Project Based Assistance

INTRODUCTION

The Project Based Assistance (PBA) program is a HUD Section 8 housing subsidy program that ties rental assistance directly to a specific unit or project. Currently the PBA program has a total of 45 vouchers allocated from the tenant based vouchers. Eligible families receive rental assistance by agreeing to live in the designated newly constructed, existing, or rehabilitated units, and continue to receive assistance as long as they reside in the specific project based dwelling unit. Developments that have been approved and have contracts are Westwood Village Apartments One, Swisshelm Village Apartments One, Swisshelm Village Apartments Two, Eastwood Apartments and The Highlands Apartments.

Funding for PBA comes from the agency’s existing 838 voucher funding allocation. Program regulations permit a housing agency to project-base not more than twenty (20) percent of the funding available for its tenant-based assistance program.

A. PROGRAM GOALS

  1. To increase the supply and availability of long-term affordable housing for very low-income households in the City of St. Cloud.
  2. To disperse concentrations of assisted families.
  3. To promote partnerships between public, semi-public, or non-profit agencies and organizations to provide affordable housing in proximity to community amenities and services.

B. GENERAL CRITERIA FOR PARTICIPATION

  1. Qualifying developments may be new construction, existing units, or in conjunction with a rehabilitation project and meet HUD Housing Quality Standards (HQS).
  2. Qualifying developments must be located in the city limits of St. Cloud, Benton County, Sherburne County or Wright County.
  3. No more than 25% of the dwelling units in any one building may be project-based with the following exemptions: single family properties and dwelling units specifically for elderly families or families receiving supportive services.
  4. Current residents of proposed PBA units must have incomes of less than 50% of the area median income as defined by HUD to remain in a PBA assisted unit.
  5. New residents or vacancies in PBA assisted units must be filled by eligible families from the PHA’s Section 8 Waiting List. The PHA will make selected applicant names available to the owner as soon as possible, no later than thirty (30) days of receiving the owner’s notification of vacancy. Owners may establish tenant screening and selection procedures provided they are reasonably applied and consistent with the PBA program criteria and are enforced uniformly.
  6. Owners of qualifying developments will be required to enter into a Housing Assistance Payments Contract with the St. Cloud HRA for a period of not less than one year and not more than ten years.
  7. Qualifying developments must not have initiated construction or rehabilitation activities before executing an Agreement to Enter into a Housing Assistance Payments Contract.
  8. Financing for construction or rehabilitation of qualifying developments is the responsibility of the owner. The PBA program is a rental assistance program only. However, participation in the PBA program may increase the development’s opportunity for funding from the Minnesota Housing Finance Agency (MHFA) and other funding sources.
  9. Qualifying developments must propose Gross Rents that are determined reasonable by the PHA and approved by the Department of HUD.

C. APPLICATION PROCEDURES

The PHA will advertise the availability of the PBA program, inviting interested parties to make application. The advertisement will be published once a week for three consecutive weeks and specify an application deadline of at least 30 days after the last date advertised. The advertisement will specify the number of units the PHA estimates that it will be able to assist under the available funding and include the PHA’s selection criteria. Applications will only be selected from respondents to the published advertisements. After receipt of the completed PBA applications, PHA staff will conduct a review of the proposals and rank them in accordance with the PHA’s established Section 8 Policies, selection criteria, and their apparent adherence to applicable HUD regulations. The PHA may forward applications to HUD for review and approval of certain compliance issues.

D. PROGRAM OPERATION

Housing Assistance Payments (HAP) Contract The owner must enter into a HAP contract with the PHA. The initial HAP contract term may not be less than one year or more than ten years and is subject to the future availability of sufficient funding under the PHA’s Annual Contributions Contract (ACC) with HUD. Within these limits the PHA has the sole discretion to determine the HAP contract term. The PHA has the sole discretion to renew or to not renew expiring HAP contracts. The effective date of the HAP contract may not be earlier than the date of the PHA inspection and acceptance of the unit. After commencement of the HAP contact term the PHA must make monthly housing assistance payments for each unit occupied under lease by a family.

Responsibilities of the PHA The PHA must inspect the project before, during and upon completion of construction or rehabilitation; and, ensure that the amount of assistance committed to the development is within the amounts available under the ACC.

