Increases in Rural Housing Programs Depend on Fast Congressional Action
The Biden administration’s budget request for fiscal year 2023, released last week, includes substantial increases in many of the U.S. Department of Agriculture’s (USDA’s) rural housing programs. Also included are proposed increases in key programs of the U.S. Department of Housing and Urban Development (HUD) that serve rural communities.
Congress will now start to act on the proposals, after just completing a full budget for fiscal 2022 in mid-March. In this election year, Congress may move quickly. Several of USDA’s and HUD’s main housing programs would get their most important increases in years – if Congress agrees.
The Housing Assistance Council’s budget analysis points out that the request “for fiscal year 2023 proposes funding increases for almost every [USDA] rural housing program, along with some important program changes for preservation of aging rental housing.”
This proposed budget pays more attention to and seeks more spending for USDA rural housing than the first Biden budget request last year. But the president’s requests this year and last are both very different from President Trump’s budget proposals, which in every year of his administration asked for zero funding in most USDA housing programs. The table below compares final 2021 and 2022 appropriations to the 2023 proposals (all in millions of dollars).
The increase in Section 515 rental housing funds — which provides mortgages to provide rental housing for lower income residents — will be used to preserve units in the program.
In the Section 521 rental assistance account – funding that supports tenant rents in housing built with Section 515 or Section 514 farm labor funds – the budget proposes a set of technical changes that would help tenants pay their rents after their properties’ USDA subsidies end. As HAC points out, at present “…the programs are linked: [rental assistance] cannot be made available to a property unless it has a USDA Section 515 or 514 loan.”
Housing programs in the Department of Housing and Urban Development are very important to rural America. For 2023, they would see a dramatic increase in many areas – but also some cuts. The proposal is for total HUD discretionary spending in 2023 of $71.9 billion. This would be a $12 billion increase over FY 2021 and a $6.2 billion raise over FY 2022. An analysis by the National Low Income Housing Coalition (NLIHC) points out that the “president’s budget also requests … a proposed 11% increase for Homeless Assistance Grants, a 10% increase for public housing capital funding, and a 30% increase to the HOME Investment Partnerships Program (HOME).” There would be some HUD cuts – for example in housing for seniors and the disabled.
Perhaps the most important HUD request is to significantly increase Housing Choice Vouchers, the federal government’s main rental subsidy program for low-income renters. The request is for a 2023 appropriation of $32.1 billion to renew all existing vouchers and provide them for an additional 200,000 households. NLIHC points out that, if enacted, this “would be the most significant expansion of housing vouchers in the program’s history.”
The budget also seeks funding for a new “Housing Supply Fund.” The budget document notes that:
Housing production has lagged compared to population growth for decades, largely due to regulatory barriers and lack of affordable financing options. The estimated shortage of 3.8 million homes has resulted in rental units and homeownership being unaffordable, and often unattainable, for millions of Americans .
This proposal has several parts:
- $35 billion for a Housing Supply Fund at HUD for housing finance agencies and their partners to provide grants, loan funds and other streamlined financing tools, and also grants to support state and local efforts to remove barriers to affordable housing development.
- Program expansions at the Department of the Treasury, including $10 billion in Low-Income Housing Tax Credits and $5 billion for Community Development Financial Institutions to support new affordable housing construction or substantial rehabilitation.
If even a major portion of these 2023 proposals become law, urban and rural areas would benefit. But it may be important to complete work in the next few months. If control of Congress switches in November, the opportunities may be lost.