- Projects -- Rental assistance may
be used in both existing and newly constructed HCFP Rural Rental Housing (Section 515) or
Farm Labor Housing (Section 514) financed projects. Projects must be established on a
nonprofit or limited profit basis.
- Tenants -- Persons with very low and low
incomes, the elderly, and persons with disabilities are eligible if they are unable to pay
the basic monthly rent within 30 percent of adjusted monthly income. Very low income is
defined as below 50 percent of the area median income (AMI); low income is between 50 and
80 percent of AMI; moderate income is established by adding $5,500 to
the low-income limit.
HCFP and the project owner execute
a five-year contract in which HCFP commits payments on behalf of tenants in a designated
number or percentage of the units. Both HCFP and the project owner agree to be bound by all
applicable HCFP regulations. The contract becomes effective on the first day of the month
in which it is executed (additional units may be covered if funds are available and an
additional contract is executed). The agreement may be renewed as many times as funds are
made available. State Directors may transfer unused and unneeded contracts or portions of
contracts to other projects.
The Rural Rental Assistance
(RA) program provides an additional source of support for households with incomes too low
to pay the HCFP subsidized (basic) rent from their own resources. HCFP pays the owner of a
multi-family housing complex the difference between the tenant's contribution (30 percent
of adjusted income) and the monthly rental rate.
Priority for RA in housing financed by Section 515 is given to a
project either if a market study indicates the greatest percentage of prospective tenants
need RA or if the area has the greatest housing need within the state and is selected for
funding in accordance with the weighted criteria (set forth in FmHA Instruction 1944-E
[1944.231]). Comments: The request for RA is generally initiated by the borrower (project
owner). However, if the borrower does not request it, people eligible for rental
assistance in a project may petition the borrower to obtain rental assistance for them.
There is an HCFP appeals procedure if rental assistance is denied by the owner. In existing
projects, demand far exceeds supply.