Administrative Policy & Procedures. Development of Project Base Voucher Policy

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1 HOUSING CHOICE VOUCHER PROGRAM PROJECT-BASED ASSISTANCE 1

2 FINAL RULE Final Rule published October 13, 2005 Final Rule is self-contained and specifically identifies the provisions of 24 CFR 982 that apply to project-based vouchers. Final Rule also identifies the provisions of 24 CFR 982 that do not apply to projectbased vouchers. PIH issued September

3 KEY FEATURES Simplifies the project-based voucher(pbv) program. Gives PHAs greater flexibility to address local housing needs and objectives. Requires more accountability of PHAs. Eliminates most required HUD approvals (except for projects involving PHA-owned housing and new construction). 3

4 PHA CHOICE Sole PHA option whether to implement PBV program. PHA may project-base up to 20% of its authorized budget authority. No special funding for PBV. The PHA may use funding for its PBV under its voucher ACC for tenant-based vouchers and project-based units. 4

5 Administrative Policy & Procedures PHA Administrative Plan Development of Project Base Voucher Policy Review of PHA Plan 5

6 PHA PLAN PHA Plan must state its policy for developing project-based vouchers (PBV). PHA Plan must identify the projected number of units to be project base. PHA Plan must identify the general locations where projects will be developed. The areas designated by the PHA must be consistent with the program site and neighborhood standards and the PHA policy on de-concentrating poverty and expanding housing and economic opportunities identified in the PHA plan. 6

7 ELIGIBLE TYPES OF HOUSING New construction Rehabilitation Existing (Note: The units in an existing project must substantially comply with the housing quality standards for the program at the time of selection for project based assistance). 7

8 SELECTION OF PROPOSALS Must establish and follow procedures in PHA administrative plan as defined in CRF PIH Notice PHA may select proposals based on: PHA request for proposals; or Proposals selected in accordance with a competitive selection under a federal, state, or other local competition within the last three years. Ref: CFR 983.5(1)(b) Public notice of PHA request for proposals. Notice of opportunity to submit proposals. 8

9 SELECTION OF PROPOSALS CONT D Submission deadline. Availability of application and selection information. PHA Notice of Owner Selection Prompt Written Notice to selected party. Prompt Public Notice of Selection. Public inspection of documentation. 9

10 UNIT CAP Not more than 25% of dwelling units in a development may be assisted. Exceptions: Single family properties (1-4 units). Units specifically for occupancy by elderly or disabled families. Units occupied by families receiving supportive services. PHA may establish a lower unit cap on the number of units in a development that may be assisted. 10

11 SITE SELECTION STANDARDS PHA administrative plan must state the PHA policy for selecting sites. Site must be consistent with the goal of deconcentrating poverty and expanding housing and economic opportunities. PHA must consider the following: If the census tract is in a HUD Enterprise Zone, Economic Community, or Renewal Community. If the census tract has had a decrease in assisted housing because of public housing demolition. If the census tract is undergoing significant revitalization. 11

12 SITE SELECTION STANDARDS (CONT D) If Federal, state,or local dollars have been invested in the census tract. If new market rate units are being developed in the census tract. If the poverty rate of census tract exceeds 20%, the extent there has been a decline in the poverty rate over the last five years. If there are meaningful opportunities for educational and economic advancement in the census tract. 12

13 SITE AND NEIGHBORHOOD STANDARDS The location of the project must meet the site and neighborhood standards. The standards for new construction did not change. The standards for rehabilitation did not change. The standards for existing housing are the same as the standards for rehabilitation. 13

14 ENVIRONMENTAL REVIEW The environmental review is required for all PBV units including existing. A PHA/an owner/or contractor may not acquire rehab, convert, lease, repair, dispose of, demolish, or construct or commit local funds funds for PBV until the environmental is completed. Specifically, no AHAP for Rehab or new construction may be executed until the environmental is completed. 14

15 ENVIRONMENTAL REVIEW CONT D No housing assistance payments (HAP) contract may be executed for existing units until the environmental review is completed. The unit of general local government, a county, or state (responsible entity) is responsible for the federal environmental review. In the case of existing housing the responsible entity is responsible for determining if projectbased assistance is categorically excluded from review. 15

16 PHA-OWNED UNITS If the PHA selects its proposal for PHA-owned units, HUD or an independent entity approved by HUD must determine that the PHA owned units were appropriately selected. An Independent entity must inspect units for compliance with HQS and conduct rent reasonableness determinations. Initial rent determinations must be based on an appraisal by a licensed appraiser. PHA may only compensate the independent entity and appraiser from administrative fees. 16

