IMPACT: The Ney-Ross Amendment on rural multi-family housing will de-regulate some 300,000 units of rural rental housing financed by the US Department Of Agriculture. Under this amendment, owners of section 515 developments will be permitted to prepay their loans and displace the tenants. The Ney-Ross Amendment will also deregulate several thousand units of housing financed for migrant and seasonal farmworkers. The Amendment is sponsored by Representatives Bob Ney (R-OH) and Mike Ross (D-AR) as part of H.R.3995, the Housing Affordability for America Act of 2002.

TENANTS: Some 60% of the residents of section 515 are elderly or disabled households. The average annual income of section 515 tenants is a little over $8,000.

HISTORY: In 1987, Congress enacted legislation to regulate rural rental housing principally financed under section 515 of the Housing Act. This legislation placed a low-income use restriction on section 515 and also established financial incentives to owners to maintain their properties for low-income housing.

The Ney-Ross Amendment will modify the main provisions of the 1987 Act, effectively end the low-income use restriction and allow prepayment of section 515 loans. Estimates the units to lost range from 24% of the portfolio or about 100,000 units (GAO) to almost 300,000 units (USDA). Regardless, the Ney-Ross Amendment will result in the displacement of thousands of rural families as owners prepay their loans and get out of the program.

There is a significant shortage of affordable housing in rural America. In many small town and farming communities, the only adequate affordable rental housing is that the section 515 project.

TENANT PROTECTIONS: The amendment only authorizes the use of vouchers and does not provide additional appropriations. In an amendment to the amendment, sponsored by Representative Doug Bereuter (R-NE), and incorporated during the committee markup into H.R. 3995, made it a requirement that voucher money be made available before owners could prepay.

The cost of vouchers is estimated at $1.5 billion. It is doubtful that these funds will become available. The Agriculture Department does not have authority to administer an enhanced voucher program and has never administered any kind of rental voucher program. HUD, instead, would administer the enhanced voucher program. However, HUD's performance in serving rural areas is very poor - only 10% of section 8 vouchers ever find their way to rural America.

The Committee also agreed to prepare language for the House floor which would require the owners prepaying the loans to take vouchers held by their Section 515 tenants.

In short the protections are really a series of "ifs". If there is an adequate, advance appropriation for enhanced vouchers; if the owner will accept the vouchers; if there is decent rental housing in the community; if low income elderly and disabled families can manage the HUD-USDA continuum; then it is possible that tenants will retain decent affordable housing. It's just not very likely.

In recent years Congress and the Administration have unwisely reduced funding for rural rental housing and, therefore, made it more difficult to provide adequate incentives to preserve rural rental housing. However, this lack of funding does not justify the displacing low-income rural residents, including many disabled or elderly households.

National Rural Housing Coalition
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