The House Financial Services Committee on July 11 unanimously passed the “Strategy and Investment in Rural Housing Preservation Act of 2019” (H.R. 3620), which aims to preserve affordable homes and avoid displacement in rural areas. The bill, introduced by Representative Lacy Clay (D-MO), would permanently authorize the Multifamily Housing Preservation and Revitalization program. It would also create an advisory committee to help the U.S. Department of Agriculture (USDA) develop a comprehensive strategy to maintain the agency’s rental housing portfolio, which provides more than 415,000 affordable homes to low-income people living in rural areas.
Many of USDA’s properties financed through the Section 515 and 514 programs are projected to lose their affordability provisions in the coming years, and no new properties have been financed in several years. Section 515 direct loans are an important source of funding for affordable housing in rural areas but often lose their affordability protections once the loans mature or are prepaid. A report published by the Housing Assistance Council (HAC) in September 2018 estimates a total of 892 properties with 21,452 rental homes are projected to leave the program because of maturing mortgages in the next ten years. The loss of homes will increase dramatically in 2028, with more than 80,000 homes projected to leave the program in the following five years.
The annual average household income of tenants in Section 515-financed properties is only $13,600, and the majority of residents are seniors and people with disabilities. Because rental assistance subsidies that keep homes affordable, such as USDA Rural Development Section 521 Rental Assistance or HUD Section 8 vouchers, are tied to Section 515 loans and, because Section 515 homes are often the only housing option for the lowest-income people in rural areas, preserving this source of affordable housing is crucial.
The bill would help address this crisis by permanently authorizing the Multifamily Housing Preservation and Revitalization program – currently a demonstration – which allows USDA to restructure Section 515 loans, extend incentives for owners to stay in the program, and provide properties with additional resources to repair and restore homes. The proposal includes an authorization of $1 billion over 5 years and requires USDA to develop a comprehensive plan to preserve multifamily housing with these new resources and tools. An advisory board with stakeholders from various sectors, including low-income tenants, would help guide USDA’s implementation of their preservation and revitalization plan.
H.R 3620 is at: https://bit.ly/2Ju7J7r
More about USDA rural rental housing programs is on page 4-69 of NLIHC’s 2019 Advocates’ Guide.