Millennial Housing Commission
Millennial Housing Commission
Federal
Housing
Assistance
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)
Renters
Ow ners
100%
Percent of Households
90%
25%
80%
70%
29%
35%
60%
19%
69%
71%
60%
21%
91%
50%
95%
98%
47%
40%
30%
83%
56%
50%
20%
24%
22%
27%
10%
18%
0%
E xt r emel y Low
V er y Low I ncome
3%
2%
0%
Low I ncome
M oder at e I ncome
Hi gh I ncome
I ncome
Share w ith Severe Cost Burdens
14%
16%
7%
1%
7%
E xt r emel y Low
V er y Low I ncome
Low I ncome
3%
4%
1%
M oder at e I ncome
Hi gh I ncome
I ncome
Share w ith Moderate Cost Burdens
Share Not Burdened
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.
Millennial Housing Commission
Source: See Table 1
Housing Program Tutorial, June 2002
Existing Affordable Rental Housing
Mismatch(1999)
Units and Households (millions)
16
14
12
10
8
6
4
2
0
Supply
Demand
ELI
Supply
Demand
VLI
Supply Available to Income Group
Notes: Vacant and occupied units; Demand defined as number of households that fall under
AMI cutoffs; supply defined as
number of units priced at under 30% of Income.
Source: See Table 2
Supply
Demand
LI
Supply
Demand
MI
Share rented by Wealthier Renters
Millennial Housing Commission
Housing Program Tutorial, June 2002
The Nation’s Directly Subsidized Housing
Owner Assistance-591,000
Rental Assistance-4,820,000
Total Direct
Assistance
5,411,000
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
Millennial Housing Commission
Housing Program Tutorial, June 2002
The Nation’s Direct Rental Subsidies
Public Housing
Tenant-Based
1,274,000
1,581,000
Total Rental
Assistance
4,820,000
Private Project-Based
1,965,000
Source: See Table 4
Millennial Housing Commission
Housing Program Tutorial, June 2002
The Nation’s Direct Rental Project Subsidies
S.202/811—83,000
S.8 New/Sub. Rehab.- 851,000
S. 515—410,000
S. 236, no
S.8—60,000
S. 236, w/S.8—403,000
Other “Older Assist.”-158,000
Total Direct PBA units—1,965,000
Source: See Table 5
Millennial Housing Commission
Housing Program Tutorial, June 2002
New vs. Existing Rental Commitments
250,000
200,000
150,000
100,000
50,000
0
1977
1979
1981
1983
1985
1987
Existing Rental Housing
Source: See Table 6
1989
1991
1993
1995
1997
1999
New Rental Construction
Millennial Housing Commission
Housing Program Tutorial, June 2002
Condition of Assisted Housing Stock
$25,000
Average Per Unit Un-Funded Backlog of Physical Needs
$20,390
$20,000
$15,000
$10,000
$5,000
$4,202
$3,437
$1,526
$0
Older Assisted
Stock
Un-funded Backlog:
(In Millions)
$2,858
Newer Assisted
Stock
$1,255
FHA Insured
Unassisted Stock
$540.3
Public Housing
$24,600
In 1998 dollars
Source: See Table 7
Millennial Housing Commission
Housing Program Tutorial, June 2002
Beneficiary Characteristics—Income
Household Income by Program
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
221(d)(3)-BMIR
Section 236
Section 8
TBA
$0-10,000
Source: See Table 8
Public
Housing
$10,000-15,000
S. 8-New
Const. And
Sub. Rehab
15,000-20,000
Section 8
Mod. Rehab
Nation
> $20,000
Millennial Housing Commission
Housing Program Tutorial, June 2002
Beneficiary Characteristics—Families with
Children
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Section 8 New
Const./Rehab
Section 236
Public
Housing
% 1-parent Household
Source: See Table 9
Section 8
Mod. Rehab
"Older
Assisted"
Units
% 2-parent Household
Section 8
TBA
Nation
Other
Millennial Housing Commission
Housing Program Tutorial, June 2002
Project Locations
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Section
515
Section
811
Tax credits
Central city
Source: See Table 10
Section
202
Suburban
Vouchers
HOPE VI
Nonmetro
Millennial Housing Commission
Housing Program Tutorial, June 2002
Incidence of Poverty and Project Location
Distribution of Units by Area Poverty Rate
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Public Housing
Project-Based
Assistance
<10%
Source: See Table 11
10-29%
Certificates and
Vouchers
30-39%
All Rental Units
>40%
Millennial Housing Commission
Housing Program Tutorial, June 2002
GAO Program Cost Estimates
First Year Federal Costs: Production and Voucher Programs
$12,000
$10,210
$10,000
$8,000
$6,920
$6,680
$6,280
$6,000
$4,960
$4,500
$4,200
$4,440
$4,000
$2,910
$2,610
$2,000
$0
Tax Credit
HOPE VI
Section 202
Voucher Cost for Comparable Unit Mix*
Section 811
Production Program
* Voucher costs adjusted to account for program location and average bedroom size.
