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Neighborhood Housing faces continued budget cuts in 2013

Friday, May 4, 2012 by Elizabeth Pagano

The diminished budget that the city’s Neighborhood Housing and Community Development Office has been operating with over the past year will probably get even smaller next year, according to the department’s budget presentation Wednesday.


Combined, the loss of federal funds to NHCD will be about $1.7 million in the next year.


“It’s a lot of money, and it’s the second year,” NHCD Director Betsy Spencer told In Fact Daily. “In the last two years, it’s been about $3.5 million.”


Spencer added that last year’s cuts were managed, in part, by transferring debt that was formally paid for by Community Development Block Grants funds to the city, and not filling seven vacant positions.


“We’ve tried real hard to make sure the community didn’t feel that impact, but we’ve absorbed a lot of it in the department by still offering the services without additional staff,” Spencer told In Fact Daily. “Without the funds that we need we will not be able to offer these programs at the level that we were and we may not have all those folks.”


Roughly $185,000 of the decreased federal grant funding is in CBDG grants, and $1.5 million in HOME Investment Partnership Grants. HOME investments have historically funded programs such as tenant-based rental assistance, homeowner rehabilitation loans, down payment assistance, acquisition and development and various programs in the Community Housing Development Organization.


In 2013, if the cuts were applied in a uniform 39.5 percent reduction (something that she is by no means suggesting as a strategy) 86 households in Austin would be affected.


The $1.5 million reduction could also cause the loss of five full-time employees in the department, though the positions were not identified.


In total, the department estimates total unmet needs for next year at about $3 million, even accounting for a much smaller budget.


“Just so you know, if we looked at this picture last year, our annual budget was about $23 million. Without the unmet needs being met, we’re only at $12.8 million. We have lost – between expending all the GO bonds ((city General Obligation bonds), and the loss of federal income – roughly $10 million,” said Spencer.


In addition to the loss of federal grants, Spencer anticipates NHCD’s General Obligation Bond Funds will be exhausted by August of this year.


“I suspect that source, at least, will come back very shortly,” said Council Member Bill Spelman. “The bonds were extremely popular the last time we put them out, and I think the next time we put out an affordable housing bond it’s going to be just as popular if not more so.”


Spencer was optimistic that an upcoming bond package could help fill the gap left by the decrease in federal funding as well. She told In Fact Daily that some of the programs that would be most impacted by the drop off in HOME grants had, in the past, been funded by bonds.


In her presentation to City Council, Spencer explained that bond funds of $53.5 million had leveraged over $177 million in private/public partnerships and created over 1,500 jobs and over 2,500 units.


The city is expecting to put a number of bond propositions on the November ballot, but it is not clear exactly what those will look like.


“This is very important. It’s people in the community that are affected, its staff that are affected, I mean this is affecting everything that we do,” said Spencer. “We can not absorb any more. They’ll choke me. They’ve absorbed a lot. I’ve asked a lot of everybody in order to keep things whole. We’ve done that for two years.”

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