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HUD Housing Programs: Tenants’ Rights (The Green Book): 1.3.2 Section 221(d)(3) Below-Market-Interest-Rate Program

The oldest of the Federal Housing Administration’s (FHA) low- and moderate-income housing programs was the Section 221(d)(3) Below-Market-Interest-Rate (BMIR) program. Created by Congress in 1961, the program provided subsidized financing—at 3 percent mortgage rates—to private developers of rental housing for families.100 The program continued until 1968, when the Section 236 program replaced it as a vehicle for producing multifamily housing for lower income families.

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.3.3 Section 236 Subsidized Housing

In 1968 Congress replaced (for purposes of new projects) the Section 221(d)(3) BMIR program with the Section 236 program, which was also intended to subsidize the development of privately owned housing for low and moderate income families.102 This program was active for new commitments until Congress ceased appropriating funds for it in 1973,103 and the pipeline for new projects was exhausted a few years later.

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.3.4 Section 202, Section 811, and Project Rental Assistance Contracts (PRACs)/Project Rental Assistance (PRA)

Overview. Section 202 has undergone several interations, utilizing different structures from the original Section 202 program created in 1959. The newer-Section 202, Section 811, and PRAC programs, along with some of the older Section 202 properties, are governed by a unified regulation, 24 C.F.R. Part 891, which sets forth residents’ rights and owners’ responsibilities. HUD has also published several handbooks related to the programs.123

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.3.5 Flexible Subsidy Program

In 1978, Congress created the Flexible Subsidy program for housing projects developed under the FHA-subsidized programs, including the Section 221(d)(3) (BMIR) and Section 236 programs.143 While not technically a subsidized mortgage insurance program, the Flexible Subsidy program was usually used in conjunction with such programs, at least until funding ceased after FY1995. It remains relevant because there may be outstanding loans or Use Agreements that affect operations at developments that still provide affordable housing.

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.4.1.1 Overview

In 1974, Congress enacted Section 8 as the primary vehicle for the federal government’s efforts to provide an adequate supply of low-income housing.147 Although Section 8 is only one section of the revised United States Housing Act of 1937, it authorizes a number of distinct programs, including: Tenant-Based Section 8 Housing Choice Vouchers, and numerous project-based programs, including New Construction, Substantial Rehabilitation, Moderate Rehabilitation, the Additional Assistance program for projects with HUD-insured and HUD-held mortgage

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.4.1.2 Section 8 New Construction

Under the Section 8 New Construction program,161 HUD contracted directly with developers who then acquired sites and constructed housing specifically for the Section 8 program.162 All forms of rental housing, including cooperative housing, were eligible for the program, and the units were anything from single-family homes, including mobile homes, to apartments in high-rise developments.163 In addition, the rents charged had to be within limitations

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.4.1.3 Section 8 Substantial Rehabilitation

The Section 8 Substantial Rehabilitation program181 is essentially the same as the New Construction, program except that it assisted only units substantially rehabilitated specifically for the Section 8 program.182 Cosmetic improvements alone did not qualify as substantial rehabilitation, but anything from curing a substantial accumulation of deferred maintenance to complete gutting and renovation of a building did qualify.183

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.4.1.5 Rural Housing Services (formerly FmHA) Section 515 Set-Aside

To encourage the development of subsidized low-income housing in small towns and rural areas, Congress annually set aside a specific amount of Section 8 appropriations for HUD to use with newly constructed housing financed by the Rural Housing Services (RHS, formerly Farmers Home Administration) under Section 515 of the Housing Act of 1949.192 HUD also established regulations for projects developed under this program.193 The regulations resemble the basic regulations for the Section 8 New Constr

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.4.1.6 Section 202 Housing for the Elderly or People with Disabilities Set-Aside

Another set aside of the appropriated Section 8 funds is used for projects for elderly or people with disabilities, financed under the Section 202 loan program.200 Prior to 1990, the Section 202 program provided direct HUD loans to nonprofit sponsors of housing projects for elderly or people with disabilities.201 HUD established special regulations for the processing of applications for those loans,202 which contained some provisions on project man

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.4.1.7 Additional Assistance for Projects with HUD-Insured or HUD-Held Mortgages (Loan Management Set-Aside)

Soon after the Section 8 program was created, HUD administratively decided to make some of the appropriated Section 8 funds available to already existing FHA-subsidized projects (such as Section 221(d)(3) BMIR or Section 236), which were encountering financial difficulties. This resulted in the Loan Management Set-Aside (LMSA) program (or the Additional Assistance program). Under this program, Section 8 subsidies were made available to tenants in projects that were unable to raise their rents high enough to meet rapidly escalating operating expenses.

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.4.1.8 Additional Assistance for the Disposition of HUD-Owned Projects

Through the Property Disposition program, HUD provided Project-Based Section 8 subsidies for projects it acquired after foreclosure and sold to private landlords. Most of the subsidized projects are former Section 236, Section 221(d)(3) or Rent Supplement projects, although the Section 8 subsidies could have been made available for any projects that HUD re-sold after acquisition.

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.4.2 Section 8 Moderate Rehabilitation

The Section 8 Moderate Rehabilitation program, generally authorized for new units between 1978 and 1990, combined aspects of the Substantial Rehabilitation program and the Tenant-Based Section 8 (then Certificate) program.229 Although the Moderate Rehabilitation program is project-based, it was originally enacted and funded within the tenant-based provisions of the Section 8 statute and HUD appropriations.

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.4.4 Rent Supplement Program

The Rent Supplement program was the first rental assistance program for privately owned properties,279 enacted in 1965 and active for new commitments until 1973. At its peak, this program assisted 179,908 units.280 Most Rent Supplement contracts have been converted to the Project-Based Section 8 Loan Management Set-Aside program, although, as of July 2018, HUD was reporting 3,983 units receiving Rent Supplement assistance.281

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.5.1 Housing Choice Voucher Program (Section 8 Vouchers)

The Section 8 Voucher Program is the largest HUD housing program serving low-income families. Housing Choice Vouchers (HCV) are tenant-based vouchers through which HUD provides rental subsidies for standard-quality units that are chosen by the tenant in the private market. In 1981 HUD began pushing Vouchers as the primary federal mechanism for subsidizing low-income families as part of its policy of emphasizing use of the private market and its opposition to project-based subsidies.

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.5.2.4 Family Unification Program

The Family Unification Program (FUP) is a program under which housing Vouchers are provided to families for whom the lack of adequate housing is a primary factor in the separation, or the threat of imminent separation, of children from their families, and to provide Vouchers to youths from ages 18 to 21 who exit foster care and lack adequate housing. FUP was created in the Cranston-Gonzalez Affordable Housing Act of 1990 as part of the Tenant Protection Fund.359

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.5.2.5 Welfare-to-Work Voucher Demonstration

The Section 8 Welfare-to-Work (WtW) Rental Voucher program helps eligible families make the transition from welfare to work by providing them with tenant-based rental assistance. The program was created in 1999,363 although no appropriations for new Vouchers have been made since that time. Phase-out of the WtW Voucher Program demonstration began on March 11, 2004, but PHAs can use the Vouchers for the same purpose upon turnover.364

HUD Housing Programs: Tenants’ Rights (The Green Book): 1.5.3 Vouchers for Homeownership

In the 1990s, Congress authorized homeownership Vouchers to promote homeownership among low-income people.380 Homeownership Voucher Assistance provides monthly housing payment assistance to families that have been admitted to the Section 8 Housing Choice Voucher program, meet certain criteria and are purchasing eligible homes in an amount that would otherwise have been provided to that family as Tenant-Based Voucher assistance.