24 C.F.R. § 891.835
§ 891.835 Eligible uses of project rental assistance. (24 CFR Part 891)
Operative Text
(a) Section 202 or 811 project rental assistance may be used to pay the necessary and reasonable operating costs, as defined in 24 CFR 891.105 and approved by HUD, not met from project income and attributed to Section 202 or 811 supportive housing units. Operating cost standards under 24 CFR 891.150 apply to developments under this part. (b) Section 202 or 811 project rental assistance may not be used to pay for: (1) Debt service on construction or permanent financing, or any refinancing thereof, for any units in the development, including the 202 or 811 supportive housing units; (2) Cash flow distributions to owners; or (3) Creation of reserves for non-202 or -811 units. (c) HUD-approved operating costs attributable to common areas or to the development as a whole, such as groundskeeping costs and general administrative costs, may be paid from project rental assistance on a pro-rata basis according to the percentage of 202 or 811 supportive housing units as compared to the total number of units.
Under 24 CFR Part 891 § 891.835, federal project rental assistance tied to Section 202 (elderly housing) or Section 811 (persons with disabilities) programs is restricted to covering necessary and reasonable operating costs that project income alone cannot meet. This assistance cannot be directed toward debt service on any financing, cash distributions to property owners, or building up reserves for units outside the 202 or 811 program. When a development includes both assisted and non-assisted units, shared costs like groundskeeping or general administration may be drawn from this assistance only in proportion to the share of 202 or 811 units in the overall development.
Plain English — not legal advice.
Operators of Section 202 or 811 developments subject to 24 CFR Part 891 § 891.835 generally maintain clear accounting records that separate eligible operating costs from ineligible expenditures such as debt service, owner distributions, and reserves for non-assisted units. Compliant operators submit only HUD-approved operating costs for reimbursement and apply a documented pro-rata calculation when allocating shared costs—such as landscaping or administrative overhead—across the development. Keeping this cost-allocation methodology well-documented and consistent with the operating cost standards referenced in 24 CFR 891.150 is a common practice among operators seeking to remain in good standing with HUD.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Residents living in Section 202 or 811 supportive housing units benefit from the protections established under 24 CFR Part 891 § 891.835, which limits how project rental assistance funds can be spent and helps ensure those funds support the actual operation of their housing. If tenants have concerns that assistance funds are being misused—for example, to cover debt payments or owner distributions rather than legitimate operating costs—they may raise those concerns with their local HUD field office or a tenant-rights organization familiar with federally assisted housing programs. Tenants may also review their development's HUD-approved operating budget or request information through available public channels to better understand how costs are being allocated.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 4, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
Effective Timeline
References Out
No outbound references recorded yet for this provision.
References In
No inbound references recorded yet for this provision.