Analysis: HUD’s Rural Housing Programs Lie Dormant

The federal Department of Housing and Urban Development has some great rural housing programs. If only the administration would support them and Congress would fund them.

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Every year since 1999, U.S. presidents have proposed gutting a Housing and Urban Development program that helped build houses and capacity in rural communities. In 2011, the Executive Branch finally got its wish.

The U.S. Department of Housing and Urban Development, despite its name, provides substantial funding and programs in rural America. A better name for HUD could be the Department of Housing and Community Development. Or maybe Housing and Urban-Rural Development, a clumsy phrase but a really fun acronym — “HURD.” In Washington, D.C., we are desperate for fun acronyms.

For most HUD programs, from 10 to 20 percent or more of the funds get spent in rural areas and small towns. Public housing, HOME, Community Development Block Grants, and rental housing for seniors and the disabled are but a few examples. But there are three small, specifically rural, HUD programs, designed by Congress to serve rural areas, that are either dormant or have so far never provided any funds.

Congress in its annual appropriations bill for HUD in 1999 created the Rural Housing and Economic Development program (RHED). Members of Congress felt that HUD should be doing more for rural America. So Senator Kit Bond (R-Missouri), chairman of the VA-HUD Appropriations Subcommittee, created the RHED program, working with Senators Barbara Mikulski (D-Maryland) and Tom Harkin (D-Iowa). This very flexible resource at its height made about $25 million a year in 100 or more highly competitive grants to rural nonprofits and tribes, mostly in high-poverty areas.

After RHED was first created and funded by Congress – and HUD had to implement it – in subsequent years every president’s proposed federal budget for HUD called for elimination of the program. The HUD/OMB budgets’ annual rationale for this cut was that RHED duplicated USDA rural housing programs. But in fact they were very different and did not overlap at all. For example, RHED funding was all in the form of flexible grants to organizations, while USDA Rural Development housing funding was and is mostly loans to individuals. RHED funds also could be used for housing production or much-needed organizational capacity building. USDA has very little for capacity building. The USDA housing programs also have very specific criteria into which an applicant must fit — e.g., loans for single- or multi-family housing with very detailed production rules. But the flexible RHED program stressed innovative projects and let the applicant propose its own activity, with local communities defining their own needs and projects. RHED eligible applicants were nonprofits, tribes, and state agencies. But some USDA funds go to for-profit housing developers or the homes they build. Most of the largest USDA housing program – for single-family mortgages – is used directly by home-buying consumers. RHED was completely different and had no funding directly to consumers.

Fortunately the president proposes and the Congress disposes. Every year Congress, led by Senator Bond on a bipartisan basis, said no to HUD’s and OMB’s cut and provided new RHED funds in the annual HUD appropriations act. The program stayed alive, providing millions in small grants most years to a wide range of grass-roots rural groups. Many of the recipients were in Indian Country, serving the needs of very low-income tribal members. Others were in the border colonias, but all regions were served.

Then Senator Bond retired in 2011. In 2010, with some fanfare, HUD’s budget and the HUD secretary proposed a new program, the Rural Innovation Fund, to replace RHED. Congress went along and funded it for one year, FY 2011, just as Senator Bond was retiring. HUD made awards to 51 organizations and tribes in August 2011.

Then, surprise, in the very next appropriations cycle the president’s budget request for HUD dropped the Rural Innovation Fund. Now you see it, now you don’t. With Senator Bond no longer on the scene, Congress did not fund either RHED or RIF, and has not since.

A perhaps equally frustrating tale — at least for rural advocates — is that of the HUD Rural Housing Stability Assistance program (RHSA). As part of a larger 2009 bill reauthorizing and revising federal programs for the homeless, Congress created the RHSA program to serve the rural homeless. HUD issued regulations for RHSA in 2013, with nonprofits and local government as eligible applicants. Congress has appropriated funds for RHSA for the last several years, but as part of a larger HUD account to combat homelessness generally. But HUD has determined each year that there are insufficient funds to keep the bigger program renewed and also fund RHSA. So HUD has never conducted an RHSA funding competition or released any dollars. Currently the HUD website says the program is “being implemented.” For funding actually to get out the door, Congress will very likely have to give a direct order to HUD in an appropriations bill. That got part of the way to completion this year. Maybe next year?


Or maybe it would help if HUD became the Department of HURD ….?

Joe Belden lives in Washington, D.C.



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