Responsibilities of the Owner

  1. Perform all of the owner responsibilities under the Agreement and the HAP contract.
  2. Provide the PHA with a copy of any notice of termination of tenancy.
  3. Offer vacant, accessible units to a family with one or more members with a disability requiring the accessibility features of the vacant unit and already occupying an assisted unit not having such features.
  4. Provide not less than one-year written notice to tenants and HUD of expiration or termination of the HAP contract.

Family Participation A family becomes a participant when the family and owner execute a lease for a unit with project-based assistance. The PHA will use the tenant-based waiting list to select participants for admission to the PBA program. Participants must be selected from the PHA waiting list in accordance with the admission policies section of the PHA Administrative Plan.

Before a PHA elects to assign assistance to a specific unit the PHA must determine whether an eligible family occupies the unit.

Income Limits for Admission

An eligible applicant must be a "family" whose annual income does not exceed the applicable income limit set by HUD.

Filling Vacant Units

When the owner notifies the PHA of vacancies in units to which PBA assistance is available, the PHA will refer to the owner one or more families of the appropriate size on its waiting list. A family that refuses the offer of a unit with PBA assistance keeps its place on the PHA’s waiting list.

To the extent possible, the owner must rent all vacant PBA assisted units to eligible families referred by the PHA from its waiting list subject to appropriate tenant screening. The PHA must determine eligibility for participation in accordance with HUD requirements. If the PHA does not refer a sufficient number of interested applicants on the PHA waiting list to the owner within 30 days of the owner’s notification to the PHA of a vacancy, the owner may advertise for or solicit applications from other eligible very-low income families. The owner must refer these families to the PHA to determine eligibility.

The owner is responsible for the screening and selection of tenants. The owner must adopt written tenant selection procedures that are consistent with the purpose of improving housing opportunities for very low-income families, maintaining a decent living environment for all tenants, and enforcing appropriate lease provisions.

The PHA may, at its sole discretion, continue to provide assistance to the owner for a unit that becomes vacant after the assisted occupancy by a family for up to a maximum of 60 days. Payment will only be made if the vacancy is not the fault of the owner and owner takes every reasonable action to minimize the likelihood and extent of vacancies.

Briefing of Families

When the family is selected to occupy a project-based unit, the PHA must provide the family with information concerning the tenant rent, any applicable utility allowance and a copy of the HUD-prescribed lead-based paint brochure.

The family must also attend a briefing session and be provided with a full explanation of the following:

  1. Family and owner responsibilities under the lease and HAP contract
  2. Information on Federal, State and Local equal opportunity laws and ordinances.
  3. The fact that the subsidy is tied to the unit and if the family moves from the unit they may be offered tenant-based assistance.
  4. The family’s options under the program, if the family is required to move because of a change in family size or composition.
  5. Information on the PHA’s procedures for conducting informal hearings for participants, including a description of the circumstances in which the PHA is required to provide the opportunity for an informal hearing under 24 CFR 983.208 and of the procedures for requesting a hearing.

Rent and Housing Assistance Payments

For the following components of the PBA program the same rules of the Section 8 tenant-based program apply. For detail, call 320-252-0880 and ask for the Section 8 Director.

  1. Determination of the FMR/exception rent limit
  2. Determination of family income and composition
  3. Regular and interim examinations
  4. Utility allowance schedule

Housing Assistance Payment

The monthly housing assistance payment equals the gross rent minus the higher of:

  1. The total tenant payment
  2. The minimum rent of $40.00

Amount of Rent Payable by Family to Owner

The amount of rent payable by the family to the owner must be the Tenant Rent. The Tenant Rent is calculated by subtracting the amount of the housing assistance payment from the contract rent.

Minimum Rent

The PHA has established a minimum rent of $40 for families living in all PHA Section 8 assisted units.

Lease Requirements

The lease between the family and the owner must be in accordance with HUD regulations and requirements and include all provisions required by HUD and not include any provisions prohibited by HUD.

When offering an accessible unit to an applicant not having disabilities, the owner must:

  1. Require the applicant to agree to move to a non-accessible unit when one becomes available and an eligible disabled applicant or tenant is in need of such unit; and
  2. Incorporate the agreement into the lease.

