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Sustaining Rural Rental Housing

Sustaining Rural Rental Housing Presented by Colleen Fisher October 14, 2008 Housing Colorado Now! Breckenridge, Colorado Housing Act of 1949 Authorized the USDA to make loans to farmers to construct, improve, repair, and replace dwelling to their farm buildings

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Sustaining Rural Rental Housing

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  1. Sustaining Rural Rental Housing • Presented by Colleen Fisher October 14, 2008 Housing Colorado Now! Breckenridge, Colorado

  2. Housing Act of 1949 • Authorized the USDA to make loans to farmers to construct, improve, repair, and replace dwelling to their farm buildings • Over time the act has been amended to authorize housing loans and grants to rural residents in general

  3. Rural Definition: • An area with a population less than 50,000 inhabitants; For Section 515, it’s less than 20,000 • An area not contiguous and adjacent to areas to non-rural area (suburbs are not rural)

  4. Section 515 –Rural Rental Housing: • Direct loan program • Effective 1% interest rate • 50-year amortization • Original loan terms were 50 years • New loan terms 30 years w/ balloon

  5. Section 521 – Rental Assistance: • Rental Assistance program equivalent to project based Section 8

  6. Section 538 – Rural Rental Housing Guaranteed Program: • Loan Guarantees (construction, acquisition, rehab) • No Rental Assistance • Terms of loan (up to 40 years) • Rates of loans (30 years fixed) • Maximum rent – 30% of 115% • Average rent – 30% of 100%

  7. Characteristics of the Section 515 Portfolio: • 16,500 properties • 434,296 units • Average size is 27 units • Existing tenant base is 57% elderly • Average property age is 23 years; 2/3 over 20 years old • Average annual tenant income is $9,075 • 74% of units are covered by RA • 8% project based section 8 • 9% section 8 vouchers • 74% of households are female based

  8. Preservation Issues: • Aging portfolio • Aging GPs • Existing limited partners taxable phantom income • Average 515 loan balance is $25,722/unit • Average current rehab need is $26K • In order to fund 100% of the 20 year needs, average monthly reserve contributions would have to rise from $33 to $74; this would make no provision for unit upgrades • Mortgage Restructuring

  9. Challenges Facing Rental Rural Housing: • Emphasis on preservation • Need to make RD MPR Program permanent • Housing and Economic Recovery Act of 2008 • Tax Credits-Investment in Rural Complexes

  10. CARH Webmap • Search for Section 515 properties by state and county • www.carh.org

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