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Francis S. Redburn
09/07/2000
03:11:21 PM
Record Type:
Record
To:
Michael Deich/OMB/EOP@EOP
CC:
See the distribution list at the bottom of this message
Subject: Barbara Sard's "Project Basing" Legislative Proposal
You asked for reactions to the latest version Oi Barbara's proposal. Jim, Lauren Bloomquist, and I have
looked at it and offer the following comments:
If enacted, it would make PHAs' existing discre to project-base up to 15 percent of their housing
vouchers (up to 250,000 units nationally) more fiexible and easier to use, especially to foster rehabilitation
and new construction. It also would authorize a new category of "housing production vouchers" (HPVs)
for extremely low-income families, plus a one-time grant to the developer, to be used for up to 25 percent
of units constructed with support of the Low-income Housing Tax Credit or FHA's "risk-sharing" mortgage
insurance program. The latter is similar to the 2001 Budget proposal for 10,000 vouchers to be used in
Tax Credit and certain FHA-insured projects.
In both cases, voucher holders moving into project-based units would have the option to reject the unit
without losing their place in line for voucher assistance and could move elsewhere with the voucher after
the one-year initial lease period. The project owner would be guaranteed a replacement voucher holder
for the term of the contract -- up to ten years initially for the regular program and up to 15 years for HPVs.
Likely Effects
We believe that, by making it more attractive and easier for PHAs to project-base vouchers and by giving
landlords incentives to sign long-term (10 or 15 year) assistance contracts (subject to annual
appropriations and willingness of voucher holders to live there), the proposal will result in project-basing
many vouchers. Incentives include the ability to set a higher payment standard than for other vouchers
and to pay owners for up to 60 days for vacancies when they occur.
In locations where landlord participation in the voucher program has been a problem, the long-term
commitment to accept voucher holders could increase landlord participation and help sustain success
rates when markets are tight and rents rise. Rents would be capped by a maximum payment standard
just as they are for other voucher holders, but may differ from (exceed) the payment standard that a PHA
applies to its other vouchers.
The proposal also could serve as an inducement for development of additional affordable housing. This is
clearly the case for the HPV component. However, a PHA could also offer a developer a commitment to
project-base vouchers for up to 100 percent of the nits (up to 50 percent in a high-poverty neighborhood)
in a new or rehabbed property initially for up 10 3 but with the commitment extendible at the PHA's
option, thereby increasing supply. We therefore expe. St me PHAs to use project-basing of their existing
vouchers (as opposed to HPV vouchers if available) to induce the construction or rehabilitation of new
subsidized housing.
Our Concerns
We believe that the proposal as drafted preserves voucher holder choice, which is critical both to
maximizing the benefits of the voucher to the recipient and to providing an incentive for good operation of
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"ocrText": "Francis S. Redburn\n09/07/2000\n03:11:21 PM\nRecord Type:\nRecord\nTo:\nMichael Deich/OMB/EOP@EOP\nCC:\nSee the distribution list at the bottom of this message\nSubject: Barbara Sard's \"Project Basing\" Legislative Proposal\nYou asked for reactions to the latest version Oi Barbara's proposal. Jim, Lauren Bloomquist, and I have\nlooked at it and offer the following comments:\nIf enacted, it would make PHAs' existing discre to project-base up to 15 percent of their housing\nvouchers (up to 250,000 units nationally) more fiexible and easier to use, especially to foster rehabilitation\nand new construction. It also would authorize a new category of \"housing production vouchers\" (HPVs)\nfor extremely low-income families, plus a one-time grant to the developer, to be used for up to 25 percent\nof units constructed with support of the Low-income Housing Tax Credit or FHA's \"risk-sharing\" mortgage\ninsurance program. The latter is similar to the 2001 Budget proposal for 10,000 vouchers to be used in\nTax Credit and certain FHA-insured projects.\nIn both cases, voucher holders moving into project-based units would have the option to reject the unit\nwithout losing their place in line for voucher assistance and could move elsewhere with the voucher after\nthe one-year initial lease period. The project owner would be guaranteed a replacement voucher holder\nfor the term of the contract -- up to ten years initially for the regular program and up to 15 years for HPVs.\nLikely Effects\nWe believe that, by making it more attractive and easier for PHAs to project-base vouchers and by giving\nlandlords incentives to sign long-term (10 or 15 year) assistance contracts (subject to annual\nappropriations and willingness of voucher holders to live there), the proposal will result in project-basing\nmany vouchers. Incentives include the ability to set a higher payment standard than for other vouchers\nand to pay owners for up to 60 days for vacancies when they occur.\nIn locations where landlord participation in the voucher program has been a problem, the long-term\ncommitment to accept voucher holders could increase landlord participation and help sustain success\nrates when markets are tight and rents rise. Rents would be capped by a maximum payment standard\njust as they are for other voucher holders, but may differ from (exceed) the payment standard that a PHA\napplies to its other vouchers.\nThe proposal also could serve as an inducement for development of additional affordable housing. This is\nclearly the case for the HPV component. However, a PHA could also offer a developer a commitment to\nproject-base vouchers for up to 100 percent of the nits (up to 50 percent in a high-poverty neighborhood)\nin a new or rehabbed property initially for up 10 3 but with the commitment extendible at the PHA's\noption, thereby increasing supply. We therefore expe. St me PHAs to use project-basing of their existing\nvouchers (as opposed to HPV vouchers if available) to induce the construction or rehabilitation of new\nsubsidized housing.\nOur Concerns\nWe believe that the proposal as drafted preserves voucher holder choice, which is critical both to\nmaximizing the benefits of the voucher to the recipient and to providing an incentive for good operation of"
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