CONNECTING

THE
DOTS
A Location Analysis
of USDA’s Section 515
Rental Housingg Program
g
and other Federally
Subsidized Properties in
Rural America

Research Findings
Housing Assistance Council
 Research Overview
• The research provides a comprehensive
examination of the location, composition,
and proximity of federally subsidized
rental housing properties and units in rural
communities with a special focus on
communities,
USDA’s Section 515 Rural Rental Housing
program.
program
 Rural Rental Housing Backdrop
• Preponderance
epo de a ce oof homeownership
o eo e s p has as
overshadowed the importance of the rental
housing stock and the needs of rural renters.

• Rural renters generally have much lower

incomes than rural owners.
owners

• Minorities in rural areas occupy rental housing at

a significantly higher rate than do whites.
 Rural Rental Housing Backdrop

• Renter-occupied
Renter occupied households in rural areas are
twice as likely to live in substandard housing as
their owner counterparts.

• Disproportionate
p p number of rural cost burdened
households are renters.

• Over half of rural households with multiple

housing problems are renters.
 Research Concept

• Incorporates a location and distance analysis of federally subsidized

housing properties in rural America.

• F
Federally
d ll assisted
i d housing
h i data
d are usedd to illustrate
ill the
h location
l i
and scope of these properties across rural areas.

• D
Determine
t i ththe extent
t t tto which
hi h USDA’
USDA’s rurall rental
t l housing
h i units
it co-
exist with other federally subsidized programs as well as their role in
rural communities’ rural rental housing network.

• Ultimately informs the larger debate on the role, availability, and

preservation of affordable rental housing in rural America.
 The USDA Section 515 Rural Rental
Housing Program
• Section 515 has been the mainstay of USDA’s efforts to serve the poorest of
the rural poor.
poor

• The Section 515 Rural Rental Housing program provides mortgage loans to
develop rental housing for very low-, low- and moderate-income tenants.

• Since inception Section 515 has produced thousands of housing

developments containing more than half a million units of affordable rental
housing in rural areas.

• The current Section 515 portfolio contains nearly 16,000 projects providing
homes for over 445,000 households.

• Average annual income of Section 515 residents is $9,785. Most Section

515 residents have very low incomes. Nearly 60 percent of Section 515
residents are elderly or have disabilities.
 The Geography of USDA Section
515

• USDA Section 515 properties have a broad reach across

the United States.

• Every state as well as Puerto Rico, the U.S. Virgin Island

and the West Pacific territories have Section 515 units
units.

• Nearlyy 2,800
, (or
( 89 percent)
p ) counties across the United
States have a Section 515 rental housing property
located within their boundaries.
USDA Section 515 Rental Housing Units

Legend
g

Counties
Section 515 Units
2.00 - 101.00
101.01 - 215.00
215.01 - 387.00
387 01 - 751
387.01 751.00
00
751.01 - 2137.00
No Section 515 Properties
USDA Section 515 Properties

Legend

Section 515 Property

 The Prepayment Dilemma
• A significant
g portion
p of the units in the Section 515 Rural
Rental Housing portfolio is at risk of being lost as low-
income housing.

• As of 2007, there are approximately 7,372 Section 515

projects (46%), encompassing over 195,000 units, that
are eligible to prepay.
prepay

• Another 2,008 Section 515 p properties

p (13%)
( ) built before
1989 will ultimately be eligible to pre-pay, but are
currently under a restrictive use clause for a certain
period of time.
p
USDA Section
S ti 515 Prepayment
P t Status,
St t
Properties
Pre 1989
Restrictive Use
Clause, 12.6%

P t 1989 Loan,
Post L
41.3%

Pre 1989 Eligible to

Prepay, 46.1%

Post 1989 Loan Pre 1989 Eligible to Prepay Pre 1989 Restrictive Use Clause
 Research Framework
• USDA Section 515 Rural
Rental
R t l Housing
H i
• The study undertakes a • HUD Public Housing
location analysis of • HUD Project Based (Section
federally subsidized rental 8) Rental Assistance
housing properties and • HUD Housing Choice
units
it in
i rurall (Section 8) Vouchers
communities.
• Low Income Housing Tax
• A focus
ocus on
o Section
Sect o 5 515
5 Credit
rural rental housing and
• HUD Section 202-811
the issue of prepayment.
• HUD Section 236
• USDA Section 538
 Research Framework

• 1st Level of Analysis • 2nd Level of Analysis

• County composition • Distance between

and characteristics, in Section 515 and other
relation to USDA federally subsidized
Section 515 rural rental properties.
rental properties.
Location Analysis: Research Model

Distance Relationships County Relationships

USDA
USDA
Section
Section515
515
Properties
Properties
And
AndUnits
Units

Proportion of PHA
PHA Property Location Subsidized Units
Section 8
Section 8 Average Distance Property
Property Population
Located within Decline LIHTC
LIHTC 10 miles
of Urbanization Section
Section Section 515 202-811
202-811 Housing Stress
Section 236
Section 236 Minority Population
Section 538

Coverage
Coverage
and
and
d
Prepayment
Prepayment
 A Cautionary Note About
Cross-Subsidy!
• Approximately
pp o ate y 21 percent
pe ce t oof LIHTC
Cpprojects
ojects
(5,542 properties) also include USDA Section
515 funding.

