October 15, 1991

October 15, 1991 | Executive Memorandum on Religion and Civil Society, Civil Society

The Housing Bill: Waiting for a Bush Veto


(Archived document, may contain errors)

10/15/91 313

THE HOUSING BILL: WAITING FOR A BUSH VETO

The White'House has the chance to demonstraw its support for the Department of Housing a nd .Urban Development's bold proposals for improving the housing of low-income Americans. It can do this .'by blocking legislation that guts the best of HUD's new ideas. George Bush has failed to issue a clear threat to veto the housing appropriations bin no* on his desk. This signals Capitol HUI that he perhaps.-is more interested in spending billions of dollars on' a space station'than on backing his own HUD Secretay, Jack Kemp, who is fighting to retain the central provisions of landmark housing reforms enacted last year. Top White House aides have indicated to the' press that Bush does not intend to veto RR. 2519,. the ap- .propriations bill which House and Senate conferees approved this September 26. This bill appropriates $80.9 billion infiscal 1992 b u dget authority for HUD, the Department of Veterans Affairs, the National Aeronautics and Space Administration, the Natibnal Science Foundation, arid-the Environmental Protec- .'.:tion Agency. Some $23.8 billion would go for HUD, $1.7 billion less th@n the $25.5 billion Administra- '@iion request. Ina September 25, 199 1, letter to Senator Barbara M-ikulski, the Maryland Democrat, Kemp com- .plained bitterly that the allocation of funds in the bill is 'a betrayal of low income families who hope one ',"'.day to become homeowners." Ile bill guts Kemp's promising initiatives to help the poorobtain decent .'housing And a chance to own their own homes. Instead it directs huge sums to the constructioa industry. At the same time, the bill lavishly funds a space sta t ion project that eventually- could wst more than $30 billion; some estimates even put the space station cost Atmore than $100 billion. The bill runs contrary to Kemp's initiatives in a number of ways: Example: The bill appropriates only $361 million for t h e new HOPE (Homeownership and Opportu- nity for People Everywhere) program, enacted in last year's housing bill. The. program would provide federal matching grants designed to help low-income families become first-time homeowners. Ile $361 million is abou t 60 percent less than the Administration's reques $1.61 m onwo d t. Of this illi ul go for HOPE 1, which is to enable tenant organi.zations in public housing to buy their apartments; $95 Mil- Bon each would go for homeownership grant@ in HOPE 2 (financial l y distressed.govermment-fore-' closed or -insured multifamily housin and HOPE 3 (financially distressed government-foreclosed. or - g) insured single-family housing); and $10 million would go for Elderly Independence, which would supply housing vouchers a n d- supplemental services to frail, l.ow income elderly Americans, so that theycan live at home, rathdrthin ih-nursing homes orother institu- tions. These programs were intended by HUD to replace expensive existing activities such as new,.pub- lic housing. Example: The confereesicompletely elimiriate rental -assistance funding within the, Shelter PlusaCare @prp gram. Intended to enable -the mentally ill homeless to live normal U'ves, rather than wandering.the ing.on grates program funded it, would have link ed housing fund- sleep the had Congr6s ing to s6ivices to combat substance- abuse, and provide treatment to the- mentally ill.

F,xample:.The bill grants only $777.5 million of the Administration request of $1.1 billion for hous- W& vouch . crs. Such vouc hers are subsi 'dies of a fixed dollar amount which give low-income househol. 'ds; for men choice over where they live. For each family housed, vouchers cost taxpayers about half as - much as other housing programs, such as public housing or federally-sub s idized private construction.. F.xample: The bill appropriates $1.5 billion to fund the HOME Investment Partnership program cre- ated in last year's federal housing package. HOME provides block grants to state and local govern- ments, as well as nonprofit g roups, to subsidize the construction, rehabilitation, and acquisition of low.- income bQusing. The problem with HOME is that the focus is on expensive new construction, and it is not targeW enough to low-income areas. Conferees, moreover, waived for fisca l 1992 HOME's re- quirements for state, local, and private recipients to match federal dollars -with funds of their own. State and local officials therefore have no financial incentive to make sure that the "fi-ee" federal money is used wisely. Further, th e bill eliminates incentives for grant recipients to use funds for tenant-based as- sistance and rehabilitation instead of expensive new construction. The money thus will produce fewer homes for the poor than if used for vouchers. As such, Congress has tra n sformed HOME into a new version of the scandal-ridden construction programs that were ended only when Kemp took over the reins at HUD. In these programs, developers lobbied powerful lawmakers and HUD officials to steer grants in their direction. The irony is that Congreiss applauded Kemp when he announced he would shut down such programs.

Conferees have decided to support public housing instead of HOPE. This expansion of public housing funding was supported by lobbyists for the powerful public housing authorities (PHAs). These are man- dated to provide "decent and safe" housing for those i n need, but many of the largest PHAs fail in this task. Many are little more than patronage mills, with their badly-maintained projects suffering from crime, drug trade'l and rampant teen pregnancy. has tried to tr sfo m. HUD Kemp is urging a veto of the b i ll. Since taking office in February an from an open cash register for the housing industry into an agency to help poor Americans .obtain decent homes. The HOPE program, now essentially gutted by Congress, is the heart of Kemp's strategy. Rather than add m o re units to the nation's 1.4-million-unit public housing stock, where over 100,000 units are va- cant, HOPE would tear boards off windows and doors, and improve existing units. It also would promote tenant management and ownership, which has a demonstrate d record of reducing project operating costs and stabilizing neighborhoods. If fully funded, HOPE would sell off as inany as 20,000 units of public housing by the end of 1992, and give grants to more than 300 resident management groups to develop fo- ture h ome ownership programs. Cbance for Low-Income Americans. Kemp anticipated opposition from lawmakers with close links to the construction industry and those who resist his empowerment agenda. What is puzzling is George Bush's failure to give HUD the suppor t needed to push through this program. Shortly after passage of RIL 2519, Kemp sent a letter to Bush, White House Chief of Staff John Sununu, and Director of the Of- fice of Management and Budget Richard Daman, requesting that the bill be vetoed unless fun d ing is in line with the Administration's request. According to press reports, Kemp has been told his reform pack- age is not worth a veto. And according to Mikulski, Bush has said that he feels the bill's $2 billion for the space station outweighs any fla ws in the allocation of funds for HUD. If Bush fails to stand by HUD on this crucial bill, his Administration will lose its chance to demonstrate its ability to fiffill the housing drearns of low-income Americans.

Stuart M. Butler, Ph.D. Director of Domestic and EcDnomic Policy Studies

Carl F. Horowitz, Ph.D. Policy Analyst

}}