President Donald Trump released a preliminary 2018 budget proposal last month, and as expected, federal funding cuts were recommended across many departments, including education, housing, health services and transportation.

For the U.S. Department of Housing and Urban Development, the administration proposes a cut of more than $6 billion – a 13.2 percent decrease in the department’s operating budget. Combined, cutting programs would reduce the HUD budget by about $4.1 billion.

Amy McClain, an attorney and partner at Ballard Spahr law firm in Baltimore who leads the firm’s government-assisted housing practice, stresses that while she doesn’t expect budget cuts to be as severe as those proposed, “There’s a definite threat to the sources of funding we have available to do the work.”

HUD’s Rental Assistance Demonstration program is one particular platform McClain points to as valuable to the affordable housing industry, which could have detrimental effects if it were cut or reduced significantly. RAD gives housing authorities the ability to convert public housing to Section 8 housing using a combination of public and private debt. The program is aimed at reducing what HUD estimates to be a $26 billion backlog of deferred maintenance in public housing throughout the U.S., though McClain notes the total is likely more than $30 billion.

Converted property is legally required to remain as Section 8 housing under stewardship of the RAD program, but it is able to attract private investment.

“In my mind, it’s a very attractive model, particularly for Republicans because it has that private sector aspect to it – but it’s dependent on those rents,” McClain says. “If the public housing operating subsidy and the public housing capital fund get diminished [in the budget], then the rents are no longer viable to convert to the Section 8 platform.”

Ideas for introducing new HUD programs, or revising or eliminating current ones, remain theoretical while the budget has yet to be determined.

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