How & Why
Project-Based Vouchers
Eva Tafoya, Program Analyst, OPH, HUD
Terry Barnard, Tax Credit Officer, CHFA
Lori Rosendahl, C.O.O., GJHA
Project-Based Vouchers
HUD Regulations & Guidance
Eva Tafoya, Program Analyst, OPH, HUD




Long-term HAP contract with owner
Assistance tied to unit, not participant
Up to 20% of voucher budget authority
Up to 25% of units within a project



Excepted: elderly, disabled, supportive services
Governed by 42 U.S.C. § 1437f(o)(13) and
24 C.F.R. Part 983
Administrative and Annual or 5-year Plans
Ref: 24 C.F.R. §§ 983.5-.6, 983.51, 983.56-.57, 983.251-259, 983.261
3
HUD Denver Office of Public Housing


Housing and Economic Recovery Act of 2008
Proposed rule issued May 15, 2012



Proposed rule notes self-implementing changes
Feb. 3, 2014 letter: no retroactive waivers
PBV Guidebook: December 2014
Ref: 77 Fed. Reg. 28742 (May 15, 2012)
4
HUD Denver Office of Public Housing
5
Competition
HUD Review
(if PHAowned)
Inspection 1
Determination
of Rent
Environmental
Review
Selection
Inspection 2
HAP Contract
Occupancy
HUD Denver Office of Public Housing
HUD Review
(if PHAowned)
Selection
Environmental
Review
Determination
of Rent
Construction
Agreement to
Enter HAP
Subsidy
Layering
Review
Inspection
HAP Contract
Occupancy
Competition
6
HUD Denver Office of Public Housing





Proposal selection date is key
Existing: substantially complies with HQS
Newly constructed: does not exist
Rehabilitated: exists but does not substantially
comply with HQS
PBVs may not be awarded to properties in
which construction has begun but before the
units substantially comply with HQS
Ref: 24 C.F.R. § 983.3; 77 Fed. Reg. 28742 (May 15, 2012)
7
HUD Denver Office of Public Housing

Request for proposals



Prior competition



Public notice
Open to proposals from multiple sites
PBVs may not have been considered in prior
competition
Prior selection must have occurred within 3 years
Administrative Plan sets selection criteria
Ref: 24 C.F.R. § 983.51
8
HUD Denver Office of Public Housing

Units qualify for PBVs
Within budget authority and project caps
 Not already under construction
 Eligible units under 24 C.F.R. §§ 983.53-.54
 Compliant with civil rights law
 Meets site selection standards of 24 C.F.R. § 983.57



Review of selection process (PHA-owned)
Existing housing only:


9
Independent entity approval (PHA-owned)
Substantially complies with HQS (24 C.F.R. § 983.52)
HUD Denver Office of Public Housing



May not discriminate based on familial status
Must admit elderly families with children
Units must have a 62 and older restriction to
qualify as “excepted”
Ref: 42 U.S.C. §§ 3607(b)(2), 1437a(b)(3)(B); 64 Fed. Reg. 16324 (Apr. 2, 1999)
10
HUD Denver Office of Public Housing



Unit owned by the PHA administering the
voucher program
“PHA” means PHA or its officers, agents, or
employees
“Owned” means holding a direct or indirect
interest in unit or in entity that owns the unit



Titleholder or lessee
Stockholder, member, or general or limited partner
Member of a Limited Liability Corporation
Ref: 24 C.F.R. § 983.3
11
HUD Denver Office of Public Housing

Review of selection process



HUD Field Office
HUD-approved independent entity
Provide documentation (selection criteria,
proposals)
Ref: 24 C.F.R. § 983.51(e)
12
HUD Denver Office of Public Housing


HUD approves independent entity
Independent entity’s duties:
Set initial rents and contract term
 Conduct annual redetermination of rent
 Determine reasonable rent
 Perform HQS inspections
 Submit reports to HUD and PHA


Appraisal required
Ref: 42 U.S.C. § 1437f(o)(11), (13); 24 C.F.R. §§ 983.51, 983.59, 983.103, 983.303
13
HUD Denver Office of Public Housing


All VASH PBVs require HUD approval and
VA partner support
Complete selection requirements prior to
seeking VASH PBV approval

Includes HUD field office approval of PHA-owned
selection
Ref: PIH Notice 2011-50
14
HUD Denver Office of Public Housing


Proceeds generally reserved for provision of
low-income housing
Ensure PBVs are allowed before committing
proceeds


If not allowed, reserve units receiving proceeds for
HCV families
Do not steer HCV families to reserved units
Ref: 42 U.S.C. § 1437p(a)(5)(B); 24 C.F.R. §§ 970.19, 982.352(b); PIH Notice 2012-7
15
HUD Denver Office of Public Housing



Only applies to new construction and
rehabilitated projects
Sets plan for construction, rents, and timing
Before AHAP execution:



