Major HUD Programs - Section II Part B

The Section 8 Housing Assistance Payments (HAP) program is a rent subsidy program that assists eligible low-income families to obtain decent, safe, and sanitary housing. It consists of various subprograms, designed to reflect the different types of housing (new construction, substantial rehabilitation, moderate rehabilitation, existing) and delivery mechanisms available. More than 3 million families are assisted under the Section 8 program. The programs share many of the same features.

1. Families receive the benefit of a rental subsidy, known as a housing assistance payment, equal to the difference between their share of the rent and the rent charged by the owner. Adjustments are made if the rent does not include all utilities. (The Voucher program, under section 8(o), works differently, as described in the individual program descriptions set forth below.)

2. Owners, which may be public or private, receive the housing assistance payments directly from HUD or from a PHA that administers the program for HUD for a fee.

3. Eligible families and individuals must be low- income families, which are families with incomes no higher than 80% of the area median. A large majority of eligible families are very low-income families, which are low-income families whose incomes are no higher than 50% of the area median. Section 16 of the 1937 Act restricts the number of eligible families that may be admitted with incomes between 50% and 80%. For pre-1981 units, no more than 25% of the families admitted (on a national basis) may have incomes between 50% and 80%. For post-1981 units, no more than 15% of the families may have such higher incomes.

4. The units must be maintained by the owner in decent, safe, and sanitary condition. If not, the owner does not qualify to receive the HAP payment.

5. Rents must be within the fair market rent (FMR) for the area and type of housing. (The Housing Voucher program also differs on this point as described below.)

6. There exists a Federal statutory preference for families that live in substandard housing, are paying more than 50% of income towards rent, or are involuntarily displaced. However, these Federal preferences have been suspended through FY 1997.

7. At the request of the owner, HUD is to renew §8 contracts which expire or terminate during FY 1997 for one year at the current rent levels, but not more than 120% of FMR. However, for a §202, §811, or §515 project, or a project for which primary financing or mortgage insurance is provided by a public agency (typically an HFA), the contract is to be renewed at current rents which may exceed 120% of FMR. Upon request of the owner and notice to the tenants, HUD is required to let projects where the rents exceed 120% of FMR participate in the Mark-to-Market demonstration (§211 (section 8 renewals) and §212 (Mark-to-Market) of the FY 1997 appropriations Act).

1. Safety and Security. A number of changes were made to enhance safety and security in both public and section 8 housing, including amendments which (a) broaden the scope of activity resulting in eviction or termination of assistance; (b) make persons evicted for drug-related criminal activity ineligible for assistance for 3 years; and (c) require PHAs to exclude current drug users, and permit PHAs to exclude current or former alcohol abusers, if such persons are thought to threaten the rights of other residents. (section 9 of the Extension Act)

2. Streamlining Section 8 Tenant-Based Assistance. The "take-one, take-all" requirement and the "endless lease" provision have been suspended through FY 1997. Several burdensome notice requirements for the Certificate and Voucher programs have been removed for FY 1997 (section 203 of the FY 1996 appropriations Act; section 201(e) of the FY 1997 appropriations Act).

3. Section 8 Fair Market Rentals and Delay in Reissuance. Fortieth percentile FMRs and the 90 day delay in the reissuance of certificates and vouchers are extended through FY 1997.

4. Section 8 Rent Adjustments. Where the contract rent exceeds the FMR, the amount of the adjustment is limited to the amount the owner demonstrates the adjusted rent would not exceed comparable rents. The adjustment factor is reduced by one percentage point for a unit where the same tenant is in place as was in place the year before.

5. Indian Housing Assistance. Beginning in FY 1998, the Indian component of the Section 8 HAP program will be removed and folded into the Native American Housing Block Grant program (see Section XIV Part A of this document).

6. Minimum Rent. Through FY 1997, PHAs are required to charge tenants a minimum rent (up to $50). The Office of Public and Indian Housing, which administers the public housing, certificate, voucher, and moderate rehabilitation programs, has given PHAs the discretion to establish minimum rents anywhere from $0 to $50, and encourages PHAs to adopt hardship exemptions (see PIH Notice 96-81). The Office of Housing, which administers the project-based assistance program, requires private owners of assisted projects to establish a mandatory minimum rent of $25 based on total tenant payment (TTP) with exemptions for the elderly, handicapped/disabled, and working families with adjusted monthly incomes below $75 (see Housing Notice H96-89).

Parts 880 "New Construction," 881 "Substantial Rehabilitation," 883 "State Housing Agencies," and 884 "New Construction Set-Aside for Section 515 Rural Rental Housing Projects;"

Part 882, Subparts A and B: Certificate Program;3

Part 882, Subparts D and E: Moderate Rehabilitation Program

Part 885: Section 202/8 Program;

Part 886, Subpart A (LMSA) and Subpart C (PD);

Part 887: Voucher Program.

Part 982: Voucher and Certificate Program;

Part 983: Project-Based Certificate Program; and

Part 984: Section 8 Family Self-Sufficiency Program.

Program Status:

New Construction and Substantial Rehabilitation: Repealed.

Section 202/8 Program. No new funding. See Section II Part C of this document for revised capital grant/project rental assistance program description.

FY 1997 Funding. The FY 1997 appropriation is $3,600,000,000 to extend expiring section 8 contracts, and $850,000,000 for section 8 contract amendments, to be taken from the $4.64 billion appropriated under the heading "Prevention of Resident Displacement." In addition, $190 million is earmarked for (A) the relocation of residents of properties (1) that are owned by HUD and are being disposed of; (2) that are discontinuing section 8 project-based assistance; or (3) that are subject to special workout assistance team intervention compliance actions; (B) the conversion of section 23 projects to section 8 assistance; (C) family unification; or (D) witness relocation. Finally, $50 million is earmarked for assistance to nonelderly disabled families affected by the designation of public housing as elderly only or by the establishment of preferences pursuant to section 651 of the HCD Act of 1992.

Moderate Rehabilitation program. Except in connection with homeless housing assistance under the McKinney Act, no new funding.

LMSA Program. No new funding.

PD Program. Funding for approximately 5,000 units available for FY 1997.

Pension Fund Demonstration. No new funding.

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