In the coming fiscal year, caps on federal discretionary spending will be about $3 billion less than the year before. This means that without an increase in the spending caps, Congress will have to cut funding for discretionary programs, meaning affordable housing programs administered by the Departments of Housing and Urban Development and Agriculture are at risk at seeing their funding slashed. These housing programs are simply too important to local economies and the lives of millions of low income Americans who rely on them.
HUD and USDA programs, such as HUD’s Housing Choice Voucher program help low income families afford safe, decent, and accessible housing, while flexible block and formula grants allow states and communities to address their unique housing and community development needs. These programs enable local agencies and nonprofit organizations to develop and rehabilitate affordable housing for families, seniors, people with disabilities and other vulnerable populations in every type of community across the country. At the same time, federal investments in local housing and community development creates jobs, boosts families’ incomes and encourages further developments in rural and urban areas alike.
HUD investments are also used as crucial gap financing for Low Income Housing Tax Credit (Housing Credit) deals. The Housing Credit is the main driver of affordable housing production in the U.S. but it is not designed to cover the full cost of financing a development. This means that developers need access to both public and private gap financing to make these housing deals pencil out.
One key federal funding source of Housing Credit developments is the HOME Investment Partnerships Program (HOME). About a quarter of Housing Credit developments use HOME grants as gap financing, and more than one-third of HOME dollars disbursed are used as gap financing in LIHTC deals. Cuts to the HOME program would undermine the ability of Housing Credit to produce or rehabilitate affordable homes that are in high demand. In Nebraska, with the minimum wage set at $9.00/hour, an individual would have to work 53 hours a week just to afford a modest 1 bedroom rental home at Fair Market Rent. That is a problem.
The case for greater federal investment is simple. Affordable housing production and preservation creates jobs and gives an economic boost to communities, while also ensuring people of modest means have a home where they can prosper and gain economic mobility. In contrast, caps on federal spending will ensure more funding cuts to HUD and USDA programs, further impairing their ability to serve Americans with the lowest incomes in communities across the country.
Instead, Congress and President Trump must work to lift these spending caps and ensure affordable housing programs receive the highest amount of funding possible. We must invest in the resources families and communities need to thrive.
