Housing coalition responds to House committee vote to repeal National Housing Trust Fund

Earlier I posted the audio of the July 12 House committee hearing on repeal of the National Housing Trust Fund. In the course of the debate before the committee a number of arguments were raised against the National Housing Trust Fund that were strongly disputed by defenders of the trust fund.

On Tuesday the National Low Income Housing Coalition (NLIHC), the leader in establishing the National Housing Trust Fund, issued a memo to the coalition’s members responding to the arguments made by the bill sponsors. The following is drawn from the NLIHC memo…

On July 12, 2011, the Subcommittee on Capital Markets and Government Sponsored Enterprises of the House Committee on Financial Services marked-up H.R. 2441, the Housing Trust Fund Elimination Act of 2011, introduced by Representative Ed Royce (R-CA). The bill was voted out of subcommittee on a straight party line vote. During the mark-up, Mr. Royce made numerous assertions about the National Housing Trust Fund that were misleading, distorted, off base and just plain wrong. Here is a selection of what he said followed by the facts.

Mr. Royce: “We have 89 housing affordability programs that apply about $60 billion to improving rental affordability every year,” citing a list of 89 HUD programs produced by Republican committee staff.

FACTS:

  • This is a list of various accounts at HUD; 28 items on the list do not provide housing, no longer receive any funds, are duplicates, or have not yet been implemented.
  • Only 16 items on the list “improve rental affordability” for low income renters. Most are programs that support homeownership.
  • Not one item on the list provides funding to produce new rental housing specifically for extremely low income (30% of area median income or less) households, the primary purpose of the National Housing Trust Fund.
  • The list includes several programs with multiple accounts. For example, there are seven listings for the CDBG (Community Development Block Grant) program.
  • The National Housing Trust Fund is on the list, but it has not been funded.
  • The dollar amount is also wrong. HUD’s latest published estimate for its FY11 budget is $50.3 billion. The amount appropriated by Congress for the 16 items that improve rental affordability for FY11 is $39.3 billion.

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Mr. Royce: “It’s not for lack of funding in this regard,” saying there is no need for the National Housing Trust Fund when the government spends $60 billion for rental affordability.

FACTS:

  • Due to a lack of federal funding, only 25% of all low income households eligible for federal housing assistance actually receive any aid.
  • Nationwide, there are 10 million extremely low income renter households and only 6.5 million rental homes that they can afford.
  • The lack of funding to make housing affordable for low wage workers and poor people with disabilities or who are elderly is a proven cause of homelessness and housing instability.

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Mr. Royce: “If we’re going to put resources into [the housing trust fund], let’s put it into Housing Choice Vouchers, let’s put it into Section 8, let’s put it into public housing, let’s put it into project based vouchers, let’s put it into the Low Income Housing Tax Credit, you know, the Homeless Assistance Grants.”

FACTS:

  • Mr. Royce has not supported the programs he cited. He voted for H.R. 1, the House’s FY11 budget proposal, which would have cut HUD programs by $5.7 billion below FY10 funding.
  • Mr. Royce declined to sign Representative Maxine Waters’ (D-CA) letter to House appropriators supporting adequate FY12 funding for Section 8 and public housing.
  • Mr. Royce has not proposed any increases in funding for these programs.
  • Mr. Royce has not proposed targeting any existing housing programs to extremely low income households.

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Mr. Royce: “There is the great potential for fraud. Many of the aspects of the fund are based off of what was called the HOME program,” implying that the National Housing Trust Fund will be fraudulently used.

FACTS:

  • The “fraud” claim is based on controversial Washington Post articles that alleged that 14% of HOME projects were significantly delayed, not fraudulently used. HUD testified to Congress that in fact only 2.5% of all projects underway (27% of the 700 projects in the articles) met the Post’s definition of delayed. When a project is not completed in the timeframe required by regulation, HUD redirects the funds. If funds are misspent, HUD always recaptures them.
  • Both HOME and the National Housing Trust Fund are block grants, which are intended to give maximum flexibility to state and local governments to manage their programs.
  • While HOME is distributed to 642 state and local governments, the National Housing Trust Fund will go to only 55 states and territories, making it much easier to monitor.

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Mr. Royce: “According to HUD’s proposed rule… most of the eligible activities under the housing trust fund are similar if not identical [to HOME].”

FACTS:

  • The National Housing Trust Fund was enacted because no other federal program supports production of rental housing that is affordable for extremely low income households.
  • HOME creates homeownership and rental housing. When HOME is used for rental housing, at least 90% of the units are for households with incomes under 60% of the area median, with remainder for households with incomes up to 80% of the area median. If HOME jurisdictions use their funding for homeownership, all households served must have incomes below 80% of area median.
  • At least 90% of the National Housing Trust Fund funds must be used for rental housing; up to 10% may be used for homeownership. At least 75% of the funds used for rental housing must benefit extremely low income households; up to 25% can be used for households with incomes of 31% to 50% of the area median. Any National Housing Trust Fund dollars used for homeownership must benefit households with incomes below 50% of the area median.
  • ________

Mr. Royce: “ACORN has been investigated in 14 states for massive voting irregularities, hundreds of thousands of registrations that were invalid,” referencing his belief that “ACORN… would receive funding under the housing trust fund, if we ever funded it…”

FACTS:

  • The National Housing Trust Fund can only be used to build and operate housing.
  • The National Housing Trust Fund statute prohibits funding political activities, as well as advocacy, lobbying, travel, counseling, or preparing of tax returns.
  • Congress passed legislation prohibiting federal funding for the nonprofit organization ACORN.
  • ACORN has gone out of business.

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Mr. Royce: “ACORN played a pretty substantial role, frankly, in erosion of mortgage lending standards throughout our market. The Chicago Tribune article in 1991 went back to how housing activists in this organization were pushing to undermine or change standards, change down payments, trying to drive that down to zero.”

FACTS:

  • The National Housing Trust Fund campaign has never supported nor endorsed substandard lending practices, including zero down payments.
  • The primary purpose of the National Housing Trust Fund is to create rental housing for extremely low income households.
  • Again, Congress passed legislation prohibiting federal funding for ACORN and ACORN has gone out of business.

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Mr. Royce: “According to the NLIHC, some of these organizations are very public in their endorsement in the housing trust fund for the reason that they want to get money out of the housing trust fund.”

FACTS:

  • Yes, it is true that many housing organizations support the National Housing Trust Fund because it is their mission to build and operate rental housing that is affordable for extremely low income households.
  • 7,155 national, state and local organizations, including organizations in Mr. Royce’s district, support funding the National Housing Trust Fund, because they recognize the shortage of rental housing that extremely low income households can afford in their communities and nationwide.