Rural housing crunch ‘ripe and ready’ for legislative fix, lawmakers say 

Senators expressed bipartisan optimism Tuesday about moving ahead with legislation aimed at relieving the affordable housing crunch in rural communities.

A bill introduced this week by Sen. Tina Smith (D-Minn.) and Sen. Mike Rounds (R-S.D.) could expand availability of affordable housing by updating programs under the U.S. Department of Agriculture’s (USDA) Rural Housing Service. 

It includes provisions that would make more federal support available to individual renters and open up more properties to nonprofits in order to keep affordable units on the market for cash-strapped buyers.

Smith pointed out the unique challenges of supporting rural housing during the Tuesday hearing of the Banking Subcommittee on Housing, Transportation and Community Development.

“Because the reality is if you don’t have a safe, affordable place to live, nothing else in your life works, not your job or your education or your health,” Smith said.

A critical aspect of the new legislation, Smith said, is to modernize the USDA’s Section 515 program, which provides mortgages for rental housing in rural areas.  

Right now, more than 560,000 renters who live in apartments financed by Section 515 are under threat due to mortgages maturing or losing eligibility for other reasons, according to Natalie Maxwell, managing attorney for the National Housing Law Project. 

Currently, additional rental assistance under the USDA’s Section 521 is only available to recipients of Section 515 loans. The new bill would “decouple” the programs, so individuals can continue to receive 521 assistance even if they lose 515 eligibility. 

The bill would also allow more nonprofits to purchase properties previously eligible under Section 515 and keep them affordable for residents. Other changes include updating the USDA’s foreclosure process and quickening the time it takes the agency to process loans. 

“In rural communities, the Section 515 program has been a critical source of affordable housing especially for low income seniors and people with disabilities,” Maxwell said. “Congress can and must do more to preserve these properties for families living in poverty.”

David Lipsetz, president and CEO of the Housing Assistance Council, said the loss of rural housing from the USDA’s Section 515 program is a “crisis,” adding that the proposed legislation “doesn’t cure everything” but is necessary progress.

“It does provide owners with a viable path to stay in the program,” Lipsetz said.  

Decoupling rental assistance and Section 515 aid would decrease the cost of housing, so renters could still get aid without going through the burden of complying with 515, said Chris Potterpin, president of the Council for Affordable and Rural Housing.

“One of the challenges with putting together properties in rural communities is that you have to layer different levels of affordable financing, and one of the main advantages of this bill and decoupling is that it simplifies that process, and there’s less layers to go through,” Potterpin said. 

“Throughout rural America, there continues to be an overwhelming need for both affordable and decent housing,” Potterpin added. “The lack of affordable housing reflects the lack of investment in these localities more broadly.”

Subcommittee Ranking Member Cynthia Lummis (R-Wyo.) said the hearing was a “preliminary step” in creating effective legislation that will aid rural families. 

“I think it is ripe and ready for a bipartisan effort,” Lummis said. “We owe it to these communities to ensure we’re spending federal tax dollars efficiently and effectively and stretching them as far as possible.”