Review of FY23 HUD Funding Bill: Affordable Senior Housing

Review of FY23 HUD Funding Bill: Affordable Senior Housing

Overall, the fiscal year 2023 omnibus bill would provide $58.2 billion for HUD, an increase of $4.5 billion compared to fiscal year 2022. Funding for HUD’s Section 202 account increased by $42 million, to $1.075 billion while the much larger Section 8 Project-Based Rental Assistance account increased by $1 billion to $14.9 billion.

Below is a summary of the bill’s provisions of particular interest to affordable senior housing and other aging services providers.

New Section 202 Housing

The bill provides $110 million for new capital advances and Project Rental Assistance Contracts for new Section 202 homes, less than FY22’s $199 million but $10 million more than HUD requested for 2023 (despite, as HUD said in its FY23 request to Congress, the program “the only Federally funded program that expressly addresses the need for affordable elderly housing.”) The new funds for FY23 are expected to result in about 1,120 new Section 202 homes. Of the $110 million, $25 million is set aside for intergenerational households. The bill does not include HUD’s request to allow HUD to issue Section 8 Project-Based Rental Assistance with new Section 202 awards.

The bill includes $50 million for about 12,000 new Housing Choice Vouchers, which aging services providers can work to project-base in affordable senior housing and in assisted living. The bill also includes a new $85 million program to incentivize local governments to improve zoning practices for affordable housing and a new $75 million program for new Permanent Supportive Housing to expand housing options for people experiencing homelessness. The bill flat-funds HUD’s HOME program at $1.5 billion.

Contract Renewals and Preservation

The omnibus bill provides full funding to renew Section 202 Project Rental Assistance Contracts as well as Section 8 Project-Based Rental Assistance contracts.

In addition to full renewal funding for Section 202 PRACs, the bill also includes $6 million to increase PRAC rents prior to 202/PRAC conversion to the Section 8 platform via the Rental Assistance Demonstration housing preservation program. For FY23, HUD had requested $10 million for this purpose. Having the highest PRAC rents possible translates into having the highest Section 8 PBRA rents possible after a RAD conversion, which can help meet rehabilitation needs of communities.

Interestingly, almost $1 billion of the bill’s $14.9 billion for the Section PBRA account is from emergency funding from the Disaster Relief Supplemental Appropriations Act, which is one of many provisions in the omnibus in addition to the 12 appropriations bills.

The omnibus includes an iteration of authority requested by HUD, and supported by LeadingAge, to increase post-Mark-to-Market rents or renew contracts at levels equal to the lesser of budget-based rents or comparable market rents. HUD estimates that of the approximately 1,800 post-M2M Section 8 properties, about 830 have rents currently below their area’s Fair Market Rent. With the authority, HUD can increase rents at the request of an owner or purchaser who demonstrates that project income is insufficient to operate and maintain the project (and no rehabilitation is currently needed) or the rent adjustment or renewal contract is necessary to support commercially reasonable financing for rehabilitation necessary to ensure the long-term sustainability of the project. Under either scenario, the owner / purchaser must agree to extend affordability and use restrictions for an additional 20 years. If an owner / purchaser fails to implement the rehabilitation as required by the Secretary, the Secretary may “take such action against the owner or purchaser as allowed by law.”

This new authority was sought by HUD in its FY23 budget request to Congress, but also with $275 million for these rent adjustments that did not martialize in the final bill. The omnibus does not set aside specific funding for the rent adjustments, but the bill goes further than HUD’s request by placing some responsibility on the owner / purchaser, including by extending the affordability and use restrictions by 20 years and by restating HUD authority to sanction owners who do not invest these funds into needed rehabilitation. LeadingAge worked with appropriations committee staff to support this authority and the additional funding, and LeadingAge supported language (included in the final omnibus) to bring additional accountability to these funds.

Service Coordinators

The omnibus bill would fully fund grant-funded Service Coordinator renewals but is unlikely to have enough funds to expand the number of grant-funded Service Coordinators. HUD’s FY23 budget request said that $120 million is necessary to renew the 1,600 existing Service Coordinator grants.

HUD’s FY23 request also sought funding for more budget-based Service Coordinators through a $31 million increase to Section 8 PBRA budget-based rent increases. The omnibus does not provide any of these funds, which LeadingAge supported.

As Congress did in the FY22 HUD bill, the FY23 bill directs HUD to distribute Service Coordinator funds within 120 days of the bill’s enactment.

Performance-Based Contract Administrators

The bill provides $343 million for Performance-Based Contract Administrators, $32 million less than HUD sought for FY23. In addition to the funding, the bill’s report is quite clear on how HUD should proceed with its draft solicitation for new PBCAs: stop. “The bill prohibits HUD from issuing a solicitation or accepting bids on any solicitation that is substantially equivalent to the draft solicitation entitled ‘Housing Assistance Payments (HAP) Contract Support Services.’” The bill’s report says that if HUD cannot come up with a draft solicitation that’s very different than the widely criticized and / or questioned 2022 draft solicitation, it must include a PBCA legislative proposal as part of its FY24 budget request to Congress. And, if a legislative proposal is necessary, HUD must develop that with “relevant stakeholders.”

Homeless Assistance Grants

The bill Homelessness increases funding for HUD’s Homeless Assistance Grants (HAG) account by $420 million to $3.63 billion. The 13.1% increase is the largest ever for the homelessness program; and the total amount is also the largest ever for the program. The funds include increases for housing stability assistance, a new national homeless data project, and a one-time $75 million award for new construction, acquisition, or rehabilitation of new Permanent Supportive Housing. This resource increase aligns with the Administration’s goal to reduce homelessness in the United States by 25% by 2025.

Older Adult Home Modification Program

The bill doubles the funding, compared to FY22, for HUD’s Older Adult Home Modification Program, from $15 million to $30 million and, as LeadingAge has urged since the program’s inception in the FY19 HUD funding bill, expands program beneficiaries from “low income elderly homeowners” to “low income seniors” so that all older adult households (owners and renters) (besides those with HUD project-based assistance) can benefit from this much-needed program.

Smoke Alarms in HUD Housing

The omnibus bill includes the Public and Federally Assisted Housing Fire Safety Act, which LeadingAge supported while also recommending changes to it during 2022. The bill requires owners and operators of Section 202, Section 8 PBRA, Public Housing, Housing Choice Vouchers, Section 811, HOPWA, and USDA Section 514 and Section 516 to install hardwired or tamper-resistant, battery-powered smoke alarms. The requirement takes effect two years after the omnibus is signed into law and authorizes “such sums” as may be necessary to carry out its provisions. The bill is silent on who will enforce its provisions.

Low Income Housing Tax Credits

The omnibus bill does not include any measures to improve or expand the Low Income Housing Tax Credit program. Despite a long wish-list for the Housing Credit program, outlined in bi-cameral bills with robust bi-partisan support (HR 2573, S 1136), LeadingAge and other advocates focused on securing two provisions in any end-of-year package: to expand Housing Credit authority by 50%, and at a bare minimum reinstate the 12.5% cut to the Credit made at the end of 2021 and to enhance the use of existing Private Activity Bond authority for rental housing production by lowering the bond financing threshold from 50% to 25%.

Read the bill here.

Read the bill’s explanatory statement here.




Alyssa Odegaard – Vice President, Public Policy 
cell: 206-948-2279

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