Tag Archive for: HUD

Tracking Implementation of Rural Provisions in the 21st Century ROAD to Housing Act

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The 21st Century ROAD to Housing Act, enacted in July 2026, includes a wide variety of provisions. Many of the law’s provisions require further action by federal agencies and/or Congress before they will impact the U.S. housing supply. Some require agencies to develop regulations or conduct studies. Others will not be effective unless Congress adds funds in future appropriations bills.

The Housing Assistance Council (HAC) is tracking actions taken to implement the law’s provisions that seem most relevant to affordable housing in rural areas. This tracker does not include every provision in the law.

If you are aware of implementation actions that are not on this list but should be, please let HAC know.

Table of Contents

Rural Rental Housing Preservation
Other Rural Housing Provisions
Environmental Review
Finance and Banking
Native American Housing
Persistent Poverty Areas
Manufactured Housing
HOME
CDBG
Small-Dollar Loans
Other HUD
Research and Reports Related to Rural Housing
Resources for More Information

PROVISION

ACTION NEEDED

STATUS

Rural Rental Housing Preservation
Decoupling: At the time the law was enacted, Section 521 Rental Assistance could be provided only if a property had an active Section 515 or 514 loan. ROAD changes this by “decoupling” the Rental Assistance from the USDA loan in certain circumstances. The loan must be within four years of expiration. USDA must determine that the loan cannot be restructured, or the property owner must decline to restructure it. The property must have Rental Assistance already. If all these conditions are met, USDA can renew the existing RA contract for 20 years, subject to annual appropriations. USDA can also extend the RA to cover unassisted units at a property where existing RA is being decoupled. (ROAD Section 502(e)) ROAD requires USDA to publish a proposed rule by approximately January 7, 2027 and an interim final rule by July 11, 2027.

Congress will need to continue appropriating funds for Section 521 Rental Assistance.		 Decoupled Rental Assistance is operating and funded through December 11, 2026, as it has been since FY24 based on authority provided in USDA’s annual appropriations. USDA has named this pilot program Stand-Alone Rental Assistance (SARA). The pilot’s terms are explained in a USDA notice.
Preservation and Revitalization Program: The Multifamily Preservation and Revitalization Program (MPR) is permanently authorized, with a number and a revised name: the Section 545 Housing Preservation and Revitalization Program. (ROAD Section 502(e)) ROAD requires USDA to publish a proposed rule by approximately January 7, 2027 and an interim final rule by July 11, 2027.

Congress will need to continue appropriating funds for the program.		 MPR is funded through December 11, 2026 and is operating based on funding notices such as this from 2024.
Preservation Technical Assistance: USDA may make grants to nonprofits, coops, and public housing agencies to provide technical assistance for preservation. (ROAD Section 502(e)) ROAD requires USDA to publish a proposed rule by approximately January 7, 2027 and an interim final rule by July 11, 2027.

Congress will need to continue appropriating funds for the program.		 [Pilot program] is operating and funded through the end of FY26 on September 30, 2026.
Notices to Owners and Tenants: USDA is required to send written notices every year to owners whose mortgages will mature within four years, and tenants who live in properties with mortgages that will mature within two years. (ROAD Section 502(e)) ROAD requires USDA to publish a proposed rule by approximately January 7, 2027 and an interim final rule by July 11, 2027.
Two-Step Transfers: When a nonprofit or limited partnership purchases a Section 515 property to preserve it, the ownership transfer may occur before rehabilitation. (ROAD Section 502(n)) USDA has a “Simple Transfer” pilot in effect until December 31, 2027.
Foreclosures: When a USDA multifamily mortgage is foreclosed, USDA Rental Assistance continues and can be used at other USDA-financed properties. The law also extends existing federal foreclosure processes to include properties with Section 538 guaranteed loans. (ROAD Section 502(a))
Vouchers: By July 11, 2028, USDA must issue regulations establishing a process for adjusting the amounts of rural housing vouchers annually and when tenants’ incomes change. (ROAD Section 502(k)) ROAD requires USDA to issue regulations by July 11, 2028.

Other Rural Housing Provisions
Staffing and Technology: If Congress appropriates funds for these purposes, USDA may increase its staff and upgrade its information technology systems for the rural housing programs. (ROAD Section 502 (c)) Congress would need to appropriate funds.
Section 502 Direct: Effective immediately, USDA has the authority to extend a Section 502 direct loan for a term up to 40 years after the date of loan refinancing or modification. (ROAD Section 502(o)) USDA RD should issue guidance (a handbook change, Unnumbered Letter, or Administrative Notice) or a regulatory change.
Section 502 Guaranteed: Licensed or regulated child care providers can run their businesses in homes with Section 502 guaranteed loans. Properties that include Accessory Dwelling Units are eligible for Section 502 guaranteed loans. (ROAD Sections 502(q) and (r)) USDA issued proposed regulations on March 31, 2026 that would make these changes. Comments were due June 1. A final regulation has not yet been promulgated.
Section 502 Guaranteed: When a buyer takes over the seller’s Section 502 guaranteed mortgage, the seller is no longer liable for the mortgage. USDA may charge a processing fee. (ROAD Section 502(p))
Section 504: Home repair loans and grants under Section 504 have been available for very low-income homeowners only. ROAD extends the eligibility for loans (but not grants) to include homeowners with low incomes. Also, for years, the law has required USDA to place a mortgage on any property receiving a Section 504 loan over $7,500. ROAD raises that minimum to $15,000. (ROAD Section 502(g))
Rural Community Development Initiative: The law authorizes the RCDI capacity building program with a $500,000 cap on grants. (ROAD Section 502(h)) USDA RD must develop regulations for the program. (RCDI has existed for years as a pilot program without regulations.) Congress will need to continue appropriating funds for it. USDA issued a NOFO for FY25 RCDI funds in July 2025 but rescinded it in July 2026, announcing that it would be revised and new applications would be required. The program also received an appropriation for FY26.

