24 C.F.R. § 880.503
§ 880.503 Maximum annual commitment and project account. (24 CFR Part 880)
Operative Text
(a) Maximum Annual Commitment. Where HUD is the contract administrator, the maximum annual amount that may be committed under the Contract is the total of the contract rents and utility allowances for all assisted units in the project. Where the PHA is the contract administrator, the maximum annual contribution that may be contracted for in the ACC is the total of the contract rents and utility allowances for all assisted units plus an administrative fee for the PHA as approved by HUD. (b) Project Account. (1) A project account will be established and maintained by HUD as a specifically identified and segregated account for each project. The account will be established out of the amounts by which the maximum annual commitment exceeds the amount actually paid out under the Contract or ACC each year. Payments will be made from this account for housing assistance payments (and fees for PHA administration, if appropriate) when needed to cover increases in contract rents or decreases in tenant rents and for other cost specifically approved by the Secretary. (2) Whenever a HUD-approved estimate of required annual payments under the Contract or ACC for a fiscal year exceeds the maximum annual commitment and would cause the amount in the project account to be less than 40 percent of the maximum, HUD will, within a reasonable period of time, take such additional steps authorized by Section 8(c)(6) of the U.S. Housing Act of 1937, as may be necessary, to assure that payments under the Contract or ACC will be adequate to cover increases in Contract rents and decreases in tenant rents.
Section 880.503 establishes two financial mechanisms governing Section 8 housing assistance contracts under 24 CFR Part 880. First, it caps the annual dollar amount that can be committed under a Housing Assistance Payments (HAP) contract, calculated as the sum of all contract rents and utility allowances for assisted units—with an added PHA administrative fee when a Public Housing Authority serves as contract administrator. Second, it requires HUD to maintain a segregated 'project account' for each project, funded by the difference between that annual cap and actual payments made, which serves as a reserve to cover rent increases or tenant rent decreases; if that reserve is projected to fall below 40 percent of the maximum annual commitment, HUD is obligated to take corrective steps under the U.S. Housing Act of 1937.
Plain English — not legal advice.
Owners and managers of projects operating under 24 CFR Part 880 § 880.503 generally ensure that their contract rents and utility allowances are accurately reported, since those figures directly determine the maximum annual commitment available under the HAP contract. A compliant operator maintains awareness of whether HUD or a PHA is serving as contract administrator, as that distinction affects how the annual cap is calculated and whether an administrative fee is included. Operators also monitor the project account balance, understanding that HUD is required to act if projected payments would reduce that reserve below 40 percent of the maximum annual commitment, which can affect the timing and availability of housing assistance payments.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Tenants living in projects covered by 24 CFR Part 880 § 880.503 benefit from a structural protection: HUD is required to maintain a dedicated project account and to take corrective action if that account is projected to fall below 40 percent of the maximum annual commitment, helping to ensure that housing assistance payments remain available even when contract rents rise or tenant rents decrease. If a tenant believes that housing assistance payments are not being properly applied to their unit, they may raise that concern with the contract administrator—either HUD or the relevant PHA—depending on which entity administers the contract. Tenants can also seek guidance from a local tenant-rights organization or HUD's regional office to better understand how the project account and annual commitment limits under § 880.503 may affect their housing assistance.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 4, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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