West Broadway Villas in Monticello, NY. (Photo from Regional Plan Association)

A report from a New York organization says that some low-income rural residents in the state may soon be at risk of losing their homes following the expiration of USDA-financed mortgages that provide protections and rental subsidies to tenants. Money from the state may help repair and rehabilitate some of the buildings, but nationwide, the program is undergoing challenges. 

The report shows that as soon as 2027, hundreds of tenants in rural communities in New York will be subject to displacement each year – with limited options for housing and support – as programs begin to lapse. Nationwide, the USDA Section 515 Program has lost more than 150,000 of its original units.

“A lot of these properties are 30 years old and are in need of repair,” Mike Borges, executive director of the Rural Housing Coalition of New York, told the Deesmealz in a Zoom interview.

“Many of the private landlords who own these buildings have not invested in upkeep. So they're not in great shape. I think it could be one of the first efforts at the state level to preserve USDA 515 housing.”

The report indicated that New York had approximately 12,000 USDA 515 affordable rental housing apartments, housing about 15,000 low-income seniors and families.

Once the mortgages expire, the owners have the option to leave the program, which comes with rental protections, regulatory protections, as well as rental subsidies that allow people to live there through a rent subsidy and other affordability measures.

The New York State Legislature provided $10 million in state funding to be used for the acquisition of the USDA 515 properties and to rehabilitate them, Borges said.

Established by President Harry Truman in 1949, The U.S. Department of Agriculture’s Section 515 Program provided low-cost financing for the construction of affordable multi-family rental housing in rural communities. The USDA program produced 550,000 affordable apartments in rural communities. However, the program has not produced new units in more than 10 years. On top of that, the program has lost more than 150,000 of its original units to reach its current size of less than 390,000 units, according to the recent Multifamily Housing Occupancy Report.

At the Housing Assistance Council, Kristin Blum, manager for the Center for Rural Multifamily Housing Preservation, said the organization agrees with the findings of the report and the urgency to preserve Section 515 properties before the housing resource is lost.

“We hope that the Rural Housing Coalition of New York is successful in their efforts to raise state resources to preserve Section 515 properties,” she added. “Preservation of these properties will require capital investments and states can and should help address these needs.”

Blum said since the start of the Center for Rural Multifamily Housing Preservation two months ago, the focus has been on ramping up technical assistance programs for nonprofits who are acquiring Section 515 properties. Across the country, two-thirds of families and individuals in Section 515 properties are seniors or individuals with disabilities. The average income of tenants is less than $16,000.

“Since March, we’ve added nine nonprofit organizations to our technical assistance program,” she told the Deesmealz in an email interview. The technical assistance is across the country and will help preserve 500 units of affordable rental housing in California, Georgia, Kansas, Kentucky, Montana, North Carolina, Tennessee, Texas and Utah.

Jonathan Harwitz, director of public policy at HAC, said the USDA’s Section 515 portfolio is a “critical source” of affordable housing in rural communities across America. There is at least one USDA Section 515 property in 87% of all U.S. counties.

“For many rural communities, these 515 units constitute the only affordable rental housing available,” he said.

Yet not all tenants in Section 515 properties receive rental assistance that limits their rent to 30% of household income. Approximately three-quarters of all Section 515 tenant households live in units that are rent subsidized through USDA’s Section 521 Rental Assistance program. Another 15% receive some other help with their rent, such as Housing Choice Vouchers, Project-Based Rental Assistance or HOME program rental assistance administered by the U.S. Department of Housing and Urban Development.

The remaining 15% receive no rental subsidy, with the result that more than one-third of those unassisted tenants are cost-burdened, he added.

Lance George, director of research and information at HAC, said although the Section 515 program has financed over half a million units since 1963, just over 388,0000 units remain in the program today.

“These units are quickly losing affordability as the mortgages mature or the property is eligible to prepay, putting some of rural America’s most vulnerable residents at risk of homelessness,” he added in an email interview.

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