The Housing Assistance Council is an independent, non-partisan and regularly responds to Congressional committees, Member offices, federal agencies, and policy advocacy coalitions with the research and information needed to make informed policy decisions. Our research work, Rural Data Portal, and Veterans Data Central all provide valuable, educational context to frame the rural policy conversation. If you want to know how a new program or policy could impact America’s small towns and rural places, please don’t hesitate to contact us at policy@ruralhome.org.

Policy News from the Administration

HAC CEO Responds to Executive Order Impacting Rural CDFIs

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I’ve worked in enough small towns across America to know this: rural communities prosper when they have financial partners ready to invest in homeownership dreams and small business start-ups. A recent Executive Order targeting Community Development Financial Institutions has me concerned that rural America could lose access to the $6 billion in business CDFIs generate in their local economies.

For years, rural areas faced dwindling access to financial services. The number of rural headquartered banks fell by over 3,600 since 1995, an astounding 57% decline. Thankfully over that same 30-year period over 500 rural CDFIs have been created, filling gaps in the banking landscape of every State. And they do it effectively, leveraging $8 in private investment for every $1 in federal support. This has been especially helpful for local organizations with projects that are too small or specialized for the remaining banks or distant commercial lenders to finance.

HAC is one of those rural-serving CDFIs. Our work is supported by the resources the recent Executive Order is trying to undermine. We want to continue delivering real results for real people.

  • In Clearfield County, PA, where 45% of grandparents are raising grandchildren due to the opioid epidemic, HAC’s financing helped build the Village of Hope, a multigenerational affordable housing development designed for seniors and youth to live together.
  • In Pahokee, FL, our loan helped Diverse Housing Services breathe new life into Amaryllis Gardens, 44-units of workforce housing for employees of the surrounding farms.
  • In Visalia, CA, HAC’s $12 million in financing to Self-Help Enterprises has enabled over 300 low-income families to help construct their own homes as “sweat equity” downpayments.

The good news here is that the Executive Order is to be “implemented consistent with applicable law and subject to the availability of appropriations.” The CDFI Fund is not a discretionary policy—it’s embedded in federal statutes such as the Riegle Act, the Community Renewal Tax Relief Act, the Housing and Economic Recovery Act, and the Small Business Jobs Act. And funds for CDFI’s were included in this year’s appropriations and continuing resolutions.

It also helps that the CDFI Fund programs were created and supported by bipartisan consensus. Leaders across political lines and branches of government understand that rural America’s need for economic opportunity and stable housing is a shared national priority. We are encouraged by Treasury Secretary Bessent’s recent statement recognizing “the important role that the CDFI Fund and CDFIs play in expanding access to capital” and affirming that “CDFIs are a key component of President Trump’s commitment to supporting Main Street America.” For over 50 years, HAC has worked directly with rural policy-makers — Republican, Democrat, and Independent alike — to make affordable housing a reality. We hope that under the current Administration, the CDFI Fund will continue to be staffed and funded as Congress has legislated.

HAC stands ready to continue serving the millions of Americans who depend on the stability and opportunity CDFIs’ investments create. The path forward must strengthen, not undermine, our ability to serve hardworking rural families. They deserve nothing less.

What would a federal government shutdown mean for rural housing?

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As of noon Eastern time on March 13, 2025, there was no agreement on continuing federal government funding beyond March 14. The federal government, or parts of it, close when funding (appropriations) lapses. None of the fiscal year 2025 appropriations bills have been enacted yet. During 2024, the House and Senate proposed different FY25 funding levels for USDA and HUD. On March 11, the House passed a continuing resolution that would fund the government through September 30, the end of fiscal year 2025, and would give the Trump administration a degree of flexibility to move funds between programs.

Follow HAC’s reporting on appropriations in the HAC News (subscribe here) and on our web pages for USDA and HUD funding.

Federal agencies are required to prepare contingency plans identifying which functions will continue during a government shutdown and which will not. The summary below is based on the most recent plans posted online for USDA, HUD, and the Treasury Department. All of them were prepared during the Biden administration.

A brief federal government shutdown probably would not impact most people who receive housing assistance but, at some point after the first few days, the housing effects would begin to be noticeable. In fiscal year 2019, a record 35-day shutdown from December 22, 2018 to January 25, 2019 led some owners of USDA-financed rental properties, unaware that the agency had enough Section 521 Rental Assistance (RA) funding to last through January, to threaten to evict tenants who could not pay full rent on their own. Fortunately, Congress reached a funding agreement before any RA renewals were missed that February. (More details about the 2019 shutdown are included at the end of this post.)

KEY TAKEAWAYS

  • A brief federal government shutdown probably would not impact most people who receive housing assistance but, at some point after the first few days, the housing effects would begin to be noticeable.
  • Section 521 Rental Assistance disbursements would continue, but not until the 30th day of a shutdown, and only if funding is available, according to USDA Rural Development’s shutdown plan, dated January 2024.
  • No new rural housing loans, grants, or loan guarantees would be committed during a shutdown.
  • HUD’s monthly subsidy programs – including public housing operating subsidies, housing choice vouchers, and multifamily assistance contracts – would operate only while funding remained available, according to HUD’s September 2023 contingency plan. If they ran out of money during a shutdown, they would cease to operate.

WHAT SHUTS DOWN

USDA Rural Development

Rural Development’s contingency plan, dated January 2024, indicates that State Directors, their staff, and some employees in the Washington, DC national office and the Customer Servicing Center in St. Louis would continue working during a shutdown.

