On Nov. 18, Congress adopted H.R. 2112, which included the FY 2012 budget for the U.S. Department of Housing and Urban Development (HUD). Although Congress killed new construction under the Section 202 program for 2012, there is a little good news for the preservation of senior housing: The conference report for H.R. 2112 includes:
- First-time funding for the Senior Preservation Rental Assistance Contract (SPRAC).
- Assistance for unassisted residents of the older Section 202 properties that are refinanced.
Both the ability to refinance the oldest 202 inventory and to provide rental assistance for unassisted seniors who would be displaced by a rehab and refinancing were provisions of the Section 202 reform legislation that was approved in December of 2010. Funding for SPRAC had not been available until now. HUD has been working on the regulations to implement SPRAC since the beginning of the year and we hope they will be available shortly, now that there are funds explicitly available.
The conference agreement also includes a demonstration program - known as Rental Assistance Demonstration (RAD) (formerly known as PETRA or TRA) - that permits public housing authorities to convert operating subsidies and capital funds to section 8 project based assistance. The demonstration includes no new money and is limited to 60,000 units.
For rent supplement and RAP properties that are eligible for tenant protection vouchers, under the RAD authority, the tenant protection assistance may be converted to project based section 8 vouchers as long as the residents are consulted and the housing authority administering the tenant protection vouchers agrees.
As a new source of tenant protection assistance, there is $10 million for tenant protection vouchers in situations where the Sections 236 or 221(d)(3) mortgages and rental assistance contracts mature and as non profit owned , the owner could not prepay without HUD permission. The enhanced vouchers can be converted later to project based vouchers.
The conference report also includes authority to extend the Mark to Market Program until September 30, 2015 for those HUD insured mortgages with Section 8 rents that exceed market and need to be restructured to lower the rents. Extension of the program authority also means additional refinancing tools for this inventory.
In terms of specific funding amounts, for the renewal of Project Based Section 8 contracts, the conference report provides $9.3 billion including advance funding authority of $400 million to be available Sept.30, 2012. The advance funding authority is particularly helpful when Congress fails to enact spending bills at the start of the fiscal year of October 1. It is anticipated that this funding is sufficient to fund all contracts for the full year renewal.
While the HUD funding bill does protect those with Section 8 assistance, both tenant based and project based assistance, the HUD budget overall took more than its fair share of cuts. Not only did the conference report eliminate new construction of Section 202 housing, but it made to the HOME program, CDBG, Section 811, and public housing.
I also encourage you to take a look at Center on Budget Policies and Priorities analysis of the overall HUD budget.