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What Types of Multifamily Subsidized Housing Programs Are There?

Produced by Massachusetts Law Reform Institute
Reviewed December 2009

Multifamily subsidized housing is owned and operated by private owners. If you are a tenant in multifamily housing, you cannot take the subsidy someplace else. It stays with the development.

The ownership may be for-profit or nonprofit. Owners receive subsidies from the government to lower the cost of their mortgages or to rehabilitate existing housing or build new apartments. In exchange, they are required to set aside a certain percentage of apartments as affordable for low- and moderate-income people.

Most multifamily developments are mixed income housing. This means that some apartments are subsidized and some are market-rate apartments. Sometimes, however, all of the apartments are subsidized. Multifamily housing may also be subsidized by more than one program. For example, there may be a mix of subsidies, such as a deep subsidy, in which rent is set at roughly 30% of your income, and a shallow subsidy,in which the rent is below market level, but is not based on a percentage of your income. The best way to figure out the rent of an apartment is to contact the owner or manager and ask what programs subsidize the housing and what type of subsidy is involved (deep or shallow). You can also check your lease, your annual recertification papers, and any other papers the landlord gave you when you first moved in. Sometimes this will help you figure out what kind of subsidy you have.

There are many different types of multifamily housing programs in Massachusetts, each with its own rules, income limits, and affordability restrictions. What follows is a summary of the major multifamily programs.

Federal multifamily subsidized housing

In federal multifamily housing, the owner has a contract directly with the U.S. Department of Housing and Urban Development (HUD). HUD provides rental subsidies, below-market interest financing, mortgage insurance, or other forms of assistance. In exchange, the owner agrees that during the term of such assistance, the property is subject to low-income use restrictions. There are approximately 71,000 affordable apartments in Massachusetts funded through federal multifamily programs. You can contact HUD's Boston regional office at 617-994-8200 to get a complete list of multifamily developments with contact information for each development. HUD can also send you a booklet containing a lot of this information.

If an owner is not complying with HUD requirements, HUD can be contacted but it usually provides only limited oversight. HUD handbooks describe the form of the lease and detail many of the procedures to be followed in admitting applicants and determining rents.68 All HUD multifamily developments follow similar eviction requirements, and the owner must have good cause for eviction based on a breach of the lease.69 HUD also has tenant participation requirements, providing tenants and tenant organizations with certain rights and protections.70 The primary federal multifamily housing programs are:

Section 221(d)(3) and (d)(4) (BMIR) multifamily housing

HUD subsidizes an owner's mortgage by lowering the mortgage interest rate. Properties subsidized under this program are sometimes referred to as Below Market Interest Rate (BMIR) property. Rents are not based on a percentage of a tenant's income, but are a flat amount that HUD approves.71 However, in a number of these developments, there may be other rental assistance under the rent supplement or Section 8 project-based assistance programs for some or all apartments that will change these rent rules. There are approximately 9,700 apartments in Section 221(d)(3) developments in Massachusetts; some also receive project-based Section 8 multifamily assistance (see below).

Section 236 multifamily housing

HUD subsidizes the interest on an owner's mortgage. HUD sets a basic rent and the tenant must pay at least either the basic rent or 30% of income, whichever is higher.72 However, the development may receive other forms of rent subsidy under the rent supplement, Section 236 RAP, or Section 8 project-based assistance programs. There are approximately 26,000 apartments in Section 236 developments in Massachusetts; some also received project-based Section 8 multifamily assistance (see below).

