Background

HISTORY

Private HUD (the U.S. Department of Housing and Urban Development) subsidized housing covers a multitude of federal housing programs. The buildings in these programs are privately owned but are made affordable to low income families through subsidies provided by the federal government. There are two kinds of subsidies, operating subsidies and mortgage subsidies. Mortgage subsidies consist of low cost mortgages which were available to the developer of a project and subsequently reduced the operating costs and therefore reduced the rents developers charged to tenants. In buildings with operating subsidies, rents are 30% of a tenant’s income. Buildings originally built with only mortgage assistance became unaffordable to low income families. The federal government responded by providing additional operating subsidies to enable rents to be capped at 30% of a tenant’s income, for those buildings that were already built and had received a mortgage subsidy. The project Section 8 program was also created, but it provided for operating subsidies from the start.

In addition to project based Section 8 program, the federal government, through HUD, operates the following types of affordable housing programs:

• The Housing Act of 1959 created the Section 202 Supportive Housing for the Elderly program.
• The National Affordable Housing Act of 1990 created the Section 811 Supportive Housing Program for Persons with Disabilities program.
• The National Housing Act of 1961 created the Section 221 (d)(3) Below Market Interest Rate program.
• The Housing and Urban Development Act established the Section 236 program.
• The United States Housing Act of 1958 established the Section 231 program.

As costs in buildings built with mortgage subsidies increased at a rate faster than the incomes of low and moderate income families, these families could no longer afford the rents the developments needed to charge to remain solvent. In response to this problem, Congress enacted legislation to create additional operating subsidies for these developments, which became available to the tenants.

WHO ADMINISTERS THE PROGRAM

Federal Agency

At the federal level, HUD administers the program. It distributes the funds and issues regulations and policy notices which the individual owners and operators of this housing must follow.

Local Administration

The private landlord who is the recipient of the federal funds for the program is responsible for administering the program.

FUNDING

All of the funding for HUD-subsidized housing comes from HUD. The federal government has stopped providing direct funding, whether in the form of low interest mortgages or operating subsidies for the development of low income housing since the mid 1980’s. The funding currently provided is only for operating subsidies for existing buildings in the various programs.

Summary of Other Types of Private HUD Subsidized Housing

HUD provides a low interest mortgage and/or operating subsidies to owners of privately owned developments. Owners, who may be for profit or not-for-profit entities, rent individual units to eligible tenants. HUD determines the mandatory and permissible eligibility criteria for each type of subsidy. Each development may have more than one type of subsidy for all or some of its units. Units with mortgage subsidies have rents based on the development’s operating costs. In units with operating subsidies, tenants generally pay 30% of their net income in rent.

Each development maintains its own waiting list and prospective tenants must apply directly to the development. Tenants are entitled to remain in occupancy so long as they abide by the rules of the development.