Congress Enacts Section 811 Modernization Legislation

On December 21, the House passed, by voice vote, the Frank Melville Supportive Housing Investment Act of 2010, S. 1481.  The bill modernizes the Section 811 Housing for Persons with Disabilities program.  It passed the Senate on December 17.

The bill directs HUD to delegate program review and processing functions to state and local housing agencies it determines are qualified to carry out those functions for developments receiving Section 811 capital advances and additional funding from other sources.  HUD must delegate review and processing of a development within 30 days of awarding an advance to the development.  The bill also instructs the HUD Secretary to develop criteria and a timeline to periodically assess the performance of state and local housing agencies in carrying out the delegated processing.  

The Secretary retains the authority to process capital advances in cases in which no housing agency chooses to participate or is sufficiently qualified.

Agencies performing delegated processing may assess a reasonable fee, which will be included in the capital advance amounts in excess of those initially awarded by the Secretary.  The Secretary is instructed to develop a schedule for reasonable fees to be paid to delegated processing agencies.

The bill directs the Secretary to make funds available for project-based rental assistance and to provide HFAs and other appropriate entities the opportunity to apply for the funds.  HUD cannot require the applicant to identify in the application the eligible projects for which the funds will be used.

The number of project-based rental assistance-assisted units in any one development cannot exceed 25 percent of the total number of units in the development.  Eligible developments include new or existing multifamily housing developments for which the development costs are paid with other public or private resources and a commitment has been made by the State Housing Credit allocating agency for an allocation of Housing Credits, by the HOME participating jurisdiction for HOME funds, or by any federal agency or state or local government for funding the development from other sources.  State agencies responsible for health and human services programs must be involved by entering into agreements, as the Secretary believes appropriate, to identify the target population, to set forth methods of outreach and referral, and to make appropriate services available.

Project rental assistance may be provided only for units for extremely low-income (ELI) persons with disabilities and ELI households that include at least one person with a disability.  Units must be operated as supportive housing for persons with disabilities for not less than 30 years.  

The legislation authorizes $300 million in appropriations for each of the fiscal years from 2011 through 2015.

The bill transfers all Section 811-funded mainstream vouchers to the Section 8 Housing Choice Voucher program and directs HUD to develop guidance to ensure that vouchers continue to be provided upon turnover to qualified persons with disabilities or to qualified non-elderly disabled families.

The bill allows rental assistance contract terms to be lengthened from 20 to 30 years for developments using Housing Credits.  In addition, the cost limits established for the HOME program will apply to Section 811 supportive housing receiving a capital advance to assist private, nonprofit organizations expand the supply of supportive housing for persons with disabilities.

HUD recently released its own proposal for reforming the Section 811 program.  HUD’s analysis of its proposed bill says the legislation would reform and streamline the program.  The bill would allow for gap financing, in lieu of full capital funding; align the payment of project-based rental assistance in the Section 811 program with the Preservation, Enhancement, and Transforming Rental Assistance Act of 2010 (PETRA); remove unneeded regulatory oversight; and promote and facilitate community integration as appropriate for persons with disabilities.

The HUD bill would amend the purpose of the program to clarify that housing is intended to be the platform for services.  It would also replace the capital advance with gap financing, and require it be used with other financing and grants, such as Housing Credits and commercial loans.

Similar to S. 1481, HUD’s proposal would replace Section 811’s current development cost limits with the HOME program’s cost limits and would limit to 25 percent the total number of units used for persons with disabilities in any multifamily development receiving gap financing.

The HUD bill also would expand the definition of eligible applicant from private non-profit entities to all tax-exempt entities.

HUD’s proposal is currently in the discussion draft stage and was not introduced in the 111^th Congress.