Environmental review
Subsidy layering review
Must be executed prior to the start of
construction
Ref: 24 C.F.R. §§ 983.3, 983.58, 983.151-.156; AHAP, HUD-52531A & B
16
HUD Denver Office of Public Housing

SLRs: certain new/rehabilitated projects




Any other Federal, State or local housing assistance
including tax credits
PHA prepares SLR request
CHFA may conduct if project has tax credits
HUD conducts all other SLRs
Ref: 42 U.S.C. § 1437f(o)(13)(M); 24 C.F.R. § 983.55; 75 Fed. Reg. 39561 (Jul. 9, 2010);
PIH Notice 2013-11
17
HUD Denver Office of Public Housing

Owner, contractor, subcontractor requirements:
Employ low-income persons and program
participants (Section 3)
 If developing 9+ units, pay Davis-Bacon wages
 Provide overtime and safe conditions
 Provide equal employment opportunity


PHA may not enter HAP Contract if work did
not comply with AHAP
Ref: 24 C.F.R. § 983.154-.156; AHAP Part 2, HUD-52531B
18
HUD Denver Office of Public Housing

Before HAP Contract execution:
Environmental review (existing)
 Independent entity approval (PHA-owned new and
rehabilitated projects)
 Units fully comply with HQS
 Initial rents set

 Lowest: 110% FMR, reasonable rent, or requested rent


Maximum total term: 30 years
Sign lease/tenancy addendum at occupancy
Ref: 42 U.S.C. § 1437f(o)(13); 24 C.F.R. §§ 983.58, 983.103, 983.204, 983.256, 983.301;
HAP, HUD-52530A, B, & C
19
HUD Denver Office of Public Housing


Payment standards do not apply
Tenant rent = TTP – utility allowance


Utility reimbursement = utility allowance – TTP
HAP = rent to owner – tenant rent
Ref: 42 U.S.C. §§ 1437f(o)(2)(C), 1437f(o)(13)(H); 24 C.F.R. §§ 983.351, 983.353
20
HUD Denver Office of Public Housing





Waiting list/referral process
Participants eligible for HCV after one year
HQS: turnover and sample annually
Different reporting in PIC 50058 and VMS
Vacancy payments
Ref: 42 U.S.C. § 1437f(o)(13)(E), (J), (K); 24 C.F.R. §§ 983.103, 983.251, 983.260, 983.352
21
HUD Denver Office of Public Housing




Ownership
Modernization
Contract units
Rent
Ref: 42 U.S.C. § 1437f(o)(13)(H)-(I), (K); 24 C.F.R. §§ 983.206-.207, 983.254, 983.301-.303
22
HUD Denver Office of Public Housing
Project-Based Vouchers
CHFA Role
Terry Barnard, Tax Credit Officer, CHFA

Subsidy Layering Review


Review process to ensure that housing projects
receiving HUD assistance do not receive excessive
compensation by combining various forms of HUD
program assistance (including PBVs) with assistance
from other Federal, State, or local agencies.
LIHTCs fall into the definition of “other”
Government Assistance
--Federal Register, July 9, 2010

Subsidy Layering Review

Background
 Section 102(d) of Housing and Community
Development Reform Act of 1989 -- HUD Secretary
must limit assistance granted to a project to “…not be
more than is necessary to provide affordable housing
after taking account…(Other Government Assistance).”
 Section 911 of the Housing and Community
Development Act of 1992 -- the requirements of 102(d)
would be satisfied in connection with a project
receiving assistance under a HUD program and under
IRC Section 42 by certification of a housing credit
agency.

Subsidy Layering Review

Background (cont’d)
 Section 42 of the IRC -- authorizes LIHTC allocations to
be administered by State or local housing credit
agencies to encourage the development of housing for
very low income tenants.
 Section 42 -- requires CHFA to ensure that, “The
housing credit dollar amount allocated to a
development shall not exceed the amount the housing
credit agency determines is necessary for the financial
feasibility of the development and its viability as a
qualified low-income housing development through
the credit period.”

Subsidy Layering Review

Background (cont’d)
 1999 – CHFA began performing subsidy layering
analyses on projects in which CHFA was the lender and
HUD Housing Assistance was involved, primarily, the
542(c) Risk Share Mortgage Insurance program.
 >> 9 years
 HERA Act of 2008 made revisions to PBV program,
including delegating SLRs for projects involving PBVs
and LIHTCs to State or local agencies for new
construction and rehabilitated projects.

Subsidy Layering Review

Projects involving PBVs
 Administrative Guidelines for conducting SLRs
contained in the Federal Register Notice of July 9, 2010
 Guidelines required HCAs to submit Intent to
Participate to HUD for conducting SLRs and HUD to
acknowledge the HCA participation by posting the
agency name on the PIH website.
 HUD required to conduct SLRs for projects that do not
involve LIHTCs

Tasks and Duties of a SLR

CHFA must consider the following:
 All sources and uses of funds
 The proceeds expected to be generated by the sale of
tax credits
 The reasonableness of development and operational
costs of the project
 The affect of operational support from the PBV subsidy
to make the project feasible without overcompensation.
 Operational support analysis considers the debt service
coverage ratio (DCR) and the amount of cash flow
generated by the project.