  • View HUD's Section 236 PDF Fact Sheet on how rents are calculated for the regular Section 236 program

Section 236 Rental Assistance Program (RAP)

This is an early form of rental subsidy that was used for up to 20% of the units in Section 236 developments prior to the Section 8 program. Some developments still have Section 236 RAP assistance. With this subsidy, your rent is set at 30% of income.73

Rent supplement program

This is an early form of rental subsidy that was used in Section 221(d)(3) and Section 236 developments prior to the Section 8 program. Some developments still have rent supplement assistance. Your rent is the higher of either 30% of income or 30% of the gross rent.74

Project-based Section 8 assistance for multifamily housing

Starting in the mid-1970s, HUD made project-based Section 8 assistance available for multifamily housing—for new construction, for substantial rehabilitation of existing buildings, for additional assistance for Section 221(d)(3) and Section 236 developments that were having financial difficulty (also called loan management set-aside), and for sale of multifamily developments (property disposition) that HUD had acquired when the owners went into default. The term of these Section 8 subsidy contracts can vary from 5 to 40 years. Rent is set at 30% of your income.75 This is a very large and important resource. There are approximately 33,000 apartments with Section 8 project-based multifamily assistance in Massachusetts.


This program is different from the Section 8 Project-Based Voucher (PBV) discussed above. It is easy to mix up the programs due to the similarity in names. This Section 8 assistance, however, does not come from a housing agency's regular Section 8 voucher inventory, but is from the owner's direct Section 8 contract with HUD.

Section 202 housing for seniors and people with disabilities

HUD provides grants or loans to nonprofits to construct or rehabilitate housing for seniors and people with disabilities. The Section 202 program evolved into a program that was renamed Supportive Housing for Elderly, which was only for seniors where one or more people in the household were 62 or older. Usually there is a form of Section 8 project-based assistance tied to the development, and rent is set at 30% of income.76 There are approximately 9,650 apartments in Section 202 developments in Massachusetts.

Section 811 housing for people with disabilities

This program provides supportive housing for people with disabilities who are very low-income. Here again, usually there is a form of Section 8 project-based assistance tied to the development, and rent is set at 30% of income.77 There are approximately 670 apartments in Section 811 developments in Massachusetts.

Expiring use

Many multifamily developments are facing what is called an expiring use problem. These developments received mortgage insurance or financing or signed project-based subsidy contracts that required owners to keep rents affordable for up to 40 years. In some cases, owners could pay off the subsidized mortgage earlier (prepay) or the mortgage is coming to the end of its term. In other cases, the owner and HUD might not agree to renew the subsidy contract. If either of these happens, the restrictions that keep rents affordable may be lost and rents can be raised to market rate. A number of owners in Massachusetts have pre-paid or attempted to pre-pay. Other developments are coming to the end of their use restriction period or subsidy contracts.

Expiring use not only can result in displacement of tenants, but can result in the loss of affordable housing opportunities for applicants. You are not powerless in this situation. A combination of legal strategies and organizing efforts may be successful.78 If you are facing this problem, you should contact your local Legal Services program.

  • Visit the Expiring Use Database from the Citizen's Housing and Planning Association website to get a list of expiring use properties in Massachusetts

Enhanced vouchers

If a federal multifamily development has had its mortgage pre-paid or if an owner has refused to renew the project-based subsidy contract, there is also a program called the Enhanced Voucher program. It is designed to help protect tenants already in the development from displacement. The voucher looks a lot like a regular Section 8 tenant-based voucher and is administered by a housing agency. However, it can pay a higher rent than would ordinarily be the case if it is used at the development. While you are at the development with your Enhanced Voucher, the owner must always have good cause to evict you or to not renew your lease. If you move out, the voucher's value changes to that for a regular Section 8 voucher, and regular Section 8 eviction rules apply. Some special rent rules apply to Enhanced Vouchers so that tenants' rents are generally similar to those previously in effect. Tenants at the development will be notified of the need to apply for the vouchers in order to qualify for continued assistance.79 As of 2009, there are approximately 7,500 Enhanced Vouchers administered by about 30 housing authorities in Massachusetts.80 

Section 8 Moderate Rehabilitation Program

A number of apartments are subsidized under the Section 8 Moderate Rehabilitation (or "mod rehab") program. In exchange for providing a moderate level of rehabilitation to a property, the owner is provided a rent subsidy for a number of years by the local housing authority or a regional nonprofit housing agency.81 Some Section 8 mod rehab funds are part of the McKinney program and are targeted for single room occupancy (SRO) units for the homeless.82 There are over 1,500 Section 8 mod rehab units in Massachusetts; over 900 of those units are McKinney SRO units.

