Chapter XXII: Project Based Voucher Program

Effective: November 2009

Introduction

The U.S. Department of Housing and Urban Development (HUD) allows a Public Housing Authority (PHA) to allocate up to 20% of the Housing Choice Vouchers (HCV) to a Project Based Voucher (PBV) program provided it does not contribute to additional concentrations of extremely low income families in certain properties or neighborhoods. The Michigan State Housing Development Authority (MSHDA) may allocate up to 20% of its HCVs to this initiative. Project-based units are defined as units where the rental subsidy assistance is assigned to a specified unit, not a tenant.

After the publishing of HUD’s final rule for the PBV program (24 CFR Part 983) in October 2005, MSHDA implemented changes to the administration of its PBV Program. New awards for PBV will follow this policy. All regulations at 24 CFR Part 983 are followed for PBV site selection and project selection.

After a tenant-based PBV is awarded to a family, all regulations cited in 24 CFR Part 982 for Section 8 Tenant-Based Assistance: Housing Choice Voucher and other appropriate sections of the Code of Federal Regulations (i.e., Part 5) related to tenant-based assistance apply to the administration of these vouchers.

Section A: Selection of Properties (24 CFR 983.51)

Beginning in FY 2006, MSHDA selects proposals for PBV that have successfully competed for housing assistance under a federal, state, or local government housing assistance, community development, and supportive services program, provided the proposal has been selected in accordance with such program’s competitive selection requirements within three years of the PBV proposal selection date, and the earlier competitive selection proposal did not involve any consideration that the project would receive PBV assistance.

MSHDA additionally set the requirement that all proposals must have been competitively awarded on or after January 1, 2006 and have successfully met all Supportive Housing underwriting criteria as established by MSHDA’s Office of Rental Development & Homeless Initiatives, been part of a commitment for supportive housing within the MSHDA’s Low Income Housing Tax Credit (LIHTC) Program and/or MSHDA HOME Program. All MSHDA PBV awards must be for new units (acquisition/rehabilitation, substantial rehabilitation, or new construction) and at minimum meet HUD HQS standards at time of occupancy and have satisfied HUD Environmental Review Requirements.

1. 25% Cap (24 CFR 983.56)

The PHA will not allow more than 25% of the units in a building to receive PBV unless they are units in a single-family building (1-4 units); units that house elderly or disabled households for the term of the Housing Assistance Payment (HAP) Contract; or units that receive supportive services for the term of the HAP.

2. Site Selection (24 CFR 983.57)

For existing and rehabilitated PBV housing, applications will be selected that demonstrate that the proposed site is in compliance with PBV goals, fair housing requirements and HQS requirements and will be in a census tract showing expanded housing opportunities. Consideration of all the following factors will be given at the time of project selection. The census tract area must:

1. Be located in or adjacent to a HUD designated Enterprise Zone, Economic Community, or Renewal Community;
2. Be undergoing significant revitalization;
3. Be receiving or has received significant investment of state, local, or federal dollars;
4. Have new market rate units being developed in the area and those market rate units will positively impact the poverty rate in the area;
5. Have seen a decline in the overall poverty rate in the last 5 years if the poverty rate is more than 20%; or,
6. The local government will provide PILOT/tax abatement; or
7. Has a homeless population that exceeds shelter bed capacity; or
8. Have meaningful opportunities for educational or economic advancement.

MSHDA will grant exceptions to the 20 percent proverty concentration standard where MSHDA determines that the PBV assistance will complement other local redevelopment activities designed to deconcentrate proverty and expand housing and economic opportunities in census tracts with poverty concentrations greater than 20 percent. However, under no circumstances will MSHDA approve PBV assistance in a census tract with a concentration factor of more than 40% of the census tract poverty rate or 75% of the community wide poverty rate, whichever is lower.

3. Serving Homeless

Applications will be selected that have a focus for serving the special needs and homeless population in Michigan and meet one or all of the following:

1. The proposed site is located in a county that has no homeless shelter; or,
2. The homeless population exceeds shelter bed capacity; or
3. A Memorandum of Understanding exists between the developer, property management company and local service agency(ies) assuring that homeless, special need tenants, have access to a wide array of supportive services including eviction prevention.
4. The lack of shelter beds results in unstable housing/living conditions.

4. Neighborhood criteria for existing and rehabilitated sites

The following additional neighborhood standards must be met:

1. The site must be adequate in size to the number of units proposed to meet appropriate infrastructure and utility needs.
2. The site must offer a greater choice of housing opportunities and avoid a larger concentration of assisted persons in an area already containing a high concentration of low-income persons.
3. The site must offer a wide variety of social, commercial and health facilities that are similar to those found in a neighborhood of primarily unassisted housing of a similar nature.
4. The site must offer forms of transportation that are not cost prohibitive to lower-income workers to places of employment, enjoyment, educational, or health services.

