This graph illustrates the potential losses to Section 515 housing as more and more properties age out of affordability requirements (Source: Housing Assistance Council)

There is a new version of the Build Back Better Act, which is a part of the infrastructure legislative efforts being negotiated by Congress. The pared, down $1.75 trillion framework proposes $150 billion for affordable housing—the largest investment in housing programs in a generation. Of particular note for rural America, the bill proposes $2 billion for Rural Housing Services at United States Department of Agriculture (USDA), including funding for a largely under-the-radar loan program known as Section 515, which has been one of the only sources of federal support for affordable rental housing targeted to rural communities. 

Since the 1960s, Section 515-backed buildings have provided over 400,000 homes to lower-income renters, primarily seniors and people with disabilities. While they are concentrated in the Midwest and the South, 87% of U.S. counties are home to a USDA property, and they are a lifeline for their residents, whose average income is just $13,000 per year. But the program has a critical flaw: once the 30-year loans are paid off, owners have the option of leaving the program and eliminating affordability protections for residents. 

Robin Wolff (Photo submitted)

Thousands of homes exit the program each year, and based on the age of the properties, the pace is accelerating. Without federal action, 20% of all USDA Section 515 housing will disappear by 2027, and a further 20% will be lost every five years thereafter. Preserving and even expanding these affordable rental options is not only possible, but essential. 

As rural populations decline, housing developers are not incentivized to build enough new affordable homes to make up for the loss of Section 515 properties. These homes are the most affordable option available and residents, who are often on fixed incomes, often have no other choices when rents rise to market rates.  

Beyond the Build Back Better Act, which is the hot topic of Washington presently, a bill introcuded in September by Senator Ron Wyden of Oregon proposes additional solutions to address the withering rural affordable rental housing supply.  The Decent, Affordable, Safe Housing for All (DASH) Act proposal from Wyden, who chairs the Senate Finance Committee, is a comprehensive housing bill supported by Enterprise Community Partners and affordable housing advocates across the country. In the DASH Act are provisions that would directly get to the root of the issue for the Section 515 program by requiring the USDA to produce and execute a plan to preserve housing projects that receive USDA funding, including restructuring the loans that currently finance Section 515 developments. The bill also stipulates that the USDA must offer to renew contracts with property owners who receive USDA rental assistance payments, helping them keep those units affordable, while also providing an additional $250 million in rental assistance for low-income rural residents. 

The DASH Act and the latest version of the Build Back Better Act also include critical expansions to the Low-Income Housing Tax Credit (Housing Credit), the country’s most successful tool for producing and preserving affordable homes, with provisions that would make it easier to finance housing in rural communities. In addition, they would make important changes to strengthen nonprofits’ Right of First Refusal and fix Qualified Contract loopholes in the Housing Credit law, preserving our federal investment in Housing Credit units and ensuring the long-term affordability of rental housing properties. Right now, the Qualified Contract issue, which allows certain owners and investors to “opt out” of maintaining affordability after a 15-year period, is leading to the loss of over 10,000 affordable units every year. 

The clock is ticking: as Section 515 loans advance toward maturity with each passing year, thousands more rental homes hang in the balance. As Congress debates the largest potential investment in affordable housing in a generation, improving tools like Section 515, providing more resources for the lowest income rural renters, and incentivizing development and preservation of affordable rental housing where its needed most must be at the top of the priority list.  Congress must ensure this legislation moves forward.

Robin Wolff is the senior program director for the Rural and Native American Program at Enterprise Community Partners, a national affordable housing nonprofit.

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