Environmental Review
Exemption from Review: USDA-financed construction or modification on an infill site is exempt from environmental review. An “infill site” is defined as a site served by existing infrastructure including water lines, sewer lines, and roads. (ROAD Section 103) By July 11, 2031, USDA must submit a report to Congress on the impact of this exemption.
HUD-USDA coordination: The law requires HUD and USDA to coordinate their environmental review processes for projects that receive funds from both departments. (ROAD Section 802) By early January 2027, HUD and USDA must develop a memorandum of understanding establishing coordination. By July 11, 2027, they must report to Congress on ways to improve the review process for jointly funded projects.
State and local actions: The law allows state, local, and Tribal governments to streamline environmental reviews. (ROAD Section 205)

Finance and Banking
Public welfare investment: The amount banks are permitted to use for public welfare investment, known generally as the PWI cap, is increased in Section 203 of the law. The provision applies to national banks (regulated by the Comptroller of the Currency) and to state banks that are regulated by the Federal Reserve. Previously they were permitted to invest up to 15% of their capital and surplus in public welfare activities, which can include Low-Income Housing Tax Credits, support for small businesses, and the like. ROAD to Housing raises the cap to 20%. (ROAD Section 203) By July 11, 2028, and then every two years, OCC and the Federal Reserve must submit reports to Congress about public welfare investments.
Rural lenders studies: The law requires two studies examining rural lenders. The federal bank regulators (the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve) must produce a joint study regarding the institutions they oversee, and the National Credit Union Administration must conduct a similar one for credit unions. Both studies will identify ways to “improve the growth, capital adequacy, and profitability” of institutions that primarily serve rural areas, then identify federal statutes or regulations that limit those lenders’ work or the establishment of new rural institutions. (ROAD Section 909) Both studies are due to Congress by July 11, 2027.

Native American Housing
Tribes and Tribally Designated Housing Entities are specifically eligible for some of the new and revised programs under the law, but it does not otherwise address Native housing programs.

Persistent Poverty Areas
The law specifically mentions persistent poverty areas only once, providing that USDA may (but is not required to) exempt projects in persistent poverty regions from the requirement for Rural Community Development Initiative grantees to provide matching funds. (ROAD Section 502(h)) USDA could include exemption language in its RCDI regulations.

Manufactured Housing
Chassis: The law removes the permanent chassis requirement for manufactured housing. (ROAD Section 301(a) and (b)) HUD, in consultation with the Manufactured Housing Consensus Committee, must develop standards for homes without a permanent chassis. HUD recently proposed to eliminate the permanent chassis requirement for upper floors of manufactured homes, so that change could be put into place soon.
Energy efficiency: Energy efficiency standards for manufactured housing must be adopted by HUD (i.e., standards cannot be imposed by other agencies unless HUD agrees). (ROAD Section 301(d)) HUD must adopt minimum energy efficiency standards by July 11, 2027 and then update them every three years.
FHA insurance: HUD must study barriers to FHA-insured lending for modular housing and recommend changes. FHA financing for modular homes is authorized. HUD must study the cost effectiveness of offsite construction. (ROAD Sections 302 and 303) The reports on the barriers study and the offsite construction study must be published by July 11, 2027. By early November, 2027, HUD must begin developing regulations for construction financing loans on modular homes.
PRICE: The law authorizes HUD’s Preservation and Reinvestment Initiative for Community Enhancement (PRICE) Program for seven years to provide grants to entities to maintain, protect, and stabilize manufactured housing and manufactured housing communities. (ROAD Section 304) Congress will need to appropriate funds for PRICE. HUD will need to develop regulations. PRICE was initially created and funded in the FY23 omnibus appropriations bill and received a small additional appropriation in FY24, but has not been funded since then.

HOME
Authorization: The law permanently reauthorizes HOME. (ROAD Section 501)
Home values: HOME funds can be used for purchase or rehab of homes valued at up to 110% of the average purchase price for the area, instead of 95%. (ROAD Section 501) HUD will need to revise its regulations.
Income limits: Households earning up to 100% of area median income are eligible for HOME homeownership assistance. HOME rental housing is still limited to households earning no more than 80% of AMI. (ROAD Section 501) HUD must revise its regulations by July 11, 2027.
Environmental review: The law categorically excludes some HOME activities from environmental review: new construction infill housing, acquisition of real property for affordable housing purposes, rehabilitation projects, and new construction of projects with 15 or fewer units. Developments receiving funding from two separate entities must have only one environmental review. (ROAD Section 501(l)) HUD must revise its regulations by July 11, 2027.
Build America, Buy America: HUD must review and update its implementation of the Build America, Buy America Act for HOME-funded projects. (ROAD Section 501(m)) (The law has no other provisions regarding BABA.) By early January, 2027, HUD must review its implementation of BABA for HOME-funded projects. By early April, 2027, HUD must update its guidance on applying BABA to HOME projects and must report to Congress.