5. Neighborhood criteria for new construction PBV sites

The following additional neighborhood standards must be met:

1. The site must be adequate in size to the number of units proposed to meet appropriate infrastructure and utility needs.
2. The site must offer a wide variety of social, commercial and health facilities that are similar to those found in a neighborhood of primarily unassisted housing of a similar nature.
3. The site must offer forms of transportation that are not cost prohibitive to lower-income workers to places of employment, enjoyment, educational, or health services.
4. The site must not be located in an area of minority concentration unless there are a sufficient number of comparable units for the same household type (i.e. family, elderly, disabled) located outside the area of minority concentration that will over time result in a balance of housing choices within and outside the areas of minority concentration.
5. The overall impact of HUD-assisted housing on the proposed site will benefit the families because it will lead to greater housing choices for families within and outside the area of minority concentration because
   • there are neighborhoods that are racially integrated;
   • there are programs available to families that will assist them find housing outside the area of minority concentration;
   • local activities have been undertaken to expand choices for minority families outside of areas of minority concentration.

6. Environmental Review Requirements (24 CFR 983.58)

Every PBV project is subject to HUD environmental review requirements. Prior to execution of a HAP Contract, the owner must present evidence that the environmental review has been performed by a HUD designated “responsible entity” and approved by HUD; or where applicable, categorically excluded from review. 

7. Supportive Services

Units that require supportive services may include any or all the following types of training and services; however, this list is not all inclusive:

1. Job training, development, and/or placement;
2. Money management skills and services;
3. Providing resources to assist families achieve economic self-sufficiency;
4. Parenting skill training;
5. Individual and/or family counseling services;
6. Educational services;
7. Substance abuse training, counseling, and/or treatment;
8. Mental health treatment and/or counseling

Section B: Ineligible Properties (24 CFR 983.53)

Units that are ineligible for project-based assistance include those that are:

• Already subsidized by another form of Project Based Section 8, Section 236, Rural Development Section 515 or Section 521 assistance.
• Subsidized by Section 221d4, Section 202, Section 162, Section 811, Section 101 Rent Supplement.
• Assisted under a former Section 23 program or any other duplicative Federal, State or local housing subsidy as determined by HUD or MSHDA.
• Shared housing, nursing homes, transitional housing, intermediate care facilities, facilities providing continual psychiatric, medical, or nursing services, board and care, foster care or intermediate care.
• Within the grounds of penal, reformatory, medical, mental and similar public or private institutions.
• Located in an area that has been identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards.
• College or other school dormitories.
• A manufactured home.
• Public housing.
• Occupied by households requiring displacement and/or relocation of current tenants.

Section C: Public Notification Methods (24 CFR 983.51)

MSHDA will utilize its web page at www.michigan.gov/mshda to make public all major announcements, key documents, and application materials for the PBV Program. Should MSHDA decide to conduct a Request for Proposal method of project selection, MSHDA will announce that it will accept PBV proposals at least three weeks in advance of the designated due date.  The announcement will include the proposal application, review criteria, required documents and the date it will stop accepting proposals.

MSHDA may implement more than one PBV initiative at any one time. The specific requirements of each initiative will be publicly announced.

Any proposal for PBV housing in which MSHDA has a direct or indirect interest will be considered PHA–owned housing. Any PHA-owned proposals must be approved by HUD or an independent entity selected by HUD, after MSHDA has granted preliminary approval. Applicants will be informed that a final proposal selection determination cannot be made until this review is completed and approved by HUD.

Section D: Housing Assistance Payment (HAP) Contract Term (24 CFR 983.202 and 983.205)

MSHDA enters into a HAP Contract (HUD 52530A New Construction projects or HUD-52530B for Existing Projects) with the owner of the property selected to have a PBV program in the format required by HUD headquarters. The initial term of the HAP contract may be executed for a period of up to fifteen years for each contract unit. The length of the term of the HAP contract for any contract unit may not be less than one year, nor more than fifteen years. Within one year before expiration, MSHDA may agree to extend the term of the HAP contract for an additional term of up to fifteen years if it is determined an extension is appropriate to continue providing affordable housing to extremely low income families. Any extensions must be on the appropriate form and subject to conditions set by HUD at the time of the extension.

At the time the HAP Contract is executed, the owner will identify the specific units that will be assisted under the Contract. A copy of the HAP contract will be required in a tenant file. Each tenant will have a lease with the owner for the specified unit.

