On March 13, the White House released appendices and tables to accompany with the fiscal year 2024 budget request overview delivered to Congress on March 9. For housing programs, the new documents provide detail on the Administration’s request. Overall, the FY24 request seeks $73.3 billion for HUD, approximately $1.1 billion more than the 2023 enacted funding level.

Mandatory and Discretionary Spending Requests

The Administration’s request for HUD funding includes both mandatory (off-budget; outside of the annual appropriations process) and discretionary (subject to the annual congressional appropriations process) spending. One of President Biden’s campaign proposals was to establish an entitlement to housing assistance for income-eligible households. The FY24 request makes good on that proposal for veterans experiencing homelessness and youth transitioning out of foster care. For both, the request seeks mandatory funding for vouchers to address these populations’ housing needs over 10 years. The request also seeks $7.5 billion in mandatory funding for new Project-Based Rental Assistance contracts, the first in decades, as well as $7.5 billion for public housing repair. While interesting, this Congress is not expected to enact or support any mandatory funding for HUD rental assistance programs.

Section 202 Supportive Housing for the Elderly

The request seeks $1.023 billion for the Section 202 account, slightly less than the $1.075 billion enacted by Congress for FY23, for FY24. This includes $797 million to renew Project Rental Assistance Contracts and Senior Project Rental Assistance Contracts, $100 million for new Section 202 homes, and $112 million to renew existing Service Coordinator grants. The Section 202 account request does not appear to seek any new funding for new grant-funded Service Coordinators. “As the physical repair or replacement needs of aging properties increase, HUD has noticed a decline in the availability of other sources, such as residual receipts, to cover a portion of service coordination costs, leading to increases in the size of annual extension requests for established [Service Coordinator] grants,” the request says.

As it did, unsuccessfully, for FY23, the Administration is requesting authority for 202/PRACs to use of an operating cost adjustment factor (OCAF) for annual contract adjustments, with budget-based rent increases every five years. HUD says, and LeadingAge agrees, this would streamline the rent adjustment process for Section 202 and reduce administrative burden on property owners and HUD program staff. Currently, contract rents for properties with Section 202/PRACs are set through annual budget-based rent increases. LeadingAge supports this policy request.

For new Section 202 homes, HUD is also again seeking authority HUD to enter into Section 8 Project-Based Rental Assistance Housing Assistance Payments (HAP) contracts in lieu of PRACs, which HUD says would facilitate nonprofit developers’ access to debt and equity financing and reduce the reliance on direct Capital Advance funds. LeadingAge also supports this proposal.

RAD for Section 202

The budget request seeks three Rental Assistance Demonstration (RAD) items associated with the Section 202 program. First, authority to expand RAD to include Senior Project Rental Assistance Contracts. Second, $10 million in RAD conversion subsidy “to support the cost-effective conversion of 3,000 Section 202 PRAC properties that could not otherwise participate in a RAD conversion to support a more sustainable long-term operation” to increase PRAC rents prior to conversion to the Section 8 platform under RAD. Third, $2 million to utilize for the use of Participating Administrative Entities (PAEs), originally used in the Mark-to-Market program, to conduct the property-level due diligence, including Capital Needs Assessments and environmental reports, that are required of all RAD conversions for small properties converting under RAD. PAE’s “would provide significant relief for owners of small properties, where the cost of such due diligence is often prohibitive to taking the necessary steps to improve the property for residents. These small properties are often in underserved communities, and this authority will assist in long-term preservation and affordable housing opportunities,” the request says.

Section 8 Project-Based Rental Assistance

The request would fully fund PBRA renewals. The Section 8 PBRA program provides operating subsidy for about 1.3 million households through approximately 17,700 rental assistance contracts; Section 8 PBRA provides the operating subsidy for about two-thirds of the nation’s Section 202 communities. Overall, 45% of PBRA-assisted households are headed by an older adult.

The request also includes $25 million to allow budget-based rent adjustments for certain at-risk post-Mark-to-Market Section 8 properties to prevent distress and facilitate rehabilitation (Mark-to-Market contract rents are initially set at market levels and may currently only be adjusted by Operating Cost Adjustment Factors unless approved by HUD for a budget-based rent) as well as $3 million for budget-based rent adjustments at 10–15 properties with health and safety deficiencies. The request also seeks authority for a new $25 million Distressed Properties Capital Loan Program to help about 12 properties (500 units, approximately) support rehabilitation the most distressed PBRA inventory.

In addition to seeking full funding for PBRA renewals, the request seeks new funding of $31 million to support budget-based rent adjustments at PBRA properties serving older adults to cover the cost of a Service Coordinator to help older adult residents stay healthy and age in community.

The President’s budget documents can be found here.