Project-basing More than 25% of the Units in a Project

HUD restricts the percentage of units in a project that can be project-based to 25%. This is commonly referred to as the “25% cap.” PHAs are permitted to exceed the 25% cap on the number of project-based units in a building in two instances that are very important to creating supportive housing:

1. The project serves elderly or disabled households.
If your PHA seeks to project-base vouchers for either of these populations, the 25% cap on the number of units to be project-based in a project may be exceeded. This is especially important because these households often have fixed incomes and can afford very little rent. The rent from these tenants is not enough to support the costs of building operations and capital repairs, and project-basing only 25% of the units in a building generally does not provide enough subsidy for the development to break even. Housing developers will ask PHAs to project-base a greater percentage or all of the units in these types of supportive housing developments. Doing so can be advantageous to the PHA because it ensures that the building has enough operating revenue and can address ongoing capital repair needs and continue to pass HQS.

2. The project serves families receiving supportive services.
PHAs can project-base more than 25% of the units in a building that serves families who are not elderly or disabled if the families are receiving supportive services. PHAs must describe the type of services that will be offered to families in the units that exceed the 25% cap in its administrative plan. The plan must also specify how and when the PHA will monitor that families are receiving services. Establishing your supportive services plan is best done in partnership with a qualified service provider. While working with social service systems may be new to your PHA, know that service providers and their funders rarely understand the complex rules and regulations of the PHA world. Sitting down together to establish the requirements for a project’s service plan will help you build relationships with local service providers and inform many aspects of your program.

Program Fact Sheet
Once you’ve designed your program and your board has adopted the changes to your administrative plan, you may want to consider posting a “fact sheet” about project-basing vouchers and specific elements of your program on your website. When the word is out that your PHA is going to project-base vouchers, you might get several phone calls and/or requests for meetings to discuss prospective projects. Having a fact sheet on your website will help interested parties and other stakeholders to learn about your program and save you time.

 

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