Slide 1

Rental Assistance Demonstration (RAD) Program 2013 NJAHRA CONFERENCE Atlantic Club Hotel & Casino Atlantic City, NJ Presenters: William F. Snyder Louis Riccio Slide 2 What is RAD? It is the conversion from Section 9 Public Housing Assistance to Project Based Section 8 Assistance. You will be released from your Public Housing Annual Contributions Contract and the Declaration of Trust. You will have less administrative burden (HUD estimates about 15%). You will be relieved from the burdens imposed by REAC (PASS, FASS, MASS). RAD is the current administrations attempt to recapitalize public housing through private debt & equity. Slide 3 RAD-Should I or Should I not! What is the future of public housing? Will the PH program provide a stable funding source for operations & capital needs in the future? Do my properties have significant capital needs? Can my properties pass HUDs physical condition assessment (PASS)? Slide 4 HUD Funding for Public Housing What do we know about the stability and rate of funding for the Public Housing Program? Slide 5 Proration Factor The Annual Contributions Contract (ACC) stipulates that your subsidy is subject to annual appropriations from Congress. There is currently an $800,000,000.00 gap in PHA Operating Fund eligibility and Congressional appropriations. PHAs must estimate what percentage Congress will approve in preparing their budget. Slide 6 The Proration Factor Slide 7 Operating Fund For 2012, the Congress accepted the Administrations recommendation and funded the Public Housing Operating Fund at $3.982 billion, $1 billion below total subsidy eligibility. This funding level was paired with a $750 million offset against excess existing operating reserves held by Public Housing Authorities (PHAs).. A year-long CR at the 2012 level will provide only 83 percent of PHAs operating costs for calendar year 2013. This would be the deepest proration in the programs history. Slide 8 Capital Fund Status Estimated Need (Abt) $26 Billion Annual Accrual Rate $3.6 Billion 2013 Appropriation $1.78 Billion 25% Cut in CFP from 2010-2012 Slide 9 Capital Fund Program From 2001 to 2013 the Capital Fund has been cut by nearly 50%! 25% from 2010 to 1013 alone! Slide 10 Capital Fund Program For 2012, the Public Housing Capital Fund was funded at $1.875 billion, the lowest funding level in the history of the program. Between 2010 and 2012, the Capital Fund experienced an unprecedented 25 percent reduction from what was already an inadequate funding level given the inventorys annual accrual of capital needs. According to the Capital Needs Assessment recently completed by Abt Associates at HUDs direction, the portfolio already has a modernization backlog in excess of $26 billion, with an annual accrual rate of approximately $3.4 billion. Slide 11 Housing Choice Voucher Program Need/Eligibility $18 Billion Current HAP Funding 94% Admin Fee 69% Slide 12 Housing Choice Voucher Program HUDs FY 2013 budget proposed $1.575 billion for administrative and other expenses of which up to $50 million shall be available toallocate to public housing agencies that need additional funds to administer their Section 8 programs at pre-QHWRA rates, leaving at least $1.525 billion for ongoing administrative fees. Vouchers from incremental and special purpose programs such as HUD-Veterans Affairs Supportive Housing (HUD-VASH), Non-Elderly Disabled (NED), the Family Unification Program (FUP), tenant-protection vouchers, and opt- outs will be leased and therefore roll into the Section 8 tenant- based renewal account for FY 2013, HUD has previously estimated that the proposed funding level would provide an 81 percent pro-ration for 2013. The FY 2012 act provided just $1.3 billion for ongoing administrative fees, $97 million less than the FY 2011 enacted level. This results in proration of 69 percent, this represents the lowest pro-ration in the 37-year history of Section 8 tenant-based voucher programs. Slide 13 Community Development Program From 2004 to 2013 the CDBG program has been reduced by 1.54 billion. Slide 14 HOME Program The HOME Program has been utilized as a source of gap funding in developing new affordable housing. Over the last 10 years, the HOME program has been slashed by 50%! Slide 15 Washington to the Rescue? Do you think that the