Agenda - Council - 08/24/1982 - Laserfiche WebLink

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T~tE WEi i( II~i ill VIEW- 82-31 - 5- July 30, Jl -] ]1 The Farmers Home Administration (FmHA) subsidizes the housing costs, of some Iow- and moder- ate-income households in rural areas by providing reduced-interest homeownership and rental housing loans. The cost to the Federal government of outstanding mortgages totaled $1 billion in 1981 and is expected to reach $1.6 billion by 1983. Major Lending Programs. The two major FmHA lending programs are the Section 502 homeowner- ship program, which finances the purchase of newly built or existing single-family homes, and the Section 515 rental housing program, which finances the construction or rehabilitation of multi- family rental projects. Although the Congress has modified the programs in recent years in order to lower program costs, other options exist to lower costs still further. Reducing Costs. The long-term costs of Section 502 and Section 515 interest-credit loans in 1983 could be lowered either by reducing the loan volume in any one year or by requiring tenants to pay a larger share of program costs. The savings realized by providing less assistance would be straightforward; any reduction in funding levels would yield a proportionate reduction in long- term costs. The savings realized from requiring tenants to pay an increased share of their housing costs would depend on how the increase was structured. Costs can be reduced by: · Increasing homeowners' interest payments by requiring them to pay 25% of their incomes rather than 20%. · Recapturing a larger share of interest subsidies by collecting a fixed per- centage of property appreciation. · Raising the share of income that renters contribute toward their housing ex- penses.from 25% to 30% of their incomes. The FmHA currently reports the annual costs of the programs only after they are incurred, which is the basis for the appropriation for past-year losses. Thus, the Congress is not able to consider the long-term cost of rural housing loans at the time they are authorized. As an alternative to pro- viding funding for the full cost of housing loans at the time they are made, the Congress could require the FmHA to include estimates of the expected long-term costs of additional lending in its budget submissions. This would provide the Congress with cost estimates that it could com- pare with estimates of the cost of other Federal programs. Taxes HOUSE VOTES TO GO TO CONFERENCE ON SENATE TAX BILL On Wednesday, the House Of Representatives (by a 208-197 vote) decided to go directly to confer- ence with the Senate on the latter's $99 billion tax-increase bill, instead of 'trying to write its own tax bill. This procedure should expedite passage of a tax measure while still affording the House conferees an opportunity to seek changes in the Senate bill. The Republican conferees chosen by the Senate are Senators Dole (Kan.), Packwood (Ore.), Roth (Del.), and Danforth (Mo.). The Democrats are Senators Long (La.) and Bentsen (Tex.). Also chosen was Senator Byrd (Va.), an independent who generally votes with the Democrats. On the House side, the Democratic conferees are Representatives Rostenkowski (111.), Gibbons (Fla.), Pickle (Tex.), Rangel (N.Y.), and Stark (Cal.). The Republicans are Representatives Conable (N.Y.), Duncan (Tenn.), and Archer (Tex.).