New York State 2013-14 Budget

Affordable Housing Highlights

Governor Andrew Cuomo has released his $135 billion budget proposal for the coming fiscal year.  The plan, which needs to be approved by the Legislature, closes an estimated $1.35 billion budget gap in the coming year and keeps growth in state spending under 2 percent.  The proposal allocates resources for a number of initiatives Cuomo discussed two weeks ago in his State of the State address, including the creation of a new House NY program to preserve the state’s aging Mitchell Lama portfolio.

The Executive Budget recommends $287.4 million for the Division of Housing and Community Renewal (DHCR).  This is a decrease of $50.6 million from the 2012-13 Budget.  The decrease primarily reflects a reduction in excess Federal authority for the weatherization program and a funding source change for the Neighborhood and Rural Preservation Programs and the Rural Rental Assistance Program.

The Executive Budget recommends a workforce of 692 Full Time Equivalents (FTE) for DHCR, which reflects the transfer of 66 FTEs to the new Office for Information and Technology Services in the current year, and the transfer of 9 housing capital development staff from the Office of Temporary and Disability Assistance (OTDA) who would move to DHCR along with the Homeless Housing and Assistance Program.

Here are the housing highlights:

• Expand Affordable Housing Opportunities:  The Executive Budget proposes a new House NY program that would invest $1 billion of additional resources over five years to preserve and create 14,300 affordable housing units statewide.  This multi-year initiative would include the revitalization of 45 Mitchell Lama affordable housing projects that suffer from significant physical deterioration ($706 million), the creation and preservation of over 5,000 affordable housing units through various housing and community development programs ($231 million), and other initiatives.  As part of the House NY Program, the Mitchell-Lama affordable housing asset portfolio will be transferred from Empire State Development to NYS Homes and Community Renewal (HCR) or DHCR. 

• Utilize MIF Resources to Support the NPP/RPP and the RRAP:  The Executive Budget proposes to utilize $64 million in excess reserves from the Mortgage Insurance Fund (MIF) to support the Neighborhood and Rural Preservation Programs (NPP/RPP) and the Rural Rental Assistance Program (RRAP) through the Housing Trust Fund Corporation for a two year period. Additionally, the Budget proposes to consolidate the NPP and RPP into a single “Community Preservation Program” and implement reforms to encourage greater accountability and performance. (2013-14 Value: $32 million; 2014-15 Value: $32 million). 

• Streamline Administration of Homeless Housing Development to Speed the Completion of Projects:  The Executive Budget will transfer the $30 million Homeless Housing AssistanceProgram (HHAP) – which finances construction of housing units for homeless individuals – from theOffice of Temporary and Disability Assistance (OTDA) to DHCR.  Currently, programs to finance construction of homeless and affordable housing aremanaged by OTDA and DHCR, often requiring developers to work with two separate agencies tocomplete a single project.  On average 32 percent of HHAP projects also receive funding through DHCR. HHAP staff would also be transferred to DHCR. 

• The proposed budget reduces funding for the New York Main Street Program and eliminates funding for the Rural Area Revitalization Program and the Urban Initiatives Program.  Funding for all other capital programs (Low Income Housing Trust Fund, Homeless Housing Assistance Program, Access to Home, Affordable Housing Corporation, Housing Opportunity Program for Elderly, Public Housing Modernization Program, and Homes for Working Families Program) remain at prior year levels. (See below chart). 

In addition to the enactment of the Budget, amending legislation would be necessary to implement the following changes in law: 

• Transfer the administration of the Homeless Housing and Assistance Program from the Office of Temporary and Disability Assistance to the Division of Housing and Community Renewal.
• Merge and reform the Neighborhood and Rural Preservation Programs.
• Modernize the investment powers of the State of New York Mortgage Agency and the Housing Finance Agency.
• Provide for the utilization of excess Mortgage Insurance Fund reserves. 

Other Budget proposals of interest include the following: 

• The Executive Budget continues the implementation of Medicaid Redesign Team recommendations, including making additional funding available for affordable housing. 

• The Executive Budget includes funding to support community and treatment opportunities, including new supportive housing units in New York City for homeless families with members suffering from a chemical dependency.  These investments are supported by savings attributable to agency efficiency actions, as well as the use of available Federal funds. 

• Extend and Enhance the Historic Commercial Properties Rehabilitation Credit:  Provide assurance to developers who are rehabilitating historic commercial property, or are considering doing so, by extending the existing $5 million per project tax credit for five years (2015-2019) and making the credit refundable beginning in tax year 2015. 

• Reform the IDA State Sales Tax Exemption: Currently, Industrial Development Authorities (IDAs) are allowed to use State resources for economic development purposes without consulting with the State or receiving input from the regional economic development councils. The Executive Budget will make IDAs more accountable by limiting the industries to which IDAs can offer State sales and other use benefits to those key sectors (scientific research and development, software development, agriculture, back office operations, distribution centers, financial services data centers, and manufacturing) that are eligible to receive New York’s Excelsior tax credits. Additionally, IDA projects involving State sales tax exemptions will require the approval of the regional economic development council and in cases where an IDA recaptures State sales tax from under-performing projects, IDAs will be required to return the proceeds to the State. 

• The Recreate NY Smart Home and Recreate NY Home Buy-Out Programs: These programs will ensure that New York rebuilds from Hurricane Sandy to modern building standards and, in locations where rebuilding is impractical, provide a voluntary home buyout alternative.