A housing authority can utilize up to 20% of its Housing Choice Voucher (HCV) funding to “attach” rent subsidies to specific housing units. The attached subsidy is known as a project-based voucher (PBV). PBVs are a component of the HCV program and share most of the same rules and regulations. PBVs are attached to units via a contract with the owner that requires the units be rented to families eligible for the HCV program. While tenants living in a PBV unit may move with regular voucher assistance, the PBV remains attached to the unit and the owner must select another HCV-eligible tenant for that unit. The advantage of PBVs for owners is that the PBV commitment from a housing authority can be used to leverage financing for the construction, rehabilitation, or preservation of housing for low-income families by providing a greater cash-flow than the property would otherwise generate. This is because most funding available to owners of affordable projects restricts the rent that can be collected from tenants to an affordable amount that is usually far less than a comparable unit would merit on the open market.
However, because the HCV program pays market rate rents by subsidizing the difference between an affordable rent for the tenant and the market rate rent for a particular unit, and the PBV program uses this same basic formula, the amount of rent that an owner can collect from a PBV unit is usually significantly higher than otherwise available to the project. This allows the owner to leverage far more financing than if PBVs were not available and thus can be crucial to the success of a given project. The primary advantage of PBVs to a housing authority is that they help increase or preserve the supply of permanent, affordable housing available to both the community and to HCV recipients.
HUD requires housing authorities to utilize a competitive process to select developments that will receive PBV or RAD PBV assistance. A housing authority can utilize its own competition or may choose projects that were competitively awarded affordable housing funds under a federal, state, or local government program (e.g., CDBG, HOME, competitively awarded Low-Income Housing Tax Credits). If the competitive process of another governmental entity is used, the award of those funds cannot have occurred more than three years from the PBV selection date, and the earlier selection proposal must not have involved any consideration that the project would receive PBV assistance.
There are two methods by which developers can secure PBV assistance. One method is through a competitive solicitation. In September of 2015, HACCC posted a competitive solicitation that advertised the availability of up to 500 units for PBV assistance, conditioned on the acceptance of responders of RAD PBV assistance as part of the award. Twelve developers submitted applications in response to the request for proposals (RFP) and were conditionally approved for 189 RAD PBV and 121 traditional PBV units of assistance. A new competitive solicitation is currently out to the general public that makes 250 units of project-based assistance available and is has a deadline of June 30th for submission of applications by interested developers. The second method by which PBV assistance can be awarded is through a non-competitive process. As provided for in HACCC’s Section 8 Administrative Plan approved by the Board of Commissioners, HACCC can accept proposals for PBV assistance from owners that were selected in another governmental entity’s affordable housing competition. HACCC targets projects awarded funding by the Contra Costa County Department of Conservation and Development in one or more of its competitions for HOME, CDBG, HOPWA or other affordable housing programs. HACCC has taken this approach to maximize the success rate of projects funded by both the County and HACCC.
699 YVR Housing successfully competed for Federal HOME funding without the need for PBVs earlier in 2022 through a competitive Notice of Funding Availability, for HOME funds, issued by the County of Contra Costa. As a result of successfully competing for other Federal, State or Local funding without the use of PBV funds, RCD is eligible to seek PBVs through the non-competitive award process. 699 YVR Housing meets the criteria for submitting a non-competitive request for PBV assistance and HACCC has the ability to award the PBVs at this time.
This Board Order seeks to approve the award of 24 PBVs for 699 YVR Housing. If approved by the Board, HACCC will eventually enter into a housing assistance payment contract (HAP) with the owner of the development for an initial term of 20 years and an extension of the initial term of 20 years. Federal statute permits the initial term to be anywhere from one to twenty years. HACCC utilizes a twenty-year term to accommodate the tax credit compliance term and to provide projects with the maximum financing available. In addition, the Federal statute also permits housing authorities to grant an extension of up to twenty years to the PBV contract at signing. HACCC utilizes the twenty-year extension to further increase the financing available to the project and to ensure long-term affordability of the units. Any contract extensions are subject to the availability of federal funding for the HCV program.
All tenants of PBV units must be screened for eligibility for the HCV program by HACCC and must come from HACCC’s PBV site-based wait list for the property. The PBV site-based wait list is open to all families on HACCC’s HCV wait list. The property owner will then select tenants for occupancy of a particular unit after conducting additional suitability screening consistent with their tenant screening and eligibility policies for that property. Tenants in PBV units will sign an initial lease with a one-year term. After one year, a PBV tenant can move from the PBV unit by using regular tenant-based HCV assistance subject to availability. If a PBV property does not continuously lease up all its PBV units, or if the property fails to meet HUD’s Housing Quality Standards for health and safety, then the PBV units awarded to that property can be rescinded.
To date, HACCC has awarded 1,789 PBVs in previous funding competitions. Staff recommends that HACCC award 24 PBV units to RCD for 699 YVR Housing in Walnut Creek.
The 699 YVR Apartments project is expected to receive approximately $36.6 million in rent and subsidies if the proposed contract and terms are approved. Funding for project-based vouchers is provided by utilizing a portion of the Housing Authority of the County of Contra Costa’s (HACCC) tenant-based voucher funding.
Should the Board not approve the award of 24 PBV units to Resources for Community Development on behalf of 699 YVR Housing, the project will likely not be able to proceed as the rental assistance for these units is critical to its financial viability.
Speakers: No name given; Caller 6770.