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Millennial Housing Commission
Housing Program Tutorial, June 2002
Millennial Housing CommissionFederal Housing
Assistance
Millennial Housing Commission
Millennial Housing Commission
Housing Program Tutorial, June 2002
Forms of Federal Housing Assistance
• Direct Assistance– Block Grants– Categorical Funding
• Tax Expenditures
• Direct Loans and Loan Guarantees
Millennial Housing Commission
Housing Program Tutorial, June 2002
Others Forms of Federal Support and Intervention
• Government Sponsored Enterprises (GSEs)
• Regulation of Financial Institutions
• Fair Housing
• Consumer Protection and Disclosure
Millennial Housing Commission
Housing Program Tutorial, June 2002
Eligibility for Housing Assistance
•Income eligibility—Gross annual household income defined as percentage of area median income (AMI).
• Rent Calculation—Based on adjusted gross annual income. Income includes pre-tax income, periodic payments (insurance, alimony, etc), or payment in lieu of earnings.
• Income adjustments include a dependent allowance, elderly or disabled deduction, as well as child care and medical expense allowances.
Millennial Housing Commission
Housing Program Tutorial, June 2002
Cost Burdens Fall Heavily on Those With Lowest Incomes (1999)
Notes: Occupied units; includes no cash renters; Severe Cost Burden defined as households paying more than 50% of income for housing cost; ELI defined <30% of Area Median Income (AMI), VLI defined as 30-50% of AMI; LI defined as 50-80% of AMI; MI defined as 80-120% of AMI. Share spending 50%+ defined as households paying more than 50% of income for monthly housing costs; Share spending 30-49.9% defined as households paying 30-49.9 of monthly income for housing costs. Subsidy defined by the AHS.
Source: See Table 1
56%
18%
3% 1% 0%
50%
16%7% 3% 1%
19%
47%
27%
7%2%
21%
24%
22%
14%
4%
25%35%
69%
91%98%
29%
60%
71%
83%
95%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Extremely Low
Income
Very Low Income Low Income Moderate Income High Income Extremely Low
Income
Very Low Income Low Income Moderate Income High Income
Per
cen
t o
f H
ou
seh
old
s
Share w ith Severe Cost Burdens Share w ith Moderate Cost Burdens Share Not Burdened
Renters Owners
Millennial Housing Commission
Housing Program Tutorial, June 2002
Existing Affordable Rental Housing Mismatch(1999)
Notes: Vacant and occupied units; Demand defined as number of households that fall under AMI cutoffs; supply defined asnumber of units priced at under 30% of Income.Source: See Table 2
0
2
4
6
8
10
12
14
16
Supply Demand Supply Demand Supply Demand Supply Demand
ELI VLI LI MI
Un
its
an
d H
ou
se
ho
lds
(m
illio
ns
)
Supply Available to Income Group Share rented by Wealthier Renters
Millennial Housing Commission
Housing Program Tutorial, June 2002
The Nation’s Directly Subsidized Housing
Note: Units and households under assistance net of housing tax expenditures and block grant funded units without other subsidies. Owner Assistance includes Section 235 and Section 502 direct loans.Source: See Table 3
Rental Assistance--4,820,000
Owner Assistance--591,000
Total Direct Assistance
5,411,000
Millennial Housing Commission
Housing Program Tutorial, June 2002
The Nation’s Direct Rental Subsidies
Public Housing
1,274,000
Tenant-Based
1,581,000
Private Project-Based
1,965,000
Total Rental Assistance
4,820,000
Source: See Table 4
Millennial Housing Commission
Housing Program Tutorial, June 2002
The Nation’s Direct Rental Project Subsidies
Total Direct PBA units—1,965,000
Source: See Table 5
S.202/811—83,000S.8 New/Sub. Rehab.- 851,000
S. 515—410,000
S. 236, no S.8—60,000
Other “Older Assist.”-158,000
S. 236, w/S.8—403,000
Millennial Housing Commission
Housing Program Tutorial, June 2002
New vs. Existing Rental Commitments
