Congress Approves Bill That Would Give HOME Program $1.5 Billion Next Year
WASHINGTON - Congress has granted final approval to legislation that would give $1.5 billion next year to the new housing affordability program and exempt state and local governments from contributing funds to the program during 1992.
The bill now goes to President Bush for his signature. Housing and Urban Development Secretary Jack Kemp has said he would recommend a veto of the bill, because he believes the funding level is too high and state and local governments should be forced to kick in some of the funds for the program.
But housing lobbyists said they believe the President will sign the bill, which makes appropriations for fiscal 1992 for HUD and several other federal agencies. The bill funds a number of items the administration strongly supports, they said.
Housing lobbyists have praised the $81.5 billion level on which Congress finally settled, which is well above the administration's proposal for $1 billion and the House bill's level of $500 million. But at least one member of Congress has hinted that it may not be possible to deliver that entire amount next year.
During debate on the Senate floor last Wednesday, Sen. Jake Garn, R-Utah, said the funding levels for programs in the appropriations bill "cannot be sustained with any plausible expectation of what will be available" next year.
"The housing programs in this measure are based on optimistic cost assumptions," said Sen. Garn, who is the ranking Republican on the Senate Appropriations Committee's Subcommittee on HUD, the Veterans Administration and Independent Agencies. He predicted Congress "will revisit some of the recommendations contained in our conference agreement during the course of this fiscal year."
The housing affordability program, popularly known as HOME, was created by Congress last year. It requires the federal government to match financial contributions state and local governments make to low-income housing projects. HUD has said it would allow general obligation bonds to count toward the match, and housing industry officials have been pushing for HUD to make private-activity bonds and revenue bonds eligible as well.
But the question of which bonds should count toward the match was pushed aside after the Senate, in its version of the bill, proposed waiving the matching requirement for one year, so that financially strapped governments with little or no extra money to contribute to the program could still receive federal funds in 1992. When the House and Senate versions of the bill were reconciled, House conferees accepted the Senate proposal.
Housing lobbyists have said they will be back next year to push HUD to allow bonds other than general obligation bonds to count toward the match when it goes back into effect in 1993.
Meanwhile, those lobbyists have been divided as to whether waiving the match will discourage issuance of tax-exempt bonds under the program. With no incentive to come up with matching funds, states and localities will have no need to issue bonds for the program, some lobbyists have said.
But others disagree, saying that many state and local governments will want to make those federal dollars go farther by contributing their own funds, and bonds are the most likely source of that financing.