National Housing Law Project Housing Law Bulletin

Greatly Reduced Funding Levels
Enacted for Rural Housing Programs

Both the House and Senate approved the conference report setting funding levels for Fiscal Year 1996 for the rural housing programs.¹ The House had recommended a funding level of $550 million for the Section 502 Direct Loan program. This program, administered by the Rural Housing and Community Development Service (RHCDS, formerly the Farmers Home Administration), funds deep subsidy direct loans for home purchases and repairs for low-income participants. The Senate had approved $1 billion for this program, down $500 million from the FY 1995 appropriation. The conferees ultimately agreed on the Senate's figure.

The Section 515 Rural Rental Housing program — under which RHCDS makes direct loans for the development of low-income rental housing in rural areas — was funded at $150 million, down from the FY 1995 appropriation level of $220 million. This reduced funding level represents a serious blow to a program that has already experienced a substantial funding reduction from FY 1994 as well as an expiration of its statutory authorization due to the failure of the Congress to adopt a housing reauthorization bill.²

Funding for the Section 533 Rural Housing Preservation program was cut to $11 million, half of its FY 1995's appropriation of $22 million. This program provides grants to private nonprofits, Indian tribes, local governments and others to rehabilitate or replace low-income single-family and rental or cooperative properties.

Although the President has threatened a veto of several other appropriations measures — including funding for VA, HUD and Independent Agencies³ — because of the deep cuts that hurt the most vulnerable populations, he signed the Department of Agriculture appropriations bill into law.⁴

1. H.R. 1976, The Agriculture, Rural Development, Food and Drug Administration and Related Agencies Appropriations Act of 1996, H. REP. NO. 268, 104th Cong., 1st Sess. (Sept. 28, 1995).
2. See The Strangulation of RHCDS's Section 515 Program, 25 HOUS. L. BULL. 83 (April 1995), for related article on this beleaguered program.
3. See Senate Appropriations Action: Big Cuts, Big Changes, 25 HOUS. L. BULL. 147 (Sept. 1995).
4. Pub. L. No. 104-37, 109 Stat. 299 (Oct. 21, 1995).