Senate HUD Bill: Improve RAD for Rents, Services, SPRACs

Legislation | November 13, 2020 | by Linda Couch

The Senate’s fiscal year 2021 appropriations bill for HUD, released on November 10, 2020, includes welcomed changes for HUD’s Rental Assistance Demonstration. 

The Senate’s fiscal year 2021 appropriations bill for HUD, released on November 10, 2020, includes welcomed changes for HUD’s Rental Assistance Demonstration. 

The Senate bill would exempt properties converting on a budget-neutral basis from Section 202 PRACs and Section 202 SPRACs (if authorized, see next paragraph) from initial rent setting provisions of the Section 8 statute in order to continue critical services for older adults and prevent a reduction of project funding. Properties assisted through the Section 202 PRAC and Section 202 SPRAC programs receive funding for the provision and coordination of services within their current contracts. However, initial contract rents under Section 8 are subject to a Fair Market Rent (FMR) cap designed for contracts that only support shelter costs and do not anticipate the cost of these critical services. As properties from these programs convert at budget-neutral levels, enactment of this provision would allow HUD to exempt such conversion from the FMR cap to ensure that the conversion does not put at risk the ongoing provision and coordination of services or result in a reduction in project subsidy. 

The Senate bill would also expand the Rental Assistance Demonstration to include Section 202 Senior Preservation Assistance Contracts. This expansion was requested by HUD. SPRACs were authorized in 2010 as a preservation solution for affordable senior properties that were refinancing their pre-1974 Section 202 Direct Loans. However, with limited funding from Congress and alternative preservation solutions identified by HUD, the stock is unlikely to grow much beyond the 1,450 units currently supported by SPRACs. The proposed change will consolidate the SPRACs, which, by statute, already operate very similarly to Project-Based Rental Assistance, onto the Section 8 platform.

LeadingAge summary of other pieces of the Senate’s FY21 HUD appropriations bill.