17 HOUSING QUALITY STANDARDS INSPECTIONS Each unit must be inspected for compliance with HQS. Each unit on turnover of a family must be inspected for compliance with HQS. PHA may not provide assistance until a unit fully complies with HQS. Annual inspections are conducted on a random sample of 20% of the units in each building. If 20% or more of the units inspected fail the annual inspection, the PHA must inspect 100% of the contract units in the building. 17

18 HOUSING QUALITY STANDARDS INSPECTIONS (cont d) Complaint inspections. Follow-up inspections to ascertain that HQS deficiencies were corrected. Supervisory quality control inspections. PHA cannot inspect PHA owned units. 18

19 AGREEMENT TO ENTER INTO HAP CONTRACT (AHAP) For projects of new constructions or rehabilitation an (AHAP) must be executed prior to start of construction between PHA and owner. Agreement specifies owner commitment to develop housing and PHA to lease units. Agreement specifies: 19

20 AGREEMENT TO ENTER INTO HAP CONTRACT (cont d) Site; Location of contract units; Agreement specifies: Services and maintenance supplied by the owner; Utilities to be paid by the owner; Estimated initial rents; and Description of work to be performed. 20

21 WHEN AGREEMENT IS SIGNED PHA must sign Agreement promptly after proposal selection. However, Agreement may not be signed: Until completion of subsidy layering review if required; Until the environmental review is completed; and After the construction or rehabilitation work is started. 21

22 DEVELOPMENT WORK Complete work specified in Agreement. Pay Davis-Bacon wages for projects with nine or more units. Owner must comply with section 3 training, employment, and contracting opportunities. Owner must comply with federal equal employment opportunities. Owner must certify not on GSA list excluded from federal procurement and non procurement. Owner must disclose any possible conflict of interest. 22

23 DEVELOPMENT WORK (cont d) Owner must complete housing in accordance with the Agreement. PHA must accept the completed units. PHA and owner execute housing assistance payments contract.(hap) 23

24 HOUSING ASSISTANCE PAYMENTS CONTRACT PHA and owner enter into HAP contract. HAP contract information: Site; Location of contract units; Total number of contract units by bedroom size; Services and maintenance to be provided by the owner; Utilities to be paid by the the owner; HAP contract term; Initial rent to owner; and Number of units that exceed 25% which will be set aside for qualifying families. 24

25 WHEN HAP CONTRACT IS SIGNED PHA must inspect units and determine that they meet HQS before HAP contract is signed. Existing housing: HAP contract is signed promptly after proposal selection and PHA unit inspections. New Construction and Rehabilitation: HAP contract is signed after unit inspection and determination that units were completed in accordance with the Agreement. 25

26 HAP CONTRACT TERMS Initial term: Up to 5 years. Subsequent Extensions: Up to 5 years each, if PHA determines an extension is appropriate. Term of HAP contract is subject to availability of appropriations. Owner termination of HAP contract: Owner may terminate HAP contract if, as a result of rent adjustments, the rent to owner is reduced below the initial rent to owner at the start of the HAP term. 26

27 OWNER OBLIGATIONS Owner must provide services and maintenance specified in HAP contract. Owner must pay for utilities specified in HAP contract. Owner must maintain units in accordance with HQS. Owner must comply with all other obligations of HAP contract Remedies: PHA may not pay HAP for any period the unit does not meet HQS. PHA must enforce HAP contract provisions if owner does not meet the HAP obligations. 27

28 PARTICIPANT SELECTION Eligible families. In-place families (existing housing and rehabilitated housing) placed at top of waiting list and are given absolute preference if eligible. Selection from waiting list is accordance with PHA policies in PHA administrative plan. Types of waiting list: Voucher program; Project-based vouchers;and Individual project waiting list. 28

29 PARTICIPANT SELECTION (cont d) PHA may give selection preference based on services provided. Disabled residents are not required to accept the particular services offered. Families that refuse an offer of projectbased assistance do not lose their position on the tenant-based waiting list. Families rejected by an owner do not lose their place on the project-based or tenant based waiting lists. 29

30 LEASING UNITS Owner selects from tenants referred by PHA (at initial leasing and at turnover). Owner must adopt a written tenant selection policy. Number of bedrooms for the family must be based on PHA subsidy standards. If a unit remains vacant for more than 120 days, PHA may reduce the number units under the HAP contract. 30