Section 3: When assisting 50 or fewer homes, state recipients of HOME funds and participating jurisdictions receiving less than $3 million in HOME funds are exempt from the Section 3 requirements to provide jobs and economic opportunities to low-income residents. (ROAD Section 501(n))

CHDO definition: The law makes it easier for local nonprofits to qualify as Community Housing Development Organizations by requiring “accountability” to low-income community residents rather than “significant accountability.” (ROAD Section 501(b))

Infrastructure: HOME funds can be used for infrastructure improvements related to a property assisted by either HOME or LIHTC in a place that is not a CDBG entitlement area. (ROAD Section 501(d)) HUD must revise its regulations by July 11, 2027.
Tenant selection: Properties with four or fewer rental units are exempted from some tenant selection requirements, such as use of a wait list. (ROAD Section 501(q))
Allocation amounts: A local government must receive a formula allocation of $750,000 rather than the previous $500,000 to be designated a participating jurisdiction. (ROAD Section 501(u))
Revitalizing Empty Structures Into Desirable Environments (RESIDE): The law creates a new pilot program within HOME, making competitive grants to participating jurisdictions to convert vacant and abandoned buildings to affordable housing. (ROAD Section 210) Congress would need to appropriate funds to implement this program. HUD is unlikely to promulgate regulations for a pilot program, but its Notice of Funding Opportunity would need to provide enough information to guide grantees.

CDBG
New construction: The law makes new construction of affordable housing an eligible activity for CDBG funds appropriated for FY27 and later years. A grantee can use up to 20% of its annual CDBG allocation for this purpose. (ROAD Section 204(a))
Community Development Block Grant-Disaster Recovery: The law authorizes the CDBG-DR program for three years. States, Tribes, and local governments are eligible for grants. (ROAD Section 504(d)) Within 30 days after the law’s enactment, HUD must publish a Federal Register notice explaining allocation methodologies and requesting comments. By January 11, 2027, HUD must issue proposed regulations for the program, with a 90-day comment period. Final regulations must be issued by July 1, 2027. Congress will need to appropriate funds for the program. The Federal Register notice was published August 13, 2026, requesting comments by September 14, 2026 on CDBG-DR allocations. Some of HUD’s questions specifically address the rural and Tribal impact of formula methodologies. The notice also asks how to define  “catastrophic disasters,” the term used in the law.
HUD/USDA/VA collaboration: The law requires HUD, USDA, and VA to identify opportunities for collaboration to streamline the implementation of their housing programs. (ROAD Section 801) The departments must provide a report to Congress by early January 2027, publish it in the Federal Register, and accept comments for 30 days.
Publicly owned land: Recipients of CDBG funds are required to maintain public databases of land they own, effective on October 1, 2026. (ROAD Section 104)

Small-Dollar Loans
Small-dollar mortgage pilot: HUD/FHA may (but is not required to) create a pilot program to increase access to small-dollar mortgages, $100,000 or less, secured by properties with 1-4 units that are their owners’ principal residences. (ROAD Section 105) The pilot may be created by July 11, 2027, and will terminate four years after it is created.
Small-dollar loan research: The law requires CFPB to study small-dollar loans originated by FHA, VA, and USDA or eligible for purchase by Fannie Mae or Freddie Mac and barriers to this type of lending. (ROAD Sections 401 and 402) Two studies are due in early April 2027.

Other HUD
Whole-Home Repairs: The law authorizes a pilot program at HUD to address home repair needs and health hazards holistically to improve accessibility, habitability and safety, or energy efficiency. Both rental and owner-occupied units are eligible. Funds will be awarded to states, Tribes, local governments, and nonprofits. For states and territories, HUD must prioritize applications that will give a proportionate share of funds to nonmetro areas. The pilot will expire on October 1, 2031. (ROAD Section 202) Congress would need to appropriate funds.
Opportunity Zones: HUD may give extra weight to funding applications that would be in or would benefit an OZ. (This provision does not apply to USDA or other agencies.) (ROAD Section 201) Before 21st Century ROAD to Housing was enacted, HUD offered preference points for OZs in several NOFOs.
Housing counseling review: The law requires HUD to review the performance of housing counseling agencies and individual counselors. HUD can require additional training and other remedial actions. (ROAD Section 101)
Foreclosure counseling: HUD must offer foreclosure mitigation counseling for owners who are 30 days or more delinquent on mortgages made, guaranteed, or insured by FHA, VA, USDA, or HUD Section 184 or 184A. (ROAD Section 101)
HUD voucher inspections: Units with financing from LIHTC, HOME, or USDA and an inspection within the past year will be considered to meet HUD voucher inspection requirements. The law also allows (but does not require) HUD to permit remote or video inspections for units in rural or small areas. (ROAD Section 405)

Research and Reports Related to Rural Housing
Section 502 direct loans subsidy recapture: USDA must submit a publicly available report to Congress on subsidy recapture, which refers to the requirement for homebuyers using the Section 502 direct mortgage program to repay a portion of their subsidy amounts when they sell their homes or pass away. The report to Congress must include information about the total subsidy amount provided, how much is being recaptured, and the amount of time and costs associated with recapturing those subsidies. ROAD Section 502(b) (which refers to Section 521 but is not about Section 521 Rental Assistance). The report is due by mid-January 2027.
Annual report to Congress: USDA must prepare an annual report on the rural housing programs and publish it online. (ROAD Section 502(i)) The report must be published annually.
GAO report: The Government Accountability Office must provide a report to Congress analyzing the impact of outdated RHS technology on borrower services and costs and estimating the funding and staffing needed to modernize it. (ROAD Section 502(j)) GAO’s report is due by July 11, 2027.
Processing backlog report: USDA must report to Congress on the status of its processing backlog for Section 502 and 504 loan applications. (ROAD Section 502(s)) The first report is due by October 9, 2026, and then a subsequent report is due every year.

