HUD’s Projected Budget for 2013

On Monday, February 13, 2012, President Obama presented the FY (Fiscal Year) 2013 budget to Congress and to the public. It is important that you know that the budget did not request full funding for all 12 months of project-based Section 8 contracts in FY 2013; funding has been requested only for the federal government’s FY. This could prove to be a problem for some Section 8 properties depending on when the property’s contract is renewed. For example, if your contract renews in June, your renewal funding will be in place through the end of September (the end of the government’s fiscal year).

“President Obama’s FY 2013 HUD budget requested $8.7 billion for the project-based Section 8 account.  Of that total, $8.44 billion was for contract renewals and $260 million was for contract administration costs.  The budget also requested an advanced appropriation of $400 million for FY 2014.  The contract renewal funding is $611 million below the FY 2012 appropriations levels and the FY 2012 budget request.”

Prior to FY 2009, HUD handled requests this same way.  The Department requested enough funding to cover the project-based Section 8 program for the length of the fiscal year rather than full funding for all 12 months of the contracts.  This resulted in the growth of a $2 billion funding gap in the program.  Property owners received partial and/or delayed HAP (Housing Assistance Payments) voucher payments because of the funding shortfalls.  As a result, owners had to defer payments on property operations – including mortgages, maintenance, staff salaries, and utilities – which jeopardized the financial and physical health of the properties.  It was not until 2009, when the $2 billion gap was funded by the American Reinvestment and Recovery Act that HUD began requesting funding for the full 12-month contract terms at the time of renewal, and funding for HAPs stabilized.

Review the FY 2013 HUD budget request.

If you are concerned about the projected budget, you should contact your Members of Congress and alert them to your concerns. Let him/her know that this funding methodology can have a profound effect on your property if there is a funding short-fall.