Term of Lease

The term of a lease, including a new lease or a lease amendment, executed by the owner and the family must be for at least one year. The term may be less than one year if the remaining term of the HAP contract is less than one year.

The family must notify the PHA and the owner in accordance with the lease before the family moves out of the unit. The lease may contain a provision permitting the family to terminate the lease on not more than 60 days advance written notice to the owner.

  1. In the case of a lease term being more than one year, the lease must contain a provision permitting the family to terminate the lease on not more than 60 days notice after the first year of term.

The owner may offer the family a new lease for a term beginning at any time after completion of the first year of the lease.

The owner must give the family a written notice of the offer at least sixty (60) days before the proposed commencement date of the new lease term. The offer must specify a reasonable time for acceptance by the family. Failure by the family to accept the offer of a new lease in accordance with this paragraph shall be "other good cause" for termination of tenancy.

Overcrowded and Under-occupied Units

If the PHA determines that a contract unit is not decent, safe and sanitary because of an increase in family size that causes the unit to be overcrowded based on the PHA’s subsidy standards:

  1. The PHA must offer the family a suitable alternative unit if one is available; and
  2. The family shall be required to move.

If the PHA does not have a suitable unit available within the family’s ability to pay, the PHA must offer Section 8 assistance to the family if it has sufficient funding.

The PHA must otherwise assist the family in locating other standard housing in the PHA’s jurisdiction and within the family’s ability to pay. The PHA must require the family to move to such a unit as soon as possible.

The family must not be forced to move and the PHA may not terminate the HAP contract for reasons stated in this paragraph, unless the family rejects, without good reason the offer of a unit that the PHA judges to be acceptable.

Informal Review or Hearing

For the PBA program the applicable sections of informal reviews for applicants and informal hearings for participants are the same as for the Section 8 tenant-based programs. Refer to the chapter "Complaints and Appeals," of the Section 8 Administrative Plan.

Continued Assistance for a Family when the HAP Contract is Terminated

If the HAP contract for the unit expires or if the PHA terminates the HAP contract for the unit, the PHA must issue tenant-based assistance to the assisted family in occupancy of the unit, unless the PHA does not have sufficient funding for continued assistance for the family.

The PHA does not have to issue the family tenant-based assistance if the family is being denied or terminated because of the family’s actions or failure to act in accordance with their lease or the HAP Contract.

If the total number of PBA assisted units are not occupied by eligible assisted families, then the available unobligated funds under the ACC that were committed for support of the PBA units must be used for the PHA’s tenant-based assistance program.

Limits of Initial Rent to Owner

The initial rent to owner for a unit may not exceed the reasonable rent as determined by the PHA. The initial rent established by the HAP Contract must not exceed 110% of the established Fair Market Rent or any HUD-approved exception payment standard. The payment standard is determined by the PHA in accordance with the rules for the Section 8 tenant-based assistance program. See the chapter "Owner Rents, Rent Reasonableness, and Payment Standards" of the Section 8 Administrative Plan.

Approval of Initial Rent

The PHA approves the initial rent to owners for PBA units that are not HUD-insured or PHA-owned. To determine that the initial rent to the owner is reasonable, the PHA will apply the same procedure as Voucher assisted units. See the Chapter "Owner Rents, Rent Reasonableness, and Payment Standards".

If a unit has been allocated a low-income housing tax credit under the Internal Revenue Code of 1986 at 26 U.S.C. 42, but is not located in a "qualified census tract" under that law, the rent to owner may be established at any level that does not exceed the rent charged for comparable units in the same building that receive the tax credit but do not have additional rental assistance. The PHA must certify that the initial rent to owner for a unit does not exceed the reasonable rent. For PHA-owned PBA units or units financed with a HUD insured multifamily mortgage, the initial rents must be approved by HUD.

Annual Adjustment of Rent to Owner

During the term of the HAP contract, the PHA must adjust the rent to owner in accordance with the following requirements:

  1. The owner must request any proposed rent increase by written notice to the PHA at least 60 days before the proposed increase is to be effective.
  2. The request must be submitted in the form and manner prescribed by the PHA. The PHA may not increase the rent unless:
  3. The owner requested the increase by the 60-day deadline;
  4. The HRA determines the proposed rent to be reasonable and under the maximum rent limit; and
  5. During the contract, the owner complied with all requirements of the HAP contract, including the Housing Quality Standards (HQS) for all contract units.

