USDA/RHS HISTORY

Since the late 1940s, the U.S. Department of Agriculture’s Section 515 housing program has been the federal government’s principal financial assistance program for rural and small town multifamily housing serving low-income individuals and families. Property owners participating in the USDA Rural Housing Service program are eligible for below-market mortgage financing and ongoing rental assistance in exchange for long-term commitments to retain units for lower-income residents.

According to the most recent USDA/RHS data, nearly 460,000 apartment units in more than 17,500 multifamily housing properties currently participate in the Section 515 mortgage program. Combined, these properties have an outstanding loan principal of nearly $12 billion.

Many owners of Section 515 housing are or soon will be eligible to pre-pay their USDA mortgages and leave the low-income rental marketplace. Others have exhausted the once-attractive federal tax benefits associated with Section 515 ownership. Overall, USDA officials estimate that roughly 11,000 multi-family housing properties – totaling about 300,000 apartment units – currently are at risk of sale or removal from the Section 515 program.

In some cases, these properties may be converted to market-rate housing, making them unaffordable to low-income tenants. In other instances, owners without for-profit sales opportunities – and no longer benefiting from lucrative federal tax advantages – may allow properties to fall into disrepair. Either outcome threatens the nation’s low-income rural rental housing stock.

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©2008 National Affordable Housing Preservation Associates, Inc.