NAHPA State Agency Program

For several decades the US Department of Agriculture, Rural Housing Service (USDA/RHS) Section 515 program has been the principal funding program for rural multifamily housing serving low income persons.

The Section 515 program is a loan program of USDA/RHS which directly finances multifamily properties housing low income persons. Many owners of this housing are now eligible to prepay their loans. With a portfolio of some 17,500 properties, USDA/RHS estimates that some 11,000 are at, or nearing eligibility for prepayment and are at risk of sale or removal from the Section 515 program.

For various reasons, many owners are seeking to sell their properties at this time and are free to do so under terms of their agreement with USDA/RHS. USDA/RHS and NAHPA and other affordable housing advocates are concerned that some Section 515 units may be converted to market rate housing, making them unaffordable to low-income persons. Equally of concern, owners without opportunity for transfer (and no longer benefiting from tax advantages) may allow the properties to fall into disrepair.

Many USDA/RHS Section 515 properties were placed in service several decades ago. While these properties generally have been well maintained, most need moderate rehabilitation. If the new purchaser agrees to maintain the property as affordable housing, USDA/RHS will allow the new owner to assume the USDA/RHS loan and will subordinate the USDA/RHS loan to a new first loan.

The National Affordable Housing Preservation Associates, Inc., (NAHPA), a national nonprofit organization, has designed a program intended to preserve, as affordable housing, rural multifamily housing assisted under the USDA/RHS Section 515 program by accomplishing transfers of the properties.

NAHPA is willing to work with state agencies and nonprofit purchasers to accomplish suitable transfers of ownership thereby preserving this essential housing for low-income residents. NAHPA serves as an intermediary to identify preservation eligible USDA/RHS properties, determine with USDA/RHS and the state agency the allowable purchase price, process the required USDA/RHS transfer documentation, negotiate the project budget with USDA and accomplish closing.

Pursuant to any eligibility criteria established by the state agency, NAHPA would assist in identifying suitable end purchasers for projects. The state agency would advance the predevelopment financing to cover due diligence costs and would provide the permanent financing for the new first loan to be recorded against the property. USDA would agree to subordinate its loan to the state agency's new loan.

Additional Contact Information:

initiatives@nahpa.org

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©2002 National Affordable Housing Preservation Associates, Inc.