NACCED, NCDA Submit Joint Comments on Proposed Rule Defining “Homeless” for the HEARTH Act

In a June 21st letter to HUD’s Office of General Counsel, NACCED and the National Community Development Association (NCDA) jointly submitted comments with respect to the proposed rule defining “homeless” under the Homeless Emergency Assistance and Rapid Transition to Housing Act of 2009 (HEARTH). The proposed rule was published in the Federal Register on April 20 th and members of NACCED’s Housing Committee helped develop the Association’s Comments. They included: Housing Committee Chair Cassa Collinge, Allegheny County, PA; Vice Chair Paul Herdeg, Cuyahoga County, OH; NACCED President Susan Walsh, Hamilton County, OH; NACCED Pat President Gary Bachman, Pima County, AZ; NACCED Board members Cheryl Markham, King County, WA and Karen Wiley, Salt Lake County, UT; and NACCED member Mary Lou Egan, Ramsey County, MN.

The letter states: “As a general comment, NACCED and NCDA are pleased to see an expanded definition of ‘homeless,’ ‘homeless individual,’ ‘homeless person,’ and ‘homeless person with a disability,’ contained in HEARTH and proposed to be implemented by this rule. This is an important expansion and will provide the opportunity to serve additional persons who are homeless or threatened with becoming homeless at the community level. However, it is important to note that the funding made available under HEARTH will not be sufficient to meet the expanded need without the ability for local practitioners to tap homeless funding from the programs of other federal agencies. We encourage HUD to undertake efforts similar to those underway under the Sustainable Communities Initiative, and efforts in the HUD Secretary’s Office aimed at coordinating federal income support programs, to break down silos at the federal level and help achieve the integration of federal funding to meet the pressing needs of the homeless.

“The following are our specific comments.

“In Section II p.20542 – HUD states that it is considering repeating regulatory text & definitions in the sections for each program [the new Emergency Solutions Grant program, the Continuum of Care program, and the Rural Housing Stability program], rather than having to cross reference to one regulatory text section and welcomes public comment on this. NACCED and NCDA support having the complete regulatory text for and within each program; it is much more user friendly for our members.

“In Section II p. 20542 with respect to the four broad categories of homeless, NACCED and NCDA recommend that HUD permit local governments or Continuums of Care to create priorities or preferences within the eligible categories. These priorities or preferences could be based on HUD or local provider-driven data including the number of homeless households in the jurisdiction, local housing cost compared to Area Median Income, and state or local statutory requirements that pertain to who and who cannot be served. This would help ensure that those with the greatest needs are first to be served.

“In Section II p. 20543 there is provided a third case in which the imminent loss of a nighttime residence may be evidence to qualify as homeless i.e. when the individual or family is no longer permitted to stay by the owner or renter of housing with whom the individual or family is staying. This situation often accounts for doubled-up households that are multi-generational families where the secondary tenant (son or daughter) can move out and obtain a letter from the mother/father that would permit the tenant to be considered homeless and eligible for HEARTH’s benefits even though the housing they were occupying was considered safe and appropriate. NACCED and NCDA recommend that the rule permit such individuals to be given lower priority in terms of eligibility for HEARTH funding than those who are vacating housing that is unsafe or unhealthy.

“In Section II p. 20543 NACCED and NCDA recommend removing language requiring verification from the host family when a household is doubled up. Host families will often not provide verification because allowing others to double up in their home may violate their lease. In addition, requiring a caseworker to contact the host family may result in the homeless family being asked to move out immediately potentially putting that family on the street.

“In Section II p.20542, NACCED and NCDA support the change in the standard for ‘temporarily resided’ from 30 days to 90 days, for purposes of qualification of a person who was homeless before entering an institution and ‘temporarily resided’ in the institution.   We recommend that ‘institution’ defined to include all possibilities, including health, mental health and chemical dependency institutions and jails/prisons.

“In Section II p.20543, NACCED and NCDA believe the definition of ‘persistent instability,’ proposed as ‘three or more moves over a 90 day period immediately prior to applying for homeless assistance’ is too compact a period of time. Instead, we recommend that it be defined as ‘three or more moves within a 180 day period,’ which we believe is more realistic.

“In Section II p. 20543, NACCED and NCDA recommend that language be included with respect to victims of domestic violence to cover situations where the health and safety of children are jeopardized. Without this language situations could exist where children are occupying housing that is unheated, contains dangerous physical conditions, or contains other health hazards.

