Abstract: This chapter presents the budget estimates and program justifications for the Department of Housing and Urban Development (HUD). HUD’s core mission is to promote adequate and affordable housing, economic opportunity and a suitable living environment free from discrimination. The 2001 Budget for HUD reflects the successful implementation of a multiyear comprehensive reform effort which has helped restore the effectiveness and financial integrity of the Department’s critical affordable housing and economic development initiatives. Building on the success of these reforms, Congress and the Administration have provided significant increases in key HUD programs over the past two years. The 2001 Budget will continue these historic successes by providing the Department with the tools to fulfill its fundamental strategic goals: increasing the availability of decent, safe and affordable housing in American communities (including the enhancement of homeownership opportunities, especially for minorities and first-time homebuyers, the transformation of public housing and the expansion of housing assistance to alleviate severe housing needs); ensuring equal housing opportunity; promoting self-sufficiency and asset development of families and individuals (including moving homeless families to self-sufficiency through locally-developed continuum of care strategies and contributing to the success of welfare-to-work efforts); and improving community quality of life and economic vitality through locally-driven initiatives and programs. The 2001 budget provides increases for two successful block grant programs which serve HUD’s fundamental affordable housing and economic development missions—the Community Development Block Grant (CDBG) and the HOME Investment Partnerships programs. These programs provide states and localities with formula funding pursuant to locally-developed consolidated plans for a wide variety of activities which benefit low and moderate-income families. The Community Development Loan Guarantee program (under Section 108 of the Housing and Community Development Act of 1974) will be continued with level funding and a slightly increased loan guarantee limitation. The Economic Development Initiative will also be maintained. Grants for Urban Empowerment Zones will continue support for ten-year plans to provide new job opportunities and community revitalization in 15 urban areas. The Rural Housing and Economic Development program will be continued at an increased level. HUD’s Homeless Assistance programs will be funded at an increased level to enable communities to continue their development and implementation of comprehensive coordinated continuum of care systems to address the needs of homeless people and families. This funding includes 18,000 rental assistance vouchers designed to provide affordable permanent housing for formerly homeless individuals and families in order to provide a stable living environment, a critical necessity for maintaining access to needed services and providing access to employment opportunities. HUD’s Continuum of Care approach recently received the prestigious 1999 Innovations in Government award from the Harvard University’s John F. Kennedy School of Government and the Ford Foundation. The 2001 Budget maintains the Federal commitment to replacing distressed and obsolete public housing with attractive, mixed-income communities and creating new economic opportunities for residents. Consistent with this commitment and with a special focus on replacing projects that have been determined to be non-viable, the HOPE VI program will receive a significant increase from last year’s enacted level. The 2001 Budget provides $3,192 million for the Public Housing Operating Fund, which helps to maintain good quality housing, and provides a slight increase for the Public Housing Capital Fund, which helps modernize and improve the housing stock. The 2001 budget includes 120,000 incremental vouchers that will help address the severe housing needs of low-income households. These vouchers are necessary to address the continued increase in the number of families nationwide which have worst case needs for housing assistance, including extremely-low income families currently paying more than half their income for rent or living in severely inadequate living conditions. The Administration reaffirms its long-held commitment to renew all expiring Section 8 contracts, to protect residents from displacement by substantially increasing funding for Section 8 renewals, to provide Section 8 tenant-based assistance for displaced families, and for the replacement of affordable housing due to opt-outs from the project-based Section 8 program. The Administration also continues its support for the Department’s successful Housing for Persons With HIV/AIDS program (HOPWA) by providing increased funding to prevent thousands of persons with HIV/AIDS from becoming homeless. This increase is necessary to continue to provide stable housing and services in existing local programs and fund new jurisdictions as they become eligible for formula funding due to the continued increase in the number of AIDS cases. Building on last year’s successful adoption of the Housing Security Plan for Older Americans, the Housing for the Elderly program (under Section 202 of the Housing Act of 1959) will receive a substantial increase, including an increase in capital funding to convert existing housing to assisted living with services and an increase for construction of new affordable assisted living. The Housing for Persons with Disabilities (under Section 811 of the National Affordable Housing Act of 1990) will receive additional funding. In support of the Administration’s strong commitment to increase homeownership opportunities, the 2001 budget includes major support to help lowand moderate-income American families become homebuyers. The budget will increase the Federal Housing Administration’s (FHA) maximum mortgage loan limits, allowing Single Family insurance to cover loans up to the same level as the Fannie Mae and Freddie Mac (GSEs) limits. (Currently FHA can insure home mortgages only up to 87 percent of the GSE limits in high cost areas and only up to 48 percent in low-cost areas, including approximately 2,200 rural counties throughout the Nation). In addition, the budget authorizes FHA to develop new adjustable rate mortgage products. These provisions will provide much-needed assistance to first-time homebuyers, minorities, and other underserved populations. Increased funding for the Fair Housing Assistance and Fair Housing Initiatives programs (FHAP and FHIP) will strengthen the ability of public and private fair housing groups, and partnerships between them, to enforce the laws protecting all Americans against illegal housing discrimination. In order to ensure the effective implementation of its programs, the Department’s Office of Policy Development and Research (PD&R) will be provided with a budget increase. These additional funds are necessary to ensure timely provision of data, research and analysis of national housing and economic conditions, and to measure the performance of pro-