Congress needs to act to prevent rental assistance (RA) crisis

Around the country, property managers of low-income housing developments have been receiving letters from the Rural Housing Service of the United States Department of Agriculture, warning them that the funding for their Rental Assistance (RA) contracts will be exhausted before the end of the fiscal year. That means less rental assistance for the people who need it the most.

In addition, they’re being reminded that they cannot reapply for new funding when those funds run out – because language included in the Consolidated and Further Continuing Appropriations Act, 2015 (“FY 2015 Act”) prohibits the renewal of Rental Assistance contracts during the contract’s 12-month term.

These property owners and tenants are between a rock and a hard place. The Council for Affordable and Rural Housing (CARH) says that, in June, only 50 properties around the country were affected. But that number could skyrocket as the year continues. CARH believes that in the first quarter of the new Fiscal Year that begins Oct. 1, more than 700 properties could be impacted.

How did this happen? CARH believes that the federal government’s methods used to calculate the amount of rental assistance needed by developments are faulty, including the decision to fund RA contracts based on an average state-wide cost of operating a low-income housing unit over the past three years – and not on the actual cost of operating individual developments. Not all properties have the same needs.

And with restrictions on re-renewals still in the proposed spending bills for FY2016, these same problems could surface again next year.

Unless congress takes action now. CARH has started a campaign and is asking its members – and especially any affected property owners – to make their voices heard in the halls of congress.

CARH is urging its members and property owners to:

  • Contact members of Congress and tell them that the renewal language needs to be eliminated for FY 2016 and additional funds allocated for FY 2015.
  • Ask residents to contact their members of Congress as well and tell them the impact of losing rental assistance.
  • Tell the story of your individual properties. For example, if you are in the process of preservation transactions with Housing Credits and using other sources of funding, explain the impact that a loss of rental assistance would have on those transactions.

2 comments

  1. The RHS National Office, for years, has taken an extraordinarily simplistic and incredibly flawed approach to allocating RA. The statewide average valuation method is a ridiculous way to calculate costs. Operating costs can vary wildly from region to region, city to city and even within the same market due to innumerable factors including economy, other funding programs involved in a property and the age and condition of a property.

    While the rest of the industry has become sophisticated, the outmoded practices of RHS continue to hurt preservation of the rural housing portfolio and create problems for us all.

    The Senate Appropriations Committee was right to include language in last months budget report to investigate RHS’s administration of he RA program. I just hope the N.O. finally realizes that they need to modernize their practices and assumptions if we are all going to preserve their portfolio.

  2. What’s more, RHS has all the data they need to make much better projections. When I worked for the Agency 15 years ago, the data infrastructure was adequate to do project level projections. The Agency has consciously chosen not to go to the extra effort to make better projections. It’s time they get held to an acceptable standard. Our Nation’s rural poor depend on it.

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