Most of HUD's multifamily housing properties designed for the elderly and people with disabilities operate with some kind of rental subsidy. This subsidy is provided by HUD to the owner of the property and is tied to that development.
Most sites receive either project-based Section 8 or Section 202 Project Rental Assistance Contract (PRAC) funds, which pays for a proportion of the property's operating expenses. If expenses at the site increase, HUD can sometimes provide additional Section 8 or PRAC funds.
In developments funded by project-based Section 8 or PRAC and in others where the original mortgage loan was subsidized, housing managers can sometimes accrue rental subsidy that isn't needed to pay operating costs. Because the funds are excess subsidy provided by HUD, the monies usually must be spent on activities that will benefit the property and the residents. These "excess" funds are normally referred to as "residual receipts" or "excess income".
Housing owners can include the Service Coordinator position in the development's operating budget, where the position is supported by project-based Section 8 or PRAC funds. Owners can also use residual receipts or excess income to pay for a Service Coordinator program. The Department urges housing owners and managing agents to use these project-related funding sources to fund a Service Coordinator program, whenever possible. These funding streams are more stable and consistent over time. Grants, by their nature, are temporary sources of assistance and the future availability of such funds is never certain.