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HomeMy WebLinkAboutMINUTES - 06132006 - HA.2 HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA TO: BOARD OF COMMISSIONERS 2- FROM. Rudy Tamay o, Executive Director DATE: June 13, 2006 SUBJECT: SECTION 8 ADMINISTRATIVE PLAN REVISIONS SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION I. RECOMMENDED ACTION: APPROVE revisions to the Section 8 Administrative Plan, Chapter 24, Project-Based Voucher Program, for the Housing Authority of the County of Contra Costa, as required by the U.S. Department of Housing and Urban Development (HUD) to implement a Project-Based Voucher Program. II. FINANCIAL IMPACT: Ability to fund over $1.6 million annually for previous commitments of Project-Based Vouchers and the ability to make future funding commitments for Project-Based Vouchers from existing Section 8 funds. III. REASONS FOR RECOMMENDATION/BACKGROUND HUD implemented a final rule for the Project-Based Voucher (PBV) Program on November 14, 2005. The final rule gives housing authorities more discretion and responsibility (but no new funding) for implementing and operating site-based Section 8 subsidized housing for low-income families. Substantial revision to Chapter 24 of the Section 8 Administrative Plan, dealing with Project-Based Vouchers, is needed to accommodate the broader scope of program administration. While most of the changes are technical in nature, dealing with the timeframe for soliciting new proposals for PBVs and changing some project approval responsibilities from HUD to the housing authority, other changes are more substantial. For instance, the establishment of three (3) new waiting lists for the East, Central, and West portions of Contra Costa County, is a fairly significant change. There is a high demand for affordable housing subsidized by Section 8 because of its relatively "deep" subsidy. Newly constructed or rehabilitated properties are likely to be in high demand. This demand would be handled through the use of new waiting lists to ensure equal housing opportunity. Special provisions are made for seniors and disabled when units or projects with special features for these residents are available under the PBV Program. It is important to note that when PBV are attached to existing housing occupied by a qualified low-income tenant, that family is given an "ultimate" preference. Displacement of otherwise qualified low income families are not permitted under the PBV Program. CONTINUED ON ATTACHMENT: YES SIGNATUR Ru ama ,Executive Direct RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON�o oZ�� APPROVED AS RECOMMENDED O/HER 10 VOTE OF COMMISSIONERS / I HEREBY CERTIFY THAT THIS IS A % UNANIMOUS (ABSENT ) TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ON THE ABSENT: ABSTAIN: MINUTES OF THE BOARD OF COMMISSIONERS ON THE DATE SHOWN. ATTESTED 0I-1N CULLEN,CLERK OF THE BOARD OF COMMISSIONERS AND COUNTY ADMINISTRATOR ` r BY DEPUTY H:\JudyHayes\MSOFFICE\WINWORD\BOARD\BO-Section 8 Admin Plan Revisions.doc The revisions to Chapter 24 have been written to take advantage of the additional discretion and flexibility that has been granted by HUD. Request for Proposals can be tailored to specific housing needs in the community. Preservation of existing low income housing, senior housing, housing for the disabled, and housing for large families have been identified as local housing priorities that can be supported with PBVs. The revisions to Chapter 24 would be effective upon Board approval. Two projects are anticipated to be placed under PBV contract within the next 60 days, with the remainder of the 150 units to be occupied over the next year as construction or rehabilitation is complete. IV. CONSEQUENCES OF NEGATIVE ACTION: Should the Board of Commissioners elect not to approve this revision, the Housing Authority would be unable to implement the proposed changes to the Section 8 Program. This would result in the inability to fund previously approved commitments for over 150 Project-Based Vouchers with an estimated value of$1.6 million annually. It would also restrict the housing authority from committing any additional funding for new, rehabilitated, or existing Project-Based Voucher properties. i s8admin 4 ' Chapter 24 Project-Based Voucher Program (PBV) (24 CFR Part 983) I. Applicability of Project-Based Voucher Final Rule (24 CFR Part 983) Projects with a letter of commitment/selection on or after November 14, 2005 are covered by the "Project-Based Voucher Program: Final Rule' (also known as the"new" rule) which was effective November 14, 2005. Projects with a commitment/selection letter, an Agreement to enter an Housing Assistance Payment (AHAP), or Housing Assistance Payment (HAP) contract that was executed on.or after January 16, 2001,but before November 14, 2005, are covered by the "Revisions to the PHA Project Based Assistance Program: Initial Guidance" (also known as the"old"rule). II. Overview HUD's Project Based Voucher program allows the Housing Authority of the County of Contra Costa(HACCC) to project base up to 20 percent of its Housing Choice Voucher (HCV) tenant-based funding. At least 80 percent of HACCC HCV funding must remain tenant-based. Subsequent reductions in budget authority do not require any reduction in the number of PBV units under AHAP or HAP. HUD does not provide additional Housing Assistance Payments or Administrative Fees for the PBV program. Units may be selected in a new construction project, a rehabilitation project, and/or an existing project. The number of units that can be selected is generally limited to 25 percent of the units in a building. Exceptions to the 25% general rule are available for units in single-family homes (defined as four units or less), and units in a multifamily building that are available for qualifying families. Qualifying families are elderly or disabled families and families receiving supportive services. HACCC can execute initial HAP for up to ten years, with the option to renew the HAP contract in up to five-year increments. Rents under the PBV program are generally limited to 1 10 percent of the Fair Market Rent or other HUD-approved exception rent. Like tenant-based rents, PBV rents must also be rent reasonable. HUD has promulgated special exceptions for projects that receive other forms of subsidy or tax credits. After twelve months, families may have the option to move from PBV-assisted housing to tenant-based housing if funding is available. A separate transfer list has been established to facilitate a fair and equitable method of allocating available tenant-based vouchers to eligible project-based residents. 1 III. Owner Proposal Selection Procedures HACCC will award PBV-assistance through competitive processes, as follows: A. Competitive Processes I. HACCC Request for Proposals (RFP) An advertisement announcing a Request for Proposals will be published once a week for three (3) weeks in the newspaper of general circulation (currently The Contra Costa Times). The advertisement will state the number of vouchers available to project based, the type of units that will be considered for the project-based program, the submission deadline, and will note how to obtain the full Request for Proposals that contains comprehensive information on the application and selection process. Any advertisement for the PBV will contain a statement that participation in the PBV program requires compliance with Fair Housing and Equal Opportunity Requirements. Interested Owners will have at least 30 calendar days from the date of the last publication to respond. 2. Other Competitive Proposals Selection of a proposal that was previously selected within the last three years pursuant to another program's competitive process (i.e. HOME, tax credits, etc.) and in which the possible receipt of PBV assistance was not a consideration. Solicitation of successful proposals from other competitions is.open and ongoing. Such proposals will be evaluated in accordance with criteria established in the HACCC's Annual Plan and the jurisdiction's Consolidated Plan. This open and ongoing solicitation may be terminated at any time with publication of a public notice in the local newspaper of general circulation so stating. Resuming consideration of other competitive proposals may be accomplished in similar fashion. 3. Previous Commitments of Project-Based Vouchers It is the intent of the Housing Authority of the County of Contra Costa to honor previous commitments of New Construction and Rehabilitation Project-Based Vouchers that were properly solicited and awarded, as Existing Housing under the final rule dated October 14, 2005. These projects shall otherwise comply with all PBV Program rules as contained in the final rule and this Administrative Plan. 2 B. Criteria for PBV Award 1. Deconcentrates Poverty The site and/or location is consistent with the goal of deconcentrating poverty, expanding housing and economic opportunities, and facilitating compliance with Fair Housing laws. Generally, this standard is rnet as long as no more than 20% of the households in the census tract in which the project is located are at or below the established poverty level for the County. 