“In Section II p. 20544 with respect to self-certification as to homeless status, NACCED and NCDA urge the Department to develop an approved form containing specific language for the certification.

“The proposed rule raises several other questions that NACCED and NCDA urge be addressed in the final rule.

“Please provide a clearer definition of what is a ‘chronic homeless family.’ Is it more than one person, such as a couple, or must there be children included to qualify?

“The definition of ’families with a disability’ needs clarification: does the person with the disability need to be the head of household or can it be any member within the family (spouse, child)?”

Part 577 – Emergency Solutions Grant Program

“577.2 Definitions

p.20545 2(i) – NACCED and NCDA support the addition of prevention to the definition of homeless i.e. – ‘the primary nighttime residence will be lost within 14 days of the application for homeless assistance.’

“p.20545 3(iii) – NACCED and NCDA recommend that ‘childhood abuse’ be defined. We further recommend that ‘history of incarceration’ should be expanded to include ‘history of incarceration or detention.’

“577.3 Recordkeeping Requirements

3(i)(C) – NACCED and NCDA agree that an oral statement that a household will lose its housing within 14 days should be followed up with a signed self-certification.

:4(iii) - NACCED and NCDA recommend that disability confirmation should be consistent with the Fair Housing Act and allow for confirmation from an appropriate professional rather than solely a ‘medical professional’ as there are professional counselors who are appropriate and qualified to confirm a disability.

“NACCED and NCDA recommended further clarification as to a possible scenario under HEARTH. 

“Can an individual currently residing in a permanent supportive housing complex for chronically homeless individuals, who is not thriving or doing well, be moved to a different permanent supportive housing complex for chronically homeless individuals and still be considered chronically homeless?   Technically this person would not be considered homeless. However, it would be in the client’s best interest to make this move.   The need for such a move would have to be based on a determination made by the complex management or client case manager. NACCED and NCDA recommend that such a change be permitted.” 

CDBG Program Updates

Steve Johnson, Director of the Entitlement Communities Division at HUD’s Office of Block Grant Assistance, has provided the following Updates:

Low/Mod Income Summary Data as of 2010 posted on HUD website:

Low & Moderate Income summary data, adjusted for the latest official boundary changes used in IDIS Online for 2010, is now on HUD's web site at http://www.hud.gov/offices/cpd/systems/census/lowmod/.  Those with questions may contact Abu Zuberi in CPD HQ’s Systems Development & Evaluation Division at 202-402-3351.

2010 HUD Program Income Limits Released:

The FY 2010 Income Limits have been released and became effective on May 14, 2010. The FY 2010 HUD income estimates and limits, a documentation system that explains the derivation of each area's limit and median income estimates, links to the current Income Limits Area Definitions, and other useful information are available as a free download from HUD USER at http://www.huduser.org/portal/datasets/il/il10/index.html. The briefing materials for the FY2010 Income Limits can be accessed directly at http://www2.huduser.org/portal/datasets/il/il10/IncomeLimitsBriefingMaterial_FY10.pdf.  On May 17, HUD published a Notice in the Federal Register announcing that HUD will discontinue the ‘hold harmless’ practice for income limits for most HUD programs. HUD will allow Section 8 income limits to decrease beginning with the Fiscal Year (FY) 2010 income limits, but will limit all annual decreases to no more than 5 percent and limit all annual increases to 5 percent or twice the change in national median family income, whichever is greater.  However, rents used in the HOME program and rural housing programs will continue to be held harmless.  See the Federal Register at:  http://frwebgate1.access.gpo.gov/cgi-bin/PDFgate.cgi?WAISdocID=39422495610+0+2+0&WAISaction=retrieve

FederalReporting.gov: The Next Quarterly Reporting Period Draws Near!

Reporting will cover the period April 1-June 30, 2010.  Section 1512 of the Recovery Act requires that all recipients, sub-recipients and contractors of Recovery Act funding report on a number of data elements, such as jobs and dollars spent.  Timetable references to sub recipient reporting refer to situations where the grantee (prime recipient) has delegated direct reporting responsibility in FederalReporting.gov to sub recipients.  When a grantee is handling all Federal Reporting data entry itself, the grantee is to review and verify the information provided to them by their sub recipients prior to data entry.  Note that the reporting period is longer this quarter due to the 4 th of July Holiday.  Grantees also need to enter or update their environmental review information in RAMPS.

