Obama Signs Legislation Supporting Section 202 Housing

In early January, President Obama signed S. 118, “Section 202 Supportive Housing for the Elderly Act of 2010,” which streamlines financing and project operation requirements and allows for increased housing opportunities for low-income seniors.
The American Association of Homes and Services for the Aging (AAHSA) lobbied for the bill’s passage, which includes several construction, refinancing, and preservation reforms. Among them:

• HUD’s Secretary has the authority to adjust the annual amount of a contract for project rental assistance to provide for reasonable project costs.
• Owner deposits will only be used for operating deficits during the first three years of operation and shall not be used to cover construction shortfalls or inadequate initial project rental assistance amounts.
• If a national private nonprofit organization owns multiple housing projects assisted under the Act, it can satisfy the local governing board requirement by having a local advisory board to its national governing board.
• HUD’s Secretary can allow the owner of an assisted housing site to give a preference in tenant selection to an elderly person who is homeless.
• Contains requirements governing senior preservation rental assistance contracts to prevent displacement of elderly project residents in the case of refinancing or recapitalization, and to further project preservation and affordability.
• Directs HUD’s Secretary to carry out a demonstration program to sell to state housing finance agencies portfolios of mortgages associated with loans related to supportive housing for the elderly.
• Prohibits HUD from imposing conditions that restrict the sale or refinancing, or require the filing of a financial report, in connection with the sale or refinancing of a multifamily housing project, or the transfer of an assistance contract on such a property requiring HUD approval, unless the condition is expressly authorized by an existing contract between HUD and the project owner or a general condition for new financing with a mortgage insured by HUD.