Statement of Administration Policy: H.R. 3838 - Housing and Community Development Act of 1994

(House)
(Gonzalez (D) TX and 26 others)

The Administration strongly supports House passage of H.R. 3838. The bill moves in the direction of many goals supported by the Administration. It would: (1) consolidate homeless programs; (2)  reform Federal Housing Administration (FHA) programs; (3)  merge the section 8 certificate and voucher programs; (4)  provide performance incentives for public housing authorities; (5) authorize appropriations for Grants for Empowerment Zones and Enterprise Communities; (6) improve homeownership counseling; and (7) authorize appropriations for the Colonias Assistance program.

The Administration, however, is concerned about certain aspects of H.R. 3838 and will work with Congress to improve and strengthen the bill as it moves through the legislative process. A major concern with the bill is its effect on the deficit. OMB's preliminary estimate is that H.R. 3838 would increase the deficit by $243.5 million in FY 1994 and by $364.4 million during FYs 1994-1998. If these costs are not offset prior to the bill's enactment, they could contribute to a sequester of mandatory programs.

Among other improvements, the Administration will work to modify H.R. 3838 to:

• Provide greater access to FHA single-family insurance without subsidizing homebuyers who could be served by the private mortgage market. H.R. 3838 would raise the limits on the size of single-family mortgages that FHA may insure. Although the Administration shares the goal of equalizing homeownership opportunities in all parts of the country, it prefers its proposal to limit FHA insurance to mortgages equal to 95 percent of the average home price in each metropolitan statistical area, and to index the limits each year.
  
  
• Include the Administration's reform proposals, such as limiting annual rent increases for units occupied by tenants who remain in place. These proposals could result in outlay savings of over $500 million in FY 1996 and $700 million in FY 1997. The savings would allow HUD to assist more low-income families and stay within the legislative caps on discretionary spending.
  
  
• Structure Section 8 renewals in such a way that the program would not limit HUD's ability to provide appropriate housing subsidies at the lowest cost for tenants. The Administration opposes certain renewal requirements, but will continue to work with the Congress to reach agreement. OMB's preliminary estimate is that this provision would increase direct spending by $229.3 million in FY 1994.
  
  
• Authorize the Administration's mandatory Section 8 property disposition proposal. The proposal would accelerate the disposition of HUD-held and HUD-owned multifamily properties and create a budgetary framework to reflect the savings realized by the Federal Government.
  
  
• Delete amendments to the Performance Funding System (PFS) for public housing. .H.R- 3838 would require additional operating subsidies for public housing that would increase HUD's costs by as much as $1 billion a year. HUD should be permitted to complete its review of the PFS before changes are made to the system.
  
  
• Include reforms similar to those in S. 2049 to the Section 515 multifamily rural housing loan program administered by the Farmer's Home Administration.
  
  
• Identify the public objectives to be achieved by requiring that certain benefits be provided to a specific number of women and minorities.
  
  
• Delete language that would prevent the Administration from obligating the full credit subsidy cost of refinancing multifamily loans. Although the Administration supports refinancing multifamily loans with high interest rates, this language would contravene the Budget Enforcement Act and require HUD to use mandatory funds to pay the cost of future defaults.

In addition, the Administration opposes provisions that would: (1) impose restrictions on Section 8 owners under the merged certificate and voucher program, thereby limiting owner participation; (2) exempt the Government National Mortgage Association from HUD's overall personnel ceiling; (3) establish new statutory advisory commissions; and (4) restrict FHA's ability to dispose of its single-family properties for Homeownership.

Pay-As-You-Go Scoring

H.R. 3838 would increase direct spending; therefore, it is subject to the pay-as-you-go requirement of the Omnibus Budget Reconciliation Act of 1990. OMB's preliminary scoring estimates for this bill are presented in the table below. Final scoring of this legislation may deviate from these estimates.

Estimates for Pay-As-You-Go
($ in millions)