Obediah Baker, Sr.
Deputy Administrator,
Multi-Family Housing Processing Division
Rural Housing Service, USDA
Washington, D.C.
Addressing NAHB:
Partnering is now the fabric of our existence. What’s keeping us in the
ball game is the 1% loan we offer, 50 year amortization with 30 year term,
and Rental Assistance.
The Rental Assistance right now, as you heard Alan, that resource
hopefully doesn’t dry up, but is diminishing.
Before I get into the Rental Assistance issue, though, I’ve been getting
calls either from the States or developers: Do I have any loose dollars? The
answer to that is we zeroed out all of our balances, including preservation.
We are beginning to use “preservation” as being synonymous with repair and
rehab.
Without Full RA Funding. . .
This potential reduction of scarcity in Rental Assistance basically
impacts how we do business in Fiscal Year 2000 beginning October 1. If we
get
less than the $640 million that Alan speaks of, we will probably not have
any
units for new construction with the exception, perhaps, for the set-asides
that we are mandated to fund — we’re looking at EZ/EC, non-profit
set-aside,
under-served areas. Beyond that, what we’re looking at in terms of use of
Rental Assistance is renewals. What Alan is saying to you is that unless our
levels come near or equal the $640 million, we’re talking individuals that
have RA contracts expiring this year who may not be able to afford their
housing. So, essentially, we want to take care of those [RA] tenants who are
in fact housed now to have affordable housing.
Repair/Rehab
The second area we’re looking at to use our resources in is the
repair/rehab on the existing portfolio. That’s key to the longevity of the
program. Not only repair/rehab to 515, but Section 514 and 516 Farm Labor
Housing.
Next will be your equity situation; in terms of funding levels, the
dollar amounts, we’re in the throes of doing our 1940-L. The Appropriations
Bills that become law basically trigger our 1940-L. You can’t release the
1940-L until such time as you have the law. All I’m saying is, when you do
complete that 1940-L, which is our vehicle for releasing dollars, then you
will be able to be more specific as to what funding level each of these
categories will have.
When we’re talking about fewer Rental Assistance units for new
construction, that in fact triggers a lot of other activities. We went
through 515 Reform several years ago; it came up we had five or six areas
that Congress mandated that we include in our regulations. We completed
that;
it is up and running; we have some very positive results.
Designated Places for FY 2000
One of those was Designated Places. If you are talking about a lack of
Rental Assistance, then the Designated Places lists that we have out there
for the most part won’t work. Some of them will work if you can find deep
subsidies from other sources, or if you get a lot of soft money, in order to
keep the housing affordable. We’ve already mentioned to our State Offices at
our Policy Meeting back in August, that they should take a look at their
Designated Places. They need to expand the list, meaning that they should go
to lower ranked places. What that means is we will be looking at higher
income constituencies. Instead of cutting off at number 20, they may have to
go to number 50 or number 60 in order to meet the 1% deal that will work
short of having Rental Assistance. Those places or markets may very well
have
incomes sufficient to make the rents affordable at the 1% loan.
We are still mandated to have set-asides for EZ/EC. And, in order to do
business in those areas, we are mandated by statute to actually have
set-asides.
Looking to Other Funding
There is another glimmer of hope, and Alan touched on this, too. Some of
your state housing agencies who administer HOME dollars, who administer Tax
Credits, don’t always have set-asides for Rural. We met with Eileen
Fitzgerald yesterday and basically we said we have to go out to the state
housing agencies in those states where the State Offices may need our
assistance in sitting down with the state housing agencies and trying to
consummate partnership agreements. We need them more than ever. Not only
state agencies, but we need banks, Fannie Mae, Freddie Mac, wherever we can
get the type of resources that will in fact facilitate us putting affordable
housing out there. We can partner with them using what resources we have
left. Then the few RA dollars we get, the few 515 dollars we get will
continue to still reach more units. That’s the name of the game.
The only thing that’s keeping us in is 1%, 30 year term, 50 year
amortization, and the few Rental Assistance units we have. I do suspect some
of our partners from the conventional side (this is speculation) will become
even more apprehensive or even may go away; and that is what we are hoping
will not happen.
We have got to do some selling; we’re asking for your support in doing
that, and letting the public know that we are willing to do business. We
still have products to offer.
Alan mentioned more dollars in repair/rehab. That is a must. I have
talked to program operators over the past few months and, basically,
indicated this is what we want to concentrate on. Most of the program
operators agree wholeheartedly: if you have few dollars, you are very
prudent
to in fact to focus at least half on repair/rehab.