White House FY 2023 Budget Proposes Major Increases in Housing Funding and New Programs to Increase Housing Supply

This week, the Biden Administration submitted to Congress the President’s Budget for Fiscal Year 2023, outlining the administration’s fiscal priorities for the coming year. The budget includes substantial investments in housing to advance efforts to end homelessness, increase housing supply, expand homeownership opportunities for underserved borrowers, increase climate resilience and energy efficiency, strengthen communities facing underinvestment, and address and prevent housing-related discrimination.

NCSHA will release its full budget analysis and updated budget chart this afternoon after HUD Secretary Marcia Fudge holds a briefing to provide additional details on the administration’s housing and community development proposals.

HUD Highlights

The budget requests $71.9 billion for the U.S. Department of Housing and Urban Development (HUD) and $28.5 billion for the U.S. Department of Agriculture (USDA), an increase of $12.3 billion (21 percent) and $4.2 billion (17.1 percent) over the FY 2021 enacted levels, respectively. Due to the timing of enactment of the final FY 2022 spending package, the budget does not reflect the details of the 2022 appropriations bills and compares its new FY 2023 investment levels to 2021 funding levels.

The budget proposes $1.9 billion for the HOME Investment Partnerships program (HOME), an increase of $400 million over FY 2022. If enacted, this would be the largest funding level for HOME in more than 15 years. It also proposes $15 billion to fully fund renewals and amendments in the Project-Based Rental Assistance, Housing for Persons with Disabilities, and Housing for the Elderly programs.

To complement these investments and address the critical shortage of affordable housing across the country, the budget proposes $50 billion in mandatory funding for increasing the supply of affordable housing. This includes $35 billion in HUD funding for state and local housing finance agencies and their partners to provide grants, revolving loan funds, and other streamlined financing tools that reduce transactional costs and increase housing supply, as well as grants to advance state and local jurisdictions’ efforts to remove barriers to affordable housing. The $50 billion is inclusive of a $10 billion investment in the Housing Credit (see below for details) and $5 billion for the Treasury Department’s Community Development Financial Institutions Fund.

See funding information for key HUD programs below.

  • $1.9 billion for HOME, an increase of $400 million. If enacted, this would be the highest funding level for HOME in 15 years.
  • $3.8 billion for the Community Development Block Grant program, an increase of $470 million over the FY 2022 enacted level.
  • $32.1 billion for Housing Choice Vouchers, an increase of $4.7 billion over FY 2022, the largest one-year increase in vouchers since the program was authorized.
  • $15 billion to fully fund renewals and amendments in the Project-Based Rental Assistance program, $1.06 billion over FY 2022. The budget also proposes $375 million for contract administration.
  • $180 million to support the creation of new permanently affordable housing units for the elderly and persons with disabilities through the Section 202 and Section 811 programs.
  • $400 million for HUD’s Office of Lead Hazard Control and Healthy Homes, $15 million less than FY 2022. The budget includes an additional $25 million to address lead-based paint in public housing.
  • $3.6 billion for Homeless Assistance Grants, an increase of $363 million over FY 2022.
  • $8.8 billion for public housing, including $5 billion for the operating fund, roughly equal to FY 2022, and $3.2 billion for public housing authorities for capital needs and modernization, an increase of $332 million over FY 2022.
  • $276 million for competitive grants for capital improvements to improve the energy or water efficiency or climate resilience of public housing and $25 million for utility benchmarking.
  • $250 million for grants and loans to improve the energy and water efficiency and climate resilience of properties assisted through the Project-Based Rental Assistance, Section 202, and Section 811 programs and an additional $31.5 million for utility benchmarking.
  • $86 million in grants to support state and local fair housing enforcement organizations and investments in HUD staff and operations capacity to deliver on the president’s fair housing priorities, including to lift barriers that restrict housing and neighborhood choice, affirmatively further fair housing, and provide redress to those who have experienced housing discrimination, level with FY 2022.
  • $1 billion to fund tribal efforts to expand affordable housing, improve housing conditions and infrastructure, and increase economic opportunities for low-income families.

Rural Housing Highlights

The budget provides $1.8 billion for USDA multifamily housing programs, an increase of $259 million from the FY 2021 enacted level, including major increases in the Section 515 multifamily loan and Section 538 multifamily loan guarantee programs from their FY 2022 appropriations. The significant investment would help address housing insecurity, rent burdens, and the impacts of climate change in rural America. The budget requests $1.602 billion for the Section 521 Rural Rental Assistance and Section 542 voucher programs, a $107 million (7 percent) increase over FY 2022 enacted levels.

Notably, the budget proposes allowing renewals or extensions of rural rental assistance for Section 521 properties that do not have an outstanding mortgage, as long as the Secretary determines a maturing loan for a project cannot reasonably be restructured with another USDA loan or modification.

See funding information for key USDA programs below.

  • $400 million for the Section 538 multifamily loan guarantee program, an increase of $150 million over FY 2022.
  • $200 million for the Section 515 direct rental housing program, an increase of $150 million over FY 2022.
  • $75 million for the housing revitalization pilot program.

Tax Highlights

Supplementing the President’s Budget, the Treasury Department separately released the General Explanations of the Administration’s Fiscal Year 2023 Revenue Proposals — commonly known as the Green Book — which describes the administration’s tax proposals for the year, including changes to housing and community development tax programs.

The administration proposes to extend the state-determined Housing Credit basis boost to some bond-financed 4 percent Housing Credit properties. Under current law, state Housing Credit agencies may provide a basis boost of up to 30 percent to 9 percent properties that need the additional Credit authority for financial feasibility, but states do not have corresponding authority to do so for 4 percent Credit developments. Developments eligible for the proposed basis boost would be bond-financed Housing Credit properties that are either new construction or substantial rehabilitation that add new net units. Allowing a state-determined basis boost for bond-financed properties has long been an NCSHA priority and is included in the Affordable Housing Credit Improvement Act.

The Green Book also includes a proposal to make permanent the New Markets Tax Credit with an allocation of $5 billion in 2025, indexed for inflation in 2026 and thereafter.

The budget and the accompanying Green Book generally do not include provisions that had been in the Build Back Better legislation, including policies such as a Housing Credit cap increase, lowering the financed-by test for bond-financed Housing Credit properties, and the enactment of the Neighborhood Homes Investment Credit. Instead, the budget notes that discussions with Congress continue on other proposals the president supports, including housing proposals. Due to the unresolved nature of these priorities, the budget includes a “deficit neutral reserve fund” to account for future legislation.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s