House of Representatives Passes Bill to Preserve Affordable Rental Housing in Rural Areas

The House of Representatives passed by voice vote on September 10 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, expand the use of U.S. Department of Agriculture (USDA) vouchers, and create an advisory committee to help the agency 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. NLIHC supports this legislation.

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 the properties funding by Section 515 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 that 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 the tenants in Section 515-financed properties is only $13,600, and the majority of residents are seniors and people with disabilities. Because the USDA Section 521 Rental Assistance subsidy is tied to the Section 515 loan and often provides the only housing option for the lowest-income people in rural areas, preserving this source of affordable housing is crucial.

This bill would help address the 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. As a last resort, the Section 521 Rental Assistance could be decoupled from the Section 515-financed mortgage, allowing the rental subsidy to continue.

The bill provides additional resources for tenants by expanding the use of the Section 542 vouchers, which function similarly to HUD’s Housing Choice Vouchers, to provide continued rental assistance for tenants displaced from Section 515 properties due to prepayment, foreclosure, or mortgage maturation. The proposal also 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.

Learn more about the bill at: