HUD Lifts Cap on Project-Based Vouchers at Tax Credit Sites

As of Dec. 18, 2007, HUD ceased prohibiting project-based voucher rents from exceeding tax credit rents. According to housing groups such as the National Leased Housing Association (NLHA), the old voucher rule, which went into effect in October 2005, was flawed; it required a change in the project-based voucher program that was inconsistent with guidance previously provided by HUD.

“The old voucher rule said that for tax credit units located outside of qualified census tracts, HUD would define the units as ‘subsidized,’ ” says Denise Muha, NLHA's executive director and an expert on HUD rules. “At the same time, HUD also decided that the project-based voucher rent could not exceed the subsidized rent, including the allowable tax credit rent,” she adds.

When housing groups such as NLHA complained about problems with the old rule, HUD backtracked almost immediately. HUD agreed not to apply the rent ceiling to sites that had been selected prior to the date the old rule was implemented in November 2005. HUD also agreed to waive the rent ceiling on sites that first opened after the implementation date.

As a result of consistent pressure from housing groups such as NLHA, HUD changed its policy, says Muha. Now, it's official: HUD's final rule, which went into effect on Dec. 19, 2007, lifts the cap on rents for units at tax credit sites that have project-based vouchers, she adds.

Insider Source

Denise Muha: Executive Director, National Leased Housing Assn.; Washington, DC