Rental Assistance

RD’s plan says that Section 521 Rental Assistance would continue “only … if a threat to RD’s property interests becomes imminent (day 30) …, and funding remains available under existing rental assistance agreements. … On and after the 30th calendar day of a funding lapse, RD will assign the minimum number of employees needed to disburse Rental Assistance payments, pursuant to the exception for the protection of property (RD’s security interest), on the presumption that, after 30 days, the threats to RD’s property will have become and will continue to be imminent.”

The amount needed for RA can vary considerably from month to month. The RA payments each month are for the RA contracts that expired during that month, and each payment obligates a full year of RA funding. For example, the RA contracts that expired during November 2024 and were renewed in late November or early December will not be impacted again until they expire in November 2025.

The contingency plan does not have a provision – which was included in a previous version – stating that, if the agency has used up all its RA funds, “additional servicing options” could be provided to rental properties. In 2019, for example, USDA was considering permitting owners to use project reserves to cover costs. That shutdown ended before the agency completely ran out of RA money, so they did not have to decide whether to allow the use of reserves.

Loans, grants, and servicing

According to USDA’s contingency plan, no new loans or grants would be committed during a shutdown. No new loan guarantees would be issued under any of the housing programs or the community facilities program. For Section 502 guaranteed loans only, lenders and borrowers could choose to proceed with closing if USDA had already issued a valid conditional commitment. The lender would be assuming the risk until the shutdown ended and a guarantee was issued.

RD activities that are considered necessary to preserve the government’s property would continue during a shutdown, and loans and escrow accounts are considered to be government property. Therefore RD would keep processing nightly updates for each RD financial system, making insurance and tax payments from borrowers’ escrow accounts, and “reconciling and submitting for initial processing” collection activity including amortized payments and payoff activity. Some foreclosure sales would go forward. Servicing of existing guaranteed loans would continue, including processing loss claims.

Disbursements of construction loans and grants would continue during a shutdown.

HUD

HUD’s plan is dated September 29, 2023. It explains that, since 2019, appropriations language has allowed HUD’s salaries and expenses funding to be carried over into the next fiscal year. The plan explains that funds remaining from an expired continuing resolution – such as the CR that ends on December 20 – cannot be used for new obligations. The department’s senior leadership would decide how much of that funding to use and for what functions.

Programs operating with HUD funding that was obligated before a shutdown would continue to operate. Much of the Federal Housing Administration’s and Ginnie Mae’s work would continue during a shutdown. Monthly subsidy programs, however – including public housing operating subsidies, housing choice vouchers, and multifamily assistance contracts – would operate only while funding remained available. If they ran out of money during a shutdown, they would cease to operate.

Treasury

The Treasury Department’s plan, dated September 2023, states that the CDFI Fund’s programs would not operate during a shutdown, without providing any further details.

WHO KEEPS WORKING

Generally, during a shutdown, federal staff in the affected agencies do not work unless their functions are considered essential. Furloughed employees are also not allowed to do their jobs voluntarily while the government is closed. In the past, Congress and the President have usually agreed to pay furloughed employees retroactively after a shutdown ends, but they are not required to do so.

Presidential appointees (i.e., agency officials who were confirmed by the Senate) are not furloughed. They are not paid, however, unless funds for their salaries are appropriated after the shutdown ends. “Schedule C” employees, also known as political appointees (these jobs do not require Senate confirmation), are subject to the same rules as civil service employees to determine whether their roles are essential during a shutdown.

WHAT A SHUTDOWN MEANS FOR GOVERNMENT CONTRACTS

A 2023 Office of Management and Budget document explains that during a shutdown a federal contractor can proceed with work that is not impacted by the lapse in funding. For example, if an agency has already obligated funds representing the entire price under a contract or task order before the funding lapse began, the contractor can conduct the work. At the agency, however, routine operational and administrative activities relating to contract or grant administration cannot continue.

WHAT HAPPENED IN FY19

Fiscal year 2019 began on October 1, 2018 with parts of the federal government, including USDA and HUD, open under continuing resolutions. After a final CR expired, they did close down on December 22. The government reopened on January 25, 2019, under another CR that expired on February 15. A final consolidated appropriations act was signed into law by President Trump on February 15.

USDA Rural Development

The first HAC News issue after the shutdown began, published on January 15, 2019, reported that limited functions were continuing at USDA’s national office in Washington, DC and the Customer Service Center in St. Louis. Loan closings were not taking place and applications were not being processed.

Rental Assistance

USDA RD was able to renew Section 521 Rental Assistance contracts that expired in December and January. If the shutdown had continued, however, the agency would not have had enough money to renew the approximately 700 RA contracts that expired in February and 1,000 in March.

By January 25, 2019, when a deal was reached for a three-week CR, the HAC News reported that USDA was considering short-term measures, such as allowing owners to use project reserves to cover costs, but had not yet finalized any plans or notified property owners/managers. The need for providing information directly from USDA had become clear when managers of USDA-financed properties in Arkansas, Louisiana, Missouri, and Mississippi sent notices to tenants telling them their RA was ending in January and they would be responsible for paying their full rent, then backpedaled when informed by USDA the RA would be paid.