Expected Timetable:    (Subject to change by OMB)

Deadlines are as of midnight Pacific Time

Minimizing Reporting Errors in FederalReporting.gov:

Among the most common – and easily avoidable – errors observed are:

• Submitting duplicate reports (or failing to deactivate an erroneous report upon submitting a corrected report)
• Entering an Invalid Award Type (incorrectly reporting as a contractor rather than as a grantee
• Entering an Invalid Award ID, (entering something other than your grant number, or mistyping the grant number, e.g. entering ‘001’ instead of ‘0010’)
• Entering an Invalid Award Amount, (e.g. the ‘Amount Received’ does not match the amount of your CDBG-R grant)
• Incorrectly computing or entering job creation/retention figures
• Entering an Award Date other than the one on your Grant Agreement
• Entering an incorrect DUNS number
• Entering the wrong Catalog of Federal Domestic Assistance (CFDA) number, Treasury Accounting Symbol (TAS) number, or Awarding Agency Code number
• Checking ‘Yes’ on the Final Report Indicator even though all activities are not completed and all funds have not yet been drawn down

HUD has provided an Excel spreadsheet, “Grantee Specific Data for CDBG-R”, with pre-populated standard data elements for all grantees, to assist grantees in reporting the correct information, and to reduce the frequency of errors.  Please contact your HUD Field Office CPD staff if you have not seen this spreadsheet.

•   Before submitting their July report, grantees should ensure that the information on this spreadsheet is correct, and should compare this information with what the grantee reported in their April report. 

•   Blank data cells on this spreadsheet represent situations in which grantee data was missing at the time the spreadsheet was prepared in December.  Grantees should verify that this information is now correctly entered in their report.  If a grantee already entered the missing data for their April report, nothing further needs to be done.

•   If a grantee feels its data is in error, contact the FederalReporting.gov help desk or HUD's Recovery reporting help desk for assistance in changing information.

Correcting Errors in FederalReporting.gov:

Grantees should keep the following pointers in mind as they prepare their July reports.

• There is now a ‘Copy Forward’ feature that allows grantees to use the previous quarter’s report to populate the next report.  Instructions on how to use this feature can be found on FederalReporting.gov at: https://www.federalreporting.gov/federalreporting/documentation/FR-Gov%20User%20Guide%20Chapter%2010%20Copy%20Forward%20and%20Copy%20Functions.pdf.  This document also contains instructions on the ‘Change Key Business Information’ function that allows grantees to change key grantee data like the Award ID number or DUNS number for the current reporting period.
• Updated OMB instructions indicate that grantees must use the copy forward feature if they’ve reported in a prior quarter and are reporting again now.  This is particularly important if a grantee is making any changes to the award ID or DUNS number.  However, if they are correcting the award type (Contract to Grant), they cannot use the copy forward feature.   Note that the recipients will now be asked to confirm that the new report is intended to be a “continuation” of the prior report.  Recipients can ONLY copy forward reports from the most recent quarter.  (Recipients who reported in January but failed to report in April will need to create a new report.)
• If a grantee is using the ‘copy forward’ feature of FederalReporting.gov, any data elements that a grantee incorrectly entered in April will be copied as is into the July report. Grantees will need to manually correct the inaccurate elements in their July report before submitting it.
• If a grantee accidentally de-activates its “correct” report instead of de-activating an incorrect or duplicate report, the grantee should immediately contact HUD’s Recovery Act Reporting help desk.  A grantee cannot recover a de-activated report on its own.
• There is now a post-reporting-deadline ‘Continuous Quality Assurance Period’.  All April reports were “unlocked” from May 3-June 14 for grantees and federal agencies to perform Quality Assurance (QA) checks and error corrections.  The same process will be available during Aug 3–Sept 13.  This Quality Assurance Period has now become the principal time period for grantees to correct reports; the late-July grantee data review period is only two days.
• During the Agency review period and again during the Quality Assurance Period, HUD may enter review comments on grantee reports.  Some comments will note an erroneous entry that the grantee needs to fix; other comments may concern data flagged as possibly inaccurate.  Grantees should check FederalReporting.gov for any HUD error messages during these periods.  If you have received an error message comment, please post an appropriate response comment, either verifying that the information is correct as entered or acknowledging that the erroneous entry will be corrected.
• Grantees cannot de-activate a duplicate report during the Quality Assurance Period.  After the July 21-22 initial grantee data review period ends, only OMB can de-activate duplicate reports.   Please contact the HUD Recovery Reporting call center should you need a report de-activated after July 22.
• There is no way to correct a report that has been inaccurately submitted with the Award Type of ‘Contractor’ instead ‘Grantee’.  Because the reporting requirements for grantees and contractors are fundamentally different, the only thing a grantee can do is to make sure they report as a Grantee the next time.
• Before hitting the ‘submit’ button, make sure that the report is not showing up as a ‘draft’ report!  The system will generate a “successfully submitted” message, but a draft report will not actually be sent to HUD.  Hitting the ‘submit’ button does not trigger any data review/error checking function in FederalReporting.gov.
• Similarly, hitting the ‘submit’ button for a report that contains incorrect data (like a wrong grant number or wrong Awarding Agency Code) will generate a “successfully submitted” message, but the inaccurate data may prevent the report from being sent to HUD, or HUD may not be able to identify which grantee the report belongs to.

