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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

Statutory, HUD, State, and Local Preferences

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

Congress and HUD have established various types of preferences in an effort to provide housing to those most in need. HUD rules currently include four different kinds of preferences that apply to various programs. Owners must apply preferences to applicants based on the rules for the property subsidy type as well as any owner-adopted preferences. The following are types of preferences:

  1. Statutory preferences — displacement. Owners of Section 221(d)(4), 221(d)(3), and 221(d)(3) BMIR properties must give preference to applicants who have been displaced by government action or a presidentially declared disaster.

  2. HUD regulatory preferences.

    • a. HUD regulations require that owners of Section 236 properties give preference to applicants who have been displaced by government action or a presidentially declared disaster.

    • b. In Section 236 properties that also offer rental assistance through the RAP Program, owners must rank applicants according to the following criteria [24 CFR 236.715] .

HUD Occupancy Handbook Chapter 4: Waiting List and Tenant Selection

6/07

4-13

Section 1: Tenant Selection Plan

4350.3 REV-1

NOTE: These ranking criteria are secondary to the preferences required above.

Figure 4-3: Summary of Preference Requirements by Property Type

Program Statutory
Preferences -
Displacement
HUD
Regulatory
Preferences
Owner-
Adopted
Preferences
Section 221(d)(3)
Section 221(d)(3) BMIR
Section 221(d)(4)


Section 236
Section 8
New Construction
Substantial Rehabilitation
State Housing Agency
New Construction or Sub
Rehab
Rural Housing 515/8
Property Disposition
Set-Aside
Section 202/8
Loan Management
Set-Aside (LMSA)
  • (1) Applicants eligible for RAP assistance.

  • (2) Applicants eligible to pay less than market rent under the Section 236 program.

  • (3) Applicants with income sufficient to pay the market rent approved for the property. (See paragraph 3-8 for a discussion of the limitations on renting to over-income applicants. See Figure 4-4 for illustration.)

HUD Occupancy Handbook Chapter 4: Waiting List and Tenant Selection

6/07

4-14

Section 1: Tenant Selection Plan

4350.3 REV-1

  1. State and local preferences. Owners may apply preferences required by state or local law only if they are consistent with HUD and applicable civil rights requirements. For example, some states have laws that require owners to provide a preference for housing to military veterans. Owners must receive HUD approval in order to apply this locally legislated requirement. Owners must submit a written request to the HUD Field Office, describing the state or local laws requiring such preferences, requesting HUD concurrence on the preferences.

Figure 4-4: Example of Section 236 Ranking Preferences Based on Income and Rent

Clear River Apartments is a Section 236 property with RAP assistance. The basic rent is $350, and the market rent is $500.

Clear River Apartments is a Section 236 property with RAP assistance. The basic rent is $350, and
the market rent is $500.
Date of Application Applicant Name Estimated rent based
upon income reported
on application form.
Rank order for
selection based on
estimated rent
(assuming no other
preference)
6/15/2001 Joseph Jones $372 3
8/1/2001 Marenka Salnikov $500 5
8/15/2001 Donny Yee $312 1
8/23/2001 Rebecca Green $225 2
9/12/2001 Sastri Sharma $360 4

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