After the shutdown ended, the February 11, 2019 HAC News quoted a notice USDA sent to owners and managers of USDA-financed properties with Section 521 Rental Assistance: “We are pleased to inform you that Rental Assistance for Section 514/515 properties has been obligated through April. … We understand that the most recent lapse in appropriations created anxiety and uncertainty regarding the status of your contract obligations. We are hopeful that this communique and the fact that all contracts are obligated through April will provide you reassurance and operational predictability in your management of these critical low-income resources throughout rural America. Thank you for your partnership in delivering the Rural Housing Service affordable housing mission.”

A January 2019 memo from the National Housing Law Project explained the rights of federally assisted tenants during the government shutdown. NHLP is preparing an updated memo for a possible October 2023 shutdown.

Homeownership Programs

On February 1, 2019, after the shutdown ended, USDA’s single-family programs office announced it would issue new Certificates of Eligibility to all Section 502 direct applicants who had valid COEs on December 21 before the government shut down. The agency did not have enough money to obligate additional Section 502 direct loans until it received funding beyond February 15, however.

Section 504 repair loans and grants were available on February 1. USDA planned to prioritize applicants with immediate health and safety hazards.

Other Impacts

There were additional housing-related impacts from the FY19 shutdown, and only a few are summarized below.

Some HUD Project-Based Rental Assistance contracts expired early in the shutdown, as reported in the January 15, 2019 HAC News. About 21,500 households with average incomes under $13,000 per year were impacted by the expiration of 650 PBRA contracts that ended in December. More were expiring in January and February and HUD would need to determine whether it had funds available to renew them. Property owners could use their reserves, if available, to cover shortfalls. Public housing capital funding was unavailable, and operating funds would not be able to carry public housing authorities beyond February.

The shutdown’s effect in Indian Country was “substantial and unique,” the Center for Indian Country Development at the Minneapolis Federal Reserve reported, although calculating a dollar amount was not possible. Because of the unique relationship between the U.S. and Tribes, Tribal services are often closely tied to federal funding. Government employment is disproportionately high in Indian Country, Tribal staff such as those who plow reservation roads were furloughed, and Tribal education funds were in danger.

Disaster spending, particularly funding for Puerto Rico’s recovery from Hurricane Maria in 2017, was also delayed by the 2019 shutdown. Congress had appropriated $20 billion in CDBG-DR funds for Puerto Rico, but only $1.5 billion of that money was approved before the shutdown, and HUD did not disburse it during the shutdown. HUD approval of disaster spending plans or amendments from California, Florida, Georgia, Missouri and the U.S. Virgin Islands was also put on hold.

 

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HAC CEO issues statement on cuts to housing programs and professionals

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In response to reports of extensive cuts in federal programs and staff that serve rural and small town interests at the Department of Housing and Urban Development (HUD) and U.S. Department of Agriculture (USDA), Housing Assistance Council CEO David Lipsetz made the following statement.

After this fall’s election, I observed that urban and rural voters had come closer together, as their shared frustration with the economy put a new Administration in the White House.  It seemed this would lead to a rebalancing of public and private investment in housing—one where small towns finally get their fair shot at prosperity. One-quarter of all rural families—5.6 million rural households—are paying more than they can afford for housing. Rural communities are experiencing unprecedented levels of homelessness, with rents outpacing household income, and a housing market that puts the American Dream of homeownership out of reach for many young working families. I expressed hope that the outcome of the election would finally bring national attention to the severe housing crisis facing rural communities.

However, this glimmer of hope is now fading. The public frustration that I thought would drive positive changes to an imperfect system is instead fueling an indiscriminate effort to dismantle the very programs and professionals we need. Recent cuts at USDA and HUD are setting small towns back.

Millions of rural Americans can rent decent apartments and buy good homes in places that banks and builders do not serve because we the people believe everyone deserves a chance. Hundreds of thousands of rural families—many elderly and disabled—live in HUD’s publicly supported housing or rely on HUD and USDA rental programs to find a place they can call home. These public programs sustain rural communities as they cycle through tough times.

When the market doesn’t generate enough good housing in small towns, mortgages from USDA and rent vouchers from HUD fill the gap. Yet, these are not simple programs to run. For these programs to ensure that good housing is built and maintained, we need experienced professionals in the administration. Plans to terminate half of HUD’s workforce and dismiss employees at USDA threaten to severely disrupt these vital investments in rural housing. A bank would never tell its shareholders it plans to fire half its underwriters and still expects to make good quality loans.

We cannot afford this kind of disruption to programs that rural communities depend on. Congress has appropriated funding for these programs, rural families need them, and they cannot operate effectively without adequate, experienced staff to administer them.

HAC has been in small towns for 54 years and plans to be here for 54 more. We stand ready to work with the President and everyone else who wants to build up rural communities. We look forward to partnering with new leaders at HUD and USDA to make sure they have the resources to address rural America’s pressing housing challenges.  But one thing is clear: the affordable housing crisis in rural America requires more capacity and attention, not less.

Resilience Related Federal Register Items – January 13, 2025

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Rural communities are often on the front lines of disaster recovery, requiring clear guidance and timely access to resources.

To support these efforts, we’re sharing two important updates: HUD’s “CDBG-DR Universal Notice” and FEMA’s updated Public Assistance Program and Policy Guide. These resources provide vital information to help rural governments, nonprofits, and communities navigate the complexities of disaster recovery and build resilience.

