Guide to Financing Supportive Housing:
Department of Housing and Urban Development-Housing Choice Voucher Program (Section 8)

Introduction
Program Description
Regulations/Guidelines
Administrative Agencies
Eligibility Information
Grant/Loan Terms
Application Process
CFDA Code
Authorizing Legislation/Statute
Additional Resources

INTRODUCTION

Established in 1974, the Section 8 Program is the single largest source of rental assistance in the country.  The program is designed to bridge the gap between the cost of operating and maintaining housing units and what low-income individuals and families can afford to pay in rent.   The Section 8 Program is administered at the local level by Local Housing Agencies (LHAs), also known as Housing Authorities, who receive Section 8 funding through an Annual Contributions Contract.  Subsidies are available as Vouchers or Project-based, and you should be aware that PHAs are increasingly willing to convert tenant-based to project-based assistance (which is easier to underwrite for supportive housing).  In 1998, a Federal law combined the Section 8 certificates and vouchers programs into one program, which is now called the “Section 8 Housing Choice Voucher Program.”  In addition, HUD offers Welfare-to-Work rental vouchers.  In order to qualify, the families must also meet special welfare-to-work criteria established in the law.

In 2001, the HUD/VA Appropriations Bill established new regulations governing the conversion of tenant-based vouchers into project-based Section 8 assistance.  This new legislation gives Housing Authorities the authority to use up to 20% of their tenant-based vouchers for project-based assistance.  However, the new regulations grant Housing Authorities greater flexibility in how the project-based assistance is used than in the previous project-basing regulations, and represent a promising potential source of funding for supportive housing.

In October 2005, HUD issued its Project-Based Voucher Program; Final Rule, significantly changing many of the regulations related to the conversion of tenant-based Section 8 / Housing Choice Vouchers into Project-Based Vouchers.  Many of these changes make it easier for Public Housing Authorities to use their Section 8 / Housing Choice Voucher resources to support the development of supportive housing units.  One problematic issue created by the new Final Rule affected the subsidy levels that could be funded within projects developed through the use of Low-Income Housing Tax Credits, but in November 2007, HUD issued its Project-Based Voucher Rents for Units Receiving Low-Income Housing Tax Credits; Final Rule, resolving that issue.

PROGRAM DESCRIPTION:

Section 8 Rental Voucher Program

Housing Choice Voucher Fact Sheet

Project Based Vouchers

Certain Developments (Section 8 Housing Choice Voucher) 

The "Certain Developments" program is a highly underutilized program at HUD that provides portable Section 8 vouchers for non-elderly persons with disabilities.  It has been used for both families and singles.  The program was started because over the years HUD has given projects that were intended to be for elderly and disabled people the right to limit the developments to elderly only or otherwise restrict occupancy by persons with disabilities.  The net effect was that housing opportunities for people with disabilities became more restricted. 

Mainstream Section 8

A good source for portable vouchers is the Mainstream Section 8 program. The program is more competitive than Certain Developments, but the application is easier.

REGULATIONS/GUIDELINES:  24 CFR Part 982

The National Housing Law Project maintains a website with regulations and updates for the various Section 8 programs.                         

ADMINISTRATIVE AGENCIES (Federal):

Department of Housing and Urban Development, Office of Public and Indian Housing
(202) 708-0950 

 

GRANT/LOAN TERMS

Term of Awards:

• The term of HUD’s Annual Contributions Contract with each LHA is one-year.  These contracts are renewable.
• For individual and families receiving tenant-based assistance, the Housing Authority enters into a contract with the landlord for a one-year period.  These contracts are renewable.
• Under the project-based option, the Housing Authority is authorized by HUD to enter into contracts with owner/sponsors for any time period up to 10 years.  However, since HUD only commits funding to the LHA on an annual basis, project-based Section 8 contracts contain the provision that assistance for the full 10-year period is contingent upon HUD funding.  Owners who enter into Project-Based Assistance (PBA) contracts run the risk that Congress could decide not to renew funding for the Section 8 program, thereby rendering their 10-year commitment from the LHA meaningless. This is a relatively low risk proposition, however, since Congress has never once in over 30 years failed to renew Section 8 vouchers for tenants already receiving assistance.

