Dive Brief:

• The Department of Housing and Urban Development could stand to see its funding cut by $6.2 billion, or 13.2%, from 2017 based on President Donald Trump’s 2018 budget proposal released Thursday by the Office of Management and Budget, according to HousingWire.

• Programs facing elimination or major funding reductions include the Community Development Block Grant program, the HOME Investment Partnerships Program, Choice Neighborhoods and the Self-help Homeownership Opportunity Program.

• Meanwhile, the budget calls for the addition of $20 million for lead-paint mitigation in low-income housing. The budget also notes the continued support provided by the Federal Housing Administration’s mortgage insurance programs.

Dive Insight:

Affordable housing advocates say that in addition to reducing funding from or altogether eliminating critical community development and other housing programs, the proposed cuts also reduce operating and capital expense budgets.

Continued cuts from budget year to budget year hamper local agencies’ ability to maintain existing properties, suggesting that adding new inventory will become a greater challenge, Adrianne Todman, executive director of the District of Columbia Housing Authority, told journalists during a panel event in Washington, DC, on Thursday.

Less than one-quarter of households eligible for federal rental assistance actually receives it, according to the Congressional Budget Office. Meanwhile, of the 43.6 million renter households in the U.S. today, 11.4 million qualify as extremely low income — meaning their income is at or below the poverty level or 30% of the area median income — and there is a 7.4 million shortage of affordable rental homes for this group, according to the National Low Income Housing Coalition.

Common themes within the HUD portion of the proposed budget include redirecting community and economic development activities like the CDBG and HOME programs to the state and local levels. It also aims to reduce duplication of private-sector efforts — for example, by eliminating funding for HUD’s Section 4 capacity building grants, which support community development corporations and community housing development organizations.

Experts were quick to note that the budget, which focuses on discretionary spending, references areas of priority for the new administration and will likely be revised as advocacy groups, legislators and other stakeholders respond in kind and prepare to justify alternative approaches. The cuts to HUD, among other departments, come amid funding increases in transportation, veterans affairs, defense and homeland security spending. A more detailed breakdown of the budget proposal is expected in May.

HUD and HUD Secretary Ben Carson will likely focus on issues including reducing funding complexity, managing depreciation on subsidized housing and exploring adaptive reuse for new projects, according to Scott Keller, a Washington, DC–based partner in Horne LLP’s government services practice who worked with the Presidential Transition Team on Carson’s confirmation as HUD secretary. He told journalists during the panel that the budget plan put forth Thursday is “a marker” of the president’s priorities and is largely a response to campaign pledges. “At the end of the day, Congress will decide," he said.

For more housing news, sign up for our daily residential construction newsletter.