This “CDBG-DR Universal Notice: Waivers and Alternative Requirements” describes the processes, procedures, timelines, waivers, and alternative requirements that HUD intends to implement with each allocation of CDBG-DR. When CDBG-DR funds are appropriated, HUD will publish an Allocation Announcement Notice in the Federal Register that incorporates the waivers and alternative requirements provided in the Universal Notice, as appropriate, along with any other new requirements imposed by the specific appropriation. The Universal Notice is intended to provide grantees and the public with increased transparency, consistency, and more timely access to CDBG-DR funds. The Universal Notice, which serves essentially the same function as program regulations, incorporates public feedback from a 2022 request for information and is intended to improve the program in a variety of ways.

FEMA has updated its Public Assistance Program and Policy Guide. The PA program assists governments and nonprofits.

HAC’s 2025 Rural Housing Policy Priorities

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For over 50 years, the Housing Assistance Council (HAC) has been the voice for the poorest of the poor in the most rural places. Our deeply rooted work in communities across the country informs our research and drives our policy positions. Our independent and non-partisan work with members of Congress, federal agencies, affordable housing and community development organizations, and other stakeholders ensures the most vulnerable rural populations – especially those in high-needs regions like the Mississippi Delta, rural Appalachia, farmworker communities, the Southwest border colonias, and Indian Country – have improved access to safe and affordable housing opportunities.

Rural America is home to about 20 percent of the U.S. population and covers more than 90 percent of the U.S. landmass. Its small towns and rural regions are demographically and economically varied and face a wide array of local challenges and opportunities for developing their communities and housing. While each place is unique, HAC has documented several themes. Persistent poverty is a predominantly rural condition. Habitable rural housing is in severely short supply. The adequate housing that does exist is often unaffordable because rural incomes are low and run well below the national median. Rural housing lacks adequate plumbing and kitchen facilities at a rate above the national average. Overcrowding is not uncommon in some rural regions. Decades of stagnant rural house prices have denied owners the wealth and mobility so often associated with buying a home. Complicating these challenges, a lack of reliable rural data obscures rural realities.

In addressing these issues, HAC’s policy priorities include:

  1. Building the capacity of local affordable housing and community development organizations deeply rooted in rural places;
  2. Expanding access to credit and safe, affordable lending in underserved rural communities;
  3. Preserving the critical stock of USDA multifamily homes amid the growing maturing mortgage crisis;
  4. Improving the overall quality, availability and affordability of housing to buy and rent in small towns and rural places; and
  5. Preserving, increasing and tailoring resources for federal affordable housing programs serving rural populations.

We invite you to view our 2025 Policy Priorities and explore the various policy issues facing rural communities. You can also access an Executive Summary of the Policy Priorities.

 

HAC’s Policy Priorities for 2025

 

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Post-Election Insights: A Hope for New Opportunity for Rural Housing

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On November 5, a majority of American voters returned Donald Trump to the White House, along with a Republican majority in the Senate and—it now seems likely—the House of Representatives. Rural voters were a big part of his constituency. In fact, rural America gave President Trump more votes than urban America gave Vice President Harris.

The Housing Assistance Council is one of the only national housing organizations that focuses 100% of our work on small towns and rural places. All HAC loans, research reports, training programs and policy work are intended to help rural American communities address their affordable housing needs. So as you might guess, the election results prompted plenty of calls from friends in the housing industry asking versions of the same question, “Have rural and urban drifted further apart?” It may surprise you that my answer is an emphatic, “Nope, the gap just narrowed.”

Initial post-election analysis points to the economy as the decisive issue. Millions of suburban and urban Americans joined rural voters to send a message that the current economy is failing them. This is a familiar refrain for those of us who have spent years working in rural America. While the country is undoubtedly deeply divided on many fronts, perhaps this broader expression of economic pain provides an opportunity for progress toward an American future where working families in every geography have an opportunity not just to survive, but to get ahead.

Notably, because high housing costs are at the center of so many families’ economic struggles, for the first time in recent memory, housing took center stage throughout the campaign. This included an awareness that rural families earning rural wages can’t afford homes in their own hometowns. The day before the election I authored an op-ed in HousingWire that offered a set of bipartisan housing policy initiatives that would address the unique shape of the housing crisis in rural America.

With roots deep in rural communities, HAC has over 50 years’ experience providing elected officials data on rural conditions and nonpartisan analysis of public policies. We stand ready to share our expertise with the Trump Administration and 119th Congress to ensure that rural communities fully benefit from efforts to address the current housing crunch. The White House and Congress have the tools to reverse our current course. Homeownership and rental markets can be turned to meet the needs of ordinary Americans. Indeed, our nation’s history includes numerous examples in which the federal government boldly responded to housing crises with game-changing legislation, uniformly enacted on a bipartisan basis, from the National Housing Acts of 1934 and 1949 to the creation of the Low-Income Housing Tax Credit.

So with a broader voicing of economic discontent across rural, suburban and urban voters in this election, I expect the calls for changes to our economy and our housing markets will only grow louder. As we love to do at HAC, let me close with a couple of maps to illustrate the issue at hand. The map on the left is 1980. The one on the right is 2021. You can see the economy of the last forty years has left few places in which local wages allow local families to afford a place to live.

