Resources Spotlight

Housing Experts Chart Course to Preserve Affordable Rural Rental Housing

National Rural Housing Coalition convenes leaders in Affordable Rental Housing to Discuss Ways to Stem Increasing Shortages in Rural America and Prepare Recommendations for Legislators


USDA Rural Housing experts, including Under Secretary Lisa Mensah, Administrator Tony Hernandez and Deputy Administrator David Lipsetz discuss USDA’s multifamily housing programs with moderator Eileen Fitzgerald, President and CEO of Stewards of Affordable Housing for the Future.

Washington, D.C.— On October 4-5, the National Rural Housing Coalition (NRHC) convened leaders from the rural housing community to evaluate and prepare recommendations that will ensure affordable rental housing options remain available to low- and very low-income residents. The purpose of the conference, which was sponsored by PNC Bank, was to gather feedback from the community and confer on data shared by staff from U.S. Department of Agriculture (USDA) Rural Housing programs. Using this information, NRHC will release a detailed paper on the state of affordable rental housing in rural communities.

“While there were notable investments made several decades ago for the production and maintenance of affordable, rural rental housing, that federal commitment has not kept pace with the need in recent years,” said Bob Rapoza, executive secretary of NRHC. “This is significant because USDA’s current preservation efforts do not appear to be enough to sustain its rental housing portfolio, which is essential to providing clean, decent, and affordable housing for low-income residents in Rural America.”

USDA rental housing is frequently the only affordable rental housing available in rural communities. The average income for tenants is $12,729 annually, many (around 44 percent) are elderly or persons with disabilities and 70.9 percent are female headed households. USDA estimates that $5.596 billion in additional funding is needed over the next 20 years to preserve USDA’s rental housing portfolio. Renovation of these developments is particularly important because USDA no longer provides loans for the financing of new rental housing developments in rural America.

Larry Anderson, Vice President of Rural Housing Preservation Associates, and Richard Price, a Partner at NixonPeabody, discuss the current rural rental housing stock with moderator Tom Collishaw, President and CEO of Self-Help Enterprises.
Larry Anderson, Vice President of Rural Housing Preservation Associates, and Richard Price, a Partner at NixonPeabody, discuss the current rural rental housing stock with moderator Tom Collishaw, President and CEO of Self-Help Enterprises.

In addition, there is a rising tide of USDA mortgages coming to the end of their terms. When a USDA mortgage ends—whether it is due to prepayment or mortgage maturity—the property loses rental assistance eligibility, which provides a deep subsidy to very low income households.  As a result, an increasing number of very low-income households left with few or no alternatives for affordable, decent housing options.

While the need for renovation and refinancing of the USDA multifamily housing portfolio is great, several organizations have taken advantage of opportunities to acquire, improve the quality of and maintain the affordability of these properties. By working with USDA and state housing finance agencies, as well as combining multiple sources of public and private funds, housing advocates like Greystone Affordable Housing Initiatives and the Southwest Minnesota Housing Partnership have succeeded in preserving USDA’s rural rental homes. NRHC will work with USDA and members of Congress to promote these successful preservation strategies and identify obstacles to success to ensure that affordable rental housing in rural communities is preserved.

“Congress and various Administrations have underfunded efforts to preserve the physical and financial condition of USDA’s investment. As a result, none of the properties in USDA’s portfolio have the capital needed to meet long-term operational costs,” said Rapoza. “NRHC will continue to advocate for the funding and policies necessary to meet the affordable housing needs or rural people and families.”


Rick Goodemann, Executive Director of Minnesota Housing Partnership, a NRHC Member, explains the approach his organization has used to address the need for preserving rental housing in rural communities.
Rick Goodemann, Executive Director of Minnesota Housing Partnership, a NRHC Member, explains the approach his organization has used to address the need for preserving rental housing in rural communities.

About Section 515 Rural Rental Housing Loans

For over 50 years, Section 515 loans have been used to improve the quality of affordable rental housing for low-income families in rural America. Today, nearly 400,000 rural families live in housing financed with low-cost Section 515 loans.


This press release was published on PR Newswire on October 6, 2016 and can be found here.

To view the PowerPoint presentation from conference, please click here.