2. HQS Site and Neighborhood Inspection The site must meet Housing Quality Standards (HQS) site standards. The site and neighborhood must be reasonably free from disturbing noises, reverberations, and other dangers to the health, safety, and general welfare of the occupants. Other dangers shall include scientifically verified unacceptable levels of contamination of air or water. It shall be presumed if the project is surrounded by other occupied homes and/or ongoing businesses that said dangers do not exceed the threshold to pass the HQS site standards,unless information is received to the contrary. Projects must be convenient to services and/or job opportunities. Convenient is defined as provided on site or within a 25 minute drive time by public transportation or personal vehicle. HACCC is responsible for inspecting the proposed project's site and neighborhood to determine consistency with the HQS site standards. 3. Promote HACCC Goals Projects must contribute to meeting the goals outlined in the in HACCC's Annual Plan and/or the Consolidated Plan for the jurisdiction in which the project to be assisted is located. These goals will be clearly identified in the Request for Proposals and will also be applied to Other Competitive Proposals. Generally, providing or preserving affordable housing for seniors, the disabled, single parent households, or large families are considered the highest priorities. 4. Units Eligible for PBV Award Multifamily rental housing units are generally eligible for PBVs. Duplex units and larger may be awarded Project-Based Vouchers so long as their use does not fall under the categories below under"Conditions the Prohibit PBV Award." 3 Rental units located in a project that is being developed with Hope VI funds (awarded in fiscal year 2001 or later) or HUD Capital funds which are themselves not public housing units may receive PBV assistance so long as the ratio of those rental units to the public housing units in the development is not less than the ratio of non-Hope VI or Capital funds (or other public housing funds) to the Hope VI and Capital funds and other public housing funds used in the development (i.e. a 30 unit project may have 20 PBV units and 10 public housing units so long as the amount of public housing funds, including Hope V1 and Capital funds, is less than 33.33% of the total amount of funds used in the development of the 30 rental units). PBV assistance in Hope VI/Mixed Finance transactions that are "mixed-income" developments, i.e. that do not consist solely of all public housing units, is permitted subject to certain restrictions. In addition, Project-Based Voucher assistance is pennitted for a unit that has been subsidized with HUD Section 236 interest reduction payments. 5. Conditions that Prohibit PBV Award Project-based voucher assistance may not be provided to nursing homes, transitional housing, cooperative housing, student housing, owner- occupied housing, a high-rise elevator project that may be occupied by families with children, or for any unit currently existing that has a family who is not eligible for assistance under the project-based voucher program. In addition, HACCC may not pay project-based voucher assistance to any unit that is a public housing unit, a unit that is subsidized with another form of housing choice voucher assistance such as HUD's tenant-based voucher assistance, a unit subsidized with another government rental subsidy, such as HUD's Section 236 rental assistance payments or rental assistance under the federal HOME Investment Partnerships Program, or units subsidized by HUD under its Section 202 (housing for seniors) or Section 811 (housing for persons with disabilities)programs. 6. Projects Owned by HACCC Selection of PBV units that are owned by HACCC, or in which HACCC has an identity of interest, must be approved by HUD or approved independent agency using criteria that mirror those in the applicable or most recent Request for Proposals, Annual Plan, and/or Consolidated Plan of the jurisdiction in which the proposed project is to be located. . 4 IV. Project Selection and Requirements A. Notice Procedures Notice of owner selection must be in writing and can only be made after the items above have been detennined. Public Notice of the projects selected for PBV assistance must be made within 14 calendar days. Public Notice shall consist of a single notice in the local newspaper of general circulation under Legal Notices and on the official HACCC website. Selection of a HACCC-owned project can be made only after HUD determines that the selection was made in conformance of the procedures specified in the.Administrative Plan. HACCC will make available for public review all documentation used in making the selection of proposals. B. Requirements for.PB V-Assisted Construction Project Construction projects include new construction (projects that do not exist on the date of project selection) and rehabilitation (existing projects that do not substantially meet HQS on the date of selection). New construction and rehabilitation projects must have an Agreement to enter a Housing Assistance Payment(ANAP) contract before construction starts on the project. 