current congress has an appetite form increasing HUD funding Public Housing? Do you think that housing programs a congressional priority? Slide 16 National Debt Current Federal Budget$3.8 Trillion Current National Debt$16.8 Trillion Current annual budget deficit$973 Billion Proposed Budget Savings over the next 10 years $1.5 Trillion Slide 17 National Debt-over the next 10 years Per year Savings (per sequestration)150 Billion Current Annual Deficit973 Billion Annual Difference823 Billion 10 years x10 10 Year deficit8.23 Trillion Current Deficit16.8 Trillion Total Projected Deficit at 2023 25.03 Trillion Entire federal budget is 3.8 Trillion The Deficit is going up-not down as a result of sequestration! As a nation, we are overspending. The United States just doesnt not have the resources to continue to increase the federal budget. As such, it comes down to a matter of priorities (guns or butter). Currently, congress cannot agree on what priorities should be funded! Slide 18 Sequestration What is sequestration? Sequestration is an across-the-board reduction in Federal budgetary resources in all budget accounts that have not been exempted by statute. Under the Balanced Budget and Emergency Deficit Control Act of 1985, as amended by the Budget Control Act of 2011, the American Taxpayer Relief Act of 2012, and other relevant legislation, across-the-board reductions of $85 billion in budgetary resources were required to be ordered by the President on March 1, 2013. Sequestration reduces each agencys budgetary resources in non- exempt accounts for the remainder of the fiscal year (which runs through September 30, 2013). Automatic cuts come from domestic discretionary spending which make up about 30% of the federal budget. HUD spending is considered discretionary spending and is subject to sequestration. Slide 19 Sequestration What will be the impact of sequestration on HUD? HUD will attempt to minimize the impact of sequestration to the extent permitted by law. However, HUD cannot choose which programs to exempt or what percentage cuts to apply. This will mean automatic and across-the-board budget cuts at HUD. The impact of sequestration on HUD programs will be dramatic. An approximate 5% across the board cut in HUD programs added to the already historic low proration factor! Slide 20 Sequester The sequester was originally passed as part of the Budget Control Act of 2011 (BCA), better known as the debt ceiling compromise.originally passed It was intended to serve as incentive for the Joint Select Committee on Deficit Reduction (the Supercommittee) to come to a deal to cut $1.5 trillion over 10 years. If the committee had done so, and Congress had passed it by Dec. 23, 2011, then the sequester would have been averted. No compromised deal has been achieved. No compromise seems to be anywhere is sight! Slide 21 U.S. Housing Authorities Approximately 3,300 PHAs 1.2 million public housing units 60% of residents are elderly or disabled 40% include families with children Average residency for non-elderly is approximately 4 years Slide 22 Federal Budget 101 Where Does the Money Go? In fiscal year 2014, the federal government will spend around $3.8 trillion. These trillions of dollars make up a considerable chunk around 22 percent of the US. economy, as measured by Gross Domestic Product (GDP). That means that federal government spending makes up a sizable share of all money spent in the United States each year. So, where does all that money go?Gross Domestic Product Slide 23 Federal Budget 101 Mandatory and Discretionary SpendingDiscretionary Spending The U.S. Treasury divides all spending into three groups: mandatory spending and discretionary spending and interest on debt. Interest on debt, which is much smaller than the other two categories, is the interest the government pays on its accumulated debt, minus interest income received by the government for assets it owns.mandatory spendingdebt Mandatory items: Medicare, Medicaid, Social Security, unemployment, SNAP, SSI, TARP. Slide 24 Federal Budget 101 Slide 25 Slide 26 Slide 27 Total Federal Budget $3.8 Trillion Annual HUD Budget $44.8 Billion Percent of Total Budget Scope of Rehabilitation Costs RAD Awards Per Unit Rehab/Construction Costs% of Awarded Units >$50,00026% $30-$50,00022% $10,000-$30,00026%