On May 19, 2016 the Senate Appropriations Committee approved a USDA fiscal year 2017 spending bill that had passed the Agriculture Appropriations Subcommittee on May 17. The bill funds most rural housing programs at their FY16 levels, and provides increases requested by the Administration’s budget for Section 521 Rental Assistance, Section 542 vouchers, and Section 538 rental housing guarantees. It also raises Section 515 rental housing to $40 million, higher than either the budget or the House bill. (Details are in the table below.)

The Committee’s report makes clear its concerns about rural rental housing issues, describing the anticipated loss of affordable rental housing due to the “alarming number” of USDA rental housing mortgages that are scheduled to mature in the next few years. It tells the department “to engage affordable housing advocates, project owners, tenants, and others as practicable, to find acceptable and effective long term solutions that will retain projects in the affordable rural housing program.” Meanwhile, it says, it is providing several types of short term assistance:

• As an incentive for nonprofits and PHAs to purchase USDA rental properties and keep them in the program, such entities would be allowed to earn a return on investment on their own resources invested in a deal, including proceeds from Low Income Housing Tax Credit syndication, their own contributions, grants, and developer loans at favorable rates and terms.
• Property owners would be allowed to receive an asset management fee of up to $7,500 per property (rather than the $7,500 per owner that USDA has been providing).
• Section 515 funding would be increased by over $11 million, “to be used for transfers to new owners, and for re-amortizations and other servicing actions that will trigger new, extended restricted use agreements retaining the properties in the program.”
• A pilot program, funded at $1 million, would provide technical assistance to facilitate transfers of properties to nonprofits and other new owners.

The bill also requires USDA to report every quarter on the number of Rental Assistance renewals approved, on the amount of RA available, and the anticipated need for RA for the remainder of the fiscal year. The Committee’s report expresses concern about past inaccurate calculations of the amount of RA needed, notes that USDA has implemented a new tool to determine RA needs, and directs the agency to perform a detailed analysis of the tool’s accuracy and to report its findings to the Committee within six months of the bill’s enactment, as well as reporting “immediately” any inadequacies found in the forecasting tool.

Unlike the House bill, the Senate’s version does not allow use of Section 542 vouchers for tenants in properties whose mortgages mature.

The House committee passed its F17 Agriculture appropriations bill, H.R. 5054, in April (as reported in the HAC News, 4/20/16). The House bill provides steady or increased funding levels for USDA’s rural housing programs. It increases Section 523 self-help technical assistance funding to $30 million and raises Section 502 direct to $1 billion. Section 521 Rental Assistance and Section 542 vouchers would receive amounts that, according to the Administration’s budget, will allow for renewal of all current aid, new RA for new farmworker housing properties, and new vouchers for tenants in properties leaving the Section 515 program for any reason, including mortgage maturity. It also includes Administration language that would extend voucher eligibility and allow USDA to set priorities for voucher distribution.

The House Committee’s report tells USDA to provide it with a list of criteria used to define “rural in character” in determining what places are considered rural and therefore eligible for housing program funding.

NOTE: When this table was first posted there was an error in the Senate bill’s figure for Section 502 direct. It has been corrected. The Senate bill provides $900 million, not $1 billion, for Section 502 direct.