• Approximately 10 percent of Section 8 Project

Based properties (1
(1,464)
464) are also Section 515
developments.

• Excluded cross subsidized units. A limitation of

the study.
County Level
Analysis
 County Level Analysis
• The
e cou
county
ty iss a
an important
po ta t geog
geographic
ap c
designation in rural America.

• In rural areas the county is often the most-

identified with in political, social and economic
contexts.
contexts

• The county unit also allows for a great deal

contextualization in terms of social, economic,
demographic, and housing characteristics.
 County Level Analysis
• In cou
counties
t es with
t a Sect
Section
o 5 515
5pproject,
oject, Sect
Section
o
515 properties make up over one-third of all
subsidized properties and comprise about 17
percent of these county’s
county s subsidized rental units
units.

• When metropolitan counties are excluded

excluded,
Section 515 projects comprise approximately
one-half of subsidized properties and over 36
percent of subsidized rental units in areas
outside metropolitan counties.
Section 515 Units as a Percent of All Subsidized Rental Units

Legend
states
Counties
Percent Section 515 Units
0.1 - 17.3
17 4 - 36
17.4 36.2
2
36.3 - 55.6
55.7 - 81.1
81.2 - 100.0
No Section 515 Units
 County Level Analysis
• There are over 900 counties where Section 515
units make up more half of all subsidized units.

• These counties with high proportions of Section

515 units tend to be more remotely rural.

• Two-thirds of all these counties are located

Outside of Metropolitan
p Core Based Areas.
Additionally, 40 percent of counties with more
than half of subsidized units being Section 515
are located in the Midwest.
Counties Where Section 515 Units
Make up More than Half of All Subsidized Rental Units

Legend
states
No Section 515 Units
Counties
County Status
Section 515 Less than 50% of Subsidized Units
Section 515 50% or more of Subsidized Units
 County Level Analysis
• Further
u t e investigated
est gated tthe
e geog
geography
ap y a
andd
proximity of Section 515 properties in relation to
various contextual factors:
• Rurality
R li
• Urbanization
• Minority
Mi it Population
P l ti
• Housing Stress

• These characteristics are important to the

prepayment issue of Section 515
515.
 County Level Analysis
• Population Loss Population Loss Counties

Counties
• Section 515 units
make up
approximately 17
percent of subsidized
rental units in these
declining population
Legend

states
Population Loss County

counties.
No Section 515 County
Population Loss Counties
Section 515 Units as a Percent of All Subsidized Rental Units

Legend
states
Counties
Percent Section 515 Units
0.1 - 17.3
17.4 - 36.2
36.3 - 55.6
55.7 - 8
55 81.1
81.2 - 100.0
No Section 515 Units
 County Level Analysis
• Urbanizing Counties Urbanizing Counties
• Section 515
properties make up
34 percent of these
counties subsidized
units. Approximately
of section 515 units in
these urbanizing Legend

states

counties are eligible

Urbanizing County
No Section 515 Units

for prepayment.
Urbanizing Counties
Section 515 Units as a Percent of All Subsidized Rental Units

Legend
states
t t
Counties
Percent Section 515 Units
0.1 - 17.3
17.4 - 36.2
36.3 - 55.6
55 7 - 81
55.7 81.1
1
81.2 - 100.0
No Section 515 Units
 County Level Analysis
• Rural Minority County Rural Minority Counties
• Approximately one-fifth of
the subsidized units in
these counties are in
Section 515 properties.
• In Native American rural
minority counties, Section Legend

515 units comprised 44

states
County Status
Hispanic County

percentt off allll subsidized

b idi d
Asian County
Native American County
African American County
No Section 515 property

rental units.
Not rural minorty county
 County Level Analysis
Section 515 Rental Units in Rural Minority Counties

50
45
15 Units

40
35
nt Section 51

30
25
20
15
Percen

10
5
0
All RMC African Native Asian Hispanic
American American
Rural Minority County

P
Percent off S
Subsidized
b idi d UUnits
i that
h are S
Section
i 515 U
Units
i
 County Level Analysis
• Housing Stress
County Housing Stress Counties

• 11 percent of subsidized
units in these housing
counties are located in
Section 515 properties
properties.
• In housing stress
counties outside of a
metropolitan area, Legend

Section 515 units make

states

County Status
Housing Stress

up 38 percent
pe ce t o
of
No Section 515 Property

subsidized units.
Housing Stress Counties
Section 515 Units as a Percent of All Subsidized Rental Units

Legend
states
Counties
Percent Section 515 Units
0.1 - 17.3
17.4 - 36.2
36.3 - 55.6
55.7 - 81.1
81.2 - 100.0
No Section 515 Units
Distance Specific Analysis
 Distance Specific Analysis
• The study undertook a distance specific location analysis
off allll USDA Section
S ti 515 properties
ti in
i proximity
i it to
t other
th
federally subsidized housing properties.