Resources for More Information

Implementation Matrix for the 21st Century ROAD to Housing Act, National Association of Affordable Housing Lenders and the Center for Affordable Housing Lending, July 2026.

ROADmap: An Implementation Guide for the 21st Century ROAD to Housing Act, National Association of Affordable Housing Lenders and the Center for Affordable Housing Lending, July 2026.

The 21st Century ROAD to Housing Act is Now Law: What it Means for Tribal Housing, National American Indian Housing Council, July 11, 2026.

21st Century Road to Housing Act: Impacts on Low-Income Households, National Low Income Housing Coalition, July 2026.

Comparison of Selected Versions of H.R. 6644, Congressional Research Service, July 2026.

HAC News, Housing Assistance Council, every two weeks.

Rural Provisions in the 21st Century ROAD to Housing Act

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The 21st Century ROAD to Housing Act, hailed by HAC CEO David Lipsetz as “an important step forward in addressing the nation’s housing affordability crisis,” includes a wide variety of provisions. The key provisions related to affordable housing in rural America are summarized below, followed by links to others’ analyses of the law’s other provisions.

It is important to note that many of the law’s provisions require further action by federal agencies and/or Congress before they will impact the U.S. housing supply. Some require agencies to develop regulations or conduct studies. Others – including some provisions related to preserving rural rental housing – will not be effective unless Congress adds funds in future appropriations bills.

It is still possible, though perhaps unlikely, that funds could be provided for fiscal year 2027. USDA FY27 funding has been approved by the House without any 21st Century ROAD to Housing provisions because the appropriations bill passed first. Similarly, the House Appropriations Committee approved a HUD funding bill before ROAD passed. The House has also supported a continuing resolution to take effect on October 1 for appropriations bills that are not completed, and continued FY26 spending would not include ROAD provisions. The Senate has not yet released draft text or voted on a continuing resolution, an FY27 USDA spending bill, or an FY27 HUD bill.

Rural Rental Housing Preservation

Decoupling: Usually Section 521 Rental Assistance can be provided only if a property has an active Section 515 or 514 loan. ROAD changes this by “decoupling” the Rental Assistance from the USDA loan in certain circumstances. The loan must be within four years of expiration. USDA must determine that the loan cannot be restructured, or the property owner must decline to restructure it. The property must have Rental Assistance already. If all these conditions are met, USDA can renew the existing RA contract for 20 years, subject to annual appropriations. USDA can also extend the RA to cover unassisted units at a property where existing RA is being decoupled. (ROAD Section 502(e))

Preservation and Revitalization Program: The Multifamily Preservation and Revitalization Program (MPR) is permanently authorized with a number and a revised name: the Section 545 Housing Preservation and Revitalization Program. (ROAD Section 502(e))

Preservation Technical Assistance: USDA may make grants to nonprofits, coops, and public housing agencies to provide technical assistance for preservation. (ROAD Section 502(e))

Notices to Owners and Tenants: USDA is required to send written notices every year to owners whose mortgages will mature within four years, and tenants who live in properties with mortgages that will mature within two years. (ROAD Section 502(e))

Regulations: USDA must publish a notice of proposed rulemaking within 180 days of the law’s enactment (approximately January 7, 2027) and an interim final rule by July 11, 2027. (ROAD Section 502(e))

Two-Step Transfers: When a nonprofit or limited partnership purchases a Section 515 property to preserve it, the ownership transfer may occur before rehabilitation. (ROAD Section 502(n))

Vouchers: By July 11, 2028 (within two years of ROAD’s enactment), USDA must issue regulations establishing a process for adjusting the amounts of rural housing vouchers annually and when tenants’ incomes change. (ROAD Section 502(k))

Other Rural Housing Provisions

Staffing and Technology: If Congress appropriates funds for these purposes, USDA may increase its staff and upgrade its information technology systems for the rural housing programs.

Section 502 Direct: Effective immediately, USDA has the authority to extend a Section 502 direct loan for a term up to 40 years after the date of loan refinancing or modification. (ROAD Section 502(o))

Section 502 Guaranteed: Child care providers who are licensed or regulated under state or Tribal law to run their businesses in their homes are eligible for Section 502 guaranteed loans. Properties that include Accessory Dwelling Units are eligible for Section 502 guaranteed loans. (ROAD Sections 502(q) and (r))

Section 504: Home repair loans and grants under Section 504 have been available for very low-income homeowners only. ROAD extends the eligibility for loans (but not grants) to include homeowners with low incomes. Also, for years, the law has required USDA to place a mortgage on any property receiving a Section 504 loan over $7,500. ROAD raises that minimum to $15,000. (ROAD Section 502(g))

Rural Community Development Initiative: The law authorizes the RCDI capacity building program with a $500,000 cap on grants. (ROAD Section 502(h))

Environmental Review

Exemption from Review: USDA-financed construction or modification on an infill site is exempt from environmental review. An “infill site” is defined as a site served by existing infrastructure including water lines, sewer lines, and roads. By July 11, 2031, USDA must submit a report to Congress on the impact of this exemption. (ROAD Section 103)

Coordination with HUD: ROAD requires HUD and USDA to develop a memorandum of understanding by early January 2027 (180 days after the law’s enactment) to coordinate their environmental review processes for projects that receive funds from both departments. By July 11, 2027 they must report to Congress on ways to improve the review process for jointly funded projects. (ROAD Section 802)

Finance and Banking

Public welfare investment: The amount banks are permitted to use for public welfare investment, known generally as the PWI cap, is increased in Section 203 of the law. The provision applies to national banks (regulated by the Comptroller of the Currency) and to state banks that are regulated by the Federal Reserve. Previously they were permitted to invest up to 15% of their capital and surplus in public welfare activities, which can include Low-Income Housing Tax Credits, support for small businesses, and the like. ROAD to Housing raises the cap to 20%.