1. Additional HAP Contract Requirements

The HAP Contract must specify the following:

1. Total number of contract units by number of bedrooms;
2. Specific contract units in each building;
3. Owner supplied services, maintenance, and/or equipment without charges in addition to the rent;
4. Utilities available to the contract unit;
5. Initial rent to owner (first twelve months on the HAP contract term);
6. Accessibility features provided to comply with Section 504 of the Rehabilitation Act of 1973;
7. HAP contract term; and
8. Number of units that exceed the 25% per building set-aside cap if applicable.

The HAP contract will not be expected until each unit has been inspected and complies with HQS requirementms.

Section E: Selection of Housing Agent (HA) to Administer PBV

Once a PBV project has been identified, the MSHDA Office of Housing Voucher Programs Resource Specialist/Regional Manager (RS/RM) will determine if a Request for Proposal (RFP) must be executed for the assignment of the vouchers to a MSHDA Contracted Housing Agent (HA) to administer. If an RFP is necessary, the RS/RM will announce the RFP and select a HA to administer the vouchers from the responses. If an RFP does not need to be executed, then the RM will select the HA to administer the vouchers. 

Section F: Administering Project Based Vouchers

Step 1: The MSHDA Office of Housing Voucher Program reviews requests for PBV and sends Preliminary Award letters to the owner of Projects meeting criteria.

Step 2: Owner accepts or refuses the PBV Award.

Step 3: If owner accepts Award, the RS prepares the HAP contract between MSHDA and the owner of the property and the HAP Contract is executed.

Step 4: Phone calls are made by the RS, RM, and assigned HA to the property owner/on-site manager to work out initial details such as:

• establishing dates for meetings with in-place tenants,
• explaining HQS standards and establishing HQS inspection dates,
• conducting a rent reasonable test and agreeing to initial rental rates, rent increases and decreases,
• discussing tenant options if tenant is in an oversized unit,
• the MSHDA subsidy payment process, and
• agreeing to an effective date.
• The RS/RM explains to the owner that HCV rules apply to the PBV units which are different from Multi-Family Housing rules,
• vacancies,
• annual rent increases

Step 5: The processing of required PBV paperwork begins. The assigned HA will follow HCV program guidelines, and MSHDA policies and procedures for a housing choice voucher including the third party verification of income eligibility, criminal screenings, briefings, unit inspections, hearings, annual re-examinations, interim re-examinations, cancellations, etc. A listing of forms being used for PBV is located in the Applicable Forms Listing section at the end of this policy. 

Step 6: During the briefing meeting with the family, in addition to other required items, the HA must explain:

• the subsidy is tied to the unit;
• the family must inquire as to the availability of another voucher before giving the owner a 30-day notice of their intention to move if they have lived in the unit for one year and they desire continued assistance after the move.

Step 7: When vacancies occur, the owner or representative must notify the HA immediately and the HA will select names from the appropriate county MSHDA waiting list, determine eligibility, and proceed with the required paperwork verification process.

Step 8: Vacancy Loss Claims:

In order for a vacancy payment request to be considered, it must be made within 10 business days of the end of the period for which the owner is requesting the vacancy payment. The request must include the required owner certifications and the PHA will require the owner to provide documentation to support the request. If the owner does not provide the information requested by the PHA within 10 business days of the PHA's request, no vacancy payments will be made.

For payment, the owner must complete a Vacancy Loss Worksheet (MSHDA-4) and submit it to the appropriate MSHDA Office of Housing Voucher Program Resource Specialist in the Lansing office for payment. The form should be submitted when the tenant moves or when the tenant terminates participation in the program. Once payment is made, a copy of the MSHDA-4 will be filed in the payment section of the tenant file; or the form will be sent back to the housing agent for those housing agents who have their files in the field.

Based upon the federal regulations that were in place at time that PBV projects were selected, the following PBV developments are not eligible for vacancy loss payments: Allegan LDHA Scattered Sites, Avalon, Genesis East, Heritage Meadows, Herkimer, Lakewood Manor, Lapeer Scattered Sites, Liberty Street Apartments, Mystic View, On the Park, On the River, Orianna Ridge, Ottawa County Scattered Sites--Grand Haven, Holland, and Zeeland, Park Meadows, Peterboro, Pinehurst, Summit Park, Venture, Inc., West Bridge Apartments, and 11th Street Apartments.

Note: Participants in the PBV program are eligible for the Family Self-Sufficiency program and may apply to the FSS Waiting List.

