The Biden Administration’s budget for fiscal year 2023 proposes funding increases for almost every U.S. Department of Agriculture rural housing program, along with some important program changes for preservation of aging rental housing.
The March 28 budget release is only the first step in the process of developing federal appropriations for the fiscal year that begins on October 1, 2022. HAC held a webinar to review the budget’s contents and what to expect over the coming months; view the slides and recording here.
— HAC’s analysis of the HUD portion of the budget is available here. —
The USDA budget proposes to quadruple Section 515 rental housing from $50 million in FY22 to $200 million in FY23, with the funds to be used for preserving existing Section 515 properties. The Multifamily Preservation and Revitalization program, which finances efforts to upgrade and maintain aging units constructed with Section 515 financing or the Section 514/516 farmworker housing program, would jump from $34 million this year to $75 million in FY23.
Farmworker housing loans and grants would almost double, with $6 million in Section 521 Rental Assistance set aside for new Section 514/516 units. The Section 538 loan guarantee program would see a large increase as well. (Details are provided in the table below.)
The $1.564 billion requested for Section 521 Rental Assistance renewals “will enable 272,000 existing contracts to be renewed, including making permanent the approximately 27,000 units that were brought into the program by the American Rescue Plan Act supplemental funding,” according to USDA’s budget explanation. The same document states, however, that RA assisted 284,194 tenant households in FY21.
The budget also asks Congress to “decouple” Rental Assistance from Section 515. Currently the programs are linked: RA cannot be made available to a property unless it has a USDA Section 515 or 514 loan. Separating them, so that RA could be offered after a property pays off its USDA mortgage, would help keep properties affordable for their tenants.
To protect tenants whose properties leave the USDA portfolio without decoupling, the administration proposes to provide $20 million in HUD Tenant Protection Vouchers. Based on the assumption that decoupling and the availability of HUD vouchers will eliminate the need for new USDA vouchers, the budget requests only enough Section 542 funding to renew existing assistance.
The budget proposes to increase funding for all USDA’s homeownership programs. It would also provide $20.8 million to expand the Native American Section 502 Relending pilot program. The pilot has enabled Native Community Development Financial Institutions to assist Native American homebuyers in tribal communities of South Dakota and North Dakota.
Rural Partnership Program
Pursuing an idea proposed in the Build Back Better Act, which has not been passed by Congress, the budget proposes $39 million for the Rural Partnership Program. In a statement about the budget, Agriculture Secretary Tom Vilsack described it as “a renewed and expanded initiative to leverage USDA’s extensive network of county-based offices to help people in high poverty counties, including energy communities.”
The budget would provide $3 million for the Rural Placemaking Innovation Challenge “to provide planning support, technical assistance, and training to foster placemaking activities in rural communities.” [NOTE: This sentence was corrected on March 29 to say $3 million. When this post was published, it stated incorrectly that the amount was $3 billion.]
Energy Efficiency and Climate Resilience
All USDA housing production would be required to “improve energy or water efficiency, indoor air quality, or sustainability improvements, implement low-emission technologies, materials, or processes, including zero-emission electricity generation, energy storage, building electrification, or electric car charging station installations; or address climate resilience of multifamily properties.”
|USDA Rural Dev. Prog.
(dollars in millions)
|FY21 Final Approp.||Amer. Rescue Plan Act||FY22 Admin. Budget||FY22 Final Approp.||FY23 Budget|
|502 Single Fam. Direct||$1,000||$656.6||$1,500||$1,250||$1,500|
|502 Single Family Guar.||24,000||–||30,000||30,000||30,000|
|504 VLI Repair Loans||28||18.3||28||28||50|
|504 VLI Repair Grants||30||–||30||32||45|
|515 Rental Hsg. Direct Lns.||40||–||40||50||200|
|514 Farm Labor Hsg. Lns.||28||–||28||28||50|
|516 Farm Labor Hsg. Grts.||10||–||10||10||18|
|521 Rental Assistance||1,410||100||1,450||1,450||1,564|
|523 Self-Help TA||31||–||32||32||40|
|533 Hsg. Prsrv. Grants||15||–||15||16||30|
|538 Rental Hsg. Guar.||230||–||230||250||400|
|Rental Prsrv. Demo. (MPR)||28||–||32||34||75|
|542 Rural Hsg. Vouchers||40||–||45||45||38|
|Rental Prsrv. TA||2||–||0||2||0|
|Rural Cmnty. Dev’t Init.||6||–||6||6||12|
|Community Facil. Loans||2,800||2,800||2,800||2,800|
|Community Facil. Grants||32||32||40||52|
|Tribal Colleges CF Grts||5||10||10||10|
|Community Facil. Guarantees||500||500||650||500|