Poverty Spotlight

Income, Poverty and Population in Rural America

The U.S. Census Bureau’s annual report on poverty and income in America was released on September 13, 2016.

The findings of this report have been highlighted by many sources as an example of the economic growth experienced in many communities in recent years, noting that the median household income increased 5.2 percent from 2014 to 2015, the fastest increase on record.  For example, the White House Blog stated that the “report from the Census Bureau shows the remarkable progress that American families have made as the recovery continues to strengthen. . . . Income grew for households across the income distribution, with the fastest growth among lower- and middle-income households.”

While statements like this are certainly supported by the findings of the Census report, they do not provide a complete picture as to where this growth has occurred and the economic state of communities all around the country.  Specifically, within metropolitan statistical areas (MSAs), income levels rose six percent (7.3 percent for city dwellers, 4 percent for suburban and exurban residents).  Alternatively, the income levels for rural communities (including micropolitan statistical areas and areas outside of MSAs and micropolitan areas) declined by 2 percent.

A 2015 CAP report, “The Uneven Housing Recovery,” found that while many Americans have recovered from the economic recession, those that have not primarily reside in rural and nonmetropolitan areas.  The improved economies in metropolitan areas is related to growing populations and strengthening labor markets, which have aided these areas’ recovery from the recession.

Differentiated from metropolitan counties, small rural communities, which have not experienced the same level of recovery, have seen shrinking populations.  In fact, the U.S. Department of Agriculture Economic Research Service (ERS) found that between 2010 and 2015 the population of rural communities dropped 33,000 per year from 2010-2014 and 4,000 in 2015.  Comparatively, between 2010 and 2014, the urban population increased by more than two million people each year.

Decreasing populations in rural communities present unique challenges, and are a further issue impeding economic growth for these areas.  For example, the Census report found that poverty rates overall declined 1.2 percent from 14.8 percent in 2014 to 13.5 percent in 2015.  As with the Census report’s findings on income, declining poverty overall does not mean poverty has not increased in certain communities.

From 2014 to 2015, the actual number of rural Americans living in poverty declined from around 8.2 million to 7.4 million.   However, the decline in the number of people living in rural poverty was primarily due to out-migration – not improved economic conditions. Thus, for this same time period, the Census report found that the poverty rate for rural areas actually increased, albeit slightly (+0.2). The point is there was not any progress in reducing economic distress in rural areas.

The 2015 CAP report looked at the difference levels of recovery experienced by counties across the country.  The report found that most “struggling” counties are located in nonmetropolitan and rural areas.  These counties are characterized in the report as, at best, “stagnant” and more often “slipping” or sinking.”

Since 2009, slipping counties have experienced slow population growth and declining labor participation, and nearly 18 percent of the population in these areas live in poverty.  While homeownership is prevalent and renting is less common in slipping counties, the percentage of households who are cost-burdened, meaning they pay more than 30 percent of their income on housing, is much higher for renters than homeowners. Additionally, as housing prices have increased (from about 11 percent in 2011 to 11.5 percent in 2014, so too have vacancy rates, which were at percent in 2014.

Sinking counties have fared the worst in terms of recovery from the economic recession.  In addition to higher unemployment rates than other counties, the labor force has declined since 2009 and since 2013, job growth has stalled.  New construction of housing has been declining since 2012, and vacancy rates between 2010 and 2014 remained stagnant.

The Census report shows that many communities’ across the country are recovering from the economic recession.  However, a closer look at the Census report, as well as other recent research on poverty, homeownership and employment demonstrates that this recovery is not spread equally with rural communities.  As the discussion on economic growth and recovery continues, policy makers should ensure that the need of rural Americans is not left out of the conversation.

Poverty Spotlight

Achieving the American Dream through Programs that Work

Alton and Robin Alexander lived in Western Michigan with their two daughters in a comfortable, modest and safe neighborhood prior to the Great Recession. However, as the nation’s economy struggled, this family of four lost their home and was forced to move into a substandard rental unit.

The Alexanders’ story is not unique. Homeownership is considered a central tenet of the American Dream, but its value to families and communities is sometimes overlooked. June is National Homeownership Month, which shines a spotlight on the value of homeownership. For many low and moderate income rural families, homeownership is only possible through financing from U.S. Department of Agriculture (USDA) Rural Housing Service programs. In Fiscal Year 2015 alone, USDA Rural Development awarded $900 million Section 502 direct single-family housing loans and made more than $18.6 billion Section 502 guarantees to help more than 141,000 rural American families become homeowners.

