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Letters to the 107th Congress

May 3, 2001

The Honorable James T. Walsh
Subcommittee on Veterans Affairs,
    Housing and Urban Development, and
    Independent Agencies
2351 Rayburn House Office Building
United States House of Representatives
Washington, D.C. 20515

The Honorable Allan B. Mollohan
Ranking Member
Subcommittee on Veterans Affairs,
    Housing and Urban Development, and
    Independent Agencies
2346 Rayburn House Office Building
United States House of Representatives
Washington, D.C. 20515

Dear Mr. Chairman and Representative Mollohan:

We understand that the Administration's proposed budget for FY 2002 calls for a major reduction in funding for the Public Housing Capital Fund program (the Capital Fund), which is administered by the Department of Housing and Urban Development. The American Bar Association strongly urges you to oppose any such reduction in funding. The ABA is an avid supporter of increased funding for public housing and the development of well-managed and secure public housing. President Bush's budget proposal runs contrary to our policy by slashing the Capital Fund's budget by $700 million or 25%. While the Capital Fund received $2.99 billion for FY 2001, the funding would drop to just $2.29 billion for FY 2002 under the Administration's budget proposal.

As one of the two major funding sources for public housing, the Capital Fund is very important to the low-income community. Many public housing units are decrepit and in desperate need of repair. The Capital Fund is designed to alleviate this problem by improving and modernizing existing public housing projects, in order to keep them safe, operable and livable. According to the Council of Large Public Housing Authorities, approximately 3 million people depend on the Capital Fund program-this figure includes one million children, over 500,000 seniors, and approximately 300,000 veterans. More than 40% of current public housing residents are elderly or disabled. In addition, families with children comprise another 46% of public housing residents.

The Administration has argued that funding for the Capital Fund should be reduced, because some of the money for the program had not been spent as of March 2001. The Public Housing Reform Act of 1998 mandates that all Capital Funds be obligated within 24 months of their receipt and allows 48 months for the funds to be fully expended. However, those who advocate a reduction for the Capital Fund allege that funds are not needed this year, because those that were appropriated last year have not been fully depleted. This argument contradicts responsible asset management, since it is common to have balances in the pipeline, because it takes several years to complete major modernization projects (e.g. compliance with federal, state and local mandates, laws, codes and requirements). "Unspent funds" are merely funds that have been obligated to legally binding contracts between local housing agencies and contractors. It does not mean that they will not be used promptly. It means that they may require a multiyear expenditure of funds.

According to the National Association of Housing and Redevelopment Officials, cuts to the Capital Fund will result in the following scenarios: (1) housing authorities will have less money to spend for contractors; (2) agencies will have more difficulty responding to public housing assessment systems fixes; (3) delays will occur to maintenance work and, in turn, inconvenience those residing in public housing; (4) the physical improvements that an agency can make will be restricted--leading to a lower inspection score and possibly reduced funding from HUD; and (5) it will be more difficult to blend public housing properties into the surrounding communities.

The reality is that millions of people cannot find affordable housing and must rely on public housing instead. Over the past 60 years, public housing has provided an invaluable service to millions of low-income and vulnerable families. It is imperative that public housing facilities receive adequate funds for maintenance and modernization projects. As a result, we urge you and your colleagues to oppose any reduction in funding for the Capital Fund program.


Robert D. Evans
Director, Governmental Affairs Office

107th Congress Letters Home

Governmental Affairs Office
740 Fifteenth Street, NW
Washington, DC 20005
ph: 202-662-1760
fx: 202-662-1762

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