Statement of Administration Policy: H.R. 5110 - Omnibus McKinney Homeless Assistance Act of 1988

(Revised - LA)

(House)
(Foley (D) WA)

The Administration supports reauthorization for FY 1989 of the McKinney Act's Emergency Food and Shelter and Transitional Housing Demonstration programs, because they address special needs and do not overlap or duplicate numerous existing Federal programs providing resources for the homeless.

Nevertheless, the President's senior advisers would recommend that he veto the bill if it continues to include the provisions that are called "technical and conforming" but which, in fact, make significant and costly policy changes in housing programs. These provisions violate agreements negotiated with the Administration during consideration of the Housing and Community Development Act of 1987 and would add directly to Federal budget outlays even without appropriation action.

The most objectionable of these provisions would:

—    preclude the use of housing vouchers for existing Section 8 loan management cases, which reduces available budget resources so that 250,000 fewer very low-income families receive vouchers or other housing assistance, and eliminates flexibility by attaching a subsidy eventually to all of the roughly 500,000 units in this privately-owned inventory, adding to housing costs by $6.3 billion over the next 5 years;

—    require HUD to expand greatly the number of multifamily housing projects for which HUD must provide financial assistance when the project is foreclosed, at a cost of over $1 billion to the Federal Government;

—    require HUD to rescind commitments to sell HUD-owned multifamily housing projects and even rescind multifamily property sales that have already closed, at great cost and disruption to both the Federal Government and purchasers of projects;

—    require HUD to raise rents unnecessarily in certain Section 8 projects above comparable private sector rent levels at a cost of nearly $11 million per year in backdoor spending; and

—    allow State housing finance agencies to keep, rather than return to the U.S. Treasury, excess Section 8 monies that become available when projects are refinanced.

The Administration also opposes the bill's amendments to the Aid to Families with Dependent Children (AFDC) and Emergency Assistance programs. They will allow States to tap open-ended public assistance funds for the cost of running housing programs and will inappropriately use AFDC funds for operational costs and debt service of shelter facilities.

In addition, the Administration opposes reauthorization of those McKinney Act programs that continue Federal categorical programs with complex and differing requirements, because these programs do not effectively address the needs of the homeless.