Rural lenders studies: The law requires two studies examining rural lenders. The federal bank regulators (the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve) must produce a joint study regarding the institutions they oversee, and the National Credit Union Administration must conduct a similar one for credit unions. Both studies will identify ways to “improve the growth, capital adequacy, and profitability” of institutions that primarily serve rural areas, then identify federal statutes or regulations that limit those lenders’ work or the establishment of new rural institutions. Both studies are due to Congress July 11, 2027. (ROAD Section 909)

Native American Housing

Tribes and Tribally Designated Housing Entities are specifically eligible for new and revised programs under the law, but it does not otherwise address Native housing programs.

Research and Reports

The 21st Century ROAD to Housing Act requires federal agencies to provide many reports to Congress about their progress in implementing the law’s provisions. Related to rural housing, these reports include:

Section 502 direct loans subsidy recapture: Within six months after the law’s enactment (mid-January 2027), USDA must submit a publicly available report to Congress on subsidy recapture. Homebuyers using the Section 502 direct mortgage program are required to repay a portion of their subsidy amounts when they sell their homes or pass away. The report to Congress must include information about the total subsidy amount provided, how much is being recaptured, and the amount of time and costs associated with recapturing those subsidies. (ROAD Section 502(b) (which refers to Section 521 but is not about Section 521 Rental Assistance)).

Annual report to Congress: USDA must prepare an annual report on the rural housing programs and publish it online. (ROAD Section 502(i))

GAO report: By July 11, 2027, the Government Accountability Office must provide a report to Congress analyzing the impact of outdated RHS technology on borrower services and costs and estimating the funding and staffing needed to modernize it. (ROAD Section 502(j))

Processing backlog report: By October 9, 2026, and every year after that, USDA  must report to Congress on the status of its processing backlog for Section 502 and 504 loan applications. (ROAD Section 502(s))

Resources for More Information

Comparison of Selected Versions of H.R. 6644, Congressional Research Service, July 2026.

Implementation Matrix for the 21st Century ROAD to Housing Act, National Association of Affordable Housing Lenders and the Center for Affordable Housing Lending, July 2026.

ROADmap: An Implementation Guide for the 21st Century ROAD to Housing Act, National Association of Affordable Housing Lenders and the Center for Affordable Housing Lending, July 2026.

The 21st Century ROAD to Housing Act is Now Law: What it Means for Tribal Housing, National American Indian Housing Council, July 11, 2026.

21st Century Road to Housing Act: Impacts on Low-Income Households, National Low Income Housing Coalition, July 2026.

HAC CEO Responds to FY 2027 Budget Proposal

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On Friday, April 3rd, the White House released its full Fiscal Year (FY) 2027 Budget Proposal. While there are a few improvements over FY 2026 for housing affordability programs, the Housing Assistance Council (HAC) is gravely concerned about the number of programs that are slated for underfunding or elimination.

“The FY 2027 budget includes positive steps, such as restored support for USDA’s Section 502 Direct program,” said David Lipsetz, President & CEO of the Housing Assistance Council. “We welcome support for low-income homeownership during an affordability crisis. However, the proposal falls short of what is needed by failing to preserve the nation’s aging stock of rural rental housing and eliminating proven initiatives.”

At the U.S. Department of Agriculture (USDA), funding for both USDA’s Section 515 Rural Rental Housing and its Multifamily Preservation and Revitalization programs would remain at FY 2026 levels, but the budget fails to provide returns on investment or asset management fees for nonprofit and public agency owners.  Additionally, although the budget continues to support Stand‑Alone Rental Assistance to protect tenants when USDA mortgages mature, it proposes eliminating Section 542 vouchers without clearly addressing the impact on current households currently in the voucher program.

If enacted, the Administration’s budget proposal would be particularly damaging to people experiencing homelessness and unaffordable housing by eliminating a number of Department of Housing and Urban Development (HUD) programs that have a proven track record when it comes to serving Americans. The proposal eliminates the HOME Investment Partnerships Program, the Community Development Block Grant (CDBG), the Continuum of Care Program, the Housing Opportunities for Persons with AIDS (HOPWA) Program, Native American programs and Native Hawaiian Housing Block Grants, and fair housing activities.

HAC commends the Administration’s focus on rural-serving Community Development Financial Institutions (CDFIs) in its Treasury Department funding proposal. But our organization recognizes we live in a deeply interconnected nation. We have argued that if rural areas are left behind, the whole nation suffers. The opposite is true also; thus we cannot condone the Administration’s dramatic funding reduction and consolidation of the current CDFI grant programs into a single Rural Community Development Fund.

Perhaps most concerning, the proposal severely cuts funding for capacity building and technical assistance for rural communities. More than anywhere in America, small towns and rural places can struggle to maintain the expertise needed to succeed in the complex world of housing and community development. The budget calls for eliminating Rural Capacity Building at HUD and both the Rural Community Development Initiative and Preservation Technical Assistance at USDA. Such cuts to technical assistance and capacity building programs will prevent community organizations from getting new housing projects off the ground, while also limiting the critical resources they need to complete ongoing projects.