In fellowship,
David Lipsetz, President & CEO
Housing Assistance Council

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HAC Supports Rural Provisions in Capital Magnet Fund Interim Rule

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The CDFI Fund has released for comment an interim rule for the Capital Magnet Fund (CMF) program. The Capital Magnet Fund offers competitively awarded grants to CDFIs and nonprofit affordable housing organizations to finance affordable housing solutions and community revitalization efforts that benefit individuals and families with low-incomes and low-income communities nationwide. HAC has received several CMF awards, most of which have been used for the preservation of USDA’s Section 515 multifamily properties amid the maturing mortgage crisis. HAC is broadly supportive of the CMF interim rule, and submitted comments on several rural elements, including:
  • Support for the addition of a national Rural Service Area. This change will make it easier to use CMF in rural areas, and will all organizations who serve rural areas across the country to be nimble and flexible with their CMF funds.
  • Support for aligning CMF income targeting with other federal programs, with the caveat that the application competition should prioritize applications that propose deeper income targeting. Not all CMF deals include LIHTCs, especially in rural places. We encourage the CDFI Fund to consider how to continue to encourage this deeper income targeting in the CMF application scoring process, since raising the Very Low-Income threshold could result in fewer households under 50 percent AMI being served.
  • Support for the use of the Duty to Serve definition for rural areas. HAC has done extensive research on the myriad of rural definitions, and feels that the Duty to Serve definition is the most precise rural definition available.
HAC CMF Rule Comments 08.26.24
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HAC Comments on Proposed New Rule for HOME Investment Partnerships Program

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In late May, HUD published a proposed rule which would enable much needed revisions and updates to the requirements governing the HOME Investment Partnerships program. The proposed rule would make changes across the HOME program, from homeownership to rental, and included a specific focus on improving Community Housing Development Organization (CHDO) availability and capacity in rural areas. In response, HAC submitted comments on the proposed rule, applauding many of the proposed changes and pushing for additional rural-focused priorities. Specifically, key takeaways in HAC’s comments included:
  • The reality of the rural landscape must be taken into consideration as this new rule is finalized. Affordability is the greatest issue facing rural communities, like it is for the country at large. But rural areas are also disproportionately impacted by persistent poverty, substandard and overcrowded housing, and a lack of local capacity and access to capital.
  • Varying HOME program administration across Participating Jurisdictions (PJs) has been the most significant barrier for the small rural communities we serve. Over the last decade, we have observed that rural organizations experience significant challenges in effectively accessing HOME funds. Primarily, these difficulties arise from how PJs have adapted their programs, largely as a response to the 2013 regulation changes and subsequent funding reductions. PJs will need significant training in the impacts of this new rule to ensure it is implemented effectively.
  • Regulatory change alone cannot solve all the challenges within the HOME program. Because of the highly prescriptive nature of the HOME statute, a variety of statutory changes are also needed to fully transform the program such that it more positively impacts rural America.
  • Rural Community Housing Development Organizations will benefit from the proposed changes, but more is needed to move the needle. HAC applauds changes to Board Member requirements, organizational capacity requirement, and capacity building funds. We do, however, have concerns around the proposal to allow for statewide CHDOs, intended to improve rural program outcomes. Statewide CHDOs could inadvertently further disadvantage small, rural groups who are hoping to access the CHDO set-aside by forcing them to potentially compete with high-capacity, statewide organizations.
  • Streamlining and improved flexibility across the program is welcome. Helpful changes are proposed with respect to homebuyer housing, rental housing, Community Land Trusts, tenant-based rental assistance, tenant protections, maximum per-unit subsidy limits, and green and resilient property standards. These changes will help small, lower capacity groups to access and see success with the HOME program.
HAC HOME Rule Comments 07.29.24 FINAL

Senate Committee Rejects HUD Funding Cuts Proposed by House

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The full Senate Appropriations Committee approved its proposed Transportation-HUD spending bill for the 2025 fiscal year on July 25, 2024, rejecting the 60 percent HOME program cut proposed in the bill that passed its House counterpart on July 10.

— HAC’s analysis of FY25 appropriations for USDA housing programs is available here. —

The Senate THUD bill is highlighted by a plethora of budgetary increases for different HUD programs, including increased funding for the Self-help Homeownership Opportunity Program and Rural Capacity Building program, $1.455 billion for the Native American Housing Block Grant program, and a $268 million increase in funding for Homeless Assistance Grants. The Senate would also increase funding for both the HOME program and the Choice Neighborhoods Initiative. The House bill proposes to cut the HOME Program’s funding from $1.25 billion in FY24 to $500 million and to eliminate funding entirely for the Choice Neighborhoods Initiative, which received $75 million this year. The Senate bill proposes funding levels of $1.425 billion and $100 million for these programs, respectively.

The next steps will be for the full House and full Senate to vote. The House is currently on its August recess and will not return until September 9. Congress is not expected to be able to finalize FY25 appropriations by the beginning of the fiscal year on October 1. It is likely that legislators will adopt a continuing resolution to temporarily maintain federal funding; the alternative would be a government shutdown.