Tasks and Duties of a SLR
Generally, IRC Section 42 requires CHFA to make
these determinations to ensure no more credit is
being allocated than necessary to make the project
financially feasible.
 The SLR guidelines of the Federal Register Notice of
July 9, 2010 are considered to be fulfilled by the IRC
Section 42 review as long as the Section 42 review
substantially complies with the Notice requirements.
 CHFA’s LIHTC underwriting requirements,
Contractor Overhead and Profit limits, and
Developer Fee and Consultant Fee limits generally
fulfill the requirements of both.


How CHFA conducts SLRs


CHFA’s underwriting requirements for LIHTC projects are
published annually in the Qualified Allocation Plan (QAP).
CHFA’s underwriting standards and limits are as follows:
 Aggregate Builder’s Profit and Overhead
Number of units
w/ identity of interest
w/o identity of interest
75 units +
6%
8%
31-74 units
8%
10%
30 units or less
10%
12%
*percentages of hard construction costs, including new structures/rehab,
onsite work, contingency, and accessory structures

How CHFA conducts SLRs (cont’d)
 Aggregate Developer Fee and Consultant Fee Limits
Number of units
Percent allowed
51 units or more
12%
50 units or less
15%
*percentages are based on total project costs net of land,
developer/consultant fee category, and reserves
▫ Vacancy rate minimum of 7%
▫ Rent and expense trending of 2% and 3%
▫ DCR minimum of 1.15 and maximum of 1.30

Forms and Process

Subsidy Layering Checklist

Forms and Process

Subsidy Layering Checklist
 Project Name, Location
 Housing Authority
 Narrative Description of Project, including:
 Total number of units
 Type of unit, bedroom distribution
 Portion and type of units receiving assistance, compliance
with partial assistance requirements
 Sources of Funds – CHFA provides Development
Financing worksheet from LIHTC application
 Uses of Funds – CHFA provides Development Budget
worksheet from LIHTC application

Forms and Process

Subsidy Layering Checklist (cont’d)
 Tax Credit Allocation Letter – CHFA provides
 Historic Tax Credits – Sponsor provides, if applicable
 Operating Proforma showing projected project income,
expenses, and cash flow – CHFA provides
Development Income, Development Expenses, and 15Year Pro Forma worksheets from LIHTC application
 Standard Disclosure and Perjury Statement, Identity of
Interest Statement – Sponsor provides
 Initial Contract Rents – Sponsor provides

Forms and Process

Subsidy Layering Checklist (cont’d)
 Section 911 Certification letter – CHFA will provide letter to
certify that:
 The project will be receiving tax credits
 The standards for General Conditions and Contractor
Overhead are within approved processing allowances
 The standard for Builder Profit is within the applicable limit
 The standard for Developer Fee is within market limits
 The PBV assistance provided by HUD to the project is not
more than necessary to provide affordable housing after
taking into account other government assistance
 HUD Form 2880 – Applicant/Recipient Disclosure/Update
Report – Sponsor provides

Forms and Process

HUD Form 2880 – Applicant/Recipient Disclosure/Update
Report

HUD Form 2880 – Applicant/Recipient
Disclosure/Update Report

HUD Form 2880 – Applicant/Recipient
Disclosure/Update Report

HUD Form 2880 – Applicant/Recipient
Disclosure/Update Report

Forms and Process




If excessive funds are found during the SLR, CHFA
will reduce the amount of LIHTC award to balance
the sources and uses
CHFA sends complete SLR package to HUD PIH
Office
PHA may not provide PBV subsidy or enter into an
AHAP prior to the completion of the SLR
Once CHFA sends the package to HUD, the PHA
may execute the AHAP
Project-Based Vouchers
PHA Perspective
Lori Rosendahl, C.O.O., GJHA

GJHA Admin Plan for PBV




How developed (Nan McKay?)
Basic overview of competitive process
GJHA Board and management considerations - new
unit creation, rents less than FMR, special population
needs
Revisions based on PBV experience

Process of working with PBV applicant
How and when does GJHA commit
 AHAP vs HAP
 Timing and commitment issues
 Environmental – who completes
 Calculating 20% budget authority limit and balance
with long-term PBV contracts (impacts small PHAs
more significantly)


PHA owned units
Notification process to HUD
 Identification of independent entity
 Contract Costs
 Mechanics of HQS inspections, initial rent
determination




Overview of PBV HAP contracts implemented
– strengths and weaknesses
Special considerations
Common Problem areas
Questions?
Thank you