One of those families is Jeff, a single father, and his four children in Morristown, Tennessee. Back injuries limited Jeff’s ability to work and the family lived in a doublewide trailer. Eventually the family moved in to affordable rental housing owned and maintained by Clinch-Powell RC&D, a Federation of Appalachian Housing Enterprises (FAHE) Member. With assistance from Clinch-Powell, Jeff applied for a Section 502 Direct loan. FAHE helped prepare the application. Jeff and his children will soon be moving into their new home.

The Section 502 direct program is also an essential tool for the Mutual Self-Help Housing Program, where groups of six to 12 families are paired together to help build each other’s houses with technical assistance from non-profit organizations. This program, which includes more than 100 Self-Help Grantee Organizations in 40 states and territories, celebrated its 50th anniversary in 2015, and has helped more than 50,000 families build their own homes.

The Self-Help housing program is bigger than just homeownership: through the technical assistance from organizations like the Coachella Valley Housing Corporation (CVHC), this program allows families to gain financial stability and builds communities where children can thrive. For example, in Mecca, California, CVHC helped the Rodriquez family, including four children, move from their dilapidated rental apartment into a safe, clean rental complex, and eventually to become homeowners through the Mutual Self Help program. Juan Rodriguez, one of those children, went on to graduate from UC Berkeley, and now helps CVHC improve the community he grew up in.

The success of the Self-Help and Section 502 Direct programs depend on the partnership with community development organizations operating around the country. Like CVHC, Pathfinder Services, Inc. is a not-for-profit human and community development. With Pathfinder’s assistance, the Alexanders, mentioned above, were able to escape their inadequate rental home and regain homeownership through the Section 502 direct loan program. The Alexanders are now the proud owners of a new home in Fort Wayne, Michigan– a safe neighborhood where their daughters can play and grow.

It is important to celebrate the success of these families and recognize the dedication of organizations like CVHC, FAHE and Pathfinder Services. However, there is more work to be done. Affordability remains a barrier for many seeking homeownership, and in some communities a lack of affordable housing options is hindering economic prosperity for the community.  For example, in some communities in parts of North Dakota businesses are unable to fill well-paying jobs due to an absence of affordable housing.

As National Homeownership Month comes to an end, we must continue to work to ensure that all families around the country have an opportunity to achieve the American Dream.


Fahe Partners with USDA and WV Housing Development Fund to Help Low-income Families Access Affordable Housing

The Federation of Appalachian Housing Enterprises, Fahe, is one of several nonprofit organizations that participated in USDA’s loan packaging pilot program, which became permanent in May 2016.  They are working to further expand the reach and scope of the Section 502 Direct loan program to assist low-income rural families in achieving homeownership.  To achieve this goal, Fahe has partnered with the West Virginia Housing Development Fund (WVHDF) and the U.S. Department of Agriculture (USDA).  For the first time a state housing agency, WVHDF, will package USDA Section 502 Direct loans. Fahe will serve as the intermediary for the loans.

A ceremony was held at the WVHDF offices in Charleston, WV in recognition of this important event.  Presenters at the ceremony included Jim King, CEO and President of Fahe, Erica Boggess, Acting Executive Director of WVHDF; Bobby Lewis, USDA West Virginia State Director; and Tony Hernandez, USDA Administrator for the Rural Housing Service.  Additionally Mary Elisabeth Eckerson read on behalf of Senator Shelly Moore-Capito, Sara Payne Scarbo read remarks for Senator Joe Manchin, Payne Warner read remarks for Congressman Alex Mooney, and Brian Aluise read for West Virginia Governor Earl Ray Tomblin.

During the ceremony, Administrator Hernandez presented Fahe an award in recognition of the organization’s effort as a Champion of Rural Housing, and for their impact and achievements on the Section 502 Direct loan program.  Jim King said that in the past 6 years of partnership with USDA, Fahe has placed over 807 hardworking families in new, safe and affordable homes through the Section 502 Direct program.

To read more about the partnership, please read the press release on Fahe’s blog.

