As candidates in the upcoming presidential election offer strategies to address the nation’s housing crisis, there is an urgent need for new solutions to the housing shortage in rural America. The current set of government policies generally take a “one size fits all” approach based on urban and suburban market economies. As a result, one in four rural households cannot afford the home they live in, let alone climb the ladder of the American dream.
There are many examples where federal housing policy is stacked against rural landlords and tenants. Worst and biggest national housing support, mortgage interest reduction. Last year, the US spent $35 billion on this subsidy to help homeowners pay less tax.
Fewer rural families qualify for the deduction, not because they make more money or their home values are rising, but perversely because their incomes and home values are too low to qualify. Worse, the state spent more money last year on housing foreclosures than it spent on almost all other federal housing programs combined — including public housing, rural rental, Section 8 vouchers and others designed to help low-income families.
By limiting rural homeowners’ access to housing and other programs, we make it harder for them to maintain and improve their property. This has exacerbated the “price gap” for rural residents, which occurs when the appraised value of a home is below what is needed to make the area livable and is a common barrier for homeowners to rural renters.
The misunderstanding extends to the rental market as well. In rural America, multifamily rental properties tend to be smaller and have fewer units than urban and suburban developments. However, many federal multifamily financing programs favor scale and volume.
There are steps that federal policy makers can take to address malpractice, including:
1. Professional tax policy that addresses the economics of America’s rural housing market
With the Tax Cuts and Jobs Act of 2017 set to expire at the end of 2025, the next Administration and Congress have an opportunity to better address the housing needs of rural America as part of the next major tax overhaul. In particular, policy makers should:
- Designating Rural and Tribal Areas as Difficult to Develop Areas (DDAs). Doing so will increase the equity cap allowed for Low Income Housing Tax Credit (LITHC) projects in DDAs, which will help ensure that small-scale developments in rural America can flow.
- Pass the Two Neighborhood Housing Investment Act (NHIA) to establish a federal tax credit to fund the construction and/or preservation of affordable, owner-occupied housing in select underserved markets, including rural communities, and help close the “value gap.”
2. Empower the Department of Agriculture (USDA) to actively shape the next housing policy
While the USDA already has significant multibillion-dollar programs to make rural America affordable, the agency has been largely overlooked in the social media coverage of the leading presidential candidates. To strengthen and expand these important programs, policy makers must:
- Purposefully invest in the Section 515 multifamily rental program, which is losing thousands of units each year and has not seen new construction in over a decade.
- Consider the Section 502 direct home loan program, which has provided loans to more than 2 million low-income home borrowers since its inception. This program not only encourages affordable home ownership and strengthens local housing markets, it also costs the government less per household than a similar rent subsidy.
- Ensuring that new funding to promote housing provision is targeted at rural communities. The Biden-Harris Administration and the Harris-Walz campaign have proposed a multibillion-dollar Housing Innovation Fund to encourage communities to increase the supply of housing, to be administered by the Department of Housing and Urban Development. The USDA should jointly manage any such program with the responsibility of ensuring that one-fourth of the funding reaches rural communities in proportion to the share of rural America in the nation’s housing stock.
3. Adjust government housing programs and increase the capacity of rural communities to implement them
Generally speaking, rural communities have smaller governments, fewer well-resourced organizations, and less investment in community service. As a result, many rural communities have little capacity to effectively navigate the complex and complex complexities of federal housing policy, making it difficult for them to take full advantage of these important programs. To address this, policy makers should:
- Adjust the administration of federal housing programs, remembering that all the additional layers of financing, the application process, and the requirement to match money reduce the chances of the rural community being able to fully benefit from the program.
- Create a multibillion-dollar Rural Partnership and Prosperity program, modeled on bipartisan legislation in the House and Senate, to invest directly in the capacity of mission-driven organizations doing the hard work of creating and maintaining affordable housing in rural communities across the country. .
Despite popular narratives to the contrary, rural communities are dynamic, innovative, and worthy of investment. But they are also not covered under many federal housing policies. For these communities to reach their full potential, policymakers must take the tools, policies and infrastructure we already have and refine them to do justice to the millions of people who call them home.
David Lipsetz is the President and CEO of the Housing Assistance Council.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the editor responsible for this piece: [email protected]
Related
Source link
