House Subcommittee Assesses Federal Response to Rural Housing Crisis

The House Finance Services Committee’s Subcommittee on Housing, Community Development, and Insurance held its first hearing in the 116th Congress on April 2 to assess the federal response to the affordable housing crisis in rural America. The hearing focused on the issue of prepayment and maturation of Section 515 Rural Rental Housing Loans and Section 514 Farm Labor Housing Loans, as well as other proposals for addressing the risk of displacement of rural residents. Under Section 515, the USDA makes direct loans to build affordable rental homes. Direct loans for farm-worker housing are made through the Section 514 program. Witnesses spoke about affordable housing challenges for rural communities related to homelessness, rental housing, and homeownership.

Gideon Anders, senior attorney at the National Housing Law Project, testified that growing numbers of affordable rental properties are either reaching maturity or prepaying their Section 515 or Section 514 loans. Because the program is underfunded, it has been difficult to preserve the existing rental housing stock, let alone address the need for new construction. National Rural Housing Coalition President Stan Keasling urged members of Congress to reject the Trump Administration’s proposed FY20 budget for USDA Rural Housing and companion proposal to dramatically reduce program staffing. David Lipsetz, CEO of the Housing Assistance Council, asked the Subcommittee to carefully consider how affordable rural housing goals fit into ongoing discussions about housing finance reform, and he advocated for permanent “Duty to Serve” obligations, equity or equity-equivalent investments in CDFIs serving counties facing persistent poverty. He also advocated for increasing rural credit availability and secondary market access for small financial institutions. Many witnesses said USDA’s data collection processes and transparency could be improved.

Representative Axne (D-IA) asked witnesses if the lack of new construction was a factor in the declining populations in rural areas. She also brought up the recent flooding in the Midwest, and she asked witnesses if a shortage of affordable rural housing makes it more difficult for areas experiencing a disaster to recover. David Lipsetz responded affirmatively, saying that household formation is a significant factor when younger generations choose where to live. He encouraged stakeholders to take the time to build the capacity of local organizations to be able to address their own needs in disaster scenarios.

Ranking Member Sean Duffy (R-WI) asked witnesses if they felt the USDA’s Rural Housing Service was a well-run agency. David Lipsetz of HAC responded that, while it does tremendous work with very few resources, it has been set up to fail through a lack of funding. Andres Saavedra, senior program officer for Local Initiatives Support Corporation, asserted that USDA was a critical structural component to housing program fieldwork. When Representative Gonzalez expressed interest in moving USDA housing programs to HUD, several witnesses pushed back that HUD does not have experience operating direct loan programs.

Legislation discussed included the “Strategy for Rural Housing Preservation Act of 2019,” the “Rural Housing Preservation Act of 2019,” the “VAWA Protections for Rural Women Act of 2019,” “RHV 12,” and “Panett 09.”

Learn more about the hearing at: