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Less Money Available for Affordable Housing

February 21, 2012 | Comments: 0 | Views: 116

The 2012 budget is out for the U.S. Department of Housing and Urban Development's community development programs. Funding levels have been released for Community Development Block Grants (CDBG), HOME Investment Partnerships (HOME), Housing Opportunities for Persons with AIDS (HOPWA), and Emergency Solutions Grants (ESG). Many of the cities and counties that had been eagerly awaiting the news were reminded of just how difficult the country's economic situation has been.

Overall funding to the CDBG program was cut by 12 percent for FY2012, and some communities had their individual grants cut by nearly half. Hialeah, FL; Hammonton, N.J.; Miami Beach, FL; and Alexandria, VA all had their grants cut between 40 and 50 percent. Even the city of New Orleans, which is still rebuilding after being decimated by hurricanes, is receiving 27 percent less in CDBG funding this year than it did last year. For most cities, CDBGs are a small portion of the budget, but the money is generally spent on projects that would otherwise receive no funding at all.

Though cities expected some funding reductions, the amounts caught them by surprise. Not only was the overall CDBG budget cut, but HUD began using a new formula that allocates the money differently. Historically, HUD has used census date like population, housing stock information and poverty levels to determine CDBG awards. This year, however, it began using supplemental information from the Census' American Community Survey, which is conducted annually.

In addition, HUD's HOME grant program was cut from $1.8 billion to $1.6 billion - also a significant decrease. Fortunately, funding for the HOPWA program remains unchanged and Community Development Grants to Indian tribes received an $8 million boost.

Emergency Solutions Grants, which - until now - did not have its own line item in HUDs budget, have $200 million to spend in the 2012 fiscal year. Similarly, Choice Neighborhoods, and expansion of the Hope VI program which was eliminated last year, receiving funding for expansion.

So, while some of the news from HUD is not good, it's also not all bad. In some respects, communities will have to do more with less, but they'll also have new streams of funding to help bridge the gap. The final HUD budget is also not a surprise to many people. In light of recent Congressional debates about federal spending and the deficit, most government agencies were expecting budget cuts.

Even so, housing advocates have been consistently urging Congress to be careful how and where they reduce spending. Many are concerned that programs will be indiscriminately cut for the sake of saving money, without being assessed for effectiveness and need. Programs that work well to support low-income residents, they argue, should be supported, and financial savings achieved by cutting programs that are genuinely wasteful or not needed. If Congress doesn't do its due diligence, it could end up hurting some our country's most vulnerable citizens.

Want to get a free program guide of Sean Carpenter's top 8 favorite government programs for real estate developers and investors? Request your free program guide today at:

Source: EzineArticles
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Housing Funding


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