CARH’S BROADCAST E-MAIL –
Regulatory Alert

August 22, 2012

CARH has recently learned that Rural Development (RD) made the welcome decision to fund outstanding commitments for prepayment incentives. At this time it appears all incentives are being funded, however RD has not said so specifically. We understand that this decision is based on the recent Supreme Court decision in Salazar v. Ramah Navajo Chapter, which CARH brought to RD’s attention in early July. Owners with outstanding prepayment incentives commitments from RD have already begun working with RD offices to fund those commitments.

USDA’s legislative affairs office has already told Congressional offices that RD does not intend to release a NOFA for new construction projects under the Section 515 program for Fiscal Year (FY) 2012. The e-mail sent by USDA’s Office of Congressional Relations to members of Congress yesterday stated:

“I wanted to confirm that RHS will forego the release of the NOFA for Sec. 515 new construction projects. This decision not to fund new construction was due to the need to conform with the law as interpreted by the Supreme Court (Salazar v. Ramah [Navajo Chapter]), which stated that if agencies had outstanding contracts and sufficient appropriations, they must fund any of those contracts. OGC determined that the decision was relevant to the contracts, known as Rental Assistance Incentive contracts, entered into by the Rural Housing Service to avert prepayment of Section 515 rental housing through offers of prepayment incentives to the project owners.

We understand our stakeholders’ disappointment in RD’s decision not to fund 515 new construction. RD had intended to issue a NOFA; the notice was in clearance at the time of the Salazar decision. The delay led to insufficient time for Federal Register notice of a NOFA, application process and ultimate obligation prior to the end of the fiscal year. The Supreme Court's decision has forced RD to change its priorities and use 515 appropriations to fund prepayment incentives (equity loans and RA). However, the limited funding left in the 515 program will be used to rehabilitate existing 515 housing, or facilitate the sale of RD inventory properties to owners adept at finding additional resources to revitalize the properties. There is an urgent need for RD to revitalize its existing portfolio of aging rental housing. Since the cost to rehabilitate our existing housing is less than the cost of new construction, the limited funding left in the 515 program will go further and in the time required, prior to fiscal year end.”  

CARH supports RD’s decision to fully fund overdue RA and Section 515 preservation obligations. However, it appears from this statement that RD has additional funding for Section 515 but is choosing to not fund new construction activities. The decision not to release the Section 515 new construction NOFA appears to contradict at least one federal statute as Congress specifically provided for minimum new construction RA in the FY2012 appropriations legislation. CARH, in a letter, has informed RD of our appreciation for funding preservation activities, but also indicated that based on the FY 2012 appropriations bill, RD also needs to fund new construction activities. RD offices have also said they are not funding new preservation activities, and CARH is noting its objection to any such decisions. CARH has also been in contact with key members from the House and Senate Appropriations Committee regarding the agency actions, in light of the new construction issues and new preservation issues.

We will continue to keep CARH members informed on this subject. If you have any questions, please contact CARH at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or 703-837-9001.