Rural Housing Programs

Background

The Department of Agriculture’s Rural Housing Service (RHS) Section 515 program provides low-interest loans to fund the construction of apartments for renters with low incomes in rural areas. Section 515 units serve an extremely low-income population in need of affordable housing.

In 2004 the RHS published a property assessment report of its 400,000 units under the Section 515 portfolio. People age 62 and older and people with disabilities occupied 61 percent of these units. Many of these people require personal care services to maintain their independence in a residential environment. Yet Section 515 residents who are physically frail or cognitively impaired cannot receive supportive services from the housing provider. This is because RHS rules require residents to be fully independent. Staff models of care can serve residents who lack the ability or support to organize their own care. In addition they often provide the services at a lower cost because of economies of scale.

The Section 515 program has experienced severe cuts since the mid-1980s. The president’s proposed budget for fiscal year (FY) 2017 is $33.1 million. Although this is $4 million more than the funding level for FY 2016, still is more than $36 million less than the funding level in FY 2010 of nearly $70 million. Much of the existing affordable Section 515 stock is also at risk of being lost. As assistance contracts expire, owners convert their units to market-rate rentals. Displacement can have serious consequences for existing residents. Although they are given priority on the waiting list for Section 515 housing elsewhere, they may find that alternative units are unavailable.

The 2004 RHS report contained a number of recommendations to address the aging Section 515 portfolio and the loss of housing stock as providers leave the program. These recommendations included tenant protections, such as housing vouchers to help tenants remain in place or seek new housing elsewhere when the property they live in leaves the program. It also reviewed several housing-revitalization scenarios. However, some worried that the recommendations would eliminate existing policy under the Emergency Low-Income Housing Preservation Act, which helps keep older properties in the program. Most new housing in rural areas is constructed through the Low-Income Housing Tax Credit (LIHTC) program, but loss of federal funding to these areas reduces the funds that are available to entice developers (for more information on LIHTC, see Chapter 10, Utilities: Telecommunications, Energy, and Other Services—Assistance Programs). Some are concerned that the recommendations do not go far enough in providing tenant assistance when properties leave the program.

Meanwhile, the RHS Section 504 program provides home-repair assistance to homeowners in rural areas. It has had four times as many eligible applicants as it has available funds.

Rural Housing Programs: Policy

Section 515 program

In this policy: Federal

Congress should restore a substantial portion of the funding lost from the Section 515 program during the budget cuts of the past decade, including funds to expand critically needed new construction.

Congress should fund tenant-based housing assistance for those residents who face displacement from Section 515 housing due to expiring assistance contracts or prepayments. Tenants who are displaced should be offered relocation assistance.

Congress should preserve Section 515 properties for individuals with low incomes by maintaining the applicability of the Emergency Low-Income Housing Preservation Act.

Section 504 program

In this policy: Federal

Congress should increase funding for the Section 504 program to make up for losses in purchasing power due to inflation since fiscal year 1996.

Rural Housing Service (RHS)

In this policy: Federal

The RHS should target assistance under the Section 515 and Section 504 programs to underserved groups, particularly older farmworkers and older people of racial and ethnic groups that have experienced discrimination.

The RHS should drop its prohibition against staff models of providing personal care (including medication management).