What are HUD Section 202/8 and Section 202/ Project Rental Assistance Contracts (PRAC) and what they mean to applicants for Elderly Housing?
June 4, 2014
The HUD Section 202 program historically developed housing for the elderly and persons with disabilities. The program began in the 1960s. Over the past 40 years it has evolved from a loan program to a capital advance program combined with other forms of assistance. The Section 202/8 program began in 1976 and ended in 1991. Funding was a long-term, direct loan to finance housing for the elderly or persons with disabilities. In 1983Plano Community Homes East Campus was developed under the Section 202/8 program. These loans carry an interest rate based on the average yield on 30 year marketable obligations of the United States and properties were developed with 100% Section 8 assistance to help keep units affordable to low-income families. The result was a debt obligation on the property in the form of a 30 year mortgage.
Since October 1991, HUD has provided capital advances, rather than loans, to finance the development of rental housing for the elderly and persons with disabilities. The Section 202 Capital Advance Program provides housing for the elderly, and the Section 811 Capital Advance Program does the same for persons with disabilities. In both the Section 202 and Section 811 programs, the development of rental housing with supportive services is subsidized with an interest-free capital advance, and repayment is not required. Therefore no mortgage service, as long as the housing remains available to very low-income elderly or very low-income persons with disabilities for 40 years. The Plano Community Homes West, Fairoaks of Denton and Pioneer Place campuses were developed under the capital advance program and tenant rental subsidies in the form of Project Rental Assistance Contracts (PRACS).
Both cases described above are subsidized as project based vouchers that stay with the property. Project rental assistance funds are provided to cover the difference between the HUD-approved operating cost for the project and the tenants' contribution towards rent. Since all Plano Community Homes properties are project based vouchers in the form of a subsidy, tenant based voucher are not applicable or accepted at any Plano Community Homes communities.