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Spotlight on the FY 2017 House and Senate Agriculture Appropriations Bills

This is a moment in time when avoiding disaster with Congress or the Administration is viewed as a success, and seeking even the most modest improvements in policy or resources seems out of the question and hopelessly optimistic.  In light of these conditions, for those interested in improving housing and communities in rural America, the House (H.R.5054) and Senate (S.2956) Agriculture, Rural Development, Food and Drug Administration and Related Agencies Appropriations bills for Fiscal Year (FY) 2017 are, in separate ways, remarkable.

Even though both bills had overall allocations amounts less than the enacted level in FY 2016, the FY 2017 bills reported by the Appropriations Committees of both Chambers increased rural housing and rural development spending above the current FY 2016 levels and well above the FY 2017 USDA Budget request.  Both the House and Senate Appropriations Committees sought to improve rural housing conditions in their Agriculture Appropriations bills for FY 2017, but by different routes.

The House Appropriations bill includes $21.3 billion in discretionary funding, over $450 million lower than the FY 2016 enacted level, and $281 million below the Administration’s request for FY 2017.  Of the total, $2.88 billion of the funding is for rural development programs – more than $110 million more than the level enacted in FY 2016.  The House bill includes $24 billion in loan authority for the Section 502 Single Family guarantee program, and $1 billion for the Section 502 direct loan program – an increase of $100 million over the FY 2016 enacted level, as well as the President’s budget request. This is the first increase in direct homeownership loans in several years.

The House bill also provides an increased funding for Mutual and Self-Help Housing Technical Assistance Grants – funding the program at $30 million, which is $2.5 million more than the Senate bill and $12 million more than the Administration’s request. [See chart below: “Section 523 Mutual and Self-Help Housing TA”].

Selfy Help FY 2017

The House Agriculture Appropriations Bill also recommends more funding for Farm Labor Housing programs than the Senate bill.  The House bill includes $8.4 million for Section 516 Farm Labor Housing Grants, which is about $60,000 more than the Senate bill.  The House bill recommends a funding level of $23.9 million for Section 514 Farm Labor Housing loans, which is an increase over the Senate bill ($23.857 million), the Administration’s request ($23.857 million) and the enacted amount for FY 2016 ($23.855 million). [See charts below: “Farm Labor Housing”]

Farm Labor Housing

514 FY 2017 516 FY 2017

The Senate Agriculture appropriations bill recommends a total discretionary funding level of $21.25 billion – $250 million below the FY 2016 enacted level. However the Senate bill appropriates $71 million above the FY 2016 enacted level and almost $100 million above the FY 17 USDA budget for rural housing, business programs and water-waste water loans and grants.

Like the House bill and the Administration’s request, the Senate bill funds the Section 502 Guarantee program at $24 billion for FY 2017; however, unlike the House bill, the Senate does not recommend an increase in funding for Section 502 direct or Mutual and Self-Help Housing over they FY 2016 enacted levels.  The Senate bill, instead, focuses more on multifamily housing programs.  The Senate (like the Administration and the House) recommends funding Section 521 Rental Assistance at $1,405 billion – an increase of around $16 billion over the FY 2016 enacted amount.  [See chart below: “Section 521 Rental Assistance”].

521 FY 2017

Further, the Senate bill provides increased funding for Section 515, over the FY 2016 enacted amount as well as the House request.  Specifically, the Senate bill funds Section 515 rural rental housing at $40 million for FY 2017, which is an increase of five million dollars over the House bill ($35 million), almost seven million dollars over the Administration’s request, and over $11 million more than the enacted level for FY 2016. [See chart below: “Section 515”].

515 FY 2017

The Senate bill also includes several other notable changes to the Section 515 program in an effort to develop solutions to address the issues created by maturing 515 mortgages.   The Senate bill directs the Secretary to implement provisions and provide incentives to facilitate the transfer of USDA multifamily properties to nonprofit organization and public housing authorities, including to allow such entities to earn a Return on Investment and an Asset Management Fee of up to $7,500 per property.   The report includes language directing the Secretary of USDA to engage affordable housing advocates, property owners, tenants, and other interested parties, to find long-term solutions to maintaining affordable housing properties in rural America.

The Senate bill further recommends $1 million for a new pilot program for grants to qualified non-profit organizations and public housing authorities to provide technical assistance to USDA multifamily housing borrowers to facilitate the acquisition of Rural Housing Service multifamily properties by non-profit housing organizations and public housing authorities that commit to keeping the properties in the USDA multifamily housing program for a set period of time.

The House recommended better funding levels for home ownership programs and Mutual and Self-Help Housing, while the Senate recommended funding levels are better for rental housing and also include a strategy for addressing maturing mortgages which includes bill language resolving return on investment issues and lack of technical assistance to owners.   Both the House and Senate bills are improvements over the FY 2017 USDA Budget.

Congress is unlikely to complete action on appropriations until a lame duck session after the election.   When Congress finally does act, the best outcome – and far better than simply avoiding disaster –  for rural housing is the House position on Section 502 Direct loans and Section 523 TA grants and the Senate position on Section 515.