HOME, CDBG funding slated for increases in FY98
Despite good news, horizon clouded by cuts in county CDBG allocations

Two county priority programs, Community Development Block Grants (CDBG) and the HOME program, are slated for increased federal funding in FY98 as congressional appropropriators begin filling in the numbers for next year's federal budget.

In a clear victory for NACo, the Housing and Urban Development (HUD) conference report, adopted last week, increases the HOME program by $100 million to $1.5 billion. There is broad congressional recognition of the HOME program as a model federal-local partnership.

The conference report also provides $8.1 billion to renew expiring or terminated Sec. 8 project-based and tenant-based subsidy contracts. Intense negotiations between House and Senate conferees and the Administration resulted in a reform plan to restructure mortgages on privately-owned multifamily rental properties that receive excessive Sec. 8 subsidies.

The reform plan contains two major provisions that NACo actively supported. The first gives priority to local and state housing finance agencies to serve as the "participating administrative entity" to restructure mortgages and lower rents to what is charged for comparable units in the market area.

The second NACo-endorsed provision allows participating administrative entities to assess whether the subsidy should be project-based or tenant-based assistance.

On the CDBG side of the ledger, funding would grow in FY98 to nearly $4.7 billion, a $75 million increase. However, budget negotiators also increased, by $210 million, the amount of special purpose grants funded out of CDBG - up from approximately $290 million in FY97, to nearly $500 million in FY98. This means that formula allocations to states, counties and cities will drop by $135 million because more CDBG funds are set aside for special purpose grants.

This cut will come on top of cuts, ranging between 7-12 percent, that urban counties already have experienced since FY95 as a result of additional set-asides and growth in the number of entitlement jurisdictions.

In FY98 the biggest growth in CDBG set-asides is in the Economic Development Initiative (EDI) that was not funded in FY97, but gets $138 million in FY98. The conference report earmarks EDI grants for specific community and economic development projects around the country.

Further details on the multifamily housing restructuring plan and other HUD appropriations issues will be provided in the next issue of County News.