The 21st Century ROAD to Housing Act: A Step Forward for Rural America

The 21st Century ROAD to Housing Act includes promising new programs and critical changes with the potential to improve opportunities for affordable housing across the country. For rural communities, the sprawling legislation offers a major step forward for preserving affordable housing: the passage of Enterprise’s top rural priority, the Rural Housing Service Reform Act (RHSRA).

This provision addresses several major flaws in the laws that govern the USDA’s Rural Housing Service and could lead to the preservation and creation of thousands of affordable homes. However, while some provisions in the law reference tribal governments and communities, no provisions directly address programs like the Indian Housing Block Grant, nor do they create or reform programs that are specific to Indian Country.

Preserving Rental Assistance Across Rural America

ROAD separates rental assistance from the mortgage (“decoupling”), so property owners can keep offering it through a Stand-Alone Rental Assistance (SARA) contract even after their loan is paid off. Before this bill, rental assistance could only go to properties that had an active mortgage through the USDA’s Section 515 or 514 loan programs. Once the mortgage was paid off, rental assistance had to stop, even if property owners wanted to continue providing affordable housing for low-income residents. Without a fix, all 380,000-plus USDA-financed programs were on track to lose rental assistance by 2050.

Now, property owners can opt into a 20-year standalone rental assistance contract when their mortgage expires, letting them continue to receive rental assistance if they commit to continuing to provide affordable housing. The bill also raises rent levels for most assisted units, using whichever is higher: HUD’s Fair Market Rent or budget-based rents being used. Tenants in assisted units will continue to pay 30% of their income, with USDA’s rental assistance covering the rest.

Updating USDA’s Programs

ROAD modernizes many of USDA’s housing programs, improving them to be more in line with HUD programs, ensuring that they keep up with rising costs, and making common sense reforms. The bill applies HUD’s foreclosure standards to USDA properties, ensuring that rental assistance remains in place during a foreclosure process. It also improves the USDA’s Section 504 home repair program by doubling the loan limit from $7,500 to $15,000.

The bill also makes major improvements to USDA’s Section 542 vouchers. These tenant-based vouchers are intended to protect residents whose properties are foreclosed on, have their mortgages prepaid without tenant protection restrictions, or whose mortgages mature without entering the SARA program. In the past, these vouchers were static amounts. Under RHSRA, if family composition changes or unit rent increases, the voucher amount can now increase accordingly.

Finally, USDA’s single family loan programs have long prohibited running a business out of homes financed through Section 502 single family home loans. The RHSRA allows Section 502 loans to finance accessory dwelling units, and allows them to be rented, increasing supply in rural areas. This bill also allows homes financed with Section 502 loans to have in-home daycares, increasing the number of potential daycare spots — a critical issue around the country.

Authorizing Studies and Reports

Congress has recognized the importance of existing pilot programs and required a series of studies and reports on USDA Rural Housing Service technology needs, efficiency, and staffing.

The RHSRA authorizes the Rural Community Development Initiative, a program that has previously been funded through appropriations bills as a pilot and sets a maximum grant limit of $500,000. It also requires several studies and reports from the Rural Housing Service and the Government Accountability Office on technology staffing needs and loan processes. These requirements in the bill predate recent dramatic staff losses at the USDA, including a 36% staff reduction within Rural Development, the parent agency of the Rural Housing Service. Those losses have led to a major increase in loan processing and grantmaking time. Time will tell whether Congress will use the results of these studies to appropriate more funding to RHS, and whether RHS will use it to fill vacated positions and improve the agency’s outdated technology.

Tribal Housing Programs

The 21st Century ROAD to Housing Act does not include provisions specific to tribal housing. However, several new or re-authorized programs do explicitly include tribal governments and tribally designated housing entities (TDHEs) in their eligible entities, including:

The Whole-Homes Repair Act, allowing Congress to provide funding to eligible entities to administer repair programs for homeowners and small landlords
The Innovation Fund Act, allowing Congress to provide funding to eligible governments to incentivize housing construction
The Preservation and Reinvestment Initiative for Community Enhancement (PRICE) Act, authorizing a pilot program to provide governments and nonprofits funding to maintain, protect, and stabilize manufactured housing and manufactured housing communities.

The National American Indian Housing Coalition has published a deeper look at tribal housing provisions in the bill and future needs. While including specific eligibility for tribal governments and TDHEs is positive, tribal housing continues to need more dedicated resources and programs. The passage of a bill reauthorizing the programs created by Native American Housing Assistance and Self Determination Act (NAHASDA) remains Enterprise’s top tribal housing priority.

A First Step for Rural and Tribal Communities

While removing the legal barrier to continued rental assistance can benefit hundreds of thousands of low-income rural households, it is important to remember that the program is opt-in, and property owners may choose not to remain in the program. Significant work lies ahead to ensure that program regulations and incentives preserve as much affordable housing as possible.

Also, while the creation of new programs is a critical starting place, Congress must appropriate money before any funding can go to homeowners, renters, or building owners. In addition, provisions of the law changing the underlying statute of existing programs will require significant regulatory changes. Enterprise will focus over the coming months and years to ensure the success promised by this bill.

Find out more: Enterprise’s key resources for 21st Century Road to Housing Act