The Rural Housing Preservation Act of 2016 was introduced in the House and Senate on April 12, 2016. H.R. 4908 is sponsored by Rep. Ann Kuster (D-NH) and Rep. Rick Nolan (D-MN). S. 2783 is sponsored by Sen. Jeanne Shaheen (D-NH). The bills, reportedly inspired by a crisis at a USDA-funded rental property in New Hampshire, aim to address the problems that may arise when USDA-financed Section 515 mortgages reach the end of their terms. Without their USDA financing, these rural rental properties lose not only their low-interest mortgages but also their Section 521 Rental Assistance (RA), which keeps rents to a level tenants can afford while providing cash flow to property owners to cover ongoing expenses.
The bills’ provisions would:
- make USDA Section 542 vouchers available for tenants in properties whose Section 515 mortgages are prepaid or mature;
- “decouple” Section 521 RA from Section 515 mortgages that mature after the bill’s enactment, giving owners the option of receiving RA for 20 years for all units (including those that did not previously have RA contracts), including both current and new tenants; an owner would then be required to operate the property for the 20-year RA contract term as if it still had a Section 515 mortgage;
- require USDA to establish “uniform requirements, terms, and conditions” for any entity seeking to acquire a Section 515 property using Low Income Housing Tax Credits and any funds authorized by this bill; and
- authorize the Multifamily Preservation and Revitalization program currently operated as a demonstration program by USDA, for preservation of properties financed under either Section 515 or Section 514/516.
The bills would not:
- authorize vouchers or decoupled Rental Assistance to tenants in Section 514/516 farmworker housing properties; or
- authorize vouchers for tenants in properties where USDA has foreclosed on a mortgage.
H.R. 4908 was referred to the House Financial Services Committee, and S. 2783 to the Senate Committee on Banking, Housing, and Urban Affairs. Those committees have jurisdiction over the housing programs of both HUD and USDA. As of April 21, neither committee has scheduled any action on the bill.