Budget Legislation Spotlight

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.

Farmworker Housing Spotlight

Spotlight on Migrant Farmworker Housing

A recent article published by the Statesman highlights the devastating housing conditions many migrant farmworkers are facing across America, and particularly in Texas.  The article, aptly titled “Unbelievable” by Jeremy Schawrtz, explains how, in spite of existing laws that require housing facilities for migrant farmworkers to be inspected and licensed to ensure minimal health and safety conditions, many of these properties are never inspected, or, if they are inspected and problems are discovered, the owners of the properties face no penalties.

In fact, as the Statesman’s investigation uncovered, Texas, unlike other agriculture states, provides no funding to ensure safe and sanitary housing facilities for migrant farmworkers.  In addition to the lack of funding and lack of inspections, the state agency responsible for inspecting migrant farmworker housing facilities also does not engage in any outreach to determine if unlicensed facilities are being used.  Even where complaints do reach the agency, there is frequently no follow-up to determine if the problems reported have been addressed.

To read the article, please click here. The article will be published in print in the Statesman on Sunday.

Poverty Resources Spotlight

Under Secretary Mensah Meets with Central Valley Family Using USDA Funds for New Water Well

While in California last week, U.S. Department of Agriculture Under Secretary Lisa Mensah toured a self-help housing tract that Self-Help Enterprises is developing in Merced County and visited with a family that is a recipient of USDA funds. Representative Jim Costa (D-CA) was also on the tour.

Under Secretary Mensah and Congressman Costa met with the Cabrera family, of Madera, California, who have spent the past two years without running water.  According to Tom Collishaw, the President and CEO of Self-Help Enterprises, the Cabreras are one of around 2,000 families in the rural Central Valley who are suffering from water shortages due to drought.  For the past two years, the Cabreras were forced to buy water to do basic tasks such as wash dishes and flush toilets, and to go to their children’s home to shower.  The Cabrera family, with help from Self-Help Enterprises, secured USDA funding, which includes a grant for a new electrical panel and a much needed loan to finance a new water well.  The Cabreras now have running water through a temporary water tank, and a permanent water well will be installed sometime in February.  For more information on the Under Secretary’s trip and the Cabreras, please read Dale Young’s article from ABC 30 Action News and Gregory Woods’ article on


Spotlight on the Intermediary Relending Program

The Intermediary Relending Program (IRP) was first enacted in the 1980s and has had remarkable success in strengthening rural communities through investment in local projects.  Because loan capital is revolved several times over the course of an IRP loan to an intermediary, USDA estimates that every $100,000 in IRP loan funds leads to the creation of 76.5 jobs by the entities that receive funding from the IRP intermediaries.  Further, despite significant decreases in funding over the past decade, the IRP is credited with assisting an estimated 9,000 rural business across the country.

What is the IRP?

The Intermediary Relending Program, or IRP, provides low-interest loans to local intermediaries that in turn re-lend the funds to businesses and for community development projects in rural areas.  Today it is administered by the U.S. Department of Agriculture (USDA) by the National Rural Business Cooperative Services (RBCS).  Non-profits, cooperatives, federally recognized tribes, and public bodies are eligible to serve as intermediary lenders under the IRP.  Using the funds, the intermediaries create revolving loan funds (RLF).

In general, an RLF is a pool of public- and private-sector funds that recycles money as loans are repaid.  Lenders, which can be state or local government agencies and nonprofit organizations structured to make loans, receive funds from a number of federal departments, including USDA.  The lenders in turn provide loans to local groups within their communities, which use the funds for economic development and business growth.  Frequently, the communities in which RLFs are used have no other affordable credit options.

What is the Background of the IRP?

The IRP has its roots in the War on Poverty.  The Economic Opportunity Act (PL 88-452) included a “Special Impact Programs to Combat Poverty in Rural Areas,” and an authorization for loans to “raise and maintain the income and living standards of low income rural families and migrants agricultural employees and their families.”

While Congress initially authorized this program in 1967 and provided some $70 million in appropriations a few years later, the Rural Development Loan Fund (RDLF) never got off the ground.  Through the 1970’s, OEO and its successor, the Community Services Administration (CSA), refused to make the money available. Finally, a lawsuit forced the Administration’s hand, and the Carter Administration was ordered to obligate the money.  In 1980 and 1981, approximately $35 million in RDLF loans was made to a several Community Development Corporations (CDCs).

