Rural Housing Fares Better in 2016 Budget

Rural programs that were slated for cuts got a reprieve – and then some – in last month’s budget compromise. Renters, self-help home builders, and housing agencies will benefit from these last-minute changes.

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In a significant victory for affordable housing, the federal omnibus spending bill passed last month maintains or expands several U.S. Department of Agriculture and Housing and Urban Development housing programs.

In earlier drafts of the legislation, the president and congressional leaders had proposed deep cuts in some USDA and HUD initiatives. But the final bipartisan legislation, signed into law by President Obama on December 18, maintained or expanded programs that advocates say are important for rural residents and housing agencies.

A special concern recently has been the USDA rural rental programs. The 400,000-plus USDA-funded apartments have a tenant-based rent subsidy program, known as Section 521 Rental Assistance. The program needs more funding to renew support for current tenants. The omnibus bill provides $1.38 billion for this program, up from $1.17 billion in FY 2015. These payments go to owners of USDA Section 515-financed apartments to subsidize the rent payments of tenants, who have average incomes of less than $12,000 and are almost 60% elderly or disabled. The 2016 funding level ensures that all current tenants can keep their units. The bill also allows USDA to use FY 2016 funds to make up for any funding shortfalls from FY 2015. Two other USDA rental accounts — the rural housing voucher program and the rental preservation demonstration – also got substantial increases in the omnibus bill. And USDA also will now be able to shift funds between these two accounts in order to protect tenants and preserve units.

The omnibus spending bill also rejected a proposal in the president’s budget for a major cut in USDA’s Section 523 self-help sweat equity homeownership program. At $27.5 million in 2016, it will have the same amount as in 2015. In this program, eight to 12 families cooperatively build their own homes with support from nonprofit housing organizations. An expert carpenter works alongside and instructs the families, who contribute 65% of the labor required. The self-help families, who are all low- and very low-income, put in an average of almost 1,200 hours in building their own and their neighbors’ homes. No one moves in until all the homes are done. Work is on nights and weekends. In 2015 this USDA program celebrated its 50th anniversary and 50,000th home. Other USDA rural housing programs were mostly maintained at 2015 levels.

In the HUD budget for 2016, funding for the HOME Investment Partnerships Program at $950 million was a major victory for affordable housing. That important and flexible program, used by many rural housing developers, was facing near elimination in the Senate HUD appropriations bill and a $133 million cut in the House bill for HUD. But in the final omnibus act HOME got a $50 million increase over the program’s level in FY 2015. Two other HUD programs that won small increases were Section 811 housing for the disabled and Section 202 housing for the elderly.

Like some other recent Congressional actions, the omnibus bill passed with bipartisan support. In fact Democratic support was needed for passage; in the House 95 Republicans and in the Senate 26 Republicans voted no.

But overall, rural housing and affordable housing did relatively well. Soon the whole process will begin again, with the president’s proposed FY 2017 budget due out in February.

Joe Belden lives in Washington, D.C.


Topics: Housing

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