National Housing Law Project Housing Law Bulletin

The Rural Housing Service budget announced along with the federal budget on February 2, 1998, reflects a program level increase of $300 million over the Fiscal Year 1998 budget.

One hundred million is proposed for the Section 515 multifamily housing program for direct loans for the construction of affordable rental housing in rural areas. This represents a one-third reduction in funding from FY 1998’s $150 million level. Section 521 rental housing assistance is proposed for funding at $583 million, an increase in budget authority of $42 million over last year’s funding levels. This program is expected to face a similar renewal challenge experienced by HUD’s Section 8 programs.

A big funding boost was announced in the year-old Section 538 guaranteed multifamily loan program, designed to increase the availability of rental properties in rural areas. Proposed funding is to increase from a program level of $20 million in FY 1998 to $150 million for the coming fiscal year.

The Section 502 single-family direct loan program is level-funded at a program level of $1 billion, just as last year, although this represents a dramatic decrease from levels as recently as four years ago when the program was funded at $1.8 billion.

Both the Section 514 farm labor housing loan and Section 516 farm labor housing grant programs experienced some growth over last year’s levels, the loan program increasing from $15 million to $32 million and the grant program increasing from $10 million to $13 million.

Despite the overall increases, the reduction in support for the program serving the neediest population, the Section 515 program, comes on the heels of a recent study that demonstrates a record number of rural households continue to live below the poverty line and experience housing problems, including lack of affordability and substandard conditions.¹

1. Cushing Dolbeare and Leslie Strauss, Rural Housing and Welfare Reform: HAC’s 1997 Report on the State of the Nation’s Rural Housing (Washington, DC: Housing Assistance Council, Dec. 1997).