31 TENANT SCREENING Owner is responsible for tenant screening and selection of families to occupy the owner s unit. PHA may opt to screen tenants for family behavior or suitability for tenancy and may deny admission based on this screening. The PHA may give owner information about the families tenancy history 31

32 LEASE Tenant must have legal capacity to sign lease. Owner must use standard form of lease used for rental to non-assisted families. Lease must include HUD Tenancy Addendum. Initial term of lease must be at least one year. Upon lease expiration, the owner may: Renew the lease; Refuse to renew for good cause;or Refuse to renew without good cause. In this case the family will be given a voucher and the HAP contract will be amended to reduce it by one unit. 32

33 INAPPROPRIATE UNIT A unit is inappropriate if it is the wrong size based on the PHA subsidy standard or has accessibility features not required by the family. PHA offer of continued assistance in the form of: Appropriate unit in same development; Other project-based assistance, including public housing; Tenant-based rental assistance; or other comparable assistance (e.g., HOME). Assistance is terminated if family refuses other assistance. 33

34 FAMILY RIGHT TO MOVE Mobility: HAP Contract must allow families to move out of a project-based unit after 12 months. Continued assistance: If family moves after first year of assisted occupancy, PHA must offer available tenant-based rental assistance (Voucher or other comparable tenant-based assistance). If no voucher available, PHA must provide priority for next available voucher (except for targeted use vouchers). 34

35 RENT TO OWNER The rent to owner cannot exceed the lowest of: 110% of FMR or any HUD-approved exception payment standard that exceeds 110% of FMR for the area minus the utility allowance for tenant-paid utilities; the reasonable rent; or the rent requested by the owner. 35

36 RENT FOR TAX CREDIT UNITS Oct 13, 2006 Final Rule applies to units awarded after November 14, 2005 Refer to HUD Notice Units awarded before Nov 14, 2005 are subject to old rule Refer to HUD Notice Rent Rules different for units outside Qualified Census Tract 36

37 QUALIFIED CENSUS TRACT Defined by the Bureau of the Census 50% of Households at less than 60% of Area Gross Median Income; or Poverty rate is at least 25% HUD Designates Qualified Census Tracts 37

38 RENT FOR TAX CREDIT UNITS IN QULAIFIED CENSUS TRACT Same Rent Calculation Rules Apply under old and new rule same as calc for non-tax credit units The rent to owner cannot exceed the lowest of: 110% of FMR or any HUD-approved exception payment standard minus the utility allowance for tenant-paid utilities; the reasonable rent (tax credit units not considered in rent reasonableness); or the rent requested by the owner. 38

39 RENT TO OWNER FOR UNITS OUTSIDE QCT Rent calculation depends on: Project-based units awarded (Before or after 11/14/05); and Rent requested by owner for units 39

40 Rent for Units Selected before Nov 14, 2005 Notice (ext. by ) Outside QCT and Rent does not exceed 110% of FMR or HUD approved Exception Standard calculation applies 40

41 Rent for Units Selected before Nov 14, 2005, con t Located Outside QTC and rent exceeds 110% of FMR or HUD approved exception Rent cannot exceed lesser of: Rent charged for non-project based tax credit units in the development Reasonable rent for comparable unassisted units 41

42 Rent for Units Selected After Nov 14, 2005 Tax credit units outside qualified census tract where the rents exceeds FMR limitation Rent to owner is the lowest of: the tax credit rent minus any utility allowance; the reasonable rent; or the rent requested by the owner. 42

43 RENT TO OWNER IN SUBSIDIZED PROJECTS HOME: Rents cannot exceed rent limits required by HOME. Subsidized project (e.g., Section 236 or 515): Rents cannot exceed the subsidized rent. Tax credit projects: Rents cannot exceed the tax credit rents. 43

44 Rent Calculation Rules These procedures for calculating rent to owner apply for both initial rents and subsequent rent adjustments. 44

45 DETERMINING RENT TO OWNER Initial rents and rent adjustments determined by: HUD (or HUD designated entity) FHA insured units. Independent agency approved by HUD PHA owned units. PHA All other units 45

46 VACANCY PAYMENTS PHAs may continue assistance for vacant units for up to 60 days: vacancy must not be owner s fault; and owner must take every reasonable action to minimize likelihood and extent of vacancies. PHA determines the amount of the vacancy payment not to exceed the monthly rent to owner under the lease. 46

47 Questions? 47