Jobs Reporting:

        HUD has issued a revised Jobs Calculator as an optional aid to grantees in computing and reporting on jobs created/retained with Recovery Act funding.  This new calculator is consistent with OMB’s December 18, 2009 revised job counting guidance, and has been approved for use by OMB.  The current version is posted to the HUD.gov/recovery webpage at: http://portal.hud.gov/portal/page/portal/HUD/recovery/reporting/Community%20Development%20Block%20Grants%20-%20Recovery%20Reporting.

Grantees should NOT use previous versions of the job calculator, as they do not comply with the current OMB jobs guidance.  Some grantees appear to have used the outdated June 22, 2009 OMB job counting guidance to compute their jobs data, not the newer guidance.

In reviewing grantees’ April reports, HUD particularly focused on grantees whose reported jobs numbers suggest significant undercounting or over counting, grants that are more than 50% expended but reported 0 jobs, and reports with missing or insufficiently-detailed narratives regarding job creation/retention.  A jobs “over count” error message will be generated if the award amount divided by your number of FTE jobs results in a cost per job hour rate below the federal minimum wage.  A jobs “undercount” error message will be generated if the number of FTE jobs reported is much lower than expected based on your award amount and project completion status.

All grantees should make sure they follow OMB's December 18, 2009 job reporting guidance memo, M-10-08.  This is available on the FederalReporting.gov site, and on OMB’s website at: http://www.whitehouse.gov/omb/assets/memoranda_2010/m10-08.pdf.   Instructions for grantees begin with part 2 on page 10.  This memorandum makes several notable changes from the previous (June 22, 2009) Recovery Act job counting guidance:

• Grantees now report on jobs created or retained for that quarter only, based on all hours worked during that quarter.  Job reporting is no longer cumulative over the life of the grant.  The instructions for computing jobs on a quarterly basis have been simplified and clarified.
• The guidance provides definitions of jobs considered to be created or retained.  A job is to be counted as created or retained only if the wages or salaries are either paid for or will be reimbursed with Recovery Act funding. 
• Where an activity is funded by multiple funding sources, the job creation/retention figures funding are to be prorated based on the proportion of the activity funded with Recovery Act funds.

The FederalReporting.gov job counting methodology is significantly different from the computation of jobs to demonstrate Low/Mod Jobs national objective compliance.  The number of jobs reported as created/retained in FederalReporting.gov may bear no relationship to the number of jobs reported in IDIS for national objectives purposes.  For example, if a grantee makes an economic development loan to a business to purchase machinery for an expansion, the resulting new jobs would not be countable in FederalReporting.gov, because the CDBG-R funds were used to purchase machinery, not to pay employee salaries.  On the other hand, grantee or sub recipient staff whose salary is being paid for with CDBG-R administrative funds may be counted as a Recovery Act-assisted job in FederalReporting.gov. 

Grantees may wish to re-view HUD's January 6 webcast on the CDBG-R recipient reporting, which includes a discussion of the revised job counting methodology.  The webcast (with particular emphasis to slides 18-26, which focus on examples of job counting) are available at:   http://www.hud.gov/webcasts/archives/recoveryact.cfm

Expiring Central Contractor Registrations (CCR):

Grantees may be unaware that their CCR registrations expire and must be renewed.  Grantees must maintain current registration at CCR to report on Recovery Act funds in FederalReporting.gov.  HUD recommends that all grantees check to see when their current registration expires, and update their registration in a timely manner before the expiration date. HUD, through its CPD Field Offices, has notified CDBG-R grantees who’s Central Contractor Registrations will expire in the next few months. 

