how & why project-based vouchers
DESCRIPTION
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. PBV - HUD. Long-term HAP contract with owner - PowerPoint PPT PresentationTRANSCRIPT
How & WhyProject-Based Vouchers
Eva Tafoya, Program Analyst, OPH, HUDTerry Barnard, Tax Credit Officer, CHFA
Lori Rosendahl, C.O.O., GJHA
Project-Based VouchersHUD Regulations &
Guidance
Eva Tafoya, Program Analyst, OPH, HUD
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 24 C.F.R. Part 983
Administrative and Annual or 5-year Plans
3
Ref: 24 C.F.R. §§ 983.5-.6, 983.51, 983.56-.57, 983.251-259, 983.261
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
4
Ref: 77 Fed. Reg. 28742 (May 15, 2012)
HUD Denver Office of Public Housing
Existing Housing ProcessCompetitio
n
HUD Review (if
PHA-owned)
Inspection 1
SelectionEnvironmental Review
Determination of Rent
Inspection 2
HAP Contract Occupancy
5
HUD Denver Office of Public Housing
New Construction/Rehabilitated Process
Competition
HUD Review (if
PHA-owned)
Selection Environmental Review
Subsidy Layering Review
Agreement to Enter
HAPConstructio
nDetermination of Rent
Inspection HAP Contract Occupancy
6
HUD Denver Office of Public Housing
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
7
Ref: 24 C.F.R. § 983.3; 77 Fed. Reg. 28742 (May 15, 2012)
HUD Denver Office of Public Housing
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
8
Ref: 24 C.F.R. § 983.51
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. §§ 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:
Independent entity approval (PHA-owned) Substantially complies with HQS (24 C.F.R. §
983.52)
9
HUD Denver Office of Public Housing
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”
10
Ref: 42 U.S.C. §§ 3607(b)(2), 1437a(b)(3)(B); 64 Fed. Reg. 16324 (Apr. 2, 1999)
HUD Denver Office of Public Housing
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
11
Ref: 24 C.F.R. § 983.3
HUD Denver Office of Public Housing
PHA-Owned Units: Selection
Review of selection process HUD Field Office HUD-approved independent entity
Provide documentation (selection criteria, proposals)
12
Ref: 24 C.F.R. § 983.51(e)
HUD Denver Office of Public Housing
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
13
Ref: 42 U.S.C. § 1437f(o)(11), (13); 24 C.F.R. §§ 983.51, 983.59, 983.103, 983.303
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
14
Ref: PIH Notice 2011-50
HUD Denver Office of Public Housing
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
15
Ref: 42 U.S.C. § 1437p(a)(5)(B); 24 C.F.R. §§ 970.19, 982.352(b); PIH Notice 2012-7
HUD Denver Office of Public Housing
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
16
Ref: 24 C.F.R. §§ 983.3, 983.58, 983.151-.156; AHAP, HUD-52531A & B
HUD Denver Office of Public Housing
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
17
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
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
18
Ref: 24 C.F.R. § 983.154-.156; AHAP Part 2, HUD-52531B
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
occupancyRef: 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, & C19
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
20
Ref: 42 U.S.C. §§ 1437f(o)(2)(C), 1437f(o)(13)(H); 24 C.F.R. §§ 983.351, 983.353
HUD Denver Office of Public Housing
Other Differences from HCV
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
21
Ref: 42 U.S.C. § 1437f(o)(13)(E), (J), (K); 24 C.F.R. §§ 983.103, 983.251, 983.260, 983.352
HUD Denver Office of Public Housing
Changes During HAP Contract
Ownership Modernization Contract units Rent
22
Ref: 42 U.S.C. § 1437f(o)(13)(H)-(I), (K); 24 C.F.R. §§ 983.206-.207, 983.254, 983.301-.303
Project-Based VouchersCHFA Role
Terry Barnard, Tax Credit Officer, CHFA
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
PBV - CHFA 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.
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 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.”
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.
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
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.
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.
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 OverheadNumber of units w/ identity of
interestw/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
PBV - CHFA How CHFA conducts SLRs (cont’d)
Aggregate Developer Fee and Consultant Fee LimitsNumber 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
PBV - CHFA Forms and Process
Subsidy Layering Checklist
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
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
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
PBV - CHFA Forms and Process
HUD Form 2880 – Applicant/Recipient Disclosure/Update Report
PBV - CHFA HUD Form 2880 – Applicant/Recipient
Disclosure/Update Report
PBV - CHFA HUD Form 2880 – Applicant/Recipient
Disclosure/Update Report
PBV - CHFA HUD Form 2880 – Applicant/Recipient
Disclosure/Update Report
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
Project-Based VouchersPHA Perspective
Lori Rosendahl, C.O.O., GJHA
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
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)
PBV – PHA PHA owned units
Notification process to HUD Identification of independent entity Contract Costs Mechanics of HQS inspections, initial rent
determination
PBV – PHA Overview of PBV HAP contracts
implemented – strengths and weaknesses Special considerations Common Problem areas
Questions?Thank you