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House Passes Bill to Improve Ownership Transfers for Rural Rental Housing Preservation

UPDATE, January 23, 2008: Rural Rental Ownership Transfer Bill Approved by Full House. The House of Representatives passed H.R. 3873 on a voice vote on January 23, 2008. The bill will be considered next in the Senate Banking Committee. The House Committee's press release is available here.

UPDATE, November 1, 2007: Rural Rental Ownership Transfer Bill Approved by House Committee. The House Financial Services Committee approved H.R. 3873 with little discussion on October 31. The bill goes next to the House floor.

H.R. 3873, the Section 515 Rural Housing Property Transfer Improvement Act of 2007, is intended to expedite transfers of ownership of rural rental properties financed under the Section 515 program, in connection with rehabilitating them and preserving them as affordable housing. The bill was introduced on October 17, 2007 by Rep. Paul Hodes (D-New Hampshire) and Rep. Shelley Moore Capito (R-West Virginia). Reps. Rubén Hinojosa (D-Texas) and Joe Baca (D-California) are also co-sponsors.

The bill would establish new requirements for USDA approval of ownership transfers for Section 515 properties:

• It directs USDA to make whatever changes are needed to expedite approvals. “Such changes may include changing approval procedures, increasing staff and resources, improving outreach to project sponsors regarding information that is required to be submitted for such approvals, changing approval authority between national offices and the State and local offices, simplifying approval requirements, establishing uniformity of transfer requirements among State offices, and any other actions which would expedite approvals.”
• It directs USDA to consult with the IRS and HUD to simplify the coordination of rules, forms, and approval requirements for Section 515 properties that have financing from the Low Income Housing Tax Credit or tax-exempt housing bonds.
• It directs USDA to “actively facilitate” ownership transfers for preservation and rehabilitation.
• It makes clear that USDA’s Office of Rental Housing Preservation (ORHP) has final regulatory authority over all transfers of Section 515 properties, and that ORHP may work with USDA Rural Development (RD) State Offices.
• It establishes deadlines for processing of transfer applications. After a complete application is submitted, RD state and local offices must approve or deny it within
• 45 days if one property is involved,
• 90 days if 2-10 properties are involved, or
• 120 days if 11 or more properties are involved.
• After the appropriate deadline passes, if an application has not been acted upon, it must be transferred to ORHP, which must approve or deny it within
• 30 days for one property,
• 60 days for 2-10 properties, or
• 120 days for 11 or more properties.
• ORHP may obtain the assistance of other RD staff, although it remains responsible. This provision allows RD to continue using experienced staff in certain states to review applications from other states, while requiring ORHP to ensure that deadlines are met.
• Final decisions on transfers could be appealed to USDA’s National Appeals Division.

The bill would also require USDA to submit a report to Congress by July 1, 2008 explaining what actions it took, what improvements resulted, and what additional legislative changes would help expedite transfers.

The full text of H.R. 3873 is available here.

For more information about the bill's status, visit http://thomas.loc.gov and search for the bill by number.

A printable version of this summary and the summary of H.R. 4002 is available here. For more information about rural rental housing preservation, visit HAC's preservation page here.