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HUD Section 811 Supportive Housing for Persons with Disabilities: Profile of the Program

The Supportive Housing for Persons with Disabilities Program is funded under Section 811 of the National Affordable Housing Act of 1990. Under Section 811, the U.S. Department of Housing and Urban Development (HUD) provides a Capital Advance to nonprofit organizations for the new construction or substantial rehabilitation of housing for very low income persons with disabilities. A capital advance is a zero interest loan that will not have to be paid back to HUD, provided that the project remains in operation for a 40 year term, serving very low income persons with disabilities. In addition to housing, each Section 811 project has a supportive service plan that has been approved by a designated state agency, such as New York State Office of Persons with Developmental Disabilities (NYSOPWDD) for projects serving persons with developmental disabilities, the appropriate state or county office of mental health, for projects serving persons with chronic mental illness and the New York State Office of the Advocate for Persons with Disabilities for persons with physical disabilities. All eligible residents have the option of selecting services offered by the Section 811 project or services that may be available by other providers. Acceptance of services offered by the Section 811 project is not a condition of occupancy.

Eligible residents: Under Section 811, eligible tenants include persons who are 18 years and older, very low income and disabled. Disabled includes mental/emotional disabilities, developmental disabilities, chronic mental illness and physically disabled, which includes persons disabled by HIV. Very low income, for example, in New York HMFA (as of FY 2014), for a one person household, is $29,400, and for a two person household is $33,600.

Eligible costs during construction: The Section 811 Capital Advance can cover construction costs, architect fees, engineering costs, soft costs (e.g., property insurance, taxes during construction, title and recording, attorney and consultants) and property acquisition (not to exceed a HUD-approved appraised value).

Eligible applicants: The nonprofit organization that applies and competes for the HUD Section 811 Capital Advance is the Sponsor. The Sponsor should have experience in providing housing and or services for persons with disabilities. After being approved by HUD for funding, the Sponsor applicant must form a single asset not-for-profit corporation (the Owner Corporation), under Article 75 of the New York State Mental Hygiene Law, to own and run the project. The Owner Corporation will also obtain tax exemption under Internal Revenue Code 501(c)(3). During the planning phase, construction period and ongoing operation of the 811 project, HUD looks to the Sponsor to stand behind the Owner Corporation and lend its experience to address issues that may arise and provide financial support, if necessary.

Housing Operating Expenses and Subsidies: Housing expenses include the ongoing costs of housing management and administration, operations, maintenance and replacement reserve. Real estate tax exemption or abatement will be mandatory. Since the occupants are very low income, a subsidy is required to supplement rental income in order to cover the project’s operating expenses. Under Section 811, HUD provides a Project Rental Assistance Contract (PRAC) to the Owner Corporation which subsidizes the difference between tenant contributions to rent and an approved contract rent amount. Tenant contributions are at about 30% of annual adjusted tenant income and must cover 25% of the approved contract rent. The HUD subsidy will not exceed 75% of the contract rent. The PRAC contract has a five year term and is renewable, subject to HUD approval.

Type of housing: Housing types include Independent Living Projects and Group Homes.

Independent Living Project (single site apartment building or scattered cooperative apartments /condominiums):
Minimum 5 rental units; maximum 14 rental units, but not to exceed 14 disabled residents; plus 1-1 BR or 2BR unit for a resident manager, if needed. Under the 2004 NOFA, HUD will allow an independent living project to exceed 14 rental units for applications with acceptable site control and justification for the increase.
Maximum Unit Size: 0 Bedroom - 425 sq. ft.; 1 Bedroom - 540 sq. ft.; 2 Bedroom - 800 sq. ft.

Group Home: minimum 2 beds; maximum 6 beds; plus 1-1BR for resident manager, if needed. One person to live in each bedroom unless persons choose to share a bedroom.
Minimum Areas: 290 sq. ft./resident; 100 sq. ft./Bedroom

All housing projects must conform to HUD’s minimum property standards, as well as to Federal accessibility requirements and to building codes which are applicable to each area.

Development Cost limits for FY 2010 funded Section 811 projects (the most recent NOFA fiscal year): HUD will determine on a case by case basis if these cost limits apply to projects already in the pipeline:

Independent Living Project:

Unit Size Elevator

0BR: $54,447

1BR: $62,414

2BR: $75,896

3BR: $98,184

4BR: $107,777

Unit Size Non-Elevator

0BR: $51,739

1BR: $59,655

2BR: $71,944

3BR: $92,091

4BR: $102,593

Group Home for Persons with Disabilities:

Number of Residents: Physical/Developmental

2: $206,358

3: $221,908

4: $237,461

5: $253,011

6: $268,546

Number of Residents: Chronic Mental Illness

2: $199,198

3: $214,211

4: $227,547

5: $240,883

6: $254,218

NOTE: These are national cost limits. HUD allows for regional differences in the cost of housing. Starting in FY2007, at the initial approval, or Fund Reservation stage, HUD calculates the Capital Advance for projects in NY City by multiplying the cost limits by 260% for independent living projects and group homes. For prior funded prior to FY2007, during HUD’s processing of a Firm Commitment application, limits can be increased from 240% to 260% subject to HUD approval. Also, additional funding may be added based upon approved costs in the project for common space (e.g., management office, shared activity space in independent living apartment project) and site improvements.

Financial Requirements: The Sponsor must make a commitment to cover any costs over and above HUD funding, plus start-up costs until HUD funding is available (just prior to start of construction) and contribute a Minimum Capital Investment (in an amount equal to one-half of one percent of the capital advance not to exceed $10,000).