Grantees can check the status of their CCR registration quickly and easily (without logging in) at CCR by going to https://www.bpn.gov/ccr/default.aspx, selecting “CCR Search”—the second tab from the left, then entering their DUNS number under the “Simple Search.”

If all information contained in the CCR record is still valid and accurate, you may simply select “Renew.”  If any information has changed please update it, then submit.  Please update or renew as soon as possible and no later than next week to ensure there will be no disruption to your grant payments or your ability to report.  If you are unable or unsure how to update your record, you can print out the CCR user guide  or contact the Federal Service Desk between 8am and 8pm Eastern Time at 866-606-8220 or 334-206-7828.  If after consulting these resources you still have difficulty, please call HUD’s Office of Departmental Grants Management and Oversight at 202-402-3964. 

Status of CDBG-R Expenditures:

As of June 14, 26.9% of CDBG-R funds (over $263 million) have been drawn down by grantees.  Half of all grantees have now drawn down at least 30% of their funds. 122 grantees have expended 100% of their funds, and another 69 grantees have drawn down 90-99.9% of their funds.  The number of grantees that have yet to draw down any of their CDBG-R funds (163), and the number of grantees that have expended 0-9.9% of their funds (207) continue to decline.  85.9% of funds (over $842 million) have funded to specific activities in IDIS by grantees.  Only 65 grantees have yet to associate any of their funding to activities in IDIS.  While funding activities in IDIS is not technically required until a grantee wants to draw funds down, HUD encourages grantees to fund activities in IDIS as soon as practicable. 

HUD strongly encourages grantees to make regular draw downs of CDBG-R funds.  Given the high level of scrutiny placed on Recovery Act expenditure performance plus the serious budget shortfalls many local governments face, it does not make sense for a grantee to ‘front end’ expenditures with local funds and reimburse themselves with only quarterly, semi-annually or yearly IDIS draw downs.

CDBG-R Reporting Updates are also available on HUD’s Recovery webpage at: http://portal.hud.gov/portal/page/portal/HUD/recovery/reporting/Community%20Development%20Block%20Grants%20-%20Recovery%20Reporting

Sub-Recipient Reporting:

Grantees need to ensure that their sub recipients have entered their correct DUNS numbers or that their DUNS number has not expired.  If a sub recipient’s number is incorrect or expired , then that one sub recipient’s DUNS number jeopardizes the remaining sub recipients from being able to submit their data in Federal Reporting (due to the inability to perform an Excel bulk upload).  Please ensure that your sub recipients are current in maintaining their DUNS numbers.  Also, we have cases where the sub recipients’ DUNS number is not linked to their prime recipients. It is important that they are linked to ensure that we don’t end up with “orphan” sub recipient reports.

Final CDBG-R Reports and Grant Closeouts:

Grantees should keep in mind that their grant is not entirely completed if their project activity does not reflect that.  For Federal Reporting purposes, a CDBG-R report cannot be final until:

• CDBG-R activities are physically complete and are input as “100% complete” under “project status” in Federal Reporting.
• All FTE jobs created or retained with Recovery funds must be reported in FederalReporting.gov
• All CDBG-R funds must be expended or if there are unspent funds in LOCCS (which will be returned to the Department of Treasury), then a note should be sent in the FR comment box that no more money will be spent and that the report is indeed final.
• All CDBG-R activities have been entered into IDIS and complied with all program requirements. 

Keep in mind that if a grantee has unspent CDBG-R funds, the Federal Reporting system will most likely flag it as “Not Final” because their award amount and their “Total Federal Amount ARRA received/invoiced” will not be the same.  As long as the grantee posts a comment in Federal Reporting, indicating that they are indeed finished, no further error messages will be sent.  HUD will be sending out final program specific “close out” procedures at the end of the summer to ensure that each grantee has properly met their program requirements.

For additional help:

 HUD’s Recovery Act Reporting Call Center, 1-800-998-9999, is available to answer a wide variety of CDBG-R reporting questions.  The call center is available 8:30am to 5:30pm EDT, Monday to Friday, with expanded hours July 1-14, except for Monday, July 5 th when the call center will be closed, due to the Federal Holiday.  You may also e-mail the help center at .  HUD has posted a variety of resources about reporting on the HUD Recovery Act website:  http://portal.hud.gov/portal/page/portal/RECOVERY/Reporting

This site also provides links to other resources, such as the CCR registration website and the Dun & Bradstreet registration website.

