House and Senate Unite to Restore Rural Development Budget

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NRHC applauds bipartisan efforts in Congress to reject White House proposed cuts and restore funding to USDA Rural Development programs.

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This is the third consecutive year that Congress has rejected Administration proposals to gut Rural Development programs.

The National Rural Housing Coalition issued a statement in response to Thursday’s vote by the House Appropriations Committee to approve its Fiscal Year 2015 Agriculture Appropriations bill. In the statement, the coalition applauds bipartisan Congressional efforts to restore funding for U.S. Department of Agriculture (USDA) Rural Development programs, including those that help low-income rural families access affordable housing and grants that help small rural communities provide potable water and waste disposal systems to residents. The Senate Appropriations Committee approved its bill (S. 2389) last week.

“Both the House and Senate Appropriation bills soundly reject USDA’s proposed cuts to Rural Development programs because they are unwise and unwarranted,” says Bob Rapoza, executive secretary of NRHC.

“This is the third consecutive year that Congress has rejected Administration proposals to gut Rural Development programs. The reason is simple: rural housing and community development programs have improved housing conditions in rural America, provided communities with clean drinking water and better waste disposal systems, created jobs, and helped spur the rural economy,” said Rapoza.

According to the coalition, the President’s 2015 budget would have amounted to a 57 percent reduction in Rural Development funding since 2010 and its lowest level of funding in more than 40 years.

Instead, the House Appropriations Committee approved $1.98 billion in funding for Rural Development programs, which is about 27 percent or $418 million higher than the President’s spending plan. Likewise, the Senate Appropriations Committee seeks to fund these programs at $1.83 billion or more than 17 percent or $273 million higher than the Administration’s proposal.

While the Senate bill provides a freeze in funding for most Rural Development programs, both bills support higher funding levels for programs that were particularly hard hit by the President’s budget request.

This includes Section 502 Direct Homeownership Loans, which Rapoza says is the single, most cost-effective federal housing program. According to USDA, each direct loan costs the government about $3,000 over the entire lifetime of the loan, far less than the annual cost of many similar federal housing programs. Since inception, the program has helped more than 2.1 million low-income rural families become homeowners.

The President’s budget proposed to fund the Section 502 Direct Loan program at $360 million or 60 percent less than the current rate of $900 million. The House budget, on the other hand, provides a 16 percent increase in funding at $1.04 billion.

Rapoza argues that if USDA's 2015 budget had been enacted, 4,600 fewer rural families would have been able to access affordable mortgages under the program, creating 8,100 fewer jobs and generating $407 million less in local wages.

Likewise, both bills restore funding for Self-Help Housing. Under the program, families work on nights and weeks to provide 65 percent of the construction labor in building their own home. In doing so, families decrease costs, earn an average $25,000 in equity, and make lasting investments in their community. The House bill increased funding to $30 million--three times the rate proposed by USDA.

Moreover, the House and Senate bills increase support for grants to small rural communities without adequate water or waste disposal facilities. In contrast to the President’s budget, which proposed cutting the grants program from $452 million to $304 million, the House bill seeks to increase funding to more than $600 million.

“Rural advocates applaud Members of Congress from both parties for their support for these important programs,” said Rapoza.


About Section 502 Direct Homeownership Loans
Section 502 Direct Homeownership Loans provide safe and sustainable fixed-rate mortgages – with up to 38-year terms and subsidized interest rates as low as just one percent – to help low-income rural families access clean, decent, and affordable housing. Demand for Section 502 loans continues to outpace supply; over 12,500 loan applications − amounting to more than $1.5 billion − are currently on Section 502 waiting lists.

About Section 523 Mutual Self-Help Housing
Self-Help Housing is the only federal program that combines “sweat equity” homeownership opportunities with technical assistance and affordable loans for America’s rural families. The President’s 2015 Budget proposes to cut the Section 523 Mutual Self-Help Housing program by more than 74 percent since 2010, from $42 million to $10 million. More than 50,000 families are currently on Self-Help Housing waiting lists.

About the National Rural Housing Coalition
NRHC is a national membership organization of non-profit housing organizations, housing developers, state and local officials, and housing advocates. Since 1969, NRHC has promoted and defended the principle that rural people have the right – regardless of income − to a decent, affordable place to live, clean drinking water, and basic community services.

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Sarah Mickelson
Rapoza Associates
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