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Exhibit 3-14: Section 236 With Benefit of Additional Assistance – Special Instructions for Determining Prorated Assistance Payment and Prorated Total Tenant Payment/Tenant Rent for Families Subject to Proration Procedures Regarding the Restriction on Assistance to Noncitizens

Example

HUD Handbook 4350.3 REV-1 — Occupancy Requirements of Subsidized Multifamily Housing Programs · 2026 edition · updated 2026-10-05 · United States

A 100 unit Section 236 property with 50 Section 8 subsidy units is 100% occupied and has very little turnover. A Section 8 tenant moves out of the property. The manager would like to give the Section 8 assistance to a Section 236 very low-income family who qualifies for Section 8 assistance but must be sure that income targeting requirements will be met. If the owner determines that the income targeting requirement cannot be met by initially certifying a low-income tenant, the owner must fill the vacancy with an extremely low-income family from the waiting list.

  • D. Occupancy records must be kept so that auditors and those performing management reviews can monitor for compliance with the income-targeting requirement. Reviewers will check the tenant selection plan for a written description of the process and then review the admissions to ensure that the process was followed and the results are in compliance. Both move-in and initial admissions records must be maintained for auditing purposes.

  • E. If an owner actively markets to extremely low-income families but is unable to attract a sufficient number to lease 40% of available units during the year to extremely low-income families, the owner may rent to other eligible families after a reasonable marketing period.

  • F. To market adequately the owner must, at a minimum, advertise in the locality and conduct outreach to local organizations serving the extremely low-income population for no less than 30 days. If, after that period of time (with documentation of the marketing efforts), the owner is unable to attract eligible extremely low-income applicants, the owner may admit other eligible families. The owner must continue to advertise to extremely low-income applicants. Both the initial and ongoing marketing must be in compliance with the Affirmative Fair Housing Marketing Plan.

HUD Occupancy Handbook Chapter 4: Waiting List and Tenant Selection

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  • G. The owner must maintain records that demonstrate to HUD’s satisfaction that all reasonable steps were taken to fill these units with extremely low-income tenants.

  • H. Whatever method is used by owners to meet the income targeting requirement for Section 8 properties, they must periodically monitor actual admissions to ensure that at least 40% of admissions are extremely low-income families.

    1. If an owner chooses to follow the waiting list chronologically and through monitoring determines that the income-targeting goal will not be met, a specific targeting methodology may be implemented during the year. (See Example 1 – Income-Targeting Method below.) In such circumstances, the owner must clearly document in property records the date of any revision to the property’s income targeting procedures. In addition, the owner must make the revised methodology very clear to any applicants who are selected from the waiting list after the change in methodology.

    2. If an owner uses a method other than the standard waiting list order, and the monitoring results show that more than 40% of admissions are extremely low-income families, the owner may revise the tenant selection procedure to follow the waiting list in chronological order for the remainder of the year. Again, if the method is changed mid-year, documentation must be kept indicating the reason and date of such change.

    3. An example of an admissions log is shown below. An owner can use this type of log to monitor the percentage of extremely low-income admissions to a property during the year. In the example below, assume that the owner's methodology is to alternate between the first extremely lowincome applicant on the waiting list and the eligible applicant at the top of the waiting list.

  • I. Owners of properties with project-based Section 8 must comply with TRACS income-reporting requirements that will permit HUD to maintain the data necessary to monitor compliance with income-targeting requirements.

HUD Occupancy Handbook Chapter 4: Waiting List and Tenant Selection

6/07

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Section 4: Selecting Tenants from the Waiting List

4350.3 REV-1

Example 1 – Income-Targeting Method Methodology: Select (at minimum) an extremely low-income applicant to be admitted to every other vacant unit. Happy Acres: 110 units – contains both efficiencies and 1-bedroom units Section 8 New Construction Property HAP Effective Date: 11/15/81 Anticipated annual turnover: 10%, or 11 units Waiting List Efficiency 1-Bedroom Alice Johnson (VLI) Phil Jones (VLI) Aiko Kihara (ELI) Maria Rodriguez (ELI) Tina Purcell (ELI) Elsa Anderson (ELI) Rita White (VLI) Bill Rogers (VLI) Betty Harvey (VLI) Uja Gupta (VLI) Jean Miller (ELI) Robert Johnson (VLI) Randy Lopez (ELI) Sam Sorenson (ELI) Analysis to determine whether a method other than following the waiting list in chronological order is needed : 5 applicants with ELI must be admitted to the property Of the top 14 applicants from the waiting list, seven (50%) have extremely lowincomes. It appears that by following the waiting list in chronological order, the property will meet the 40% requirement.

However, if the 11 vacancies occur in a mix of five efficiencies and six 1-bedroom units, then the percentage of those admitted with extremely low-incomes will be only 36% (4 units) following the order of the waiting list.

The owner may decide to monitor admission carefully and change policies midyear if the targeting goal is not being achieved, or may develop another method to ensure compliance. Monitoring is essential.

Owner Policy on Admissions : This owner has decided to follow the waiting list in chronological order. The Tenant Selection Plan states that: "Applicants will be selected based on waiting list order. Each quarter, the percentage of extremely lowincome admissions for the year to date will be examined. An alternate tenant selection method will be implemented if extremely low-income admissions are: Less than 30% after the first quarter of the fiscal year. Less than 35% after the second quarter of the fiscal year. Less than 40% after the third quarter of the fiscal year. This policy will ensure that, regardless of which bedroom size units become available, the owner will meet the income targeting requirements.

HUD Occupancy Handbook Chapter 4: Waiting List and Tenant Selection

6/07

4-53

Section 4: Selecting Tenants from the Waiting List

4350.3 REV-1

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▸Contents — HUD Handbook 4350.3 REV-1 — Occupancy Requirements of Subsidized Multifamily Housing Programs
HUD Handbook 4350.3 REV-1 — Occupancy Requirements of Subsidized Multifamily Housing Programs

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