Wall Street Reform Bill Has $1 Billion for NSP 3

The 2,300 plus page Wall Street regulatory reform bill that cleared a House-Senate conference committee early last Friday morning contains $1 billion for a round three of the Neighborhood Stabilization Program (NSP) to be made available after October 1, 2010. NACCED, NACo and others had urged the conferees to include the funding in the bill (see attached). The provision, contained in the original House-passed version of H.R. 4173, like NSP 2, requires that grantees spend at least 50% of their funds within 2 years of receipt and 100% within 3 three years.

The provision in H.R. 4173 would allocate the $1 billion by a formula established like it was in NSP 1, and it must be established within 30 days of the legislation’s enactment. It also requires that each state receive 0.5% of the appropriation, the same as NSP 1. This provision, which reflects the Senate’s inclination toward states, has proved problematic under NSP 1for states to spend in a timely manner. The provision also permits the Secretary of Housing and Urban Development to establish a minimum grant size for direct allocation to units of local government but it may be no more than $1 million. Grantees are directed to establish procedures to create preferences for the development of affordable rental housing for properties assisted with grant funds. In addition, grantees must, to the maximum extent feasible, hire employees and use contractors that reside in the vicinity of the project.

The provision modifies current law by repealing a portion of Section 2301(f)(3)(A)(ii) of the Housing and Economic Recovery Act of 2008 (HERA) . It strikes language in HERA “for the purchase and redevelopment of abandoned and foreclosed upon homes or residential properties that will be used” with respect to the 25% set-aside for households at 50% of median income. This will give grantees more flexibility in meeting the set-aside as now they will only have to use set-aside funds to house individuals and families whose incomes do not exceed 50% of median income. This amendment applies to any unexpended or unobligated balances, including recaptured and reallocated funds, under NSP 1 and 2.

The provision also includes a definition of a notice of foreclosure as “…the date of a notice of foreclosure shall be deemed to be the date on which complete title to a property is transferred to a successor entity or person as a result of an order of a court or pursuant to provisions in a mortgage, deed of trust, or security deed.” This applies to funding under all three Neighborhood Stabilization Programs.

Finally, the bill provides that up to 2% of the funds may be used by the Secretary for technical assistance through the year 2013.

The House expects to take the Wall Street Reform bill this week. Action in the Senate has been complicated by the death this morning of Senator Robert Byrd (D-WVA). Sixty votes are need in the Senate for passage, and several Republicans will have to join with Senate Democrats to make that happen. The Democratic leadership in both houses hopes to send the bill to President Obama for his signature in time for the week-long July 4 th recess beginning the end of this week.

Tax Extenders Bill Stalls in Senate

Ending debate in the Senate on H.R. 4213, the “American Jobs and Closing Tax Loopholes Act of 2010,” the so-called tax extenders bill has failed in the Senate once again. Democrats failed to get the 60 votes needed on June 20 th to end debate. The bill is controversial for it does not offset the cost of extending unemployment benefits, an issue that has nothing to do with the tax extenders but was considered a “must pass” provision and therefore are included in a bill that is eventually expected to become law. Republicans have repeatedly forced Democrats in both houses to scale back the cost of the bill by either shortening the time that benefits would be in effect or take steps to “pay for” proposals that spend federal dollars. One of the ways the bill’s cost is partially offset concerns the tax treatment of income from venture capital and real estate partnerships.

The pending Senate version of H.R. 4213, like the House-passed version, would reauthorize through 2012 the popular “Build America Bonds” (BAB) program. Under the program, which was authorized in the American Recovery and Reinvestment Act of 2009 (ARRA), issuers receive a direct payment of 35% of the interest costs on these taxable bonds. Under the bill’s provisions, the interest subsidy would be reduced to 32% in 2011 and to 30% in 2012. The bonds, which are a compliment to traditional tax-exempt bonds, have been mainly used for infrastructure as they require the facility financed to be governmentally-owned. Their use for housing has been quite limited, although it is expected to grow in the future. In his FY 2011 budget President Obama urged Congress to make the program permanent. The Senate bill’s BAB provision is estimated to cost the Treasury $4 billion over 10-years.

