HUD Contemplating Not Renewing Funding for 23,496 Section 202 Homes

Legislation | March 13, 2017 | by Linda Couch

LeadingAge projects that 23,496 older adult households, with average annual incomes of $13,311, will lose their Section 202 Housing for the Elderly rental assistance if the leaked, potential budget cuts being considered by the White House are enacted by Congress for fiscal year 2018 (FY18). LeadingAge also predicts that 360 Service Coordinators will lose their funding in FY18 if these potential cuts are enacted.

On March 8, The Washington Post reported on leaked documents it obtained from the FY18 passback process. The passback process is a back-and-forth between the White House’s Office of Management and Budget and HUD that ultimately produces the Administration’s request for HUD funding for the next fiscal year. The leaked documents represent a point in time during the passback process and do not represent the final White House request for FY18. The White House is expected to release final agency budget request figures later the week of March 13, although specific program-level requests may not be released until April or May.

According to the Post, the passback documents include a $42 million cut to the Section 202 Housing for the Elderly program, compared to the Section 202 program’s fiscal year 2016 funding level. Because the Section 202 program’s anticipated, necessary full funding level for maintenance of existing homes in FY18 is substantially higher than the FY16 level, LeadingAge predicts that the Administration’s potential request for the Section 202 program for FY18 ($391 million) would be 24% less than the amount needed to provide stable, 12-month renewal funding to Section 202 communities nationwide ($514 million).

At 24% less funding than is necessary to renew the Section 202 program’s Project Rental Assistance Contracts (PRACs), which provide rental assistance to Section 202 nonprofit sponsors across the country, a request of $391 million for FY18 would result in the loss of rental assistance to 23,496 Section 202 households and the loss of renewal funding for 360 Service Coordinators in these Section 202 properties.

Approximately 122,000 Section 202 units receive their rental assistance from the PRACs. In FY18, contracts for 97,900 Section 202 PRAC units will require renewal funding; at a 24% cut, 23,496 units would not receive necessary renewal funding.

It is unclear what, if any, cuts to the Section 8 Project-Based Rental Assistance (PBRA) program the Administration is contemplating for its FY18 request. Approximately 204,000 Section 202 units receive their rental assistance from PBRA.

In a March 9 memo to HUD staff, HUD Secretary Ben Carson sought to quell concerns about the leaked numbers, saying, "Today you may have read preliminary HUD FY18 budget negotiations in national media reports. Please understand that budget negotiations currently underway are very similar to those that have occurred in previous years. This budget process is a lengthy, back and forth process that will continue. It’s unfortunate that preliminary numbers were published but, please take some comfort in knowing that starting numbers are rarely final numbers. Rest assured, we are working hard to support those programs that help so many Americans, focus on our core mission, and ensure that every tax dollar is spent wisely and effectively."

LeadingAge is actively working wtih House and Senate offices to ensure adeuqate funding for all of HUD's programs, including the Section 202 Housing for the Eldelry Program. For FY18, LeadingAge is working to support funding levels to maintain and preserve every HUD-assisted home. To simply maintain existing affordable housing, HUD's funding must increase each fiscal year to keep up with rising operating costs (which are coupled with almost stagnant rent payments from fixed-income residents). LeadingAge is educating House and Senate offices on the fact that any cut to HUD's housing programs will decrease the existing inventory of affordalbe housing. LeadingAge is also supporting expansion of HUD construction and rental assistance funds for the development of new housing affordable to older adults with low incomes. House and Senate offices also need to hear directly from impacted communities and residents on the negative impacts of any budget cuts.

Snapshot of the nation’s 122,000 HUD Section 202 Housing for the Elderly Residents:

  • Average annual income: $13,311
  • Female-headed: 71%
  • Over 83 years of age: 16%
  • Average rent paid by tenant: $297
  • Average HUD monthly subsidy: $364