Remarks by:
Booker Reeves
Senior Loan Specialist
Multi-Family Housing Portfolio Management Division
Rural Housing Service, USDA
Washington, D.C.
We want to talk about ways of preserving the Rural Housing Service’s multi-family housing portfolio for future generations. We want to explore different ways of making the rental housing program work for America. This means making it work for developers, the Agency and for tenants. We want to seek ways of keeping this existing stock where it is — in our housing program. We have roughly 18,000 projects with about 450,000 units. We need each and every one of those units.
When I came to the program in 1979, the Agency was getting about $800 million in funding. From that point, we’ve come down to about $150 million in funding. We don’t have the dollars that we used to have. With that in mind, I think that a lot of what is happening is that without the dollars and with some of the red tape we do have, it is easier in some cases for owners to think of moving on from the Agency. But we want to talk about some of the ways to keep you from thinking about moving on. Developers have a lot of money invested in the program. The Agency has a lot invested, too, in the Interest Credits (the buydown of the interest rate). The American citizens have a lot of tax dollars invested.
Today, we would like to discuss various strategies to keep this program around. First, we would like to explore ways to stop developers and owners from wanting to enter the prepayment process. I know what the regulations say, but I want to key a discussion to ways to keep owners from even thinking about prepayment.
What is it the Agency can do to stop owners from even thinking about coming to us? What are the things that are out there that the Agency can do? Second, we want to talk about what things we can do to avoid the prepayment process, but keep the units available for low income housing and keep them in the program. What can we do to keep these units available? It is clearly cheaper for us to keep these units in our rental program than to go out and try to replace them: that is what we really want to do. With the dollars we have, we cannot go out and replace each of the units we could lose through prepayment. We want to figure out ways to keep them in the program. Third, we want to find out what we can do to keep the prepayment process that we have, or improve it, in case you do come in to talk about prepayment.
We’d like to have a win-win situation, or even a win-win-win, where the Agency wins, the owner wins, and the tenant wins.