The Office of Multifamily Housing published a Notice today regarding the Refinancing of Pre-1974 Section 202 Direct Loans and Subsequent Issuance of Tenant Protection Vouchers (TPVs) or Senior Preservation Rental Assistance Contracts (SPRACs).
The purpose of this Notice is to provide owners with pre-1974 Section 202 Direct Loans options to preserve and extend the affordability of their properties to the low-income elderly occupants for the duration of their loan terms, which will mature over the next 5 years.
The Notice achieves this goal by clarifying that Public Housing Agencies (PHAs) may utilize any TPV assistance issued following the refinancing of pre-1974 Section 202 Direct Loan properties serving the elderly either as regular tenant-based vouchers under 24 CFR Part 982 or as project-based vouchers (PBVs) in accordance with 24 CFR Part 983, which is an important option for owners who wish to preserve the affordability of the property. The Notice also provides guidance on new project-based rental assistance under a SPRAC following the refinancing of a pre-1974 Section 202 Direct Loan. Specifically:
- The Notice clarifies that, by statute, TPVs may be project-based under the PBV program, thus providing ongoing rental assistance to keep the property affordable. This clarification is necessary because Notice H 2013-17, which describes the procedures for refinancing these loans, does not provide clear guidance regarding this option and PHA procedures to project-base these vouchers upon refinancing of pre-1974 Section 202 Direct Loans.
- Under the FY 2017 Appropriations Act, HUD was provided $10 million to use either towards Capital Advances for the development of new affordable housing for the elderly with associated project rental assistance contracts, and/or for SPRACs for preservation of existing elderly properties originally developed and made affordable prior to 1974 under the Section 202 Direct Loan program, but that currently have no rental subsidy. This Notice describes how HUD will use up to $5 million of these funds for SPRACs, which will be provided on a first-come, first-serve basis for any units that cannot be covered under the PBV HAP contract.
- Together, this Notice provides comprehensive options to preserve this stock of affordable housing for the elderly.