Alan Stephens
Acting Associate Administrator
Rural Housing Service, USDA
Washington, D.C.
Addressing NAHB:
I want to give you an overview of where we are and where we hope to be
in
the next Fiscal Year.
515 funding continues to be a budget issue. 10 or 12 years ago the
program had about $700 million in it; this year we have $114 million, and it
looks like we will have $114 million again. The 538 multi-family guarantee
program is at $74 million this year; it looks like it will have $100 million
next Fiscal Year beginning October 1, 1999. Congress is seeing how 538
works,
we’re seeing how it works, the development community is seeing how it works.
And, if it does work well (I hope we’ve cleaned up some ambiguities in the
process so that it is easier to use), hopefully, the program can continue to
grow. It fits a niche in Rural America.
RA — Keeping Tenants Housed
The Rental Assistance program (Section 521) is, of course, the key
program to keep 515 going and for the $11 Billion portfolio with about
18,000
units across Rural America. It is a very important portfolio for housing
across Rural America. We need $640 million in RA, and that’s not even quite
enough; but that’s enough at least to keep us rolling. We think we’re going
to get $640 million, and if we don’t it’s going to mean some people on the
street, frankly — people that currently receive subsidy. That’s our big
dilemma in the 515 program, but we think it’s going to be worked out.
2001 looks better
We’re working with the Department now and building our FY 2001 request.
Obviously, it hasn’t gone through all the hoops yet, but we’re working on
it.
It looks like we’re receiving some pretty good support. So, hopefully, we’re
going to get out of the President’s budget next year even a better number to
at least begin the process for 2001. A lot of that is the result of groups
like NAHB that have called attention to the need for housing in Rural
America. So, I want to thank you for that.
In the area of 515 multi-family, we had $114 million this year. That’s
not nearly enough. 97 new starts; 99 rehab projects.
Rehab Funding Commitment
We have at least $750 million in rehab needs that we know of, and
there’s
probably a lot more out there after that. So we could easily do for 5 years
$150 million just in rehab. One of the commitments that Eileen Fitzgerald
has
made (that our program people have told us is very important) is that we
make
a commitment of at least half of our money going into rehab each year, so
our
program directors in our States understand that money is there for rehab
projects. Then, they can start the complicated rehab process because it
takes
a long time to work with our owners and builders to put together proposals
so
they can be funded. We need to let them know the money is there and that is
a
commitment.
We can’t just put it all in rehab; we have to keep new starts also
because, frankly, we believe that if you don’t have new construction, the
program is not going to fare very well in Congress — you won’t have the
visibility. So, we’re going to at least put half of it in new construction.
But, that’s not a lot; you’re talking this year 97 projects; next year,
probably fewer than that because we’ll put a little more money in rehab.
That’s just a reality of only having $114 million.
Public Relations Needed
We need to figure out a way of promoting the program. When I say we, I’m
talking about Rural America. We have a lot of successes out there; there is
a
lot of need. The program got banged up pretty severely a few years ago; it
went through a Reform process; the Reforms are now implemented. The word
needs to get out.
We’re hoping to work with local communities in helping advertise
successes — the current successes we have. In fact we are leveraging a lot
of money in the 515 program; more and more we’re working with the local
housing finance authorities, with state governments in the Tax Credit
program
— and that’s working out very well. Although in some states still, they
don’t have any set-aside for Rural; so we’re encouraging our State Offices
to
work with state government and other local groups within their jurisdiction
to encourage state housing finance authorities that Rural is important. That
we need a set-aside or at least an emphasis for Rural projects. Hopefully,
that’s going to continue and it’s starting to happen state by state.
Section 538
We do have a bright spot, and that’s our 538 Guarantee program. The
Guarantee program is a program we got into the other year. This year we had
a
few more dollars — $74 million. We ran a NOFA process, which is just
recently concluded. We will be announcing projects very shortly that were
selected for processing. The way that works is the people put together a
proposal; much like a Tax Credit proposal. We then select the ones for
processing. We had $96 million in applications; we had a lot of interest in
the program. We had a lot of very interesting proposals.
The 538 program certainly is not going to replace the 515. The 515
program addresses the need with a 1% loan, that the 538 program can never
address. It does have a place in Rural America, particularly if it can be
matched with other types of dollars (grant money, Community Development
Block
Grant money, Tax Credits, and a new grant program recently introduced by HUD
under the Native American Self Determination Act). Four 538 projects used
this new HUD program.
We’re going to talk about preservation, equity loans, and the need for
preservation. I do want to thank NAHB for participation on the preservation
group with the National Housing Conference. That is a very important
function; again, trying to call attention to a real need that we have in our
housing portfolio.