Tuesday morning was marked by a yearly discussion between House appropriators and HUD Secretary Ben Carson. The budget hearing provides legislators an opportunity to question the administration’s HUD budget proposal for fiscal year 2019.

There was talk of a furniture set debacle, urgent need for continued disaster relief funding in Texas and Florida, and rural issues like broadband internet and regulatory hurdles around manufactured housing, but most interesting was Carson’s regard for the new Opportunity Zones program as a replacement for many HUD programs.

Several members of the House Transportation, Housing and Urban Development Subcommittee voiced concern regarding the numerous proposed cuts to HUD’s budget. Carson responded with two major themes: curbing a growing national debt trumps the funding needs of HUD programs and many funding voids will be filled by the new Opportunity Zones program signed into law as part of the Tax Cuts and Jobs Act of 2017.

As previously reported, The White House budget proposes zeroing out the Public Housing Capital Fund – nearly $2 billion for mitigating a $50 billion backlog in needed maintenance and repairs for public housing. When Ranking Member David Price (D-NC) asked how the $50 billion backlog would be resolved, Carson provided the proposed expansion of the RAD program. When Price pushed further, arguing that the expansion to RAD would be helpful, but not enough, Carson pivoted to Opportunity Zones. It was the same pivot when asked what would replace CDBG and HOME (two programs also proposed for elimination in the budget).

Opportunity Zones will provide a resource similar to the gap funding from the HOME program but “on steroids”, explained Carson.

In response to Carson’s testimony, NH&RA Executive Director Thom Amdur observed, “while the new Opportunity Zone program should create new investment opportunities in distressed census tracts, it is a shallow subsidy and not one particularly well suited for public housing. The RAD funding mechanism is part of the solution to the public housing capital backlog; however, it is only viable with full funding of the Public Housing Capital and Operating Funds. We call on Congressional appropriators to fully fund and indeed expand investment in public housing.”

False Claims Act and FHA Lenders
Carson also stated that HUD is working with the Justice Department in curbing the  use of the False Claims Act, which the Secretary said has been used too often to punishFHA lenders for immaterial mistakes. While Carson said he in no way wants to cover for bad actors, use of the Act needs to be reduced in certain areas in order to attract lenders back to FHA.

Carson was also asked why this year’s budget proposed no funding for the HUD-VASH program. Carson stated that caring for veterans was an extremely important mission, but that the program currently has an adequate number of vouchers. Should that need increase, Carson said a request for additional vouchers would follow.

It is important to remember that the proposed budget is just that, a proposal. The FY 2019 budget request marks the second year in a row that the Trump administration has asked Congress for significant cuts or total elimination of certain HUD programs, with legislators largely unwilling to meet such demands in the past.