Section G: Waiting List Procedures (24 CFR 983.251)

In counties where a PBV program exists, the HA will maintain PBV waiting lists that are site and bedroom size specific and separate from the county waiting list for Housing Choice Vouchers (HCV). Additionally, a separate PBV waiting list will be kept for those persons needing barrier free units.

County PBV waiting lists will remain open at all times. Applications will be accepted for the PBV program on a continual basis from lead agencies certifying applicant eligibility and are interested in receiving a project-based voucher via a first-come, first-serve method.

If a large PBV waiting list exists, (unlikely that all applicants on the list will be served within a reasonable period of time; i.e., 2 years) closure of the PBV waiting list may be discussed with the RS.

1. Placement on the Waiting List

Applicants must follow the appropriate steps to be placed on a PBV waiting list. If an applicant wants to be on both the waiting list for HCVs and a specific project-based site, they must complete two applications, and their name will be placed on both lists. If the county’s HCV waiting list is closed, the applicant may only apply to be on the PBV program waiting list. 

MSHDA must notify applicants who are listed on the county HCV waiting list about the opportunity for PBV assistance in their county. Applicants will be notified of the MSHDA website listing available PBV sites if they are interested in applying (follow attached link).

If the applicant is on both the HCV and PBV waiting lists, PBV assistance becomes available and the family refuses the offer of PBV assistance, their name would be removed from the PBV waiting list. The refusal does not affect the family’s position on the waiting list for tenant-based (HCV) voucher assistance. 

If a HCV applicant on a HCV waiting list for a county that has a PBV project refuses to accept an offer of project based assistance, their name remains on the HCV waiting list in the same position on the tenant-based HCV waiting list.

If an HCV applicant on the HCV waiting list accepts a PBV, their name may remain on the waiting list in the same position for the tenant-based HCV assistance.

2. Waiting Lists at Initial Start Up of PBV Program

1. In-Place Families

   When a PBV project begins, in-place tenants who are eligible for the program may receive a PBV. The Development must provide a list of in-place residents to the HA. If the in-place tenant is not already on the PBV development site waiting list, the in-place tenants must submit an application for assistance to the identified lead agency for the PBV development site. After the application by the in-place family located at the PBV site has been certified as eligible by the lead agency using the Lead Agency Certification (MSHDA/PBV-531), the in-place family will then be placed on the appropriate bedroom-size waiting list and then immediately pulled from the waiting list and offered a subsidy for an appropriately sized unit in the project. Applicants who are on the in-place list will be given the in-place preference. See Elite User Guides for instructions. A copy of the in-place list must be placed in the permanent section of the file.

2. Existing Vacancies at Start Up

   At the time that a PBV program begins, if a vacancy exists in an identified PBV unit at a property that is participating in a PBV program, applicants on the property owners waiting list should be referred to lead agency for certification. Once the proposed family’s eligibility is determined by the HA, the HA will then immediately pull the family’s name from the waiting list and be issued assistance for an appropriately sized unit in the project. 

   If ineligible tenants are housed in the identified PBV units, no subsidy will be offered to the ineligible tenant in that unit and no subsidy will be paid to the owner until an eligible tenant is in place.

3. Waiting Lists after Initial Lease-Up

After the initial lease-up of families in the specified PBV units, the appropriate county PBV bedroom-size and site-based waiting list maintained by the HA must be utilized. Applicants who will occupy PBV units must be selected by the HA from the appropriate bedroom-size, MSHDA PBV site-based waiting list. In the event there are not enough names on the appropriate bedroom-sized, the HA should contact the lead agency or development staff for referrals.

Property owners with PBV designated units and/or service agencies may refer applicants to the HA maintaining the appropriate county’s PBV waiting list for inclusion on the open PBV waiting list at any time.

4. Waiting List Outreach and Opening/Closing of Waiting List

When it is determined that the number of names on an open PBV waiting list is nearly exhausted, the HA will follow the procedures for purging, updating, outreach and/ or marketing the waiting list as identified in the Policy Procedure Manual, Chapter II, Waiting List Management. The HA will follow the process for removing names from the waiting list and ranking applications as appropriate.

5. Removing Applicant Names from a PBV Waiting List

A name may only be removed from a PBV waiting list when:

• The applicant refuses the PBV offering. (Note: Do not remove the applicant from the tenant-based waiting list.)
• The applicant did not respond, or designated representative did not respond to the HA’s attempts to reach the applicant for verification and/or updates;
• Applicant is ineligible (including failure to pass a criminal screening, over income, and non-citizenship);
• Applicant/tenant requests removal from the PBV waiting list.

