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Letter to Senator Kent Conrad, Chairman, U.S. Senate Committee on Budget

Snowe Joins Bi-Partisan Group to Push for Section 8 Funds

U.S. Senator Olympia J. Snowe (R-Maine) is leading a bi-partisan effort to press the Senate Budget Committee to include an advance appropriation for fiscal year 2010 of $2.8 billion for the Section 8 Project-Based Rental Assistance (PBRA) program. The Section 8 program provides safe, affordable housing to more than two million families nationwide, and more than 12,000 Mainers. It is the only option for many families, seniors and disabled tenants in Maine, with long waiting lists in most communities.

Unfortunately, for FY-2007 and 2008, the Administration underestimated its needs for this program. Although Congress voted $6.14 billion for project-based Section 8 contracts for FY-2008, Department of Housing and Urban Development (HUD) officials have acknowledged that this is still $2 billion less than what is needed to ensure one year renewal of all contracts that come up for renewal during FY 2008.

"Approximately 10,000 units of affordable Section 8 housing nationwide are lost annually as owners choose to terminate their participation in the program," Senator Snowe said. "There are many communities in Maine facing waiting lists of up to three years, and it is critical that there is enough money allocated to fund these contracts - or else people who are currently receiving vouchers will end up back on the streets. I am encouraged that the Senate Budget Resolution that passed out of the Senate Budget Committee yesterday, and will be considered by full Senate next week, includes this crucial funding."

Senator Snowe was joined by Sens. Dodd, Schumer, Reed, Lieberman, Brown, Leahy, Johnson, Kohl, Menendez, Akaka, Boxer, Casey, Kerry, Tester, Bingaman, Lautenberg, Bond, Coleman, Collins, Smith, Sununu in sending the following letter to the Chairman and Ranking Member of the Senate Budget Committee:

Senator Kent Conrad
U.S. Senate Committee on Budget
Washington DC, 20510

Dear Senator Conrad:

We are writing to urge the Budget Committee to include in the forthcoming budget resolution advance appropriations for fiscal year 2010 of $2.8 billion for the Section 8 Project-Based Rental Assistance (PBRA) program. This advance appropriation is needed to restore full funding for this critical program and to prevent the loss of affordable housing for hundreds of thousands of low-income families.

The Section 8 Project-Based Rental Assistance program is a successful public-private partnership between the federal government and private owners of rental housing, who enter into contracts with HUD to provide housing for low-income families — most of whom are elderly or have disabilities — at rents that are affordable. Rental assistance for over one million families is funded by annual appropriations and nearly 300,000 additional units are under long-term contracts funded by Congress in previous years. The annual renewal of Section 8 contracts occurs on a rolling basis throughout each year, on the anniversary date of each of the 14,000 contracts. Historically, HUD has obligated 12 months of funding for each contract at renewal, thereby reassuring owners that housing assistance payments will be made for the full period of the contract.

Unfortunately, property owners' confidence in this partnership has been badly shaken by large program funding shortfalls in Fiscal Years 2007 and 2008. In both years, HUD failed to request sufficient funding from Congress to meet its commitments to property owners. When the budget shortfalls first surfaced in 2007, property owners experienced long delays in receiving housing assistance payments from HUD. In an attempt to make the program work with inadequate funding, HUD has implemented a new policy of "short-funding" Section 8 contracts upon renewal. Under this policy, instead of obligating a full 12 months of funding, HUD is requiring property owners to sign revised short-term, 3 or 4 month contracts. In FY 2008, nearly all Section 8 contracts were short-funded to make up for a budget shortfall of $2 billion, according to HUD.

HUD's new policy of short-funding Section 8 contracts, and the recent history of late assistance payments, has created problems for the owners and residents of these properties. In a hearing before the House Subcommittee on Housing and Community Opportunity on October 17, 2007, owner representatives testified that late payments and the uncertainty created by short-funded contracts have generated numerous difficulties in managing their properties, have increased the costs of operations, and are likely to make it more difficult and expensive to raise capital from lenders and investors to improve and rehabilitate properties.

Approximately 10,000 units of affordable Section 8 housing are lost annually as owners choose to terminate their participation in the program. As owners lose confidence in the financial stability and reliability of the program — and it becomes increasingly difficult for them to raise the funds they need to modernize their properties — many more will be encouraged to leave the program, putting hundreds of thousands of affordable homes at risk.

Though the President's budget provides increased funding for the Project-Based Rental Assistance program, as well an advance appropriation of $400 million for FY 2010, this amount is $2.4 billion short of what is needed to fund all contracts on a 12 month basis. To fully fund this program, and to avoid the potential loss of affordable housing for low-income families, we urge you to include an advance appropriation of $2.8 billion for Section 8 project-based rental assistance, and that the budget resolution cap on advance appropriations be raised to accommodate this increase.

We look forward to working with you on this important issue and thank you for your consideration of our views.

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