Those first loans had 30-year terms and carried an interest rate of 1% for the first five years of the loans.  After the first five years, the interest rate rose to the market rate in effect when the loan was made.  In the early 1980’s market interest rate were in the double digits.

In 1981, Congress passed the Omnibus Budget Reconciliation Act (PL97-35).  That bill effectively repealed the Economic Opportunity Act, and created a successor agency within Health & Human Services (HHS) – the Office of Community Services (OCS), which established a block grant for grants to community action agencies and a discretionary program for grants to CDCs and rural water technical assistance.  The legislation also established a development loan fund that served as the successor authorization for the RDLF.

Under the Reagan Administration, OCS made one more round of IRP loans in 1983 – at 5% interest– to about a dozen CDCs.

The changing interest rate environment of the mid-1980’s put the CDCs with the original RDLF loans in a precarious situation.  The interest rate for the RDLF loans on their books would soon increase to higher than 10%.  At the same time, the economic downturn was forcing rates lower than the RDLF note rate.

After negotiations with HHS to revise interest rates collapsed, the CDCs persuaded Congress to act.  The 1985 farm bill – The Food Security Act of 1985 (PL99-198) — rolled backed interest rates on all RDLF loans to the rate when the loan was made.  For the loans made in 1980 and 1981, this meant an interest rate of only 1% for the 30 year term of the loan.  This construct left the note rate for 1983 loans unchanged. The farm bill also transferred the RDLF from HHS to USDA and its Farmers Home Administration (FmHA).

Persuaded that a program like the RDLF had potential for improving rural economies, Congress included a provision in the 1986 Human Services Act (PL 99-425) that set the interest rate on all RDLF loans – including those made in 1983 – at 1%, and gave the Secretary of Agriculture authority to make future loans under terms and condition established in the both the Reconciliation Act and the Human Services.

The Fiscal Year 1988 Agriculture Appropriations Act (100-202) provided $14 million under the RDLF authority.  FmHA drafted a rule for a new program – the Intermediary Relending Program (IRP).

Today, USDA makes one percent, thirty-year loans to qualified intermediaries.  The Intermediaries in turn use the loans to capitalize revolving loan funds that target the needs of small and emerging rural businesses in the intermediaries’ service area.

What is an Intermediary’s Role?

IRP intermediaries are responsible for marketing and administering a revolving loan fund.  They use IRP funds to leverage additional public and private investments for its business borrowers.  Intermediaries are limited to lending up to the lesser of $250,000.00 or seventy-five percent of the total cost of a borrower’s project per qualified borrower.

What is the Application Process?

The IPR application process is competitive and made up of five required parts: (1) a written work plan; (2) plan for how to leverage additional financing for businesses; (3) marketing plans; (4) proposed interest rates; and (5) detailed goals and benchmarks that the intermediary plans to meet. A key requirement is the match: in order to be competitive an applicant must commit to making an equity contribution of at least 25% of the total requested.

USDA reviews applications on a quarterly basis; however money is not dispersed evenly per quarter.  USDA originates 40 percent of funds in the first quarter, 30 percent in the second quarter, 20 percent in the third quarter, and 10 percent in the fourth quarter.

How are Applications Scored?

The scoring requirements for the IRP program are detailed in 7 C.F.R. 4274.344, which provides specific point values to certain factors, such as the intermediary’s loan priorities, including the amount of non-federal fund the intermediary will use, and the median household income for the service area, which USDA deems important.  The highest point value that an intermediary can receive is for contributing 25% or more to the IRP revolving loan fund (50 points.)  The next highest point value is 30 points (based on contribution to the revolving loan fund or years of experience).  Most criteria are valued between only 5 and 15 points.

What are the Area Requirements?

Eligible areas for IRP funding are rural areas which are outside of a city or town with a population of less than 50,000.  Thus, urbanized areas near a city with a population of 50,000 or more are not eligible.  Under current rules, a service area for an IRP is limited to 14 counties.

How can a Borrower use IRP Funds?

