Dear Chair Hyde-Smith, Ranking Member Gillibrand, Chair Womack, and Ranking Member Clyburn:
We, the undersigned 1,426 state and local community development and housing organizations, thank you for your support of affordable housing and economic development. We are appreciative of the $42 million provided for the U.S. Housing and Urban Development (HUD) Section 4 Capacity Building program in FY 2025 and look forward to working with you as consideration of FY 2026 appropriations begins. We urge you to support Section 4 by: (i) appropriating $50 million under the FY 2026 THUD Appropriations bill; and (ii) engaging with the U.S. Department of Housing and Urban Development (HUD) as necessary to ensure that it continues to disburse all funds that have been awarded to Section 4 grantees under prior year appropriations.
Section 4 strengthens rural, Native, suburban, and urban communities across the nation by providing flexible support to local nonprofit community development corporations (CDCs) to develop affordable housing, finance small businesses, revitalize commercial corridors, and help address local healthcare, childcare, education, and safety needs. Through direct financial assistance, training, and guidance, Section 4 gives local organizations the staffing, program development, and financial resources needed to maximize the impact of the services they provide and ensure the long-term sustainability of their investments.
Section 4 provides essential resources to build the capacity of nonprofits across the country. According to a recent analysis by the Community Opportunity Alliance, the CDC sector as a whole faces financial challenges and would greatly benefit from additional support to meet growing local affordable housing and community development needs.
We very much appreciate the funds that Congress has provided for the Section 4 program in the last few years, but the current funding levels are not sufficient to meet the growing demands that CDCs continue to face – particularly with the rising housing and consumer costs that are acutely felt by low-income families. In real dollars, Section 4 has essentially been cut by over 30 percent since 2004. An increase to $50 million in FY 2026 will right size the program to meet the growing needs of the communities and families that rely on CDCs to provide critical services and support.
Section 4 funds are matched on a 3 to 1 basis, and then used to leverage additional public and private capital. Total aggregate leverage has consistently been in the range of $20 or higher for each dollar of Section 4 funding, such that an investment of $50 million will leverage $1 billion of total investments.
Section 4 is the only federal program that is specifically designed to increase the effectiveness of nonprofit organizations by providing them with critical capacity building funds so that they may better serve all types of communities in need. Throughout its history, the program has benefited all 50 states as well as the District of Columbia and Puerto Rico. From 2020 – 2024, this investment has:
▪ Helped to create and preserve over 40,000 affordable homes;
▪ Attracted over $11.6 billion in total development costs for low-income neighborhoods and communities across the country;
▪ Assisted in job creation, support of small businesses and the development of millions of square feet of commercial, retail and community facility space; and
▪ Supported programming efforts such as financial counseling, job training, and crime reduction in order to improve the physical and economic conditions in thousands of neighborhoods.
In addition, Section 4 has provided disaster recovery relief and has been used to assist communities impacted by hurricanes, the California wildfires and other federally declared disasters. The program has helped local community development organizations in affected areas to rebuild homes and community facilities, as well as assist small businesses. Section 4 has also been used by organizations serving Native communities and populations to increase access to safe and affordable housing, and to support economic opportunities for residents.
Section 4 has a unique and effective program structure by which HUD reimburses expenses incurred by awardees only after programmatic activities have been undertaken by the CDCs and reported to the agency. As such, the success of the program is predicated upon timely reimbursements from HUD. We therefore call upon Congress to monitor HUD closely to ensure that they continue to meet the obligations of the award agreements, including making timely reimbursements to the Section 4 program awardees in order for dollars to be deployed as quickly as possible for the benefit of communities nationwide.
We recognize that there are many priorities for the Senate and House Transportation Housing and Urban Development Subcommittees, and we thank you again for your support. As you consider FY 2026 funding, we urge you to provide further appropriations to the Self-Help and Assisted Homeownership Opportunity Program account, which supports many critical HUD programs, in order to accommodate the additional requested funds for Section 4. We hope you can fund at least $50 million in FY 2026, as well as working with HUD as needed to ensure timely disbursements of funds under prior year awards.