HAC urges Congress to strengthen the FY 2027 budget by restoring technical assistance for rural housing preservation, ensuring rental assistance transitions do not leave tenants behind, fully funding all programs at HUD, and providing nonprofit owners with the tools they need to sustain affordable housing over the long term. In addition, HAC also urges Congress to continue the efforts begun in the Fiscal Year 2026 appropriations bill by specifically adding language to compel the Administration to spend appropriated funding. Read HAC’s full analysis of the Administration’s Fiscal Year 2027 budget proposal for USDA and for HUD.

PRT, HAC, HOPE Release Opportunity Zone 2.0 Recommendations

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The Housing Assistance Council (HAC) in collaboration with Partners for Rural Transformation (PRT) and Hope Credit Union/Hope Enterprise Corporation/Hope Policy Institute (HOPE) Wednesday released recommendations for the Opportunity Zone 2.0 designations to drive investments into rural communities facing persistent poverty.

PRT President Farah Ahmad said: “Opportunity Zones hold tremendous potential to drive investment into rural communities facing persistent poverty across the country – if they are done correctly. This guide offers a framework for state policymakers and local practitioners to ensure that this once-in-a-decade opportunity is not missed in the rural communities millions of people call home.”

HAC President and CEO David Lipsetz said: “Investment in persistently poor rural places is an essential step to address our nation’s affordable housing crisis. State officials have an important opening this year to identify the right places for this investment. This guide explains what’s at stake and how they can take action.”

HOPE Senior Advisor for Policy and Advocacy Diane Standaert said: “With this upcoming round of Opportunity Zone selections, states have a once-in-decade chance to get it right for rural places. HOPE’s experience demonstrates how it’s possible to align community-driven solutions, private investors, and public policy to drive transformative change in rural communities, including those experiencing persistent poverty. With advance planning as recommended in this guide, states can ensure they do not overlook solutions for economic opportunity in the rural areas that need it most.”

Created by the Tax Cuts and Jobs Act of 2017, Opportunity Zones spur economic growth and job creation in low-income communities while providing tax benefits to investors. The first round of Opportunity Zones generated $120 billion in new investments across the country. However, only a fraction of that, about $6 billion, flowed into rural communities by 2022, and even less reached areas experiencing persistent poverty.

The program was amended in the One Big Beautiful Bill Act (OBBBA) and added new incentives for rural communities, including a 30% step-up in basis points for investments and a 50% threshold for showing substantial improvement to rehabilitation projects. However, an overly broad definition of “rural” risks funding being diverted away from targeted rural and Native communities. For example, Atlantic City meets the definition of a “rural Opportunity Zone” under the OBBBA.

Activating Rural Investments in the Next Round of Opportunity Zones: Recommendations for States  can be found here. The recommendations follow four guidelines:

  • Engage Rural Communities, Native Communities, and Practitioners: Hearing directly from rural communities through organizations like Community Development Financial Institutions and non-profit developers will help state and local leaders designate Opportunity Zones that will have the greatest impact.
  • Create a Map that Targets Unique Rural Needs and Development Goals: Mapping tools can assist state and local leaders in designating rural areas where investment is needed most and illuminate the opportunities to leverage additional investment incentives.
  • Create Priorities in State Funding Programs: States can take a more active role in driving investment into rural communities facing persistent poverty by prioritizing projects within preexisting state programs to attract additional resources and investors.  
  • Create an Assessment Tool: Establishing a clear decision-making rubric can ensure high-impact selections are made in a transparent manner.

PRT, HAC, and HOPE hosted a webinar on the guide for state policymakers, regional development hubs, and local non-profits on March 12. The recording is available here.   

Policy News town

HAC Opposes HUD Proposal to Eliminate Disparate Impact Fair Housing Rules

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The Department of Housing and Urban Development has proposed to change its Fair Housing Act regulations. The revisions would eliminate HUD’s rules on disparate impact — the legal concept that conduct is discriminatory if it has inequitable effects, even if there was no intent to discriminate. HAC does not support the proposed change and strongly urges HUD to retain and enforce its current rule. HAC argues that:

  • “Housing affordability and fair housing connect through the principle of ‘disparate impact.’”
  • Rural borrowers more often receive loans with more costly terms and rural residents are disproportionately members of protected classes.
  • Court decisions have not invalidated disparate impact liability.
  • HUD has an explicit statutory responsibility to ensure equal opportunity and freedom from discrimination.
HAC Disparate Impact Comments 2026 Final

Federal government shuts down many functions

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UPDATED as of 8:00 pm Eastern time on Tuesday, October 14.

The Office of Management and Budget (OMB) has posted an updated version of its Frequently Asked Questions During a Lapse in Appropriations, dated October 3, 2025. Several of the questions and answers relate to treatment of government contracts and awards during a shutdown.

……………..

October 1, 2025 — With Congress unable to agree on appropriations bills or a continuing resolution, many government activities stopped at the end of September 30, the last day of fiscal year 2025. The closure is likely to last for at least several days, because the House is not scheduled to be in session until October 6. The last time this occurred, the shutdown lasted a record 35 days, from December 22, 2018 to January 25, 2019.

What activities continue: The administration determines what federal agency functions must be continued during a shutdown. Staff who carry out those essential functions, as well as staff whose positions are not funded through annual appropriations and political appointees confirmed by the Senate, are required to work during the shutdown, but are not paid until the shutdown ends. Other staff are furloughed – they do not work during the shutdown but after it ends they are paid for the time they did not work. If a shutdown lasts more than a few days, determinations of crucial tasks and needed workers may shift.

Agency RIFs: In the last week of September there was significant concern that this shutdown would lead to many federal employees losing their jobs, based on an Office of Management and Budget memo telling agencies to “consider” issuing reduction in force (RIF) notices for employees whose job funding lapsed and whose work tasks were “not consistent with the President’s priorities.”

