HUD Handbook 4350.3 § 5-30

Subsidy

        A.       At many multifamily properties different kinds of subsidies have been combined.
                 For many years, tenant-based Section 8 subsidies have been added to
                 properties built with Section 202 loans or financed with Section 236 and Section
                 221(d)(3) mortgage subsidies. Recently, the Low Income Housing Tax Credit
                 program has been combined with a wide range of programs, from Section 202
                 projects with Section 8 already in place (Section 202/8) to housing choice
                 voucher assistance.

        B.       Although each of the programs combined within one property may have a
                 different formula for determining tenant payments, it is generally possible to
                 determine the correct rent for a family by identifying the available program for
                 which that family is eligible that will provide the best option—or the lowest rent—
                 for the tenant. The one exception to this can be at the recertification of a Section
                 8 or Rent Supplement family in a property with Low Income Housing Tax Credits.
                 If the family’s income has increased since move-in to a point that the assisted
                 rent exceeds the Low Income Housing Tax Credit rent, that family will have to
                 make a choice between the lower tax credit rent and the security of continuing on
                 the rental assistance program.

        C.       The tenant rent at properties assisted under more than one program is generally
                 the lowest rent available for which the tenant is eligible.

                 1.       Section 202/Section 8. In a Section 202 property with Section 8 tenant-
                          based assistance, a tenant eligible for Section 8 will pay the tenant rent
                          based on the Section 8 rent formula. If that tenant’s income increases to
                          the point that its TTP equals or exceeds the Section 8 contract rent, the
                          family would no longer be eligible for the tenant based assistance.

                 2.       Section 236/Section 8. A family with a Section 8 subsidy in a Section 236
                          property will pay the Section 8 tenant rent unless, at recertification, the
                          family’s TTP equals or exceeds the Section 8 contract rent. Thereafter,
                          the family will pay the tenant rent based on the Section 236 rent formula.
                          A family living in a Section 236 property receiving Rent Supplement
                          assistance would also stop receiving Rent Supplement assistance at the
                          point the family’s TTP increased to the level of the rent supplement
                          contract rent. Thereafter the family will pay the tenant rent based on the
                          Section 236 rent formula.

                 3.       Section 221(d)(3) BMIR with Section 8. A family receiving Section 8
                          assistance at a BMIR project would continue to pay the tenant rent based
                          on the Section 8 rent formula until the TTP equaled or exceeded the
                          BMIR rent. Thereafter, the family would pay rent based on the BMIR rent
                          formula.

        D.       In some instances, a tenant will not be eligible for the program offering the lowest
                 rent, or a subsidy under that program will not be available for every unit or every
                 tenant.

Sometimes, Section 8 subsidies are not available for the unit size the family
                needs, and the family must wait for a subsidy for the appropriate unit size. The
                owner’s contract with HUD for the Section 8 assistance allocates Section 8
                funding by unit size, and the owner is required to subsidize families based on the
                unit sizes allocated. If the owner was allocated 10 two-bedroom subsidies and
                has assigned those subsidies to 10 two-bedroom families, the owner cannot use
                an available three-bedroom subsidy to assist an 11th two-bedroom family. If the
                owner has determined that the bedroom distribution in its contract does not
                match the need in the project, the owner can ask HUD for a contract amendment
                to revise the unit size designations of the subsidy awarded.

        E.       In some instances, a family will not be eligible for a lower rent program available
                 at the property.

                For example, a family in a BMIR project with Section 8 may be financially
                stretched when paying the BMIR rent but may not be income-eligible for the
                lower-rent Section 8 program.