U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan has released HUD's 2012 Fiscal Year budget request.

The latest HUD budget proposal outlines a $48 billion spending program for fiscal year 2012, an increase of more than $900 million from 2010.  The $48 billion gross budget appropriation proposal is expected to  be offset by a projected $5 billion in receipts from FHA and Ginnie Mae. When including receipts,  HUD's net budget authority will total $43 billion, this is a 1.1 percent reduction from FY 2010.

Donovan said that the budget meets the Presidents directive to freeze domestic spending for the next five years and because the President's State of the Union charge to "Win the Future" requires reforming government to be leaner and more transparent, HUD is proposing reforming the administrative infrastructure that oversees its programs.

Major cuts made to trim the budget include what Donovan calls "the difficult choice" to reduce funding for new units and projects. Community Development Block Grant funds were cut by $746 million to $3.8 billion and HOME Investment Partnerships funds will drop to $1.65 billion from $1.83 billion, largely through cuts to new construction components of the Supportive Housing Programs for the Elderly (202) and Disabled (811). 

Donovan said that the budget maintains HUD's commitment to its core rental assistance programs, requesting 19.2 billion for the Housing Choice Voucher program an increase from 18.2 in FY 2010. This will allow HUD to help more than two million extremely low- to low-income families with rental assistance in the neighborhoods of their choice.  The requested amount will fund all existing mainstream vouchers and provide new vouchers targeted to homeless veterans, families, and the chronically homeless.  The Department is requesting $9.4 billion for Project-based Rental Assistance to preserve approximately 1.3 million affordable housing units through contracts with private owners of multifamily properties.  This is an increase of $871 million from FY 2010 enacted levels.

The budget asks for $4.96 billion for the Public Housing Operating Fund, an increase of $187 million, and $2.37 billion for Homeless Assistance Grants to maintain existing units and expand prevention, rapid rehousing, and permanent supportive housing; an increase of $507 million.  Another $145 million is sought for new housing vouchers for over 19,000 homeless veterans and homeless persons who receive education, health care and other services through the Departments of Education (DOE), Health and Human Services (HHS) and Veterans Affairs (VA).

The proposed budget will provide a total of $953 million for Housing for the Elderly and Housing for Persons with Disabilities Programs which will not only preserve all existing housing units but also provide $499 million for new construction and incremental project rental assistance contracts.

The budget calls again for funding the National Housing Trust Fund (NHTF) which was not funded in FY2010.  It was designed to provide capital resources to build and rehabilitate housing to fill the growing gap in housing identified in the recent Worst Case Housing Needs Report.

HUD projects that FHA will insure $218 billion in mortgage borrowing in 2012.  In 2009 FHA was used by 38 percent of all homebuyers.  FHA along with VA and federal farm programs guaranteed 81 percent of all mortgages to African Americans, 73 percent to Hispanics, and 30 percent of first-time homebuyers.

"The budget provides a roadmap for HUD to work with our regional and local partners to win the future by investing in innovation, building neighborhoods that are connected to jobs and providing greater access to opportunity, so American businesses and communities are the best in the world" said Donovan. "The President has said that we need to live within our means to invest in the future. That has meant tough choices, including to programs that, absent the fiscal situation, we would not cut. But American families are tightening their belts and we need to do the same."

HUD's budget, working in coordination with the Department of the Treasury's budget request is proposing two reforms to the Low Income Housing Tax Credit (LIHTC) that will replace the current cap on household income at 60 percent of area median income with the option that properties serve households whose average income is no greater than 60 percent of AMI and with no individual household above 80 percent of AMI.  This will allow greater income-mixing at the project level, creating opportunities for workforce housing; help align LIHTC with HUD's and USDA's affordable housing programs (which define low-income at 80 percent of area median income); and lead to the creation of more units targeted to the lowest income households. 

HUD is requesting $72 million, to support administration of two Fair Housing programs and for funds for a multi-agency initiative to assist communities in using their funds more effectively to support job creation-an improved successor to the Empowerment Zones that expire this year. 

Donovan said of the budget, "The American people deserve a federal government that works effectively across its "silos" to deliver results.  This Administration has prioritized collaborative initiatives that feature agencies streamlining and coordinating their funding processes, so they complement rather than complicate-or even conflict with-each other."  To that end, the budget continues cross-agency collaborations with the VA, Department of Transportation, and the Environmental Protection Agency. 

A summary of the 2012 HUD Budget is available HERE