Friday, October 23, 2015

Senate subcommittee hearing reviews USDA rural development programs

By Rebekah King, National Housing Conference

On Oct. 21, the Senate Appropriations Agriculture subcommittee held a hearing on a Review of Rural Development in 21st Century America. The hearing discussed the infrastructure, economic and housing needs of rural America and how the U.S. Department of Agriculture (USDA) Rural Development (RD) programs respond to those needs. Two themes came up throughout the hearing: the need for high-speed Internet in rural America and the shortfall in FY 2015 funding for USDA multifamily rental assistance.

Subcommittee Chairman Jerry Moran (R-KS) discussed how broadband is not where it needs to be in rural America and how rural communities benefit from having access to high speed Internet. He also expressed concern about the rental assistance shortfall for FY 2015 and his belief that FY 2016 funding will also be inadequate. Subcommittee Ranking Member Merkley (D-OR) focused all of his comments throughout the hearing on the rental assistance shortfall and his concern about the negative impacts on private sector owners and tenants. Senator Merkley also expressed concern that USDA had yet to implement a plan to address the shortfall despite language in the Continuing Resolution (CR) that Congress intended to resolve the FY 2015 funding issue, which Senator Moran reiterated.

Rural development (RD) staff at the hearing provided information about their broadband funding programs and how they work in communities, with loan and grant programs available though often oversubscribed. They also discussed multifamily housing, explaining that the CR authority was unclear in terms of being able to use FY 2016 funds to address the FY 2015 shortfall, but they were exploring ways to address the shortfall. RD staff also agreed they would likely need more funding than requested for FY 2016. USDA RD staff at the hearing included Lisa Mensah, undersecretary for Rural Development; Tony Hernandez, administrator for the Rural Housing; Samuel Rikkers, acting administrator for the Rural Business-Cooperative Service and Brandon McBride, administrator for the Rural Utilities Service.

Senators Daines (R-MT), Blunt (R-MO) and Udall (D-NM) all discussed that high speed Internet is a necessity and asked about USDA programs that help rural communities implement high-speed Internet. None of the Senators at the hearing discussed how USDA’s broadband programs could intersect with other programs, like housing, to address Internet needs, which was a missed opportunity to explore opportunities to leverage federal programs. NHC’s Connectivity Working Group has drafted a set of policy recommendations on how to increase broadband in affordable housing, including recommendations directed at federal agencies.

On the second panel, Tony Chrisman of Chrisman Development discussed his experiences as a developer and property manager for affordable rural multifamily housing. His testimony and discussion with subcommittee members highlighted the vital role of USDA multifamily rent assistance in rural communities. For Chrisman Development, at least a quarter of their tenants have disabilities, and average tenant income is just $10,000 a year. Without the affordable housing provided through the USDA program, tenants would not have an affordable housing option. Mr. Chrisman’s testimony also highlighted areas where RD still has room for improvement including communication with properties and owners about the shortfall and guidance on how to proceed.

1 comment:

POH said...

The ongoing Rural Development Rental Assistance shortfall was discussed at several points during the Committee meeting. Subcommittee Chairman Moran and Ranking Member Merkley both expressed their deep concern over RD’s delay in providing back payments to owners whose Rental Assistance contracts were exhausted at the end of the fiscal year. The Committee specifically added language to the Continuing Resolution that allowed RD to make retroactive RA payments to the projects that ran short in FY 2015. However, Tony Hernandez stated during the hearing that they have not yet made retroactive payments because their counsel believes they cannot use 2016 FY funds to backfill FY 2015 shortfalls. The Committee disagreed since they had put language into the CR that would specifically allow those retroactive payments to be made and asked RD to report back to the Committee asap on when contracts will be backfilled.

After disclosing that RD was short $101 million in RA for FY 2015 Senator Merkley repeatedly urged Rural Housing Services’ Administrator Tony Hernandez to fix the agency’s persistent problems with accurately estimating the annual RA program costs. Current estimates are that RA program will be underfunded by as much as $120 million for FY 2016 bringing the combined two-year shortfall to $217 million. A shortfall of this magnitude will absolutely impact owners and thousands of extremely low income households next summer if the budget cap isn’t lifted and additional FY 2016 funding appropriated for the RA program. Senator Merkley’s questioning of Tony Hernandez begins at 1:04:40, Link here:

During the second hour, Tony Chrisman, President of Chrisman Development Inc. in Enterprise OR, testified that his company currently has 17 properties in their portfolio that have run out of RA – the projects are owed a combined $365,000 in late RA payments. Tony added that they only received notice from RD about the interruption of RA payments on one of those 17 projects. The three months of interrupted RA payments has put the projects and Chrisman’s company at risk, and while Tony said they believe they can legally raise the tenants’ rents with 30 day notice, he fully understands that raising the tenants rents won’t solve the problem and in fact would only lead to evictions and homelessness for most of these households. Senator Merkley’s introduction and Tony Chrisman’s testimony begins at 1:41:28 of the Committee hearing recording.