Tens of millions will be rescinded from Department of Housing and Urban Development (HUD) multifamily programs from unobligated COVID relief funds and overall federal non-defense discretionary spending, including for HUD programs, for fiscal year 2024 (FY24) will be at no more than fiscal year 2023 (FY23)  levels in a debt ceiling deal passed by the House and Senate May 31 and June 1, respectively, and on its way to the White House for President Biden’s signature.

Rescission of $32.91 Million of HUD Multifamily COVID Relief Funds

A chart circulated by the White House during the debt limit deal negotiations indicates $32.91 million in unobligated CARES Act funding will be rescinded from HUD multifamily programs as part of the debt limit deal. LeadingAge is working to confirm these numbers with HUD. We do understand that these claw-backs are not expected to impact already awarded Coronavirus Supplemental Payment (CSP) awards made to Section 8 Project-Based Rental Assistance (PBRA), Section 202 Supportive Housing for the Elderly, and Section 811 Housing for Persons with Disabilities.

Congress provided HUD COVID relief funds in the CARES Act, which was enacted in March 2020. The PBRA program was provided $1 billion, Section 202 received $50 million, and Section 811 received $15 million. Of the $1 billion for PBRA, HUD used $800 million to make up for lost tenant rent payments; the remaining $200 million, along with the $50 million for Section 202 and the $15 million for Section 811 were distributed over five rounds of CSP awards. In total, the debt ceiling deal rescinds $28 billion in unobligated COVID funds.

It is unclear how much of the $32.91 million in HUD multifamily funds remains unobligated. Looking back, it is frustrating to recall how very long HUD took to issue CSP awards during a time of widespread devastation. Although the funds were enacted in March 2020, HUD multifamily providers did not receive their first CSP funds until September 2020 and, even then, the first round had a very short application window as well as a very restricted scope of eligible uses.

Impact on FY24, FY25 Appropriations

The debt ceiling deal requires overall non-defense discretionary spending for FY24 to be at the FY23 funding level. Non-defense discretionary programs include all annually appropriated programs like HUD and USDA housing program. They do not include mandatory spending, such as for Medicare and Medicaid, or other tax expenditure spending, such as for the Low Income Housing Tax Credit. Because of inflation, the cost to operate HUD’s housing programs increase every year even if no additional households are served. Coupled with this are unique pressures on the FY24 HUD funding bill: $7 billion less in revenue from Federal Housing Administration programs, which is used by appropriators to help pay for the HUD bill, and about $3 billion in additional costs for HUD’s largest program, the Housing Choice Voucher program, because of increased private market rents.

If appropriators choose to flat fund HUD housing programs, these will likely result in insufficient funds for providers to run these programs. For example, Section 8 PBRA contract renewals need a funding increase of $1 billion in FY24, compared to FY23, to remain fully funded. For the Section 202 account, funds that would otherwise go to new Section 202 homes might have to be used instead to meet the rising renewal costs of Project Rental Assistance Contracts in FY24. The House is expected to consider its HUD FY24 appropriations bill in subcommittee and full committee this month; the Senate is expected to take up its HUD bill in subcommittee and full committee in July. Stakeholders are urged to use LeadingAge’s HUD funding action alert to reach out to their House and Senate members in support of strong senior housing funding for FY24.