| Section 515 | Section 521 Rental Assistance | Section 538 (Loan Level) | Revitalization and Rural Housing Vouchers (RHVs) | |
| House FY 2016 Draft Appropriations Bill | $28.39 Million | $1.167 Billion | $150 Million | $24 Million/ RHVs: $7 Million |
| Obama Administration Budget Request | $42.27 Million | $1.172 Billion | $200 Million | $34 Million/ RHVs: $15 Million |
| Current Level (H.R. 83 – FY 2015 Omnibus) | $28.40 Million | $1.088 Billion | $150 Million | $24 Million/ RHVs: $7 Million |
June 19, 2015
House Releases Draft Rural Development Funding Bill
On Wednesday, June 17, the House Appropriations Committee released its fiscal year 2016 Agriculture Appropriations bill. The bill totals $20.65 billion in discretionary funding for the U.S. Department of Agriculture’s programs, which is 1 percent below the FY 2015 enacted level and $1.1 billion below the President’s budget request. The bill provides a total of $2.5 billion for rural development programs, which is $86 million above the FY 2015 enacted level.
For affordable housing programs administered by Rural Development (RD), the House’s draft appropriations bill provides funding which is below the Obama Administration’s budget request for FY 2016. Below are the figures in the House draft bill as compared to the Administration’s request and the FY 2015 funding levels:
This bill continues controversial language regarding the Section 521 Rental Assistance (RA) program from the FY 2015 appropriations. It states “That rental assistance agreements entered into or renewed during the current fiscal year shall be funded for a one-year period: Provided further, that rental assistance contracts will not be renewed within the 12-month contract period.” RD believes these changes will provide greater predictability in the RA budget.
However, this provision has been of great concern to NAHMA since it was enacted in the FY 2015 Omnibus Appropriations bill (H.R.83). Barring contracts from renewing within the 12-month contract period provides no recourse for owners to recover RA payments for months when RD cannot, or will not, renew contracts. This language could leave owners without RA payments for extended periods.
To avoid inviting this unnecessary uncertainty into the program, NAHMA strongly urged both the House and Senate to repeal the prohibition on renewing contracts within their 12-month contract periods in testimony submitted to the Appropriations Committees in March of this year. NAHMA also suggested that an advanced appropriation would offer a more straightforward mechanism to ensure RD has the necessary funding for contract renewals in one fiscal year. NAHMA is encouraged that the controversial provision from the Obama Administration’s budget request, that “rental assistance will be renewed at the discretion of the Secretary,” was not included in the House FY 2016 draft appropriations bill.
Additionally, NAHMA will continue discussion with lawmakers whether the slated $1.167 billion for contract renewals in the RA program will be sufficient. NAHMA firmly believes that appropriations for this program must be sufficient to provide 12 months of funding for all contracts.
Of the $24 million slated for the Multifamily Preservation and Revitalization (MRP) Program, $7 million would be available for Rural Housing Vouchers. The Multifamily Housing Revitalization Program funds tenant protection vouchers, property rehabilitation and preservation demonstration programs. NAHMA supports expanding the use of Rural Housing Vouchers to protect tenants in properties with maturing Section 515 mortgages, and the targeted figure of $7 million is rather disappointing. In ongoing advocacy efforts with the Congressional Appropriations Committees, NAHMA will urge Committee members to carefully consider whether $7 million will be sufficient to meet the demand for these Rural Housing Vouchers in FY 2016 from both prepaid and mature mortgages. This is a crucial consideration as more property mortgages financed through the Section 515 program approach their maturity date.
Furthermore, NAHMA is disappointed by the proposed funding levels for the Section 515 and Section 538 programs. We support the higher funding levels as requested in the president’s budget.
The House’s draft FY 2016 Appropriations bill for the U.S. Department of Agriculture is currently undergoing debate by the Appropriations Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Subcommittee. NAHMA will continue to advocate for higher funding figures for Rural Development programs, and we will also keep members informed of the progress of this legislation. The Senate has yet to release its funding bill for Agriculture/Rural Development programs.
To view the House draft fiscal year 2016 Agriculture Appropriations bill, please click here
Senate T-HUD Appropriations Package to be Released Next Week
The Senate Transportation, Housing and Urban Development (T-HUD) Appropriations Subcommittee is set to debate its T-HUD Appropriations Act for Fiscal Year 2016 on Tuesday, June 23. This will provide a first look at the Senate’s funding figures for affordable housing programs in the coming fiscal year. NAHMA will have a summary of the legislation prepared for the next Washington Update.
The Joint Economic Committee Hearing on the Economic Exposure of Federal Credit Programs
This week the Joint Economic Committee held a hearing entitled, “The Economic Exposure of Federal Credit Programs.” The purpose of the hearing was to examine the impact of federal lending on private markets and its impact on taxpayers. The hearing focused on two accounting methods that examine the cost for credit programs: the current method used in federal budgeting under the Federal Credit Reform Act of 1990, and an alternative method, fair-value, in which cost is based on an estimate of the market value of the federal government’s obligations.
NAHMA joined other industry associations to submit comments in opposition of the fair-value method. NAHMA previously signed onto similar joint industry opposition letters to the House and Senate Budget Committees. NAHMA is concerned that fair-value accounting, which places a private market value on programs run by the federal government, like federal loans and loan guarantee programs, is an attempt to make the programs appear more expensive. Programs, such as small business loans, veterans’ housing loans, rural utility loans, FHA loan guarantees, transportation and infrastructure loans, student loans, and agriculture loans, were largely created to fill market gaps in which the private sector did not operate. Under fair-value accounting, more than 75% of these programs would appear to cost more money than they actually do, mandating policy changes or additional appropriations to offset these phantom costs. NAHMA will keep members updated on fair value accounting as it relates to affordable housing programs.
To view the Joint Economic Committee hearing, please visit: The Economic Exposure of Federal Credit Programs.
To view the joint industry opposition letters, please click here
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