The 202 project rental assistance payment is HUD-approved per-unit operating cost minus total tenant payment, capped for the year by the PRAC amount

s202prac.subsidy_calculation.prac_payment_is_approved_per_unit_operating_cost_less_total_tenant_payment · v1.0.0

A PRAC is not a HAP contract and its payment is not contract rent less tenant rent. The project rental assistance payment is the difference between the household's TOTAL TENANT PAYMENT and the HUD-APPROVED PER UNIT OPERATING EXPENSES, excluding expenses for items not eligible under the design and cost provisions. Where the utility allowance exceeds total tenant payment, HUD makes an additional payment to the household. The operating costs that may be built into the approved per-unit figure are a closed list at 24 CFR 891.105 - administration, maintenance, security, utilities (never telephone service for households), taxes and insurance, allowances for reserves, and, in Section 202 only, allowances for services. The contract amount for a year cannot exceed the sum of initial annual project rentals for occupied units plus initial utility allowances as approved; unused contract amounts stay available to the project until the contract expires, and HUD may adjust the annual amount where project income plus assistance is inadequate for reasonable project costs. The practical consequence for an operator is that the PRAC subsidy tracks an APPROVED BUDGET, not a market rent: an expense HUD did not approve is not recoverable through the PRAC, and the annual budget submission is the instrument that sets the following year's subsidy.

Confidence

high

Effective from

1996-03-22

Consequence model

contract remedy

Last reviewed

2026-08-22