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Rural Rental Housing: Incentives Maintain Low-Income Housing but Clearer Guidance Needed

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Report Type Reports and Testimonies
Report Date June 23, 1992
Report No. RCED-92-150
Subject
Summary:

The Farmers Home Administration (FmHA) is authorized to provide housing project owners with various financial incentives, such as equity loans, to encourage them to keep their apartment buildings in FmHA's rural rental housing program rather than prepaying their loans and ending their involvement in the program. Although FmHA has been successful in preserving its rural rental housing inventory and preventing displacement of low-income tenants, the financial incentives FmHA provided to achieve these goals were substantial, and, in some cases, larger than they should have been. The $69-million tab to preserve nearly 6,000 apartment units may actually be higher because costs associated with the return on investment and rental assistance incentives are unknown. Although FmHA has developed a draft final regulation that should end the payment of excessive financial incentives, the final regulation has been continually delayed because of higher priorities.

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