The ultimate recipient of a loan from an IRP intermediary can be used for a wide variety of purposes, including for the acquisition, construction, conversion, enlargement, or repair of a business or business facility, purchasing land or equipment, developing land, transportation services, or start-up costs.

IRP by the Numbers

  • 1% – the fixed interest rate of IRP funds to intermediaries
  • 30 years – the maximum loan term
  • 3 years – the number of years an IRP intermediary is permitted to make interest-only payments
  • 52 – the number of states (including Puerto Rico and the Republic of Palau) with IRP loans
  • 1,020 – the total number of loans issued to IRP Intermediaries (1984 – March 2014)
  • 492 – the number of organizations that have served as IRP Intermediaries
  • 9,000 the estimated number of rural businesses who have received financing through the IRP
  • 7-to-1 – the amount of private dollars leveraged per $1.00 in IRP funding
  • $100,000.00 – the average size of a loan to an IRP borrower
  • $747,226,497.57 – total amount of IRP loans issued to intermediaries (1984 – March 2014)

IRP Loan Award Totals by Year          

  Source: USDA data – March 2014

Appropriations for IRP

Appropriations for the IRP have suffered the same fate as other federal community development programs.  Over the 35 years, federal community development spending at HUD, Commerce, Interior and USDA as measure as a share of GDP has fallen by 75%.  For the IRP, the high-water mark of appropriations was FY 1994, where $100 million was appropriated.

IRP Approp. and Actual Awards 94-96 Chart IRP Approp. and Actual Awards 94-96

Today, IRP appropriations stand at nearly $19 million.

IRP Approp. and Actual Awards 2004-2014 Chart IRP Approp. and Actual Awards 2004-2014

How to Improve the IRP

Key Recommendations

  1. Revise the current rule — The last full re-write of the IPR was in 1994. The world of development finance has changed over the last 20 years.  The last change in procedures, as opposed to regulations, was made in 1993. The principal result of that was the use of IRP funds in participations.  However, most of the impediments to a 21st Century IRP are imbedded in the regulations governing the program;
  2. Increase Loan Limits — The current cap on IRP lending has been in place since 1994 and stands at $250,000. If that cap were adjusted for inflation, the limit would be $401,000. Even before the current economic downturn, the IRP was one of few sources of fixed rate financing in rural areas.  Now, with many private financial institutions pulling back, IRP is a key source of fixed rate credit for rural businesses.   For deals needing more than $250,000 multiple IRP intermediaries to lend to the same deal.   USDA should eliminate the loan cap or, failing that, raise that cap on IRP loans to $5 million, which is the limit on SBA (7) (a) guarantees.  Alternatively, if the cap is raised to the inflation adjusted rate of $401,000, then it should be adjusted annually thereafter;
  3. Eliminate the 14 County Rule — Under current USDA instructions, an intermediary a service area for the IRP may not exceed 14 counties. After the IRP loan is revolved, the intermediary may use the funds beyond the 14 county limit.  This artificial limitation does not result in better deals – successful applicants must score well on a variety of measures designed to ensure that IRP is low income communities and jobs are going to people who need them.  The rationale behind the limitation is community accountability. However, other federal agencies have founds was to ensure that targeted communities or populations are represented on boards or advisory committees without capping the geography served. The current limit slows the  initial obligation process and does little to create long term accountability;
  4. Revise the Intermediary Equity Contribution — In order to be successful in getting an IRP loan, under current regulations an intermediary must make an equity contribution to the IRP revolving fund of at least 25% of the federal loan. While the loan, along with interest is paid back over the 30 year term, the intermediary’s equity must remain in the fund until the loan matures.   This requirement should be revised so the intermediary’ equity is returned as they loan amortizes;
  5. Establish a Preferred Lender Program — Many of the intermediaries in the IRP program have long borrowed money from USDA – some for more than 30 years. These high performing organizations have not only improved rural economies and provided financing to businesses and projects, they protected the government’s interest.  However, with limited funds and great demand, intermediaries often apply for more loan capital as soon as the moratorium period on their most current loan expires. The preferred lender program would provide a performance based incentive to intermediaries that satisfy selected targeting criteria and allow intermediaries to retain their capital in return for meeting certain performance criteria.  USDA would grant certain qualified intermediaries a moratorium on principal and interest payments to USDA as long as targeting criteria is satisfied and IRP funds are on a sound financial footing;
  6. Take More Aggressive Measures on Unobligated IRP Fund — with limited appropriations, the notion that millions of dollars of IRP funds are unobligated is a cause for concern. Everyone agrees that rural businesses have few options to obtain credit on reasonable rates and terms. Everyone also agrees that the business climate not just in rural America but all over the country has been challenging for several years.  For these reasons USDA should provide technical assistance to intermediaries that have encountered difficulty in administering IRP fund.  USDA should take more aggressive measures to require non-performing borrowers to turn over their funds to other intermediaries;
  7. Limit USDA Review of Administrative Budgets — in at least some cases USDA is objecting to budget submissions that do not reflect a positive net fund income. This is not a requirement of law or regulation but instead State Office policy aimed at maintaining a loan fund after the IRP loan is repaid.  This requirement is not a function of the repayment ability or record of the intermediary and is almost always of a result of one expense – repayment of principal – outstripping interest income.  In any event principal repayments are not an expense to be accounted for in determining self- sufficiency of the program The  National Office should notify State Offices that maintaining a positive net fund income is not a requirement when applied for the purpose of capitalizing a fund;
  8. Permit Segregated Bank Accounts — IRP rules require separate bank accounts, segregation of income earned on I RP funds and keeping deposits within FDIC deposit insurance requirements.  IRP intermediaries that have several federal sources, including other RD sources, face similar but not identical requirements.   USDA should allow intermediaries   to pool all federal income in a single account and subaccounts could account for specific sources.  USDA should provide consider flexibility of deposits beyond FDIC limits and approve our conservative investment plans for this purpose.  IRP also requires segregation of matching funds and that all income earned from matching funds be returned to IRP lending pool.    USDA should allow pooling of all federal sources and required matching funds.

