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.
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.
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.