6. PBV Waiting List Preferences

Waiting list preferences have been identified by MSHDA that will be used for specific project-based voucher projects including homeless, elderly, veterans, special need, youth transitioning out of foster care, and domestic violence when it has been identified in the project selection process that specific supportive housing services are being provided at the project-based voucher site. Waiting list preferences cannot exclude a particular group within the population being served.

Section H: Family Eligibility Requirements

After August 1, 2008, 85% percent of the families admitted to the PBV program from the waiting list must be at or below 30% of area median income (AMI). The remaining 15% may be at or below 50% of the AMI.

The HA may only select families who are applicants to the HCV PBV program. All families must be eligible for admission to the program at the commencement of PBV assistance including income eligibility.

Section I: Tenant Moves (24 CFR 983.260)

After a tenant with a PBV has occupied the project-based unit for a period of one year or more, and funding for a HCV voucher is available; the tenant has the same rights as a tenant with a tenant-based HCV and may port (out of state) or transfer (within state) with a HCV to another unit that is not assisted with a PBV. The appropriate PPM, Transfers or Portability policy must be followed.

When the tenant notifies the HA of their intention to move and provides 30-day notice of their intent, if a HCV is available, the family may move with continued assistance. The HA will assign a new HCV increment to the tenant on PBV assistance if the HA has an increment available that can be assigned to the tenant. A short waiting period may occur if a new increment is not available at the time of the request (next available increment would be assigned). The tenant may choose to move without continued assistance.

The vacated project-based unit will be leased to another eligible family from the waiting list.

The original increment will remain assigned to the PBV unit.

If it is determined that a family is occupying a wrong size unit based on the MSHDA subsidy standard, or a unit with accessibility features that the family does not require and the unit is needed by a family that does require the features, MSHDA will promptly notifiy the family and the owner of this determination. The family must be offered the opportunity to receive continued housing assistance in another unit. MSHDA will notify the family and the owner of the family's need to move based on the occupancy of a wrong-size or accessible unit within 10 business days of MSHDA making such a determination. The family will be offered the following types of continued assistance in the following order, based on the availability of assistance:

1. PBV assistance in the same building or project;
2. PBV assistance in another project; and/or
3. Tenant-based voucher assistance.

If MSHDA offers the family a tenant-based voucher, MSHDA will terminate the HAP payments for a wrong-sized or accessible unit at the expiration of the term of the family's voucher, including any extensions granted. If MSHDA offers the family another form of assistance that is not a tenant-based voucher, the family will be given 30 days from the date of the offer to accept the offer and move out of the PBV Unit. If the family does not accept the offer, and/or does not move out of the PBV unit within this 30-day time frame, MSHDA will terminate the HAP for the unit at the expiration of this 30-day period. MSHDA may make exceptions to this 30-day period if needed for verified reasons beyond the family's control such as death, serious illness, or other medical emergency of a family member.

Section J: Termination of Assistance

The family will continue to receive the rental subsidy until the family’s Total Tenant payment equals or exceeds the gross rent for the unit. See PPM Chapter IV, Income Policy, Income Verification, Zero HAP.

Section K: Annual Rent Increases (24 CFR 983.302 and 983.303)

Owners are eligible for annual rent increases at PBV developments at the time of the annual anniversary of the execution of the HAP Contract. The rent increases will be established by MSHDA. The owner and HA will be notified of the approved rents with at least 60 day notice.

At all times during the term of the HAP contract, the rent to owner for a contract unit may not exceed the reasonable rent as determined by the PHA.

Section L: One Year Notice of HAP Contract Expiration (24 CFR 983.205)

At least fifteen months prior to the expiration of the HAP Contract between MSHDA and the owner for the project-based vouchers, MSHDA and appropriate parties will evaluate the success of PBV and determine if the HAP Contract will be extended for another fifteen years. If yes, an amendment to the HAP Contract will be executed for another fifteen-year period with the owner. If not, one year notice must be given to all families residing in the designated project-based units that the project-based rental subsidy assistance will expire and notify them of the expiration date. At the time the HAP contract terminates, if the family has occupied the PBV unit for more than a year, they will receive a HCV.

Section M: Elite Data System

See MSHDA Elite User Guides for detailed instructions on how to enter Project Based Vouchers in the Elite data system.

Section N: Applicable Forms List

There are specific PBV forms to be used with the MSHDA PBV program. These forms would be substituted when a similar form is used with the tenant-based HCV program. For example, when a tenant is participating in the PBV program, the HA would use MSHDA/PBV 145 as the appropriate Briefing Packet form instead of the MSHDA 145. Please refer to the Forms Reference Submission Chart (MSHDA/PBV 284) for appropriate PBV forms to be used with administering this program.