HUD Section 202 Housing Update at LeadingAge PEAK Conference

At last week's LeadingAge PEAK conference in Washington, DC, Ben Metcalf, the Department of Housing and Urban Development's (HUD) Multifamily Deputy Assistant Secretary (DAS), provided an update on the HUD 202 program and federal senior housing programs.

He noted that over the past several years, there has been a dramatic reduction in the Section 202 budget, depleting resources for the Section 202 development program. The fiscal year 2010 Section 202 budget was $825 million, while the current (2014) budget funds the program at $383 million. Additional federal housing programs affected by budget reductions have included the Community Development Block Grant (CDBG), HOME, and the Section 8 housing choice voucher program.

HUD’s budget was severely affected by the Budget Control Act (BCA), and projections call for level funding, or modest increases through 2021, unless Congress acts to increase senior housing and services funding.  Metcalf stated that HUD’s priorities are to stay within the budget constraints mandated by Congress while maintaining ongoing commitments to existing programs including the Section 202, 236 and other operational properties.

According to Metcalf, HUD will be looking at private capital, including funding through the Low Income Housing Tax Credit (LIHTC) Program to build new senior housing. The Department of Treasury is looking at several changes to the tax credit program including possibly expanding the nine percent tax credits offered nationally by 23 percent.

HUD Section 202 PRA Demo

The FY2014 budget includes $20 million in Section 202 funding that would include the Elderly Project Rental Assistance Demonstration Program (Section 202 PRA Demo). The program will use available residual receipts and other funds for a demonstration program through a NOFA to test housing with services models that demonstrate the potential to delay or avoid the need for nursing home placement. The NOFA is anticipated to be issued in the summer of 2014.

The Section 202 PRA Demo NOFA would include:

• Allowing properties to set aside housing for an elderly population that is older, poorer, and frailer than those who normally access housing subsidized through LIHTC and/or HOME;
• Placing strong emphasis on Service Coordination linked to community-based services; and
• Requiring rigorous evaluation of the impact of the 202 housing plus service model and demonstrating a positive outcome.

The FY 2014 Omnibus Appropriations Bills eliminates the capital advance requirements for new Section 202 projects and authorizes operating assistance-only grants that will be reflected in the NOFA.

Additional HUD Updates

Metcalf also provided the following updates affecting senior housing:

• A new Energy Reduction through Better Building Challenge will be established that will encourage reducing energy consumption by 20 percent for each project by the year 2020;
• HUD will look at ways to review and analyze the Rent Comparability Study to ensure accurate rent determinations;
• An updated 4350.1 Handbook will be issued;
• A program (Section 8bb) notice will be proposed that will allow for consolidating properties for purposes of refinancing of multiple properties including Section 202 PRACS;
• Budgeting of Section 8 contracts will be aligned with the calendar year like other HUD programs;
• Enforcement requirements will be imposed on properties where REAC scores fall below 60 and below 30; and
• An outcomes-oriented approach to service coordination will be promoted.

FY 2015 Section 202 Budget Proposal

The FY2015 Executive HUD budget proposal includes $440 million for the Section 202 program:

• $350 million for PRAC renewals for 77,505 existing units;
• $70 million for supporting 1,560 existing service coordinators; and
• $20 million for the Section 202 PRA.

LeadingAge and LeadingAge New York will track these new programs, especially the Section 202 PRA Demo, to ensure they can be accessed by our members and integrated into state programs, including the Senior Supportive Housing Services Program.

Contact: Ken Harris, kharris@leadingageny.org, 518-867-8835