New Impetus in Housing

December 18, 1990

After 10 years of willful neglect, America now has a kinder and gentler federal housing program. Housing and Urban Development chief Jack Kemp can take some of the credit here, but the 101st Congress did the lion's share of the work in shifting course. Mr. Kemp's HOPE program, designed to sell off public housing to tenants, and Shelter Plus Care, which combines housing aid with social services, both made it into a landmark housing bill signed into law in late November.

The bill has many other parts, some of which give the Bush administration pause. Besides continuing for the next two years programs already up and running, such as $9 billion worth of rental assistance contracts, the reauthorization will fund up to 360,000 additional units of affordable housing. In fiscal 1991, it will provide $17.9 billion in spending, about $3.36 billion above the existing level. In fiscal 1992, it provides $20.6 billion, $5.5 billion above current spending.

Here's one of the best parts: Under a block grant program, state and local governments will have a greater role in the structuring of housing programs using federal dollars. That money, under a formula similar to the Section 8 rent subsidy program, is to be used for rent assistance as well as for the rehabilitation of older buildings.

The Bush administration threatened a veto over this and other issues relating to construction. Congress agreed, after much arm-twisting, to limit the communities which could build new public housing and make it more expensive to do so, but the program survived.

The troubled Federal Housing Administration mortgage insurance program received new life, too. Defaults have dropped FHA funds from $3.4 billion in 1979 to $2.6 billion, and a wrinkle in the recently enacted budget agreement requires $2.5 billion to be raised in revenues from FHA premiums over the next five years. Administration proposals would have hiked FHA insurance premiums by an additional $1,300 in cash on the average $65,000 home, but after some wrangling House-Senate conferees brought it down to $833.

In all, this housing law is a good deal for some 10 million low-income families. It could not in one fell swoop replace all of the housing aid lost during the 1980s -- an 80 percent cut over eight years, according to the Congressional Budget Office -- but it does begin the healing process.

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