RIFs and furloughs are different things; a furlough is a temporary layoff with back pay later, whereas a RIF terminates a job, although a RIF’d employee receives a 60-day notice and may be transferred to a different position.

Only a few federal agencies incorporated RIF plans into their shutdown contingency plans, however, and USDA and HUD were not among them. Overall, the current furloughs reportedly impact around 550,000 federal workers, 23% of the current workforce.

USDA shutdown plan: USDA’s current plan has one page devoted to Rural Development. It shows that nearly 83% of RD’s staff are furloughed, compared to 49% of the department’s total staff. “Limited” RD activities will continue, including making Section 521 Rental Assistance payments for contracts already in effect, for as long as the funding is available. RD staff have told stakeholders that available RA funds will cover the program at least until the end of October.

RD does not have authority to renew RA contracts that expire during the shutdown.

According to the plan, the agency will continue servicing loans “only as necessary to protect RD’s interest in properties.” This seems to imply what past RD plans stated explicitly – no new loans, grants, or loan guarantees would be issued during a shutdown.

HUD shutdown plan: HUD’s plan seems to indicate that almost 94% of its employees are furloughed, with 16% of them to be recalled intermittently, but that many of its programs are functioning.

Programs such as HOME, CDBG, and Continuum of Care will continue to disburse funds when funds have been obligated and no further action by HUD employees is necessary. When HUD review or action is required, the department will recall employees “as necessary to avoid an imminent threat to the safety of human life or property.”

Monthly subsidy programs such as public housing, housing choice vouchers, and multifamily assistance contracts, will continue to operate while funding is available. Unlike USDA, HUD does have the authority to renew Project-Based Rental Assistance contracts that expire during the shutdown.

The plan notes that “nearly all of HUD’s fair housing activities will cease during a lapse” in appropriations.

National Flood Insurance Program expiration: The continuing resolution that funded the government from March 15 through September 30 authorized NFIP, so the program expired after September 30. FEMA can continue to pay claims so long as it has funds available, but it must stop issuing or renewing policies.

Long-term effects: At this point, it is difficult to determine how long the current closure may last and what its long-term impacts may be. The Congressional Budget Office estimated that around 750,000 workers could be furloughed every day of the shutdown, with the daily cost of their compensation totaling roughly $400 million.

……………

NOTE: As of mid-afternoon Eastern time on September 29, 2025, HAC could find no new information about what might happen to rural housing programs in the event of a federal government shutdown. If we receive any news we will post it here.

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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. USDA’s January 2024 shutdown plans are still online, while HUD’s and Treasury’s plans have been removed and not replaced. OMB’s shutdown page refers readers to individual agencies. OMB’s September 2023 FAQs remain online.

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 August 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.

 

Policy News town

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.

Updated March 20 – What would a federal government shutdown mean for rural housing?

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Updated, March 20, 2024 – Some parts of the government may shut down briefly this weekend while Congress finishes the process of passing a final funding measure, but the HUD and USDA housing programs will not be affected. Their final appropriations for fiscal year 2024 (October 1, 2023-September 30, 2024) were set earlier this month. HAC has posted more details about USDA’s funding levels here and about HUD’s here.

***   ***   ***

The information provided below is still accurate, but is no longer relevant for fiscal year 2024.

Update, October 2, 2023 – A last-minute agreement on a continuing resolution keeps the government running through November 17. It includes a provision allowing USDA to renew Section 521 Rental Assistance contracts as they expire, even if that requires a higher proportion of annual funding than the prorated amount for the first 48 days of the fiscal year.

The next steps towards funding for the entire fiscal year are not yet clear. The House and Senate have proposed different FY24 funding levels for USDA and HUD, and the House voted on but did not pass its USDA appropriations bill on September 28. Follow HAC’s reporting on appropriations in the HAC News (subscribe here) and on our web pages for USDA and HUD funding.

Update, September 29, 2023 – Congress has not made effective progress towards avoiding a shutdown on October 1. USDA has posted updated shutdown contingency plans, including one for Rural Development. The RD plan seems to be essentially the same as the 2021 version HAC originally summarized here. Since the updated plan indicates that USDA will be able to spend Rental Assistance funds so long as it has them, this post has been updated to remove questions about the lack of an advance appropriation for Rental Assistance.

The federal government, or parts of it, close when funding (appropriations) lapses. None of the fiscal year 2024 appropriations bills have been enacted yet, and ongoing differences between factions on Capitol Hill make temporary funding unlikely. A shutdown could begin on October 1, 2023, when fiscal year 2023 ends. If a continuing resolution (CR), or a series of them, keeps the government operating beyond October 1, a shutdown could occur whenever the final CR ends. Federal agencies have prepared shutdown plans.

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.

As HAC considers what a shutdown will mean, some important questions remain open and are included in the analysis below. HAC and other national rural housing organizations have reached out to USDA RD’s multifamily and political leadership with these questions and will update this information when we receive a response.

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 contracts would continue to be renewed during a shutdown “if funding is available,” according to USDA Rural Development’s shutdown plan, dated September 2023.
  • If the agency has used up all its RA funds, “additional servicing options” could be provided to rental properties. When the government closed in December 2018 and January 2019, for example, USDA considered permitting owners to use project reserves to cover costs, but the shutdown ended before a final decision was made.
  • 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 August 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 September 2023, 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 “if funding is available.”