 

Program
($ in millions)		 FY23 Final FY24 Final FY25 Budget FY25 House FY25 Senate FY25 Final*
CDBG $3,300 $3,300 $2,900 $3,300 $3,300
HOME 1,500 1,250 1,250 500 1,425
PRICE Manuf. Hsg. 225 10 0 10 10
Self-Help Hmownrshp (SHOP) 13.5 12 9 9 13
Veterans Home Rehab 1 0 0 0 0
Rural Cap’y Bldg (RCB) 6 6 5 5 10
Tenant-Based Rental Asst. 27,600 32,387 32,756 32,272 35,260
     VASH 50 15 0 0 15
     Tribal VASH 7.5 7.5 5 8 7.5
     Replacemts for 521 RA – – 20** – –
Project-Based Rental Asst. 13,938 16,010 16,686 16,195 16,654
Public Hsg. Capital Fund 3,200 3,410 3,312 3,047 3,200
Public Hsg. Operating Fund 5,109 5,501 5,238 5,097 5,366
Choice Neighborhd. Initiative 350 75 140 0 100
Native Amer. Hsg. 1,020 1,344 1,053 1,455 1,455
Homeless Asst. Grants 3,633 4,051 4,060 4,060 4,319
Hsg. Oppties for Persons w/ AIDS (HOPWA) 499 505 505 505 524
202 Hsg. for Elderly 1,075 913 931.4 931.4 1,046.4
811 Hsg. for Disabled 360 208 256.7 256.7 256.7
Fair Hsg. 86 86.4 86.4 85 86.4
Healthy Homes & Lead Control 410 345 350 335 345
Hsg. Counseling 57.5 57.5 57.5 57.5 57.5

* These columns will be filled in as the FY25 funding process progresses.

** Up to $20 million would be set aside to provide tenant protection vouchers to tenants who had USDA Section 521 Rental Assistance but are losing it because their building is losing or ending its USDA mortgage.

House Committee Approves 60% Cut in HOME Program Funding

UPDATE July 11, 2024 – The full House Appropriations Committee approved the proposed FY25 Transportation-HUD spending bill on July 10. The Senate Appropriations Committee has begun releasing summaries of its FY25 bills, but T-HUD is not yet available.

June 27, 2024 – The HOME program would be dramatically smaller under the FY25 spending bill approved by an appropriations subcommittee on June 26, 2024. The bill, which will be considered by the full Appropriations Committee on July 10, would also block implementation of the Biden administration’s proposed Affirmatively Furthering Fair Housing rule and the recent energy efficiency determination made by HUD and USDA.

The summary of the House bill provided by the Transportation-HUD Appropriations Subcommittee says that it funds “full renewal for all currently-leased, tenant-based rental assistance vouchers, all project-based rental assistance contracts, and all housing for the elderly and persons with disabilities contracts.” It would cut HOME, however, to $500 million from $1.25 billion in FY24. The Self-Help Homeownership Opportunity Program (SHOP) would be cut from $12 million in FY24 to $9 million next year. And the Choice Neighborhoods program would receive no funding at all.

The Senate has not yet released its version of the bill.

Administration’s Budget Requests Substantial New HUD Funding

March 12, 2024 – The Biden Administration’s budget for fiscal year 2025, released on March 11, 2024, includes proposals for HUD and other housing programs – USDA, the Low-Income Housing Tax Credit, and others – that are part of broader Administration efforts to help meet increasing housing costs and address homelessness. If the budget were adopted as proposed, several pieces of this mosaic would be mandatory funding rather than discretionary, and others would be tax credits. Discretionary funds are subject to annual appropriations, while mandatory spending is not, so it is not subject to the caps on discretionary spending imposed by the 2023 debt limit agreement.

The recording and slides from HAC’s March 13 webinar on Rural Housing in the Fiscal Year 2025 White House Budget are posted here.

Discretionary Funds

The budget would reduce funding for many of HUD’s housing production programs, including HOME, CDBG, SHOP, and Native American housing. It requests a total of $1.053 billion for Native American housing, just barely above the $1.02 billion provided in FY23 and notably lower than the $1.34 billion just adopted for FY24.

Tenant support fares somewhat better. For example, the budget proposes a total of almost $32.8 billion for Tenant-Based Rental Assistance (Housing Choice Vouchers), of which $29.25 billion is intended to renew all existing vouchers. An additional $241 million would provide 20,000 new incremental vouchers. (Separately, the mandatory funding proposals would guarantee vouchers to all extremely low-income veterans and all youth aging out of foster care.)

The budget also requests $30 million for the Recovery Housing Program, which allocates funds to states to provide temporary housing for individuals recovering from substance use disorders, including opioids.

Proposed New Mandatory Spending

The Administration’s proposals for mandatory spending programs cover production of new units, tenant assistance, and homelessness solutions.

  • Extremely low-income housing supply subsidy: $15 billion
    • New Project-Based Rental Assistance: $7.5 billion
    • Preserve distressed public housing: $7.5 billion
  • Innovation Fund for Housing Expansion: $20 billion
  • Housing vouchers for vulnerable low-income populations: $22 billion
    • all youth aging out of foster care: $9 billion
    • extremely low-income veterans: $13 billion
  • First-generation homebuyer down payment assistance: $10 billion
  • Sustainable eviction prevention reform: $3 billion
  • Homelessness grants: $8 billion
  • Emergency rental assistance for older adults at risk of homelessness: $3 billion

Tax Credit Proposals

  • The budget would expand the Low-Income Housing Tax Credit to build or preserve 1.2 million more affordable rental units. It asks Congress to increase per capital credit allocations, reduce the bond financing threshold, and revise the “qualified contract” and “right of first refusal” provisions for future developments.
  • A mortgage relief credit would provide middle-class first-time homebuyers with an annual tax credit of $5,000 a year for two years. The White House says that “this is the equivalent of reducing the mortgage rate by more than 1.5 percentage points for two years on the median home, and will help more than 3.5 million middle-class families purchase their first home over the next two years.”
  • A separate one-year tax credit is intended to assist homeowners who could purchase a larger or more expensive home but hesitate to sell their starter home because of high mortgage rates or high housing costs. A middle-class homeowner would receive a credit up to $10,000 for selling a home below the area median home price in the county to another owner-occupant. The White House estimates this proposal would help nearly 3 million families.
  • A new Neighborhood Homes Tax Credit would allocate credits to developers and other sponsors of new construction or substantial rehabilitation of homeownership units in distressed areas. The White House estimates this would generate over 400,000 homes.