You must apply through the local housing authority or a regional nonprofit housing agency, and you must regularly report to that agency regarding your income and household composition. Your rent is limited to 30% of income and cannot be higher, as it can with the regular Section 8 voucher program. The owner can evict (or not renew your lease) only for good cause. The housing agency can, however, terminate your subsidy if you have violated Section 8 program rules (such as not properly reporting your income or family composition or engaging in fraud).83

As with the multifamily housing program, this subsidy is tied to the building, and cannot be used by the tenant to relocate to another location. If the tenant moves out or is evicted, she loses the subsidy. If the property can no longer be subsidized under these programs because it is not up to code or the owner or HUD decides not to renew or extend the subsidy, the tenant will be eligible for a regular tenant-based voucher.

HOME Program (other than tenant-based rental assistance)

The state or a city or town that gets HOME assistance may choose to use it to help create or preserve affordable housing developments, rather than for tenant-based rental assistance. This funding may be linked with other sources, such as tax credits or project-based Section 8 vouchers. There are maximum rents for HOME housing, and they may not exceed 30% of what 65% of the area median income would be. Therefore, as with Tax Credit units (described below), most low-income tenants need to have other subsidies in order to be able to afford these units. In rental projects with five or more HOME-assisted units, 20% of the HOME units must be occupied by families with incomes at or below 50% of area median income, with rents set either at 30% of the tenant's actual income or at 30% of 50% of the area median income. There are special applicant and tenant protections for HOME assistance, including use of written tenant selection criteria, requiring a lease with a term of at least one year, good cause eviction protections, and the requirement for a 30-day notice to terminate the tenancy.84 There are approximately 10,000 HOME non-TBRA rental units in Massachusetts as of mid-2009.85 

Federal Rural Housing Service (RHS) multifamily subsidized housing

The Rural Housing Service (RHS) division of the U.S. Department of Agriculture also funds the development of affordable rental housing in rural areas through its Section 515 mortgage program. The program provides low-interest long-term direct loans to nonprofit and for-profit developers who agree to keep units affordable for at least 20 years. In Massachusetts, the bulk of the units are in elderly-only developments. Most projects have some form of project-based rental assistance (Section 8 or RHS rent subsidies a few have state-funded rental assistance under the MRVP program. Massachusetts has 43 RHS developments for the elderly with 1,481 affordable units.86 

MassHousing multifamily subsidized housing

Through MassHousing, a state housing agency (formerly known as Massachusetts Housing Finance Agency, or MHFA), private owners get money to develop affordable housing. These funds can come from the state or the federal government, or sometimes both.

MassHousing provides oversight for developments financed through its programs, and directly funds a few programs. It also administers a number of project-based Section 8 contracts for HUD, but does not provide general oversight over those developments, leaving that to HUD. To figure out whether the housing is financed through MassHousing, you can check their website or ask that MassHousing send you a book listing all of its developments. Unfortunately, this information does not necessarily tell you much about the types of subsidies involved and how rents are set for different apartments. You may be able to get additional information about a particular development by contacting a management analyst at MassHousing. If you have a dispute with the development owner, you may be able to get MassHousing to intervene in resolving it.87

Section 13A Interest Subsidy

A mortgage interest subsidy provided to about 60 privately owned developments that reduced rents for about 6,000 apartments. The number
of 13A apartments has decreased in recent years because some owners have chosen to pre-pay their 30- to 40-year mortgages after 20 years and end the subsidy and the restrictions that keep apartments affordable.88

Project-Based Mass. Rental Voucher Program (non-mobile)

Both MassHousing developments and some other housing developments may rely on the use of project-based MRVP assistance. Project-based MRVP assistance can include developments with moderate rehabilitation (mod rehab). Project-based vouchers stay with a particular housing development and are not tenant-based or mobile. In particular, there are designated Low-Income Set-Aside units in certain developments where Project-based MRVP is used. The Section 13A program (see above), as well as tax-related programs (see below) and a number of smaller programs all have used this assistance.89

