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September 19, 2024 - WASHINGTON – Amidst budget negotiations, Congressman Jim Costa (CA-21) is calling on Congressional Budget leaders to increase funding and address application processing delays for a key federal program to build more affordable housing in the San Joaquin Valley and rural America.
The letter, spearheaded by Costa, calls for a return to the Fiscal Year (FY) 2023 funding level of $1.258 billion for the Section 502 Direct Loan Program in the federal budget. The House Agriculture budget bill includes $950 million for FY25, while the Senate bill allocates $1 billion, falling far short of meeting nationwide demand.
“Significant delays in processing loan applications are impacting thousands of families nationwide, totaling hundreds of millions of dollars, jeopardizing their dreams of achieving homeownership, and impeding their ability to contribute to their local, rural economies,” wrote the lawmakers.
“These backlogs and processing delays are largely due to chronic underfunding of the Section 502 Direct Loan Program, which has ripple effects throughout rural communities. The resulting uncertainty leaves local contractors and vendors involved in housing construction in limbo and their livelihoods impacted.” the lawmakers continued, “Addressing these operational inefficiencies is essential not only for meeting the housing needs of our constituents but also for supporting sustainable economic growth in rural America.”
The letter was signed by Representatives Andrea Salinas (OR-06), Lisa Blunt Rochester (DE-AL), Brittany Pettersen (CO-07), Val Hoyle (OR-04), Sylvia Garcia (TX-29), Salud Carbajal (CA-24), Vicente Gonzalez (CA-34), Zoe Lofgren (CA-18), and Joyce Beatty (OH-03).
“Unfortunately, this year has brought a crisis to both the families that we serve and the families that depend on our business. The approved funding for USDA Home Loans in California has been depleted, leaving families in limbo, unable to close on their new homes. These families, some of whom have been waiting for over a year and a half, continue to live in substandard conditions while brand-new homes sit completed and ready for occupancy,” said Leonel Alvarado, Century Builders.
“The USDA Section 502 loan program has made homeownership possible for rural families across America and in the San Joaquin Valley for many years. No Member of Congress has been a greater champion of this important program than Congressman Jim Costa. In the House, Congressman Costa has led the effort to ensure that Section 502 funds are available for families living in small towns and farming communities in California and across the country. We are deeply grateful for his unwavering support,” said Bob Rapoza, National Rural Housing Coalition.
BACKGROUND
The Section 502 Direct Loan Program has been instrumental in providing affordable housing, especially for low-income families, farmworkers, and communities like Orosi, Parlier, and Orange Cove, where affordable housing is scarce. However, significant delays in processing loan applications have impacted over 47 families in California’s 21st Congressional District and 354 families in California, amounting to a total of $102 million in loans.
Delays in processing Section 502 Direct Loan applications are exacerbating existing housing challenges in rural America, where affordable housing options are already limited. These loans enable low- and moderate-income rural residents to acquire affordable housing rates for their use as a residence by purchasing a new or existing dwelling or a new manufactured home.
Local contractors, small business owners, and vendors involved in housing construction and renovation projects are also affected, as uncertainty in funding and project timelines impacts their livelihoods.
Data from the US Census found that the average annual production of new single-family houses in non-metro areas was 221,000 between 1999 and 2008. However, from 2009 to 2017, this average dropped dramatically to 68,000 per year.
A copy of the full letter is available HERE.
Learn more about the Section 502 Direct Loan Program.
Source: Congressman Jim Costa