The Administration also proposes requiring each Federal Home Loan Bank to contribute 20 percent, rather than the current 10 percent, of annual income to the Affordable Housing Program. It calculates the change would raise an additional $3.79 billion for affordable housing over the next decade and assist nearly 380,0000 households.

Senate Bill Holds Line on Most USDA Housing Programs, But Unable to Restore Cuts to Section 502 and Self-Help

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On July 11, 2024, the Senate Appropriations Committee approved a fiscal year 2025 funding bill that would keep many of USDA’s rural housing programs at their current funding levels. Where the bill does not adopt current levels, it largely follows the administration’s budget request. Section 502 direct loans are a notable exception: the Senate would raise this homeownership program to $1 billion from its FY24 level of $880 million, but even with the increase the program would remain substantially below its FY23 level of $1.25 billion. The administration’s budget request asked for a return to $1.25 billion. Self-help technical assistance is another exception, with a proposed level of $25 million rather than the $32 million that was appropriated in FY23 and requested in the budget.

— HAC’s analysis of FY25 appropriations for HUD programs is available here.  —

Details on the Senate and House bills are provided in the table below.

The Senate bill would expand the current decoupling pilot, which allows Section 515 properties to continue receiving Section 521 Rental Assistance after the Section 515 mortgage is paid off. The Senate proposes to allow 5,000 units of decoupled RA rather than the current 1,000. The House bill would also continue the pilot, but would keep it at 1,000 units.

The funding levels proposed for two capacity-building programs, the Rural Community Development Initiative and rental preservation TA, are stated differently in the Senate bill and in the report that accompanies it. The table below shows the figures from the bill itself. For RCDI, the bill text shows a $5 million funding level, but the report shows only $1 million. For rental preservation, the bill provides $2 million but the report says $1 million.

While the House bill includes a provision blocking implementation of new energy efficiency standards for some USDA-financed homes, the Senate bill does not.

 

Program
($ in millions)		 FY23 Final FY24 Final FY25 Budget FY25 House,

H.R. 9027

 FY25 Senate,

S. 4690

 FY25 Final(a)
502 SF Direct Loans $1,250 $880 $1,250 $950 $1,000
     Nat. Amer. SF Demo 7.5 5 7.5 5 7.5
502 SF Guar. Loans 30,000 25,000 30,000 25,000 25,000
504 VLI Repair Loans 28 25 28 18 25
504 VLI Repair Grants 32 25 30 12 30
515 MF Direct Loans 70 60 70 48 65
514 Farm Labor Hsg. Loans 20 15 25 12.5 25
516 Farm Labor Hsg. Grants 10 7.5 10 0 7.5
521 Rental Asst. 1,488 1,608 1,690 1,684 1,691
523 Self-Help TA 32 25 32 20 25
533 Hsg. Prsrv. Grants 16 10 16 8 10
538 MF Guar. Loans 400 400 400 400 400
542 Vouchers 48 48 38(b) 54 50.4
Rental Prsrv. Demo (MPR) 36 34 90 28 36
Rental Prsrv. TA 2 1 0 0 2(d)
Rural Cmty. Dev’t Init. 6 5 6 4 5(e)
Cmty. Facil. Direct Loans 2,800 2,800 1,250 1,000 $1,250
Cmty. Facil. Grants 25 5 22 (c) 5
   Tribal Colleges CF Grants 10 8 10 6 8
   Energy Cmties. Grants – – 10 – –
Cmty. Facil. Guar. 650 650 650 650 650

Abbreviations key

  • MF: Multfamily (Rental)
  • SF: Single-Family (Homeownership)
  • TA: Technical Assistance
  • VLI: Very Low-Income

(a) This column will be filled in as the FY25 funding process progresses.

(b) This $38 million is to renew vouchers already issued. Most tenants in USDA-financed rental properties where mortgages end or are paid off would receive Section 521 Rental Assistance under the Administration’s decoupling proposal. An additional $20 million is included in the HUD tenant protection vouchers account to provide new vouchers for tenants “in USDA properties that are unable to refinance, participate in the multi-family preservation and rehabilitation options, or decouple.”

(c) The amount proposed for non-earmarked Community Facilities grants in the House bill remains unclear after release of the committee’s report. It shows a grant level of $472 million, which includes Congressionally Directed Spending (earmarks).

(d) The Senate bill’s text shows $2 million for rental preservation TA, but the report accompanying the bill shows $1 million.

(e) The Senate bill’s text shows $5 million for RCDI, but the report accompanying the bill shows $1 million.

House Bill Proposes Cuts to Smaller Rural Housing Programs

UPDATE July 11, 2024 – On July 10 the full House Appropriations Committee approved its Agriculture appropriations bill for FY25. The full Senate Appropriations Committee has approved a bill as well, but has not yet released the full text. The Senate committee’s summary of its bill provides numbers for two of the rural housing programs: it says the bill includes $1 billion for Section 502 direct and $1.691 billion for Section 521 Rental Assistance.