Case Studies


Coastal Enterprises, Inc. (CEI) used IRP funds for a loan to the New England Outdoor Center in Millinocket. The business is a previous CEI borrower. It is one of the preeminent examples of an innovative nature-based tourism and recreation business in rural Maine. The business is committed to preserving shoreline and natural lands as public space. It began in 1982 and offers rental cabins, whitewater excursions, educational programming, an upscale restaurant/lounge, and related activities. It offers 17 high-end, fully equipped cabins for rent with frontage on Millinocket Lake and spectacular views of Mt. Katahdin, Maine’s tallest mountain. The business has 22 full-time year round and 18 seasonal employees.

New England Outdoor Center fits squarely into the goals of CEI’s five year Platform for Sustainable Lending and Investment, which prioritizes nature-based tourism and recreation and builds on its past investment of $15 million in 170 businesses in the industry, with another $40 million in private leverage. As we begin the fourth year of our 5-year strategy, CEI has already exceeded its 5-year sector investment goals by 53%.


In Paradise, California, Rural Community Assistance Program of Sacramento, used IRP funds in the amount of $83,210 were used to help repay a short term bank loan and allow the planning for a residential and community center to continue.  The borrower, Paradise Youth and Family Center, is a nonprofit organization, with primary members being the Town of Paradise, Youth for Change, Paradise Ridge Youth Soccer Club and Community Housing Improvement Corporation.  The project, when completed, is planned to have residential housing (both single and multifamily), a gym/community center, a Boys and Girls Club, a Middle School, a Skate Park, open spaces and a wetland reserve in a phased development of 48.38 acres.  Additionally, a 36 unit Low Income Housing Tax Credit project has been constructed and is fully occupied.


IRP funds in the amount of $39,116 will be used by the Campbell’s Glen Homeowners’ Association to provide updated arsenic removal treatment for a small 28 user water system in Clinton, Washington.  The existing small system had installed water treatment equipment several years ago, and while that treatment equipment had successfully dealt with some water issues, it had not consistently lowered the arsenic levels within drinking water standards.   The IRP funds will be used to bring the system into compliance with Washington State Department of Health requirements for allowable arsenic levels in drinking water.  Additionally, the funds will also address odor and discoloration issues.


