1. Project-Based Vouchers
How & Why
Project-Based Vouchers
Eva Tafoya, Program Analyst, OPH, HUD
Terry Barnard, Tax Credit Officer, CHFA
Lori Rosendahl, C.O.O., GJHA

2. Project-Based Vouchers HUD Regulations & Guidance
Eva Tafoya, Program Analyst, OPH, HUD

3. HUD Denver Office of Public Housing
PBV - 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 C.F.R. Part 983
Administrative and Annual or 5-year Plans
Ref: 24 C.F.R. §§ , , , ,
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

4. HUD Denver Office of Public Housing
Developments
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 (May 15, 2012)
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

5. Existing Housing Process
Competition
HUD Review (if PHA-owned)
Inspection 1
Selection
Environmental Review
Determination of Rent
Inspection 2
HAP Contract
Occupancy
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

6. New Construction/Rehabilitated Process
Competition
HUD Review (if PHA-owned)
Selection
Environmental Review
Subsidy Layering Review
Agreement to Enter HAP
Construction
Determination of Rent
Inspection
HAP Contract
Occupancy
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

7. Existing, New, Rehabilitated
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 (May 15, 2012)
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

8. Competitive Selection
Request for proposals
Public notice
Open to proposals from multiple sites
Prior competition
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. §
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

9. HUD Denver Office of Public Housing
Before Selection Date
Units qualify for PBVs
Within budget authority and project caps
Not already under construction
Eligible units under 24 C.F.R. §§
Compliant with civil rights law
Meets site selection standards of 24 C.F.R. §
Review of selection process (PHA-owned)
Existing housing only:
Independent entity approval (PHA-owned)
Substantially complies with HQS (24 C.F.R. § )
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

10. Elderly-Only Properties
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 (Apr. 2, 1999)
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

11. PHA-Owned Units: Ownership
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
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

12. PHA-Owned Units: Selection
Review of selection process
HUD Field Office
HUD-approved independent entity
Provide documentation (selection criteria, proposals)
Ref: 24 C.F.R. § (e)
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

13. PHA-Owned Units: Rent and HQS
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. §§ , , ,
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

14. HUD Denver Office of Public Housing
VASH PBV Approval
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
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

15. Demolition/Disposition Proceeds
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. §§ , (b); PIH Notice
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

16. Agreement to Enter HAP (AHAP)
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, , ; AHAP, HUD-52531A & B
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

17. Subsidy Layering Review
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. § ; 75 Fed. Reg (Jul. 9, 2010); PIH Notice
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

18. HUD Denver Office of Public Housing
Labor Standards
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. § ; AHAP Part 2, HUD-52531B
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

19. HUD Denver Office of Public Housing
HAP Contract
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. §§ , , , , ; HAP, HUD-52530A, B, & C
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

20. HUD Denver Office of Public Housing
Rent Calculation
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. §§ ,
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

21. Other Differences from HCV
Waiting list/referral process
Participants eligible for HCV after one year
HQS: turnover and sample annually
Different reporting in PIC and VMS
Vacancy payments
Ref: 42 U.S.C. § 1437f(o)(13)(E), (J), (K); 24 C.F.R. §§ , , ,
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

22. Changes During HAP Contract
Ownership
Modernization
Contract units
Rent
Ref: 42 U.S.C. § 1437f(o)(13)(H)-(I), (K); 24 C.F.R. §§ , ,
HUD Denver Office of Public Housing
HUD Denver Office of Public Housing

23. Project-Based Vouchers CHFA Role
Terry Barnard, Tax Credit Officer, CHFA

24. PBV - 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

25. PBV - CHFA Subsidy Layering Review Background
Section 102(d) of Housing and Community Development Reform Act of 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 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.

26. PBV - CHFA 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 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.”

27. PBV - CHFA 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.

28. PBV - CHFA 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

29. PBV - CHFA 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.

30. PBV - CHFA 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.

31. PBV - CHFA 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
10%
30 units or less
12%
*percentages of hard construction costs, including new structures/rehab, onsite work, contingency, and accessory structures

32. PBV - CHFA 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

33. PBV - CHFA
Forms and Process
Subsidy Layering Checklist

34. PBV - CHFA 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

35. PBV - CHFA 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 15-Year Pro Forma worksheets from LIHTC application
Standard Disclosure and Perjury Statement, Identity of Interest Statement – Sponsor provides
Initial Contract Rents – Sponsor provides

36. PBV - CHFA 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

37. PBV - CHFA Forms and Process
HUD Form 2880 – Applicant/Recipient Disclosure/Update Report

38. PBV - CHFA
HUD Form 2880 – Applicant/Recipient Disclosure/Update Report

39. PBV - CHFA
HUD Form 2880 – Applicant/Recipient Disclosure/Update Report

40. PBV - CHFA
HUD Form 2880 – Applicant/Recipient Disclosure/Update Report

41. PBV - CHFA 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

42. Project-Based Vouchers PHA Perspective
Lori Rosendahl, C.O.O., GJHA

43. PBV – PHA 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

44. PBV – PHA 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)

45. PBV – PHA PHA owned units Notification process to HUD
Identification of independent entity
Contract Costs
Mechanics of HQS inspections, initial rent determination

46. PBV – PHA
Overview of PBV HAP contracts implemented – strengths and weaknesses
Special considerations
Common Problem areas

47. Questions?
Thank you