Amount of Annual Adjustment

At least annually during the HAP contract term, the PHA must re-determine that the current rent to owner does not exceed a reasonable rent. The adjusted rent to owner equals the lesser of:

  1. The pre-adjustment rent to owner multiplied by the applicable Section 8 annual adjustment factor published by HUD.
  2. The reasonable rent as determined by the PHA.
  3. The rent requested by the owner.

For PHA-owned PBA units, the PHA must request HUD approval of the annual adjustment. Except as necessary to correct errors in establishing the initial rent in accordance with HUD requirements, the adjusted rent to owner must not be less than the initial rent.

In determining annual adjustment of rent to the owner, the adjusted rent to the owner must not exceed a reasonable rent as determined by a PHA "comparability study". The comparability study must include a completed comparability analysis for each unit type on Form HUD-92273. The comparability study may be prepared by PHA staff or by another qualified appraiser.

If the owner requests a rent increase by the 120-day deadline, the PHA must submit a comparability study to the owner at least 60 days before the HAP contract anniversary. If the PHA does not submit the comparability study to the owner by this deadline, an increase of rent by application of the annual adjustment factor is not subject to the reasonable rent limit. The applicable Section 8 annual adjustment factor (AAF) is the published annual adjustment factor in effect sixty (60) days before the HAP contract anniversary.

By accepting each monthly housing assistance payment from the PHA, the owner certifies that the rent to owner is not more than rent charged by the owner for comparable unassisted units in the premises.

Special Adjustment of Rent to Owner

The PHA may only make a special adjustment of the rent to the owner if HUD has approved the adjustment.

A special adjustment may only be approved to reflect increases in the actual and necessary costs of owning and maintaining the contract units because of substantial and general increases in:

  1. Real property taxes
  2. Special governmental assessments
  3. Utility rates
  4. Costs of utilities not covered by regulated rates

A special adjustment may only be approved if the owner demonstrates that cost increases are not adequately compensated by application of the published AAF and the rent to the owner is not sufficient for proper operation of the housing.

The adjusted rent may not exceed the reasonable rent as determined by the PHA.

The owner must submit financial information, as requested by the PHA, that supports the request for a special adjustment.

The PHA may withdraw or limit the term of any special adjustment.

If a special adjustment is approved to cover temporary or one-time costs, the special adjustment is only a temporary or one-time increase of rent to the owner.

Reasonable Rent

The PHA may not enter into an agreement to enter into a Housing Assistance Payments contract until the PHA determines that the initial rent to owner under the HAP contract is a reasonable rent.

During the term of a HAP contract, the rent to owner may not exceed the reasonable rent as determined by the PHA.

The PHA must determine whether the rent to owner is a reasonable rent in comparison to rent for other comparable unassisted units.

To make this determination, the PHA must consider:

  1. The location, quality, size, unit type, and age of the contract unit.
  2. Any amenities, housing services, maintenance and utilities to be provided by the owner in accordance with the lease.

Correction of Rent

At any time during the life of a HAP contract, the PHA may revise the rent to owner to correct any errors in establishing or adjusting rent to owner in accordance with HUD requirements. The PHA may recover any excess payment from the owner.

Maintenance, Operation and Inspections

The owner must provide all the services, maintenance and utilities as agreed under the HAP contract.

  1. Housing assistance payments are subject to abatement or other applicable remedies if the owner fails to meet these obligations.

The PHA must inspect each dwelling unit under HAP contract at least annually and as necessary to assure that the owner is meeting the obligations to maintain the unit in decent, safe and sanitary condition and to provide the agreed upon utilities and other services.

Refer to the chapter "Housing Quality Standards and Inspections" of the Section 8 Administrative Plan for details.

Other Subsidies

The PHA may reduce the initial rent to owner because of other governmental subsidies including tax credit or tax exemption, grants or other subsidized financing.

For provisions prohibiting PBA to units in certain types of subsidized housing, see CFR 983.7(c).