HUD_Sequestration CorrespondenceTHE CITY OF
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Masterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Sequestration Letters from HUD
DATE: March 11, 2013
Dubuque
kital
All- America City
II h/
2012
Housing and Community Development Director Alvin Nash is transmitting two letters
from the U.S. Department of Housing and Urban Development (HUD) concerning the
effects of the Sequestration budget on the programs of the Housing and Community
Development Department.
Alvin Nash advises that the City will stop the issuance of any new vouchers, but will not
interrupt those individuals currently with vouchers searching for units. Second, the City
will await final word from HUD before preparation of the Fiscal Year 2014 CDBG
funding, since the final allocation amount has yet to be determined by HUD.
The Housing Department will take steps to minimize the negative effect that the
sequestration implementation will have on program participants and service delivery.
hrit44 krt.,itaty,
Michael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Alvin Nash, Housing and Community Development Department Manager
Masterpiece on the Mississippi
To: Mike Van Milligen, City Manager
From: Alvin Nash, Housing and Community Development Manager
Re: Sequestration Letters from HUD
Date: March 11, 2013
Dubuque
All-America city
2012
Please find attached two letters from HUD concerning the effects of the Sequestration
budget dilemma's on our program. The first letter dated March 4th suggests that we
freeze the issuance of Section 8 vouchers until we receive further notice to continue
issuing.
The second letter informs us that due to the implementation of the sequestration we will
see a possible reduction of 5% in our FY 2014 CDBG funding (HUD Program Year
2013). This reduction translates to a loss of about $46,419 for next year's funding.
I recommend that we proceed with a cautious spending approach. First, we stop the
issuance of any new vouchers but do not to interrupt those individuals currently with
vouchers searching for units. Second, we will await final word from HUD before we
prepare our FY 2014 CDBG funding since the final allocation amount has yet to be
determined by HUD.
The Housing Department will take steps to minimize the negative effect that the
sequestration implementation will have on our participants and our service delivery.
Enclosures
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RECEIVED
13 MAR -8 AM 9: 55
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
THE DEPUTY SECRETARY City Clerk's Office
WASHINGTON, DC 20410-0050
Dubuque, IA
March 4, 2013
The Honorable Roy D Buol
Mayor of Dubuque
50 W. 13th St
Dubuque, IA 52001-4864
Dear Mayor Buol:
As you are likely aware, due to the failure of Congress to reach a deal on balanced deficit
reduction to avoid sequestration, the President was required by law to issue a sequestration order
on March 1 canceling approximately $85 billion in budgetary resources across the Federal
Government for the remainder of the federal fiscal year (FY). As partners with the Department
of Housing and Urban Development, you are entitled to timely and clear information about how
these unfortunate budget cuts impact us, and, in turn, what it means for program beneficiaries in
Dubuque.
At this time, HUD is taking every step possible to mitigate the effects of these cuts.
However, based on our initial analysis, it is likely that your full-year FY 2013 formula program
funding will be lower than it was in FY 2012 due to the sequester, which may affect your
workforce and planning for this year, and possibly beyond. You can expect 5 percent reductions
from the FY 2013 annualized Continuing Resolution levels for the formula programs you are
eligible for, including the Community Development Block Grant (CDBG), HOME, Housing
Opportunities for Persons With AIDS (HOPWA), and Emergency Solutions Grants for the
homeless (ESG) programs.
In testimony to Congress in January, Secretary Donovan estimated some of the impacts
sequestration would have on participants. For example, cuts to the HOPWA program would
result in 7,300 fewer low-income households receiving permanent and short-term supportive
housing assistance, including rent or utility assistance, while a sequester of HOME program
funds will result in 2,100 fewer affordable housing units produced for low-income families. As
you know, every dollar of HOME funding is leveraged with almost four dollars of other funds.
Once Congress has passed and the President has signed a full-year FY 2013 appropriation
for HUD, the exact funding levels you will be receiving for these programs will be set, and,
depending upon your program year start date, your individual FY 2013 program grant
agreements will subsequently be sent to you.
www.hud.gov espanol.hud.gov
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Thank you for your continued partnership with HUD, and for your cooperation as we
work together to manage through these unfortunate circumstances.
Sincerely,
\iQ
Maurice A. Jones
ti
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, DC 20410 -5000
OFFICE OF PUBLIC AND INDIAN HOUSING
Dear Executive Director:
March 7, 2013
Subject: 2013 Budget Update— Sequestration Implementation Housing Choice Voucher
Program
As you are likely aware, due to the inability of Congress to reach a deal on balanced
deficit reduction to avoid sequestration, the President was required by law to issue a
sequestration order on March 1 canceling approximately $85 billion in budgetary resources
across the Federal government for the remainder of the Federal fiscal year. Because you are a
partner with the Department of Housing and Urban Development, you are entitled to timely and
clear information about how these unfortunate budget cuts impact us, and, in turn, what it means
for your Public Housing Authority (PHA) and participants in the Housing Choice Voucher
(HCV) program.