Matching Requirements:  There are no matching requirements

Formula:  The number of vouchers available through a given Housing Authority is not based on any set formula – instead, it is simply the aggregate result of how many vouchers a Housing Authority has requested from HUD since the Section 8 program began in 1974.  During the 1970s and 1980s HUD offered Housing Authorities the opportunity to apply both to renew their existing Section 8 vouchers and also to obtain new “increments” of vouchers.  Some Housing Authorities were more proactive in requesting new increments, while others requested few or none at all.  During the past ten years, there have been fewer opportunities for Housing Authorities to obtain new increments, as Congress has limited HUD to renewing existing vouchers.  Generally speaking, Housing Authorities in large urban areas will have more vouchers than those in suburban, affluent areas, but the number of vouchers available depends to some degree on the housing authority’s aggressiveness in applying for vouchers in past years.

APPLICATION PROCESS

LHAs receive their allocation of Section 8 vouchers from HUD on an annual basis, through the execution of an Annual Contributions Contract ("ACC").  The Housing Authority must submit, and HUD must approve, a Housing Authority Plan, in order to receive the funds.

Tenant-Based Assistance
Individual and families apply for tenant-based assistance by placing their name on the Section 8 waiting list.  Once they come to the top of the list, they will be interviewed by the LHA.  If the LHA determines the family is eligible for the program, it will issue a voucher and the family can lease a rental unit.  Subject to their terms and conditions of their leases and any applicable regulatory requirements, families may move from one unit to another and maintain their assistance, even if they move outside the LHA’s jurisdiction (Section 8 vouchers are “portable” anywhere in the United States).

Project-Based Assistance
Housing Authorities who elect to use the project-basing option establish their own process and criteria for applications, within HUD guidelines.  Supportive housing project sponsors should approach their local Housing Authority to inquire about their process for awarding project-based assistance.  

Housing Authorities are not required to use the project-basing option, and many have chosen to use their allocation of vouchers exclusively for tenant-based assistance.   Some Housing Authorities, due to previous negative experiences with the earlier incarnation of project based Section 8 (which was highly burdensome to administer), may be reluctant to consider entering into a PBA contract.  If an LHA does not offer project-based vouchers, supportive housing developers and operators may wish to engage in education and advocacy with the Housing Authority executive staff about the new flexibility allowed by HUD in administering a PBA program, and about the critical need for affordable housing combined with services and the need for operating subsidies to make those units affordable to those with the lowest incomes.  Sponsors can also make the case that supportive housing is often most cost effective in project settings rather than in scattered sites.

Owners/sponsors of projects with project-based Section 8 subsidies must take tenants from the Section 8 waiting list.  Note that households occupying a project-based Section 8 unit have the right to obtain a tenant-based voucher from the Housing Authority when they move from a project-based unit after one year of tenancy.  If no voucher is available, they must receive priority for the next available voucher.

CFDA CODE: 14.871

AUTHORIZING LEGISLATION/STATUTE 

Housing Act of 1937, Section 8(o), as amended, 42 U.S.C. 1437(o); Department of Housing and Urban Development Act, Section 7(d), 42 U.S.C. 3535(d); Housing and Urban-Rural Recovery Act of 1983, Public Law 98-181; Housing and Community Development Act of 1987, Part 3, Public Law 100-242; National Affordable Housing Act of 1990, Public Law 101-625; Housing and Community Development Act of 1992, Public Law 102-550; Housing Opportunity Program Extension Act of 1996, Public Law 104-120; Departments of Veterans Affairs, Housing and Urban Development, and Independent Agencies Appropriations Act of 1998, Public Law 105-65; Quality Housing and Work Responsibility Act of 1998, Public Law 105-276; Preserving Affordable Housing for Senior Citizens and Families into the 21st Century Act of 1999, Public Law 106-74; Departments of Veterans Affairs, Housing and Urban Development, and Independent Agencies Appropriations Act of 2000.  

ADDITIONAL RESOURCES

The Section 8 Housing Choice Voucher Project Based Assistance Program: A Primer

Section 8 Made Simple, publication from the Technical Assistance Collaborative; TAC also has a very informative summary of the February 2005 HUD Notice PIH 2005-5 to Public Housing Agencies (PHAs) regarding the Section 8 Housing Choice Voucher program and people with disabilities.

Data for Section 8 Fair Market Rents

Data for HUD Income Limits

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