Flexible Subsidy assistance to a Section 236 project is conditioned on the owner agreeing to maintain the project's low- and moderate-income character for at least the remaining term of the mortgage

s236.subsidy_calculation.flexible_subsidy_commitment_to_low_and_moderate_income_character · v1.0.0

The Flexible Subsidy - section 201 of the Housing and Community Development Amendments of 1978, codified at 12 U.S.C. 1715z-1a - is the operating and capital-improvement assistance that Section 236 keeps pointing at: 12 U.S.C. 1715z-1(f)(3) directs the excess-income reserve to be used for the purposes of that section. A project is eligible only if, among other things, it is ASSISTED UNDER SECTION 236 or under the proviso of section 221(d)(5), or under section 101 of the 1965 Act, or received a section 202 loan more than 15 years earlier. No assistance may be made available unless the Secretary determines a list of conditions, of which the binding one for compliance purposes is the first: the assistance will restore or maintain the financial or physical soundness of the project and maintain its low- and moderate-income character, AND THE OWNER HAS AGREED TO MAINTAIN THE LOW- AND MODERATE-INCOME CHARACTER OF SUCH PROJECT FOR A PERIOD AT LEAST EQUAL TO THE REMAINING TERM OF THE PROJECT MORTGAGE. The Secretary must also find the project structurally sound or capable of being made so on an on-site inspection, competent management, a feasible plan to involve residents in project decisions, an affirmative fair housing marketing plan meeting applicable requirements, and an owner certification of compliance with equal opportunity statutes. Except where only capital improvement assistance is sought, the project must be operated under a HUD-approved MANAGEMENT-IMPROVEMENT-AND-OPERATING PLAN with six named components including a detailed maintenance schedule and a detailed annual operating budget - and HUD's failure to approve or disapprove within 30 days of submission means the plan IS CONSIDERED APPROVED.

Confidence

high

Effective from

1978-10-31

Consequence model

contract remedy

Last reviewed

2026-08-22