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My name is
My testimony draws on all of these experiences and a diverse set of programs delivered by GROW South Dakota. GROW
I provide my testimony today on the state of the rural economy including challenges of rural communities with regards to housing, access to capital, community development, the role of mission-based community lenders, and challenges in underserved communities. I would like to share with the Committee some of the issues that are critical to our agency and the rural economy.
HOUSING Housing is the foundation of success and is an essential and vital part of our rural communities across the country. During the pandemic, housing became even more sacred than ever before. People in rural communities, across our very rural state and this country, continue to express a need for housing. Housing needs that are requested from residents regularly are home improvements for the aging housing, infrastructure, senior housing, long-term care facilities, rental development and renovation, single-family development, down payment assistance programs, and removal of blighted property.
Rural and Native American communities are both challenged to secure flexible capital to meet the needs for affordable, quality, and safe housing stock. Gap financing for homeownership is needed as the cost to build is higher, and continues to rise, and Native lands and rural areas are negatively affected by the difference between the appraised value and the actual costs. Higher costs are partially due to the fact that contractors often need to travel to rural and tribal areas due to the lack of contractors in these areas. To further impact this issue, the cost to construct, repair or renovate properties is approximately 10%-30% higher, or more, than last year for the same construction materials and supplies. Local lumber yards have further indicated lumber is approximately double, sheet goods have tripled, and material availability is very tight on many products. Materials are also being delayed due to supply chain issues, adding to the increased costs of construction and renovation According to the
The needed repairs and renovations include electrical, plumbing, energy efficiencies, shingles, and addressing issues of safety. The costs to provide these updates often exceed the valuation of the property leading lenders to deny loan funds to address these issues. As a result, housing stock is often left vacant or remains severely deteriorated. The lack of housing and affordable reliable broadband contributes to the lack of workforce for our small communities. The shortage of housing stock cannot be addressed without an injection of capital to construct housing that is affordable or to complete needed repairs and renovations on the homes that do exist. Homeownership on Native lands and in rural areas is also challenging. The COVID-19 pandemic has brought to light many underlying housing issues especially in
To further address homeownership rates on Native lands, a loss mitigation risk pool needs to be considered. Most tribal ordinances in
Another solution to the housing challenges in rural America would be to provide funding to proven, reliable, and accountable non-profits such as NeighborWorks America, the
Policy change is needed to shape the course for housing, rural business development, and access to capital for our rural communities.
The USDA Rural Development Intermediary Relending Program (IRP) is an excellent resource for low-interest loan capital to relend to businesses throughout rural America. This program also has non-federal match requirements in order to have a successful scoring application. These match funds continue to be restricted until the full loan is repaid to
The IRP program also restricts the maximum dollar amount per business loan. We support the proposed change of the maximum dollar amount per loan that an intermediary may lend to a project be increased to
Due to the pandemic, SBA provided existing borrowers funded with SBA loan capital payment assistance. The first round included all borrowers, but the second round of CARES Act Section 1112 debt relief payments is confusing as borrowers with microloans were categorized for payments based on when their loans were closed. Loans closed before
POLICY RECOMMENDATIONS HOUSING
Consideration should be given to modify or simplify the HOME Investment Partnership Program funding regulations. The costs to bring a home to HUD quality standards often exceeds the maximum limits. Additionally, the contractor requirements of the Davis-Bacon Act are challenging. Most small contractors do not have the administrative staff to track the reporting requirements on these jobs. Payroll needs to be certified by job and county prevailing wage every week. HOME also requires SAM.gov registration. Contractors, especially smaller contractors, have difficulty navigating the system and getting registered. We understand this requirement will not go away, however, we recommend that SAM.gov improve the registration process.
HOME multifamily compliance requirements are not aligned with other programs. Consistency across the board would be beneficial. For instance,
1) Currently, there is a separate certification required for DOE Weatherization Auditor and Quality Control Inspector (QCI) certifications. The Auditor/QCI should be one certification as the trainings and tests are very similar. We also recommend that testing for an inspector to remain certified be increased from three years to five years as long as staff remain current with Continuing Education Units.
2) If the home is in need of electrical wiring replacement, it limits the weatherization measures that can be installed on the home. We recommend allowing electrical wiring replacement and other essential home repairs under
As a provider of programs and services addressing Native and rural needs, I strongly support needed increases of funding and regulatory changes to address the needs of housing and access to capital in our communities, in
Thank you for the opportunity to testify on the needs and challenges we face in rural communities.
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