• The distance analysis relies on a series of distance

ranges and buffers that measure approximate distance
from Section 515 projects and other federally subsidized
properties.
properties

• All USDA Section 515 properties falling within a distance

specific
ifi radius
di off another
th federally
f d ll subsidized
b idi d propertyt
were identified and analyzed in relation to their
proximity.
USDA Section 515 Rental Properties
in proximity to other Subsidized Housing Properties

Legend

Subsidized Property
PROGRAM
PHA
LIHTC
Project Based Section 8
Section 202-811
Section 236
Section 515 Property
 Distance Specific Analysis

• On average, the nearest subsidized

housing property is located approximately
5 6 miles
5.6 il away from
f a Section
S ti 515
property.

• Among Section 515 properties where a

prepaymentt iis eligible,
li ibl the
th average
distance to the nearest subsidized
property increases slightly to 6.0
6 0 miles.
miles
Average Distance to Nearest Other Subsidized Property

Sec. 236
LIHTC 28.1 miles
14.1 miles

Average
Nearest
5.8 miles
Average
Nearest
Prepay
6.0 miles
Sec. 515 Sec. 8
3.1 miles Project Based
11.1 miles

Sec. 202-811
15.6 miles
 Distance Specific Analysis

• The analysis focused on a 10 mile threshold.

• Approximately 79 percent of all USDA Section

515 properties are located within 10 miles of
another
h ffederally
d ll subsidized
b d d rentall property.

• These “Close Proximity” Section 515 properties

include about 331,000 units, or 85 percent of
the Section 515 units
units.
Distance Specific Analysis
Distance between Section 515 and Other Subsidized Housing Properties

Within 2
Within
miles of
Within 1 10 miles
another
mile of of
property
another another
56%
property Within 5 property
44% miles of 79%
another
property
64%
Percent of Section 515 Properites within 10 Miles of Another Subsidized
Property

60
es
515 Propertie

50

40
Percentt of Section 5

30

20

10

0
PHA Section 8 LIHTC Section 202- Section 236
Project 811
Based
HUD Property
 Distance Specific Analysis

• Approximately one-fifth
one fifth of Section 515 properties are located more
than 10 miles of another subsidized property.

• IIsolated
l t d Section
S ti 515s
515 ttend
d tto b
be smaller
ll properties
ti with
ith an average
of 20 units compared to 27 units for Section 515s.

• Nearly half, (45 percent) of these more isolated properties are in

the Midwest and nearly the same level are located Outside of Core
Based Counties identified byy OMB.
 Discussion
• A large number of Section 515 properties that do co-exist with (and
in some cases support) other Subsidized rental units.

• In many rural communities, Section 515 makes up a majority of

subsidized units, especially in the Midwest and remote rural areas.

• These areas of the Midwest also have a large and increasing elderly
population where affordable rental housing is needed.
needed Section 515s
and HUD Section 202-811 are not in as close proximity as other
subsidized programs.
 Discussion
• Section 515 rental units are not only important in more remote rural
markets, but also in urbanizing locales as well.

• Many properties are located in “hot” real estate markets and could
be in greater jeopardy of prepayment.
 Discussion
• The analysis
y indicates that g geographic
g p proximity
p y and
distance are important components to the supply of
subsidized housing in rural areas.

• This is especially important in areas where subsidized

housing is sparse or at risk of loss due to prepayment.
However this research was conducted at a macro
However,
national level.

• The macro research suggests that significant weight be

given to the availability of other comparable subsidized
housingg in determining g anyy prepayment
p p y request.
q
 Discussion
• This research does not take into account the p
private
market, which by all accounts is the dominant source of
affordable rental housing in this nation.

• The analysis focuses on the supply side of subsidized

housing, but does not take into account the demand
component of this paradigm
paradigm.

• The initial findings

g from the geographic
g g p analysis
y would
be greatly enhanced by the future inclusion of both
private market and demand side elements of rental
housingg markets.
 Discussion

• Takingg in the overall picture,

p , rental housing
g needs are
significant and growing in rural America. In addition to
the demographics of a growing elderly population and
transforming rural economy,
economy low-income housing needs
are woefully under addressed.

• Section 515 rental housing is an important resource to

help address these needs, especially in an era when
virtually no affordable rental housing is being produced
or even available.
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