National Housing Law Project Housing Law Bulletin

Nearly six years after Congress enacted legislation¹ establishing an Office of Rural Housing Preservation within the Rural Housing Service (RHS, formerly the Farmers Home Administration (FmHA)), RHS has finally established and staffed the Office as of the end of April 1998.

The purposes of the Office of Rural Housing Preservation (ORHP) are (1) to review and process applications to prepay RHS multifamily housing loans and (2) to preserve the housing as affordable low- and very low-income housing by (a) offering incentives to owners seeking to prepay to remain in the program, or (b) by providing financing and subsidies to nonprofit and public agencies to purchase the housing from its present owners.

The legislation mandating the establishment of an Office of Rural Housing Preservation was enacted in 1992 after FmHA was criticized for its state offices' approval of prepayments in violation of legislation intended to preserve the agency's rental housing stock, and for offering excessive incentives to owners to remain in the program. FmHA and is successor, RHS, have resisted creation of the Office due to its staffing demands. The agency has finally acceded to pressure from advocacy organizations by staffing the office with two persons detailed to ORHP from other RHS divisions. It appears that other persons may be detailed to the office on a rotating basis.

The establishment of the ORHP should have several positive impacts on RHS's preservation program. First, all final decisions regarding prepayments and incentives will now be made or reviewed by the ORHP instead of by state offices. This should result in more consistent application of program regulations, fewer prepayments, and possibly lower levels of incentives to owners. Second, ORHP is likely to commence collection of data on prepayments and requests to prepay. Data on prepayments has not been available from RHS or its predecessor for nearly four years. Third, the existence of ORHP should provide tenants and advocates with a centralized focal point to direct comments and criticisms on the operation of the preservation program in general or concerning approval of a specific prepayment request.

¹  See 42 U.S.C.A. § 1490p-1 (West 1996).