HUD Issues Layering Review Guidelines for Proposed Section 8 Project-Based Voucher HAP Contracts

Almost a year and a half after the passage of the Housing and Economic Recovery Act of 2008 (HERA), HUD has issued a notice in the Federal Register (FR-5417-N-01) that provides guidance on how Housing Credit Agencies (HCAs) should perform layering reviews for project-based voucher housing assistance payment (HAP) contracts for new construction and rehabilitated projects. The purpose of the layering review is to make sure that when there is an overlap of government subsidies that the combined forms of federal, state, or local assistance is not excessive.

For HCAs conducting the layering review, the HCA must certify to HUD that the project-based voucher assistance is in accordance with HUD subsidy layering requirements. A public housing authority (PHA) cannot provide project-based voucher assistance until after the required subsidy layering review has been performed and it receives a certification from the HCA. At that point, the PHA may execute an Agreement to Enter into Housing Assistance Payments Contract (AHAP).

If a subsidy layering review results in too much public assistance, the HCA will notify HUD in writing, and send a copy to the PHA. This notification will include either a recommendation to reduce the LIHTC allocation, proposed amount of PBV assistance, or other assistance, or a recommendation to permanently withhold entering into an AHAP for the proposed project. The notice says that HUD will consult with the HCA and the PHA prior to issuing its final determination either adopting the HCA’s recommendation or revising the recommendation. As soon as the PHA receives HUD’s final decision, it will notify the owner in writing of the outcome.

In those instances when HUD (instead of the HCA) conducts the layering review, it will notify the PHA in writing of the outcome. If HUD finds that combining housing assistance payment subsidy under the project-based voucher program with other governmental assistance results in excessive public assistance, it will require the PHA to reduce the level of project-based voucher subsidy or inform the owner that the provision of project-based voucher assistance shall not be provided.