I do believe this article is outdated as I know for a fact that Houston is over 90% obligated in Federal grant dollars and 100% obligated in Texas state NSP dollars

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