A Call to Creativity--Making Rental
Housing More Affordable

HUD issued a report entitled "Rental Housing Assistance-The Crisis Continues" in April, 1998. Its four major findings are: Despite robust economic growth between 1993 and 1995, the number of very-low-income American households with worst case housing needs remained at an all-time high 5.3 million. The stock of rental housing affordable to the lowest income families is shrinking and Congress has eliminated funding for new rental assistance since 1995. From 1991 to 1995, worst case housing needs increased the fastest among the working poor. One of every three households with worst case needs now lives in the suburbs. This crisis is real on the Delmarva Peninsula as well. Shelters are full and turning people away. Tens of thousands of dwellings are substandard. Thousands of families are on waiting lists for assisted housing. With the loss of most project based rental subsidies for new construction projects, much of what is being built does not adequately reach down to families and households of greatest need. While addressing a need, the targeting of much of our new construction rental housing serves a narrow threshold of income eligible households, most targeted to one and two wage earners. Often this market is on or near the verge of considering homeownership. The average Low Income Housing Tax Credit project cannot serve nearly as low an income family as the Rural Development Section 515 program. Yet, Section 515 has been cut 70% since 1994 and represents only a shadow of its former self. This fine program that has financed quality rental housing in most of our rural communities seems about ready to bite the dust with no real replacement in sight. RDs Guaranteed Multi-Family Housing Program, Section 538, has different target users in mind. Yes, its cheaper on the budget, but it will not be the answer to our rural rental housing needs. If we could design an optimal rental housing program to serve the poor, elderly, and special needs populations in rural America, it would have the same components that the current Section 515 program has. It would have reduced interest rate, long-term financing. It would have allow sufficient operating budgets and reserve accounts to assure quality operation and long-term maintenance. It could be used with Low Income Housing Tax Credits. Finally, it would have a Rental Assistance or Operating Subsidy component to assure the units are affordable to rural residents. Delawares rural countys have median incomes that are 30% less than metro areas. Doesnt it make sense that some form of special initiative assistance is necessary to make housing affordable in those areas? The housing affordability gap between what very low income (50% of median and below) can afford and the cost of market rate housing will have to be breached by some type of assistance, or peoples housing needs will simply not be met. There is currently so much emphasis on homeownership, that rental housing has been swept under the rug. Homeownership is great, and for folks who have the income, are mortgage-ready, and can maintain a home, it makes perfect sense for many, many reasons. Keep in mind that homeownership is at one end of the housing continuum. Yet, what about households that do not have the income, that are not at all mortgage-ready, that may not want to own or cannot maintain a home?  These families represent a large part of the Continuum. Perhaps they are homeless, or in emergency shelters or transitional housing. Maybe they live in substandard housing or overcrowded housing. Maybe they need special services or require monitored housing. Maybe they are on waiting lists for assisted housing. Maybe they are in public housing and are working towards self-sufficiency. It is time to do the following: Recognize and articulate the rental housing crisis. Start concentrating our knowledge towards serving very low income households. Think creatively about how to bridge the affordability gap on rental housing. Try some demonstrations with rental assistance or operating subsidy on rural projects in areas of low median income. Find ways to use annuities or state loans that will yield earnings to make rental housing more affordable. Listen to and work with the housing advocates and nonprofit developers who want desperately to make headway on this issue.

Copyright ©2001 NCALL Research, Inc.