Applicants apply to a project-based MRVP waiting list which a housing agency has established. MassHousing also gives a transfer preference for existing tenants in its developments who must relocate due to excessive rent burden or other good cause and who need a more affordable apartment. Low-Income Set-Aside units are to be marketed to individuals and families who have mobile Section 8 or MRVP vouchers. If sufficient applicants can not be found that way, the housing agency can request that EOHLC and MassHousing approve the assignment of a project-based MRVP voucher to the development.90

If you have a tenant-based MRVP and move into a Low-Income Set-Aside unit, you can either keep the tenant-based MRVP or can give it up for a project-based voucher. If you give up the voucher, you lose mobility, but there may be advantages on your rent level. Rent is set at 35% of income for the project-based MRVP program if you do not pay for utilities, and 30% of income if you pay for some or all utilities.91

You can be evicted from a project-based MRVP apartment only for good cause, and the owner must show good cause to not renew your lease.92

Tax-related programs for affordable housing

Several tax-related programs have been developed to help create or preserve affordable housing. These programs have been used for initiatives in many different types of housing, including redevelopment of public housing, rehabilitation or preservation of multifamily housing, and development of new affordable housing. You need to know what other programs and subsidy rules apply in order to know your rights.

Federal Low-Income Housing Tax Credit Program (LIHTC)

The federal Low-Income Housing Tax Credit program is a federal program created in 1986 that has funded about 30,000 affordable apartments in Massachusetts.93 Under the program, private owners raise money to develop and operate affordable rental housing by selling federal tax credits to investors. These tax benefits are distributed through state housing agencies, such as EOHLC and MassHousing. In return for tax credits, participating developers agree to reserve a percentage of the apartments for low-income families. There are two alternative types of rent restrictions: 40% of the apartments must be affordable to those with incomes at or below 60% of the area median income; or 20% of the units must be affordable to those with incomes at or below 50% of area median. The apartments generally must remain affordable for at least 30 years.

Unlike public housing or vouchers, tax credit rents do not change based on changes to family income unless some other subsidy rules apply to the program. These flat rents are often not affordable to those with lower incomes. However, an owner of a federal tax credit development has an affirmative duty to accept Section 8 tenant-based vouchers for available apartments.94 Applications are taken at each privately owned development or building. There are some special tax credit rules about eligibility for students, but many low-income individuals who are students may fit into exceptions so that they are eligible.95 You can be evicted only for good cause from these developments.96

State Low-Income Tax Credit Program

In 1999, Massachusetts passed a state low-income tax credit program. The state program is run by EOHLC and has features that are similar to the federal low-income housing tax credit program.97 State tax credits were used to help develop over 2,300 affordable units between 2001 and 2008.98 


68 HUD Multifamily Occupancy Handbook 4350.3, REV-1, CHG-3 (June 2009).

69 24 C.F.R. Part 247.

70 12 U.S.C. § 1715z-1b; 24 C.F.R. Part 245. Note: The HUD tenant participation regulations now apply also to MassHousing (formerly MHFA) developments with federal assistance.

71 Section 221(d)(3) program: 12 U.S.C. §1715l(d)(3) and (d)(5 24 C.F.R. Part 200 Subpart A, and Part 221, Subparts C and D.

72 Section 236 program: 12 U.S.C. §1715z-1; 24 C.F.R. Part 236.

73 Section 236 rental assistance program (RAP): 12 U.S.C. § 1715z-1(f)(2 24 C.F.R. Part 236, Subpart D.

74 Rent supplement program: 12 U.S.C. § 1701s. While the rent supplement regulations that used to be at 24 C.F.R. Part 215 no longer exist, HUD states that developments receiving assistance under this program will continue to be governed by the regulations that were in effect prior to May 1, 1996, with a few small modifications. See 24 C.F.R. §§ 200.1302 and 200.1303.

