Senators talk about a bill to tackle the rural housing crisis in the US.

A crisis in lack of affordable housing in rural areas in America for the low-income, elderly, and those with disabilities was the topic of discussion at a hearing held by a subcommittee of the Senate Committee on Banking, Housing, and Urban Affairs on May 2. The hearing was held to discuss a bill introduced by subcommittee chair Sen. Tina Smith (D-Minn.) and Sen. Mike Rounds (R-S.D.) to combat this crisis.

Addressing the Housing Shortage

Sen. Smith (D-Minn.) described how the Rural Housing Service Reform Act would change USDA law and meet the dire need for more affordable housing and rental subsidies. “We have a serious shortage of housing in this country, especially in rural communities—and those challenges are across the housing continuum, from the most affordable properties to market-rate workforce housing,” said Smith. “Housing challenges can be about families trying to find a place to live or people with disabilities or seniors that can’t find a place to live on a fixed income.

“Often, it is about people who want to take a job at a grain elevator or a meat processor or a manufacturing facility, but the closest home they can afford is miles and miles away.”

Key Provisions of Rural Housing Service Reform Act

The Rural Housing Service Reform Act would revise U.S. Department of Agriculture (USDA) rural affordable housing programs, among them the 514, 515, and 521 programs which the senators and witnesses focused on in the hearing.

• Developers receive low-interest mortgages to finance the building of affordable rural housing through the 514 and 515 programs.
• The 521 program provides a subsidy to pay for rent at 514 or 515 properties, with the subsidy equal to the difference of 30 percent of the renter’s income and the total rent.
• Under present law, when developers of 514 and 515 housing pay off a mortgage on a unit or building, those renting a residence and using 521 assistance lose that 521 subsidy.
• The Rural Housing Service Reform Act would “decouple” the programs, allowing owners to stay in the program after they pay off their 514 or 515 mortgage. Renters who chose to stay at the property would continue receiving their housing subsidy.

Owners would profit by maintaining a steady flow of rental income and being able to qualify for investments and financing from banks, community development institutions (CDFIs), and other groups. Renters would benefit from the change by not having to move and look for a new residence and be able to continue living at an affordable price.

Smith, who talked about the benefits of the decoupling of the rental assistance programs, noted that the bill she co-sponsored would make it easier for nonprofits to acquire properties that had their USDA mortgage paid off and continue offering affordable housing in those properties.