Reforming the HUD Section 811 Program Andrew Sperling – NAMI Ann O’Hara February 15, 2011

PART 1 SECTION 811 LEGISLATION AND APPROPRIATIONS

Frank Melville Supportive Housing Investment Act Reforms HUD’s Section 811 Supportive Housing for Persons with Disabilities program Bipartisan legislation signed into law on January 4, 2011 Modernizes and reforms the Section 811 program by: ◦ Emphasizing integrated housing models ◦ Creating incentives to link Section 811 rent/operating subsidy funding to other sources of affordable housing capital (tax credits, HOME funds, etc) ◦ Implementing new 811 option targeted to state housing agencies and state Medicaid agencies 3

Section 811 Background 20+ year old program which created “single purpose” housing, primarily group homes and independent living facilities Outdated statute Extensive HUD bureaucracy Low OMB score Stagnant appropriations Low demand (less than 200 applications nationally) Fewer than 1,000 new 811 units created annually since

How Section 811 Worked Section 811 provided: ◦ Section 811 Capital Advance ◦ Section 811 Project Rental Assistance Contract (PRAC) Section 811 applicants/sponsors were non-profit corporations Application required “sign-off” from appropriate state official (state developmental disability agency, state mental health agency etc.) 5

Reformed Section 811 Program 1. Reforms existing 811 Capital/PRAC program 2. Shifts appropriations for “broken” 811 voucher program (14,000 vouchers) to the Section 8 appropriation  Vouchers remain targeted to people with disabilities 3. Creates new Section 811 Project-Based Rental Assistance option to leverage integrated affordable housing units financed with mainstream housing funding (tax credits, HOME funds, etc.)  Cross-disability approach focused on priority Medicaid populations Could fund 3, ,000 new units annually 6

Section 811 Appropriations FY 2010 FY 2010 Appropriation = $300 million (a $50 million increase from FY 2009) Should mean more funding for new Section 811 units FY 2010 Notice Of Funding Availability (NOFA) not released yet! ◦ Perhaps HUD has “tweaked” the program? ◦ New opportunities could be available with FY 2010 funding ◦ Watch for more info at 7

FY 2011 and FY 2012 Appropriations Information to be provided at the seminar 8

PART TWO HOW WILL SECTION 811 WORK NOW?

How Will Reformed Capital Advance/PRAC Program Work? HUD will Publish a Proposed Rule for Public Comment – likely in late Spring/Summer of 2011 Income limits the same = 50% of Area Median Income (AMI) and below Tenant rents = 30% of monthly income Both Capital Advance and PRAC funds will be provided Applicants will continue to be non-profit sponsors “Single purpose” group homes and independent living apartment projects still permitted Creates new category of integrated “multi-family” 811 project Multi-family 811 projects may not have more than 25% of the units targeted to people with disabilities (e.g. 40 unit property could include 10 Section 811 units) 10

How Will Reformed Capital Advance/PRAC Program Work? Multi-family projects are usually funded with federal tax credits, HUD HOME funds, etc Integrated multi-family 811 projects could be prioritized by HUD over other 811 models to: ◦ Leverage these sources of affordable housing capital ◦ Reduce Section 811 capital funding per unit ◦ Produce more units from limited Section 811 appropriations Applicants for “multi-family” model could be non-profit affordable housing corporations willing to partner with local service providers 11

Multi-Family 811 Opportunities Partnerships with non-profit affordable housing developers (i.e. Community Development Corporations etc.) could be important State/local housing officials will know strong non-profit affordable housing groups These groups may be willing to include Section 811 units in their developments These groups may also need “gap” capital financing which 811 can provide Service providers will need to establish partnerships with these non-profits for referrals State sign-off on Section 811 projects will still be needed Involvement of State Medicaid agencies could be helpful 12

New Section 811 Project-Based Rental Assistance Option Goal = Integrated scattered site Section 811 units How? Small set-asides of supportive housing units (e.g units in a 100 unit project) Goal = Create 3,000-4,000 Section 811 units from the same appropriations level How? No Section 811 capital will be provided Project-Based Rental Assistance will be provided: ◦ 30 year use restriction ◦ 15 year PBRA contract with HUD ◦ 5 years of funding initially Extremely Low Income Targeting: People at or below 30% of Area Median Income (AMI) 13

How Will New Section 811 Option Work? State Housing Finance Agencies (HFAs) are the primary applicant Application will request funding for a specific number of 811 PBRA units HFAs are not required to identify the specific projects which will include 811 PRRA units Projects must be “eligible” based on HUD criteria which are likely to include: ◦ Low Income Housing Tax Credit projects ◦ HOME funded projects ◦ State Housing Trust Fund projects ◦ State bond-financed projects HFAs must have policies in place to satisfy HUD criteria ◦ Qualified Allocation Plan for LIHTC ◦ Consolidated Plan for HOME funds 2,500-3,000+ new 811 units every year with $100 million 14

How Will New Section 811 Option Work? State HFA must enter into an agreement with the State Medicaid/Health and Human Services agency which: ◦ Identifies the target populations to be served by the project ◦ Sets forth methods for outreach and referral ◦ Makes available appropriate supportive services for tenants of the project Within 3 years of enactment, HUD must report to Congress on the effectiveness of this new approach 15

Next Steps Inform state officials regarding new Section 811 opportunities Urge them to convene a workgroup to develop the HFA/Medicaid partnership agreement Participate in this workgroup and brainstorm re/ new structure for referrals to Section 811 units in affordable housing developments Urge state officials to begin engaging affordable housing developers regarding this new 811 model Participate in state/local housing planning meetings ◦ Qualified Allocation Plans ◦ Consolidated Plans 16

Timing? FY 2010 NOFA: Anytime now FY 2011 NOFA: Anyone’s guess? HUD Proposed Rule on new Section 811 options published: June or July of 2011? Comment period: days Final Rule published: December 2011? FY 2012 Section 811 NOFA: Spring of 2012? 17