75 Section 8 project-based rental assistance: 42 U.S.C. § 1437f; 24 C.F.R. Parts 880 (new construction), 881 (substantial rehabilitation), 883 (state agency set-aside), and 886 (additional assistance and property disposition). For rent and program rules, see also 42 U.S.C. § 1437a; 24 C.F.R. Part 5; HUD Multifamily Occupancy Handbook 4350.3, REV-1, CHG-3 (June 2009).

76 Section 202 program: 12 U.S.C. § 1701q; 24 C.F.R. Part 891.

77 Section 811 program: 42 U.S.C. § 8013; 24 C.F.R. Part 891.

78 Owners are required to give a year's advance notice to HUD and affected tenants before terminating any project-based Section 8 contract. The notice must state that if Congress makes funds available, the owner and HUD may agree to a renewal, and if there is no renewal, HUD will provide enhanced vouchers. 42 U.S.C. § 1437f(c)(8). If the owner wishes to prepay, the owner must give a notice of intent to prepay to HUD, affected tenants, and the chief executive officer of the locality at least 150 days but not more than 270 days prior to prepayment. Prepayment is permitted only to the extent that it is consistent with the terms and conditions of the mortgage or mortgage insurance contract for the development. The owner must also agree not to increase the rent charges for a 60-day period after prepayment. Pub. L. No. 105-276, § 219(a), 112 Stat. 2487 (Oct. 21, 1998). In some cases, prepayment is barred absent specific HUD findings. 12 U.S.C. § 1715z-15; HUD Notice H-2004-17 (Aug. 20, 2004 Brighton Village Nominee Trust v. Malyshev, 2004 U.S. Dist. LEXIS 4703, 2004 WL 594974 (D. Mass. 2004). There may also be local zoning or affordability restrictions that provide strategies for preservation.

79 42 U.S.C. § 1437f(t HUD Notice PIH Notice 2001-41 (HA), Section 8 Tenant-Based Assistance (Enhanced and Regular Housing Choice Vouchers) for Housing Conversion Actions—Policy and Processing Guidance (Nov. 14, 2001). ), as extended and revised most recently by HUD Notices PIH 2008-12 (HA), Enhanced Voucher Requirements for Over-housed Families (Feb. 15, 2008), and PIH 2008-28 (HA), Extension – Housing Choice Voucher Program – Enhanced Vouchers – Adjustment of Voucher Housing Assistance Payments for Certain Families that Received “Preservation” Voucher Assistance as the Result of an Owner Prepayment or Voluntary Termination of Mortgage Insurance for a Preservation Eligible Property in Federal Fiscal Year (FY) 1997, FY 1998, and FY 1999 (June 26, 2007).

80 Summary of Preservation Activities, New England Region/OPH, HUD, Revised 10/8/2009, on file at Massachusetts Law Reform Institute.

81 24 C.F.R. Part 882.

82 42 U.S.C. § 11401; 24 C.F.R. Part 882, Subpart H.

83 24 C.F.R. §§ 882.413, 882.514, 882.515, and 882.518.

84 42 U.S.C. §§ 12745(a) and 12755; 24 C.F.R. §§ 92.252 and 92.253.

85 Data was derived from HUD Dashboard Reports.

86 42 U.S.C. §§ 1471 et seq.; 7 C.F.R. Part 3560.

87 G.L. c. 23A, App. 1, § 1-13A (as added to St. 1966, c. 708 in 1970 and amended in 1975). There is a Section 13A Handbook which is available through the MassHousing website.

88 G.L. c. 23A, App. 1, § 1-13A (as added to St. 1966, c. 708 in 1970 and amended in 1975). There is a Section 13A Handbook which is available through MassHousing.