The bill also authorizes through 2011 another ARRA bond program known as “Recovery Zone Bonds,” which may be used by communities for infrastructure, job training, education, and economic development in areas with significant poverty, unemployment or home foreclosures. The bill makes a change in the redistribution of bond authority such that each municipality gets a minimum allocation equal to its share of the national unemployment in December 2009.

Also extended through 2010 is a provision authorized by ARRA that permits 9% Low-Income Housing Tax Credits to be exchanged for cash. Under the provision housing credit allocating agencies may exchange for $.85 on the dollar all credits carried over from prior years as well as 40% of the current year’s allocation. This provision is intended to compensate for the withdrawal of Fannie Mae and Freddie Mac from the tax credit market. The bill also extends the exchange program to 9% credits allocated in response to Hurricane Katrina and to credits allocated in 2007 for floods in the Midwest. The bill does not extend the exchange program to 4% tax credits that accompany tax-exempt bonds, something that a coalition of national housing organizations is seeking. S. 3326, introduced by Senator Maria Cantwell (D-WA), would extend the exchange to the 4% credit. Such a provision was included in H.R. 4849, a small business jobs bill passed by the House in March. That provision could be added to a small business jobs bill that is to be considered by the Senate in the near future.

The tax extenders bill also provides $5 billion for an additional round of New Markets Tax Credits in 2010. It also permits investors to claim these credits against the Alternative Minimum Tax for investments made between March 15, 2010 and January 1, 2012. Also extended through 2010 is the designation of certain economically distressed census tracts as Empowerment Zones and Renewal Communities, to which are provided tax incentives for investments in these areas.

The bill also extends through 2011 a Housing and Economic Recovery Act of 2008 (HERA) provision permitting the Federal Home Loan Banks to guarantee tax-exempt bonds used for infrastructure. Tax-exempt housing bonds have for sometime been afforded this treatment on a permanent basis. In addition, the bill extends through 2011 the ceiling on “qualified small issuer” of $30 million, a provision also authorized by HERA. NACCED and NACo have supported this provision.

The House bill provides a one-time, $1 billion capitalization of the National Housing Trust Fund, a program authorized by HERA. Under the program, whose funding is allocated among the states, the bulk of these capital funds must be used for housing benefitting households at or below 30% of median income. Also provided is $65 million in project-based vouchers to provide rental assistance, the only way that households of extremely-low income can be served. According to the provisions authors the funding will support 10,000 multifamily units and create 15,000 construction jobs and 4,000 permanent jobs.

One of the provisions that “pays” for the bulk of the bill is a change in the tax law treatment of “carried interest.” Current law provides that carried interest that arises from venture capital, private equity and real estate partnerships be taxed entirely at the 15% capital gains tax rate rather than the much higher ordinary income rate. The House version of the bill would require that some portion of income (50% in 2011 and 2012 and 65% thereafter) arising from the cashing out of these partnerships to be taxed as ordinary income. The Senate version provides that, to the extent carried interest reflects a return on invested capital, it would be taxed at capital gains rates. To the extent carried interest does not reflect a return on invested capital 75% of it would be taxed at the higher ordinary income and the balance at the capital gains rate beginning in 2011. The tax at ordinary income would be reduced to 50% for carried interest on the sale of assets held for five or more years.

Proponents have criticized current law as permitting hedge fund managers to reap a tax windfall. NACCED and NACo passed a resolution at the March Legislative Conference urging Congress to preserve the present law treatment of carried interest, arguing that applying the change to real estate partnerships will serve as a disincentive for real estate investments in distressed neighborhoods which often is the only reason that such investment takes place.

The Democratic Congressional had intended to have the final bill on President Obama’s desk prior to the July 4 th recess. That timetable has now been abandoned, although at some point the bill is expected to pass when enough offsets are found to neutralize its cost.

House Leaders Expect to Offer a One-Year FY 2011 Budget Resolution; Appropriators Awaiting Ceiling on Domestic Spending

The House Democratic leadership hopes this week to bring to the floor a FY 2010 war supplemental appropriations bill that will include an overall ceiling on domestic discretionary spending for FY 2011. The cap is expected to be set at $1.121 trillion, $7 billion below the cap recommend by President Obama in his FY 2011 budget. If the bill passes it will allow allocation of the cap among the 12 individual House Appropriations Subcommittees, including the one that sets spending levels for HUD programs, so that they can proceed on drafting their individual bills.