On July 10, 2024, the full House Appropriations Committee is marking up appropriations bills for USDA, Transportation-HUD, and Labor. The committee has released its reports on these bills, which provide additional details that were not available at the subcommittee level.

The committee’s report on the USDA funding bill makes clear that, while the committee supports the larger rural housing programs such as Section 502 direct and guaranteed homeownership loans, Section 521 Rental Assistance, and tenant vouchers, it proposes cuts in the smaller programs, all of which are important to lower income rural residents.

In addition to the cuts in self-help, home repair, and rental housing noted below, the bill proposes no funding for Section 516 farm labor housing grants, which received $7.5 million this year. It would reduce Section 514 farm labor loans from $15 million in FY24 to $12.5 million in FY25. Section 514 loans were at $20 million in FY23.

The report also makes clear the scope of the proposed reductions in the Section 504 repair grants program, from $25 million in FY24 to $12 million in FY25, and the Section 533 Housing Preservation Grants program, from $10 million this year to $8 million next year. The FY24 levels for both of those programs were lower than their FY23 appropriations.

House Bill Proposes Rural Housing Cuts, Though Not for Purchase Mortgages or Rental Vouchers

June 11, 2024 — The House Appropriations Subcommittee released its fiscal year 2025 funding proposal for USDA on June 10, 2024, and will hold a markup at 6:00 pm Eastern time on June 11. As expected, the bill would fund most USDA housing programs at levels lower than those enacted for FY24 or proposed in the administration’s FY25 budget.

The House measure would increase Section 502 direct loans to $950 million, higher than the $880 million level for FY24 but not at the $1.25 billion provided in FY23 or requested in the FY25 budget. It would keep the Section 502 guaranteed loan program at $25 billion and Section 538 guaranteed multifamily loans at $400 million.

The bill appears to provide no funding at all for Section 516 farmworker housing grants, which are used by nonprofit developers alongside Section 514 loans.

Homeownership Housing

Despite its support for home purchase programs, the House bill would reduce funding for self-help housing, Section 504 home repair loans and grants, and Section 533 Housing Preservation Grants.

Rental Housing

The bill proposes cuts in rental preservation programs, reducing Section 515 loans from $60 million in FY24 to $48 million and the Multifamily Preservation and Revitalization (MPR) program from its current $34 million to $28 million. It shows some support for tenants, however, with Section 521 Rental Assistance funding almost at the level requested by the administration’s budget, an increase in Section 542 vouchers, and continuation of the 1,000-unit demonstration program that decouples Rental Assistance from USDA mortgages reaching the end of their terms.

Energy Efficiency

The House bill would prohibit use of any USDA housing funds to implement a recent determination made jointly by HUD and USDA that would require some federally supported new housing construction, including single-family homes supported by USDA’s Section 502 direct, Section 502 guaranteed, or Section 523 self-help programs, to meet updated energy efficiency standards. The ban, tucked into Section 743 in the bill’s “general provisions,” is reminiscent of an amendment defeated in the Senate in October 2023. That proposed amendment would have prevented HUD implementation of the same energy efficiency standards.

Community Facilities

The bill would cut funding for Community Facilities direct loans by two-thirds, from $2.8 billion in FY24 to $1 billion in FY25.

Administration Proposes Small Increases in Many Rural Housing Programs

The Biden Administration’s budget for fiscal year 2025, released on March 11, 2024, would hold funding at FY23 levels for most of USDA’s rural housing programs. In effect, it would restore the cuts made in the final FY24 appropriations bill, which was passed after the budget was prepared. Details are provided in the table below.

The recording and slides from HAC’s March 13 webinar on Rural Housing in the Fiscal Year 2025 White House Budget are posted here.

Homeownership Housing

Like last year’s budget proposal, this year’s would eliminate subsidy “recapture” for the Section 502 direct program. Recapture requires that, when a low- or very low-income homeowner with a Section 502 direct loan sells the house or moves, they must repay the subsidy amounts they have received over the life of the loan. The administration estimates that eliminating this penalty for current borrowers would cost USDA $1.12 billion. It also proposes that Section 502 direct loans made in 2025 will not to be subject to recapture.

The budget would require that funding for housing construction or rehabilitation be targeted to projects that improve energy or water efficiency, implement green features, including clean energy generation or building electrification, electric car charging station installations, or address climate resilience of properties.

The budget also proposes three changes that were just adopted in the final FY24 funding bill, which had not been passed yet when the budget was prepared. These include extending the length of self-help and site-development loans from two years to five, and standardizing foreclosure procedures consistent with HUD’s.

Rental Housing

The administration again asks for legislative language to “decouple” Section 521 Rental Assistance from Section 515 and 514 mortgages, so that when a USDA rental housing mortgage ends for any reason, the tenants can continue to receive Rental Assistance. The final FY24 bill authorized a limited pilot to decouple up to 1,000 units of RA, but the budget does not propose any limits.

The budget requests Section 542 voucher funding be used only to renew “legacy vouchers,” $11.79 million in unobligated voucher funds be rescinded, and $20 million be added to provide HUD tenant protection vouchers for tenants “in USDA properties that are unable to refinance, participate in the multi-family preservation and rehabilitation options, or decouple.”

 

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