Although the former National Guard Armory, in Park Rapids, Minnesota, is one of the most prominent buildings in the downtown business district, it sat abandoned and unused for almost 20 years.  The property was considered “incurably obsolete” when purchased for redevelopment by a summer resident of this lakeside tourist community, however that resident saw the potential that the property had to be redeveloped into a profitable site.  Thanks to funding from the Midwest Minnesota Community Development Corporation (MMCDC), which provided total financing of $475,000 in 2010 to support the first phase of the project, a 6,000-square-foot redevelopment resulting in a new restaurant and one retail tenant and 12 permanent full-time jobs. This 24,000 square-foot historic landmark is now scheduled for complete redevelopment as a key strategic anchor as part of a comprehensive downtown redevelopment plan adopted by the City of Park Rapids.

MMCDC utilized alternative funding sources, including from the Office of Community Services and the Minnesota Historical Society in its first phase.   Once complete, the integrated mixed use Armory Square facility will feature a 200 to 300-seat performing arts venue, conference space, events center, and an art gallery under the banner of the Upper Mississippi Center for the Arts.   In November of 2012 the Armory Square redevelopment project received a Minnesota ReScape Community Impact Award, and was recognized as an exemplary model for redevelopment of a distressed brownfield site.

Midwest Minnesota Community Development Corporation is a leading provider of community economic development services to underserved communities in Minnesota, with a particular focus on rural areas.


January, 2016

Key Issues Poverty Spotlight

Do Presidential Hopefuls Have a Plan for Rural America?

The presidential hopefuls are well underway in their respective campaigns, with a combined total of six debates over the past few month.  While many candidates are focused on how they can make America stronger, there has yet to be any major discussion on what their plans are for rural America.  Read more in Bob Rapoza’s article, Do presidential hopefuls have a plan for rural America? – published in The Hill on December 3, 2015.

Poverty Spotlight

Mutual Self-Help Housing Program Briefing and Reception

On Tuesday, November 17, 2015, the National Rural Housing Coalition (NRHC) along with the National Rural Self-Help Housing Association (NRSHHA) hosted a Briefing in celebration of the 50th Anniversary and the 50,000th family served through the mutual self-help housing program.

The event featured seven self-help housing programs from all around the country.  Presenters included Russell Huxtable, President of the National Rural Self-Help Housing Directors Association and Vice President and COO of Milford Housing Development Corporation in Delaware; Tom Collishaw, President and CEO of Self-Help Enterprises in California, Brad Bishop, Executive Director of Self-Help Homes in Utah; Tom Manning-Beavin, Director of Housing of Kentucky Highlands Investment Corporation; John Fowler, President and CEO of Peoples’ Self-Help Housing in California; Mitzi Barker, Planning and Construction Division Director of RurAL CAP in Alaska; and Nick Mitchell-Bennett, Community Development Corporation of Brownsville Executive Director in Texas.

Karen Speakman, Deputy Director of NCALL Research, Inc. and President of NRHC gave opening and closing statements, and  Administrator Tony Hernandez of USDA Rural Housing Service, provided remarks on the success of the Mutual Self-Help Housing Program.

Two members of Congress gave remarks at the event – Representative Sam Farr and Representative David Valadao.  Both Congressmen were recognized by NRHC and NRSHHA for their dedication to America’s rural communities and contribution to the Mutual Self-Help Housing Program.

The briefing also included highlights from the NRHC Mutual Self-Help Survey, which was released in a report earlier that day.  The highlights of the survey are as follows:

  • Average Length of Time as a Self-Help Grantee: 20 Years
  • Average Hours Provided by Family Per Home:  1,189
  • Number of Homes Built or Planned for Current Grant Year: 1,566
  • Percent of Self-Help Families that are Single-Parent: 52 percent
  • Number of Children Living in Self-Help Homes: 11,308 (from 25 responding self-help grantees)
  • Percent of Families Served who are Minorities: 46 percent
  • Percent of Self-Help families who are Very-Low Income: 45 percent

To read the report, please click here.

Representative Valadao with Tom Collishaw, President of Self-Help Enterprises.
Representative Farr and South County Housing President Dennis Lalor.

The videos that were shown are provided below.

1. Community Development Corporation of Brownsville:

2. Kentucky Highlands Investment Corporation & Fahe:

3. Milford Housing Development Corporation:

4. Peoples’ Self-Help Housing:

5. Rural CAP Alaska:

6. Self-Help Enterprises:

7. Self-Help Homes: