FHA funding pinch threatens LV housing projects

Monday, May 7, 2001 | 10:21 a.m.

Four projects that would provide 344 affordable apartments to the working poor in Nevada may not be built because of a Federal Housing Administration funding shortfall.

The money to ensure the three projects in Las Vegas and one in Reno -- to be built at a cost of $13.7 million -- normally would come from the multifamily mortgage insurance fund, but that fund is depleted, according to the FHA.

Nevada is not alone. The Mortgage Bankers Association of America said the development of 51,732 projects in 33 states at a cost of $3.6 billion -- all aimed at providing homes for the working poor and other low- to moderate-wage earners -- are on hold.

The FHA provides federally backed insurance on the construction of such projects at the rate of 3 cents of coverage for every construction dollar. That means that $100 million covers $3 billion worth of construction, officials said.

"They already have used the $101 million in this fund for $3 billion worth of projects and now need another $150 million to finance $3.5 billion in other projects on the board for this year," said Howard Glaser, vice president of government affairs for the Mortgage Bankers Association in Washington, D.C.

The shortfall, said FHA officials, occurred because it was underfunded by the Clinton administration.

"Regardless of how the program was managed in the previous administration, we intend to live within our means and move forward," Nancy Segerdahl, communications adviser for Housing and Urban Development Secretary Mel Martinez, said Thursday.

"For next year's budget, the new administration has proposed a fix that will significantly reduce the need for future appropriations."

For the short term, the bankers' group is calling on Congress and the Bush administration to bail out the fund by releasing a $40 million emergency appropriation approved last year and adding another $115 million to the pot.

The locally planned projects include one with 58 units at a cost of $2.6 million, one with 51 units at a cost of $4.5 million and one with 41 units at a cost of $2.7 million. A 194-unit complex in Reno is to be built at a cost of $4 million.