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 August 2023 and were renewed in late August or early September will not be impacted again until they expire in August 2024. How much RA funding does USDA have on hand? How long will that amount last?

The contingency plan provides 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. The 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. Has USDA RD planned for such a possibility this year?

Has RD developed plans for communicating with property owners/managers and with tenants if a shutdown occurs and while it continues?

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.

HUD

HUD’s plan is dated August 30, 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, with wording similar to that used for the Rental Assistance advance appropriations. Thus, if FY24 begins without an appropriation, HUD may have some FY23 funds remaining for staff to continue working at full force, at least temporarily. 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 December 2022, 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

An 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.

 

Debt ceiling compromise limits spending, rescinds some HUD and USDA housing funds

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The Fiscal Responsibility Act – the recently enacted compromise that suspends the debt ceiling until January 1, 2025 – makes fewer cuts than the Limit, Save, Grow Act passed by the House in April, but it almost certainly will limit federal spending on housing aid for the next two fiscal years. In addition to the well-publicized work requirements for SNAP and TANF recipients, reallocation of IRS funding, and revised environmental reviews, the measure includes a variety of other provisions, several of which impact rural housing.

  • It rescinds any unspent funds from the $39 million for Section 502 direct loans and 504 loans that was provided in the American Rescue Plan Act. (The June 8, 2023 HAC News reported incorrectly that $2 million in rental preservation technical assistance funds were also rescinded. The compromise did not rescind any preservation TA monies.)
  • It rescinds unspent monies appropriated by pandemic relief laws for the Emergency Rental Assistance and Homeowner Assistance Fund programs, and funds that were appropriated in the CARES Act but have not yet been spent by HUD for Tenant-Based Rental Assistance, Project-Based Rental Assistance, Native American housing, Section 811, and Section 202.
  • It caps overall FY24 funding for discretionary programs at around FY23 levels. Despite this limit on total spending, specific programs may receive amounts that are higher or lower than their FY23 levels. As it does every year, the appropriations process in Congress will make key decisions for individual programs.
  • Overall discretionary spending can increase only 1% from FY24 to FY25. The annual appropriations bills will set amounts for individual programs.
  • If appropriations do exceed the limits in FY24 or FY25, a sequester would make across-the-board cuts to discretionary programs.
  • Discretionary spending increases are also capped at 1% for fiscal years 2026-2029, but Congress can waive these caps if it chooses. It has no such option for FY24 and FY25.
  • If Congress uses a continuing resolution to fund any part of the government beyond January 1 of FY24 or FY25, funding for that year would be reduced. If a CR were still in effect on April 30, the funding cut would be applied to the entire year.
HAC in the News

HAC receives $6,325,000 from HUD to invest in rural communities and rural housing

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Contact: Dan Stern, dan@ruralhome.org
(202) 516-6882

Washington, DC, May 15, 2023 – The Housing Assistance Council (HAC) has been awarded a total of $6,325,000 funding from the U.S. Department of Housing and Urban Development (HUD) to invest in the capacity of rural communities and help rural families achieve homeownership. HAC was awarded $4,000,000 from the Self-Help Homeownership Opportunity Program (SHOP) and $2,325,000 in Rural Capacity Building (RCB) funding. The funds represent a portion of HUD’s $22 million investment into rural communities through the SHOP and RCB programs.

The funding was announced in conjunction with an event in Russellville, AR at which HUD Deputy Secretary Adrianne Todman toured several homes that are being built using funds from HAC’s SHOP program with local partner Universal Housing Development Corporation.

HUD’s official press release announcing the award included the following statement from Secretary Marcia L. Fudge “Today, we are investing in homeownership and expanding access to affordable housing to rural communities. The SHOP program provides a unique pathway for first-time homeowners and underserved groups to buy a home. At HUD, we care about rural America and these capacity building grants are further evidence of our commitment.”

SHOP funding will allow rural homebuyers to invest their sweat equity and hard work towards the construction of their own homes in rural communities. HAC will use its RCB funding to assist a group of eligible rural organizations to undertake affordable housing and community development activities in disadvantaged and other target communities around the country.

“HAC’s decades long partnership with HUD has provided affordable homes for people and increased capacity for organizations in rural communities across the United States,” said David Lipsetz, President & CEO of the Housing Assistance Council. “These awards will improve the lives of countless rural people and highlight HUD’s commitment to rural America!”

About the SHOP Program

The Self-Help Homeownership Opportunity Program (SHOP) awards grant funds to eligible national and regional nonprofit organizations and consortia. Funds must be used for eligible expenses to develop decent, safe, and sanitary non-luxury housing for low-income persons and families who otherwise would not become homeowners. Examples are for purchasing home sites and developing or improving the infrastructure needed to set the stage for sweat equity and volunteer-based homeownership programs for low-income persons and families. Homebuyers must be willing to contribute significant amounts of their own sweat equity toward the construction or rehabilitation of their homes.

About the RCB Program

The Rural Capacity Building (RCB) program enhances the capacity and ability of rural housing development organizations, Community Development Corporations (CDCs), Community Housing Development Organizations (CHDOs), local governments, and Indian tribes to carry out affordable housing and community development activities in rural areas for the benefit of low- and moderate-income families and persons. The Rural Capacity Building program achieves this by funding national organizations with expertise in rural housing and rural community development who work directly to build the capacity of eligible beneficiaries.

About the Housing Assistance Council

The Housing Assistance Council (HAC) is a national nonprofit that supports affordable housing efforts throughout rural America. Since 1971, HAC has provided below-market financing for affordable housing and community development, technical assistance and training, research and information, and policy formulation to enable solutions for rural communities.

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