Under the 1974 Budget Control Act Congress would normally enact a budget resolution for the subsequent fiscal year by April 15 th. This would give the go-ahead to appropriators to draft the 12 individual spending bills. However, in his FY 2011 budget President Obama called for a three-year freeze on domestic spending. In the House the so-called fiscally-conservative “Blue Dog” Democrats called for an additional 5% cut on top of what the President proposed. It appears as though the Blue Dogs could get their way in the supplemental.

The Senate Budget Committee approved a FY 2011 five-year budget resolution in April that generally adopted the President’s freeze on domestic spending. That legislation will not be brought to the Senate floor unless there is assurance that the House will take up its version.

With the appropriations process delayed, it seems increasingly likely that Congress will enact few if any FY 2011 appropriations bills before the October 1 st start of the federal fiscal year. This will necessitate a “continuing resolution,” which would fund programs, including HUD’s, at the FY 2010 levels. Assuming it does, formula funding for the CDBG program would remain at $3.99 billion and the HOME program would avoid the $150 million cut to $1.65 billion that the President proposed in his budget.

How long the continuing resolution would last is open to question, perhaps until after the November elections or possibly into next year.

Announcement of NACCED Meetings in Connection with the NACo Annual Conference

This is a reminder about the NACCED Committee and Board meetings will be held in connection with the 2010 NACo Annual Conference. The meetings will be held on Friday, July 16th and Saturday, July 17th at the Reno-Sparks Convention Center in Reno/Washoe County, NV. The schedule is as follows:

Friday, July 16

9:00 a.m.- 10:30 p.m. Housing Committee Meeting – Cassa Collinge, Allegheny County, PA, Chair

10:45 a.m. – 12:15 p.m. Community Development Committee Meeting – Chair, Nick Autorina, Cobb County, GA, Chair

1:30 p.m. – 2:30 p.m. Economic Development Committee Meeting – Karen Wiley, Salt Lake County, UT, Chair

2:30 p.m. – 3:30 p.m. Program Support and Education Committee Meeting – Christy Moffett, Travis County, TX, Chair

3:30 p.m. – 4:00 p.m. Membership Committee Meeting – Lance Crawford, Clayton County, GA, Chair

4:00 p.m. – 6:00 p.m. NACCED Board of Directors Meeting – Susan Walsh, President

Saturday, July 17

9:00 a.m. – 10:30 a.m. Joint NACo/NACCED Economic Development Committee Meeting

10:30 a.m. – Noon Joint NACo/NACCED Housing Committee Meeting

1:00 p.m. – 4:00 p.m. NACo Community and Economic Development Steering Committee Meeting

NACCED to Hold Outreach Session in California, July 19th

NACCED will hold a special outreach session for members and non-members on Monday, July 19th.  The session will take place from 10 AM - 2 PM in the main library, 828 I Street in downtown Sacramento. The Sacramento Housing and Redevelopment Authority is serving as host.  The session will include a Washington Policy Update and a discussion of NACCED's advocacy activities as well as a block of time to be set aside for California's urban counties to engage in a roundtable on state affordable housing and community development issues/concerns. In addition, those who are not members of NACCED will have an opportunity to learn the benefits of membership. NACCED Executive Director, John Murphy will conduct the session with the assistance of Immediate Past President, Gary Bachman, Senior Community Development and Housing Planner for Pima County, AZ.

HUD Finds Pima County’s Analysis of Impediments to Fair Housing “Acceptable

NACCED Immediate Past President Gary Bachman reports that HUD’s Fair Housing and Equal Opportunity Office has completed its review of the City of Tucson/Pima County’s 2010-2015 Analysis of Impediments (AI) to Fair Housing. According to David Acevedo, Program Compliance Branch Chief for FHEO “… We have found the documents “acceptable” and have attached our review of the AI to this message. The City of Tucson and Pima County’s efforts to Affirmatively Further Fair Housing are commendable and the Department is looking forward to working together to achieve your Fair Housing goals. HUD’s 13-page analysis narrative is attached.

Utah Microenterprise Loan Program at Work in the Community

NACCED Board member Karen Wiley, Community Development Coordinator for Salt Lake County, UT writes: “This is an article that ran in the Salt Lake Tribune about the agency that presented at the [2009 NACCED Annual Conference in Chicago.  It's has additional successes and talks about a new opportunity that are providing for individuals with disabilities.  I thought the membership might be interested.” 

Salt Lake Tribune
Loan fund in Utah seeks to build on success
Small-business lender aims to help disabled with start-ups
By John Keahey