Source: See Table 6
0
50,000
100,000
150,000
200,000
250,000
1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999
Existing Rental Housing New Rental Construction
Millennial Housing Commission
Housing Program Tutorial, June 2002
$4,202 $3,437$1,526
$20,390
$0
$5,000
$10,000
$15,000
$20,000
$25,000
Older AssistedStock
Newer AssistedStock
FHA InsuredUnassisted Stock
Public Housing
Condition of Assisted Housing Stock
Average Per Unit Un-Funded Backlog of Physical Needs
Un-funded Backlog:
(In Millions)
$540.3$1,255$2,858 $24,600In 1998 dollars
Source: See Table 7
Millennial Housing Commission
Housing Program Tutorial, June 2002
Beneficiary Characteristics—Income
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
221(d)(3)--BMIR
Section 236 Section 8TBA
PublicHousing
S. 8-NewConst. AndSub. Rehab
Section 8Mod. Rehab
Nation
$0-10,000 $10,000-15,000 15,000-20,000 > $20,000
Household Income by Program
Source: See Table 8
Millennial Housing Commission
Housing Program Tutorial, June 2002
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Section 8 NewConst./ Rehab
Section 236 PublicHousing
Section 8Mod. Rehab
"OlderAssisted"
Units
Section 8TBA
Nation
% 1-parent Household % 2-parent Household Other
Beneficiary Characteristics—Families with Children
Source: See Table 9
Millennial Housing Commission
Housing Program Tutorial, June 2002
Project Locations
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Section515
Section811
Tax credits Section202
Vouchers HOPE VI
Central city Suburban Nonmetro
Source: See Table 10
Millennial Housing Commission
Housing Program Tutorial, June 2002
Incidence of Poverty and Project Location
Distribution of Units by Area Poverty Rate
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Public Housing Project-BasedAssistance
Certificates andVouchers
All Rental Units
<10% 10-29% 30-39% >40%
Source: See Table 11
Millennial Housing Commission
Housing Program Tutorial, June 2002
GAO Program Cost Estimates
* Voucher costs adjusted to account for program location and average bedroom size.Source: See Table 12
First Year Federal Costs: Production and Voucher Programs
$2,610
$6,280
$4,200 $4,440
$2,910
$4,500
$10,210
$6,920 $6,680
$4,960
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Tax Credit HOPE VI Section 202 Section 811 Section 515
Voucher Cost for Comparable Unit Mix* Production Program
Millennial Housing Commission
Housing Program Tutorial, June 2002
Block Grants-CDBG
• Now assists approximately 185,000 incremental housing units annually. Most for rehab. with 6.1% for homeownership assistance and 7% for new construction.
• Since 1975 about 28% of CDBG funds have gone to housing.
• In FY2001, about 35% of CDBG funding went to housing.
Millennial Housing Commission
Housing Program Tutorial, June 2002
Block Grants-HOME
• Since 1990 about 650,000 housing units have been acquired, rehabbed or newly built and about 78,000 tenants have received rental assistance.
• About 55% of funds have gone to rental of which 46.3% was for new construction and 48.6% was for acquisition and rehab.
• The remaining 45% of funds went to homeowner and homebuyer assistance.
Millennial Housing Commission
Housing Program Tutorial, June 2002
Low-Income Housing Tax Credit
• GAO estimates 752,000 LIHTC units were produced.
• NCSHA estimates about 67% of allocated Tax Credit units receive other subsidies.
Source: See Table 13
Millennial Housing Commission
Housing Program Tutorial, June 2002
Private Activity Bond Housing Programs
Source: See Table 14
•Mortgage Revenue Bonds (MRBs)
• Assisted over 2 million households through 2000.
• Annual originations now average over 100,000 loans.
• Multifamily Bonds
• Funded about 780,00 units through 2000.
• Annual originations now average 48,000 units with an average value of $2.7 billion.