At this time, HUD is taking every step possible to mitigate the effects of these cuts.
However, based on our initial analysis, sequestration has resulted in a proration for voucher
renewal funding of 94.1% compared to anticipated renewal need for Fiscal Year 2013.
HUD understands that these cuts will have a significant impact on your PHA's ability to
assist the current number of households in the program. Our national projections indicate that
the difference between the actual renewal need and the sequestration level funding results in a
shortfall of renewal funding for approximately 125,000 participating families. HCV funding
also helps to support approximately 700,000 landlords and property owners who participate in
the program by providing a fair market rent so that they can meet mortgage payments, local tax
obligations, utility expenses, and maintain properties in good physical condition. Abrupt cuts to
assistance may make it difficult for these stakeholders to meet all of their obligations.
Additionally, the sequestration will significantly reduce administrative funding, resulting
in an administrative fee proration of approximately 68.5% in 2013. This projected proration,
following the significant prorations of the past few years, could pose major challenges for
PHAs in managing their HCV programs. HUD recognizes this reduction in administrative
fees may impede and disrupt your operations and pose severe impediments on the
accomplishment of important goals such as maximizing the number of families housed
through HUD's affordable housing programs, serving homeless veterans and other
vulnerable populations, and expanding housing choice for families in areas of opportunity.
Since these cuts may have a profound impact on your PHA's ability to serve
families, the Department is encouraging PHAs to take measures to mitigate the potential
impact of these funding cuts on the families that you serve. These strategies were previously
shared with your agency on February 22, 2013.
www.hud.gov espanol.hud.gov
2
Mitigation Strategies
Given the nature of the HCV program, some PHAs will face more challenges at being able to
cope with funding reductions. Housing Authorities with low turnover rates, with increasing
per unit cost trends and with low Housing Assistance Payment reserves need to be
particularly cautious. The deep cuts that result from sequestration will limit HUD's ability to
materially assist PHAs that go into shortfall. HUD is requesting that if you have not already
done so, you take the following measures to ensure that your agency does not experience a
funding shortfall and is able to continue to assist all HCV participants.
(1) Utilization of the HCV Forecasting Tool: HUD has developed a HCV forecasting
tool that is available on -line for PHA use.' The tool will assist you in mapping
out various funding scenarios for your agency, with the ability to adjust for factors
such as attrition and success rates. Please contact your local field office for any
questions or technical assistance on using the tool.
Regardless of whether your agency uses the HCV utilization tool or its own
forecasting process, it is critical that an analysis is done to determine whether
your agency should be issuing vouchers to applicants at this time in light of
these potential cuts. In the past, certain PHAs have experienced funding
shortfalls due to continued or increased leasing without the available budget
authority to support the vouchers throughout the calendar year.
While it is possible that the sequestration cuts may be a temporary measure, it will
be necessary during this uncertain budget climate to manage resources so as to
minimize the effect of sequestration on existing HCV participants.
(2) HUD encourages your agency to review PIH Notice 2011 -28, which provides
guidance on administrative flexibility and actions PHAs may take to reduce costs
in the Housing Choice Voucher Program. Suggested actions listed in the Notice
include lowering payment standards, reviewing utility allowances, changing
portability and moves policies. Further, PHAs may wish to consider revising
subsidy standards to reduce over - housed families, increasing minimum rents, and
redoubling efforts to eliminate fraud and abuse. Early implementation of these
measures may allow your PHA to better manage any prorations in its funding over
the course of the calendar year.
PHAs also need to plan to mitigate the sequestration's significant impact on
Administrative Fee Funding to PHAs in 2013. PHAs should begin to make plans for this
contingency if they have not done so already. PHAs are encouraged to review PIH Notice
2012 -15, Streamlining Administrative Practices in the Housing Choice Voucher Program.
'The utilization tool is found on the Office of Housing Voucher Programs webpage under
"Related Program Information" at www.hud.gov
PHAs are encouraged to refer to PIH Notice 2013 -3, which provides options to PHAs in
meeting certain program requirements during this period of decreased resources.
If you have any questions concerning this letter or how to use the HCV forecasting
tool, please contact your local Field Office. If you believe that your agency might be at risk
of being in a funding shortfall position as a result of these potential funding cuts or any other
reason, please also contact your local Field Office.
Thank you for your continued partnership with the Department, and for your cooperation,
as we work together to manage through these unfortunate circumstances.
Sincerely,
cc: Board Chair
Sandra Henriquez
Assistant Secretary