Source: See Table 12
Section 515
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
•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.
Source: See Table 14
Millennial Housing Commission
Housing Program Tutorial, June 2002
Tax Expenditures
Low Income Housing
Tax Credit-$3.2
Depreciation of rental
housing-$5.2
Exception from
passive loss rules-$4.8
Deferral of Income
from installment sales$1.0
Exclusion of Capital
Gains-$19.1
Exclusion of Bond
Int. for Owners-$0.8
Exclusion of Bond
Int. for Rentals-$0.2
In billions
FY 2001 Housing
Tax Expenditures
$121.2
Real Estate Tax
Deduction-$22.4
Source: See Table 15
Mortgage Interest
Deduction-$64.5
Millennial Housing Commission
Housing Program Tutorial, June 2002
FHA-Single Family Insured Loans
Number of Loans Originated
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Source: See Table 16
Millennial Housing Commission
Housing Program Tutorial, June 2002
FHA-Multi-Family Insured Loans
240,000
Number Units Originated
220,000
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
19
70
19
71
19
72
19
73
19
74
19
75
19
76
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
-
Source: See Table 17
Millennial Housing Commission
Housing Program Tutorial, June 2002
Veterans Loan Guarantees
700,000
Number of Loans Originated
600,000
500,000
400,000
300,000
200,000
100,000
19
7
19 0
7
19 1
7
19 2
7
19 3
7
19 4
7
19 5
7
19 6
7
19 7
7
19 8
7
19 9
8
19 0
8
19 1
8
19 2
8
19 3
8
19 4
8
19 5
8
19 6
8
19 7
8
19 8
8
19 9
9
19 0
9
19 1
9
19 2
9
19 3
9
19 4
9
19 5
9
19 6
9
19 7
9
19 8
9
20 9
00
0
Source: See Table 18
Millennial Housing Commission
Housing Program Tutorial, June 2002
RHS Single-Family Loan Guarantees
Number of Loans Originated
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
1991
Source: See Table 19
1992
1993
1994
1995
1996
1997
1998
1999
2000
Millennial Housing Commission
Housing Program Tutorial, June 2002
Federal Housing Assistance-FY 2001
Direct Spending
$34.28 B
Tax Expenditures
$121.22 B
Source: See Tables 15, 21, and 22.
Millennial Housing Commission
Housing Program Tutorial, June 2002
Federal Housing Spending
Spending for Housing, 1976-2006
$180.0
$160.0
$140.0
$120.0
$100.0
$80.0
$60.0
$40.0
$20.0
$0.0
1976
1980
1984
1988
Tax Expenditures
In Billions of 2001 dollars
Source: See Table 20
1992
1996
2000
2004
2006
Assisted Housing BA
Millennial Housing Commission
Housing Program Tutorial, June 2002
HUD Budget Outlays-FY 2001
Other--$2,061
HOME--$1,734
CDBG--$4,826
Section 8-$16,579
In millions
Public Housing$7,435
Special Pop.--$1,014
Source: See Table 21
Total Program
Outlays
(FY2001)
$33,649
Millennial Housing Commission
Housing Program Tutorial, June 2002
RHS Budget Outlays-FY 2001
Other*--$24
S. 515--$59
S. 502 (Direct)
$147
S. 521--$634
In millions
Total FY 2001
Program
Outlays
$1,052
Source: See Table 22
S. 502 (Guarantee)
$186
S. 538--$2
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
Program
Direct Loans:
Section 502-Single Family
Section 515-Multi-Family
Guarantees and Insurance:
Section 502-Single Family
Multi-Family Development
HFA Risk Sharing
GSE Risk Sharing
FHA MMIF
Veterans Housing Benefit Program
Source: FY 2003 Federal Credit Supplement,
Congressional Budget Office, April 2002.
FY 2002 Commitments
Subsidy Rate
(in thousands)
13.2%
42.3%
$1,082,122
$114,069
1.3%
-0.14%
-1.55%
-0.57%
-2.07%
0.39%
$3,137,429
$3,000,000
$650,000
$100,000
$147,338,727
$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)
Millennial Housing Commission
Housing Program Tutorial, June 2002