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The U.S. House of Representatives adopted the Transportation Housing andUrban Development (THUD) spending bill for fiscal year 2013 on June 29.
For Section 202, the bill provides $425 million, including $50 million for new development of Section 202 projects, $285 million for renewal of PRAC amounts (the Administration's request) and $90 million for service coordinators and renewal of the congregate housing services program contracts.
The bill language clarifies that $50 million will be available for new development. LeadingAge pointed out to appropriations staff that as the bill came out of the subcommittee, new capital advances were not eligible expenditures of the appropriation.
The language also allows for the use of $15.00 per unit/per month from PRAC amounts for supportive services including service coordinators in PRAC properties.
Finally, the Section 202 language requires remittance of excess residual receipts in Section 202/PRAC buildings.
The bill language is intended to permit the U.S. Department of Housing and Urban Development (HUD) to gain access to excess residual receipts to be reused for new capital advances and new PRAC amounts.
In talking with the appropriations staff and with HUD, LeadingAge has learned that there is no clarity about the amount of residual receipts that could be recaptured and whether the amounts would be significant enough to justify the recapture for new development.
LeadingAge explained to both the appropriations staff and to HUD that it may be that recapturing the amounts would be counterproductive, removing funds from projects, funds that could be used for repairs or other operational purposes as so many projects operate with such small margins. Whether residual receipts will be recaptured will be determined when the final appropriations law is approved as the Senate bill does not recapture 202 PRAC residual receipts.
For the renewal of project based Section 8 contracts, the appropriations bill includes only $8.7 billion, including an advance appropriation of $400 million to cover the costs incurred at the start of fiscal year 2014 (a similar advance appropriation will be available for the start of fiscal year 2013).
The amount is insufficient to renew all contracts for the full 12 months. It also requires the remittance of residual receipts that are not owned by the property by virtue of their initial Section 8 contract.
Most Section 202 and Section 8 properties do not own their residual receipts and will be required to remit them to HUD once the policy has been defined. HUD is expected to issue guidance about recapture of residual receipts shortly.
The appropriators expect to use the remittances of excess residual receipts to fill gaps between what is necessary to renew all contracts and what has been appropriated although it is clear that residual receipts will not provide enough funding to fill the gap.
It is also clear that the appropriation will mean short funding of contracts and at least two renewals each year for each section 8 contract as occurred in 2007. The Senate Appropriations Committee has appropriated $9.3 billion in its version of the spending bill; so the differences will be worked out in conference.
There were no amendments offered on the floor that would impact either Section 202 funding or Project Based Section 8 funding as there were no offsets available to provide additional amounts for either program.
Th schedule for the Senate bill is as yet undetermined. So it is clear that throughout the summer and into the fall, we will be advocating to increase funding for Section 202 new development and to be certain that there are sufficient funds for project based section 8 to renew all contracts for a full 12 months.