WASHINGTON - Legislation that would permit the use of tax-exempt private-activity bonds in conjunction with the HOME housing affordability program is in danger of failing to pass Congress this year, housing industry officials said yesterday.
The measure, part of a broader package needed to reauthorize HOME and several other housing programs, has passed the House.
But the package is bogged down in the Senate, which has a long list of bills to complete before Congress adjourns as scheduled early next month, those officials said. The House and Senate return next week from a four-week recess.
The reauthorization bill "is very much up in the air" in the Senate, said John C. Murphy, executive director of the Association of Local Housing Finance Agencies.
Another problem for the package is that the Bush administration "has no interest in seeing it pass," said John T. McEvoy the executive director of the National Council of State Housing Agencies.
The HOME bond provision passed by the House in August would allow state and local governments to count the value of their multifamily and mortgage revenue bonds in the HOME contributions they make that are eligible for federal matching funds.
The Senate Banking Committee passed a far narrower measure in June. Under the panel's bill, state and local governments would be permitted to count 25% of the value of their multifamily bond issuances as part of their eligible contributions. Mortgage revenue bond issuances would not be eligible.
Housing industry officials said if the authorization bill does reach the Senate floor, the bond provision may be tightened even further. Sen. Donald W. Riegle Jr., D-Mich., the chairman of the committee, is expected to offer an amendment that would make a number of changes to the committee bill, including one that would lower the 25% for multifamily bonds to 10%, the officials said.
The HOME program, created by a 1990 law, requires the federal government to match contributions that state and local governments make to low-income rental and home ownership projects. The law does not specify what financial instruments may be counted among the contributions eligible for federal matching funds.
Last year, the Department of Housing and Urban Development issued regulations stating that general obligation bonds, but not private-activity bonds, were eligible for the match. HUD has argued that private-activity bonds are not a true contribution because they are repaid through project revenues.
Housing industry officials objected to the rules, and have urged Congress to reverse the department's decision. The officials have argued that issuers of private-activity bonds are taking a risk with their credit ratings, which should be considered a contribution to housing.
In addition to the reauthorization legislation, Congress is also struggling to complete a fiscal 1993 housing appropriations bill - legislation that directs the federal government to continue funding HOME and several other housing programs.
The House has passed an appropriations bill that would give $600 million in federal funds to HOME in 1993, a sharp drop from the 1992 level of $1.5 billion. Appropriations legislation pending in the Senate would give the HOME program $1.2 billion in 1993.
If the authorization bill stalls, housing officials said, basic elements of that legislation, such as the renewal of the HOME program, are likely to be folded into the housing appropriations bill during Senate debate on the measure next week. But the officials did not say whether smaller items such as the bond provisions could be preserved as well.
