As required by the Budget Control Act of 2011, the federal spending cuts known as the sequester took effect March 1, 2013. While the full ramifications of the sequester on the multifamily industry are unknown at this point, a number of government-administered affordable housing programs will be affected in the near term.
The Office of Management and Budget (OMB) provided some information on the estimated cuts at HUD and USDA; however, the affected departments could have some discretion with regard to cuts within specific programs and activities. The OMB estimated budget cuts of an average of 8 percent from a handful of accounts of interest to the multifamily industry in FY2013, although how these reductions will be implemented at a programmatic level currently is unclear. It is possible that funds available for rental assistance could be reduced, affecting select contract renewals as well as families currently waitlisted for rental assistance.
Accounts listed for cuts under the sequester include:
- Tenant-Based Section 8 Rental Assistance will have $1.5 billion cut from a total budget of $18.9 billion
- Project-Based Section 8 Rental Assistance will have $772 million cut from a total budget $9.3 billion
- HOME Investment Partnership will have $82 million cut from a total budget $1.0 billion
- Community Development Fund will have $279 million cut from a total budget of $3.4 billion
- Rural Housing Services Rental Assistance Program will have $74 million cut from a total budget of $905 million
However, certain government-backed loan guarantee and insurance programs are shielded from sequestration. These include the Federal Housing Agency’s (FHA) General and Special Risk Insurance Account, the FHA Mutual Mortgage Insurance Capital Reserve Account, the Rural Housing Insurance Account and the Rural Development Insurance Account. While new business from each program will likely diminish under sequestration, existing guarantees within these programs will remain in force.
More detailed information the effects of these budget cuts were outlined in this letter from HUD Secretary Sean Donovan.
- Source of Income Laws By State, County and City
- Senator Harris Introduces Renter’s Tax Credit
- HUD Releases Housing Choice Voucher Research
- Funding for the Section 8 Tenant-based and Project-based Rental Assistance Approved
- HUD Announces Dramatically Reduced Timelines for Subsidized Housing Inspections