Millennial Housing Commission
Housing Program Tutorial, June 2002
Tax Expenditures
In billions
FY 2001 Housing Tax Expenditures
$121.2
Source: See Table 15
Mortgage Interest Deduction-$64.5
Real Estate Tax Deduction-$22.4
Exclusion of Capital Gains-$19.1
Deferral of Income from installment sales-$1.0
Exclusion of Bond Int. for Rentals-$0.2
Exclusion of Bond Int. for Owners-$0.8
Exception from passive loss rules-$4.8
Low Income Housing Tax Credit-$3.2
Depreciation of rental housing-$5.2
Millennial Housing Commission
Housing Program Tutorial, June 2002
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
FHA-Single Family Insured Loans
Number of Loans Originated
Source: See Table 16
Millennial Housing Commission
Housing Program Tutorial, June 2002
FHA-Multi-Family Insured Loans
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
220,000
240,000 Number Units Originated
Source: See Table 17
Millennial Housing Commission
Housing Program Tutorial, June 2002
Veterans Loan Guarantees
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000 Number of Loans Originated
Source: See Table 18
Millennial Housing Commission
Housing Program Tutorial, June 2002
RHS Single-Family Loan Guarantees
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Number of Loans Originated
Source: See Table 19
Millennial Housing Commission
Housing Program Tutorial, June 2002
Federal Housing Assistance-FY 2001
Source: See Tables 15, 21, and 22.
Tax Expenditures$121.22 B
Direct Spending$34.28 B
Millennial Housing Commission
Housing Program Tutorial, June 2002
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
$180.0
1976 1980 1984 1988 1992 1996 2000 2004 2006
Tax Expenditures Assisted Housing BA
Federal Housing Spending
Spending for Housing, 1976-2006
In Billions of 2001 dollarsSource: See Table 20
Millennial Housing Commission
Housing Program Tutorial, June 2002
HUD Budget Outlays-FY 2001
Section 8-$16,579
In millions
CDBG--$4,826
Public Housing-$7,435
HOME--$1,734
Special Pop.--$1,014
Other--$2,061
Total Program Outlays
(FY2001)
$33,649
Source: See Table 21
Millennial Housing Commission
Housing Program Tutorial, June 2002
RHS Budget Outlays-FY 2001
S. 521--$634
In millionsS. 502 (Guarantee) $186
S. 538--$2
S. 502 (Direct) $147
S. 515--$59Other*--$24
Total FY 2001 Program Outlays
$1,052
Source: See Table 22
Millennial Housing Commission
Housing Program Tutorial, June 2002
Budget Process
• Discretionary spending is capped and budget authority annually appropriated
• Budget authority to cover long-term costs of credit programs must be appropriated upfront
• OMB estimates long term costs of credit programs• Subsidy rate is expressed as a share of loan
volume • Positive subsidy rate programs constrained by
budget authority• Negative subsidy rate programs constrained by
enacted loan volume limits
Millennial Housing Commission
Housing Program Tutorial, June 2002
Budget Process
• Program changes that add to collections allow equivalent spending increases elsewhere
• Tax expenditures and cuts are capped • Revenue loss estimates must be included in budget• Fannie Mae, Freddie Mac, and FHLB system are
outside the federal budget system
Millennial Housing Commission
Housing Program Tutorial, June 2002
Housing Budget Issues
• Funding expiring S. 8 long-term contracts – budget authority from $4.2 billion to $5.4 billion by 2005–approx 800k expired headed to approx 900k
• Switching from 15-20 year commitments to 1-year and some to 5-year renewal “subject to availability of the funds”
• FHA not a dedicated trust fund—cannot reinvest receipts or get a lock on program changes that raise revenue
• Subsidy rate assumptions and fund structures• Exit tax expenditure assumptions
Millennial Housing Commission
Housing Program Tutorial, June 2002
Subsidy Rates and Loan Volume
Source: FY 2003 Federal Credit Supplement, Congressional Budget Office, April 2002.
FY 2002 CommitmentsProgram Subsidy Rate (in thousands)Direct Loans:Section 502-Single Family 13.2% $1,082,122Section 515-Multi-Family 42.3% $114,069Guarantees and Insurance:Section 502-Single Family 1.3% $3,137,429Multi-Family Development -0.14% $3,000,000HFA Risk Sharing -1.55% $650,000GSE Risk Sharing -0.57% $100,000FHA MMIF -2.07% $147,338,727Veterans Housing Benefit Program 0.39% $32,066,793
Millennial Housing Commission
Housing Program Tutorial, June 2002
Additional Information
• This information as well as additional baseline information is available on the Commission’s website (www.mhc.gov)
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