89 760 C.M.R. §§ 49.02 (definition of "project-based units"), 49.06, and 49.07. Low-Income Set-Aside units exist where the development has been constructed with the assistance of certain state or federal programs in conjunction with private developers. The programs include federal and state tax credit units (as discussed in the text above), as well as a number of other programs as outlined in the MRVP regulations. As designated Low-Income Set-Aside units turn over, they must first be marketed to Section 8 and MRVP tenant-based mobile participants. If no participants can be found this way, the housing agency may ask EOHLC and MassHousing to approve the assignment of a project-based MRVP subsidy for the unit. A tenant with a tenant-based MRVP voucher residing in a Low-Income Set-Aside unit may choose to relinquish the tenant-based MRVP voucher; if she does so, the rent is set according to project-based voucher rent rules, but the tenant loses mobility. Tenants exercising this option are required to sign paperwork showing that they are voluntarily relinquishing the tenant-based MRVP. See Memorandum of Brenda Royer of EOHLC, Mobile Voucher Holders Residing in Low-Income Set-Aside Units (Aug. 7, 2001), on file at Massachusetts Law Reform Institute.

90 760 C.M.R. §§ 49.02 (definitions of Low-Income Set-Aside units, project-based units, and project-based waiting lists), 49.06, and 49.07. On the transfer preferences, see Sections D and H of MassHousing's Tenant Selection Plan REV 9/09, which can be found at MassHousing. As provided there, over-housed tenants with a project-based subsidy and unsubsidized tenants paying over 50% of income or who are overcrowded tenants can be accorded transfer preference. However, if the tenant is currently unsubsidized, the tenant may need to be referred to a local housing agency to be placed on a project-based waiting list. Local housing agencies administering the project-based MRVP Program waiting lists must have sought a waiver from EOHLC to apply these preferences. Under such waivers, one development resident may be selected for every three non-resident applicants. See Memorandum of Donna Goguen of EOHLC, Tenant Selection: Waiver to Assist Current Residents of 13A and 236 Developments (Dec. 5, 2001 see also Memorandum of Donna Goguen of EOHLC, Revised MHFA Tenant Selection Plan (Sept. 21, 1999). Both of these memoranda are on file at Massachusetts Law Reform Institute.

91 760 C.M.R. §§ 49.05(5) and 49.07(2).

92 See EOHLC's memorandum of Aug. 21, 1995, Non-Renewal of Project-Based Lease, on file at Massachusetts Law Reform Institute.

93 26 U.S.C. § 42; 26 C.F.R. § 1.42. Affordable Housing Guidebook for Massachusetts, July, 2008

94 HUD Notice PIH-2001-2 (HA), Prohibition of Discrimination Against Families with Housing Choice Vouchers by Owners of Low-Income Housing Tax Credit and HOME Developments (Jan. 18, 2001), extended by HUD Notice PIH 2002-15 (HA) (June 7, 2002) for an indefinite period.

95 26 U.S.C. § 42(i)(3)(D). If the students are receiving assistance under Title IV of the Social Security Act (are receiving SSI), were previously under the care and protection of a state agency, or are enrolled in a job training program and receiving assistance under the Job Training Partnership Act or a similar federal, state, or local law, or if the full-time students are either single parents and their children who are not dependents of another individual or are married and file a joint return, they will be eligible for the federal low-income tax credit program.

96 26 U.S.C. § 42(h)(6 IRS Revenue Ruling 2004-82 (Aug. 30, 2004 Carter v. Md. Mgt. Co., 377 Md. 596, 835 A.2d 158 (2003 Cimarron Village Townhomes v. Washington, 659 N.W.2d 811 (Minn. App. 2003 Fennelly v. Kimball Court Apts. L.P., 14 Mass. L. Rep. 37, 2001 Mass. Super. LEXIS 495, 2001 WL 1524452 (2001 Lend Lease Apt. Mgt. LLC v. Stribling,  2004 Conn. Super. LEXIS 2988, 2004 W.L. 2595805 (Conn. Super. 2004).

97 G.L. c. 23B, § 3; G.L. c. 62, § 6I; G.L. c. 63, § 31H; 760 C.M.R. § 54.00.

98 Affordable Housing Guidebook for Massachusetts, July, 2008.

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