1. Pre-AHAP Requirements Before HACCC can execute an AHAP for a new construction or rehabilitation project, the following requirements must be met: a. Environmental Review must be completed b. Request for Release of Funds must have been granted c. Determination of proposed rents and utility allowances has been made d. Subsidy layering review completed 2. AHAP Requirements 5 a. Construction cannot commence prior to the execution of AHAP (in a form required by HUD Headquarters) b. AHAP must contain description of the Project, including Identification of the site, location of contract units; 1. Number and size of units (sq. ft., bedrooms, and baths); 2. Services, maintenance, or equipment supplied by owner; 3. Utilities provided by owner; 4. Indication of whether requirements of the Fair Housing Act and 504 (access for disabled) will apply to contract units C. Estimated initial rent to owner d. Description of work to be perfonned under the AHAP including additional HACCC quality and design requirements that exceed the HQS requirements; e. Labor Standards requirements apply to the development of nine or more contract units. Note that other funding in the project may trigger a more restrictive threshold for the project. f. Section 3, employment of low-income persons on or associated with the project, and other Equal opportunity requirements; g. Debarred project principles cannot be awarded participation in the PBV program or other federal programs and activities; 11. The Owner must disclose any possible conflict of interest; i. The project must be completed within specified deadlines contained in the AHAP. 3. Pre-HAP Requirements a. Prior to execution of the HAP, HACCC must determine that the owner has submitted all required evidence of 6 completion and assure that the work has been completed in accordance with the AHAP including: 1. Certification by the owner that the project has been completed in accordance with HQS and all other requirements in the AHAP; 2. An owner certification that the labor standard requirements and the equal opportunity requirements have been complied with; 3. Any additional documentation that may be required by HACCC C. Requirements to Execute a HAP Contract for Existing Projects 1. Assure that the Environmental Review has been done and a Request for Release of Funds has been granted; 2. The determination of rents and the utility allowance has been made; 3. A subsidy layering review has been completed; 4. Assure that the project actually meets the HQS requirements. D. HAP Requirements for all (Construction and Existing) Projects 1. Must be in a form required by HUD Headquarters. 2. It must contain description of the Housing including: a. Identification of the site; b. Location of contract units; C. Number and size of units (sq. ft., bedrooms, and baths) d. Services, maintenance, or equipment supplied by owner; C. Utilities provided by owner; f. Indication of whether requirements of the Fair Housing Act and 504 will apply to contract units 3. Initial rent to owner 4. Contract term a. The term of the contract is subject to availability of sufficient appropriated funding as determined by HUD or HACCC; 7 b. The Owner may tenninate the HAP contract due to a reduction below the initial rent. 5. Number of excepted units in each building, if applicable. E. Excepted Units and Service Requirements HACCC requires that supportive services must be provided in or to qualify for the exception to the 25 percent unit limitation. Qualifying families must continue to meet the supportive service requirement during continued occupancy in excepted units. HACCC will monitor such families once each year to detennine if they are still eligible for the services provided. This will become a part of the annual recertification process for project-based units and associated residents. Residents who no longer need or participate in at least two offered services will be deemed ineligible for PBV housing where services are a component of said housing. HACCC will consider the existence of and participation in any two social services generally recognized as beneficial to the population served. These two services should be conducted on site or transportation provided to off-site locations. The definition of services is intentionally left broad, as HACCC does not wish to limit the creative energy that efficient and effective service delivery often demands. Families who do not need or utilize the services provided will be relocated to other project-based units on a priority basis on the HACCC project- based waiting list. V. HAP Contract Amendments A. Limited unit substitutions allowed A unit meeting the PBV requirements, including meeting HQS, can substitute a different unit of the same bedroom size in the same building by amendment. The reasonable rent for the substitute unit must be detennined prior to effective date of the substitution. B. Limited additional units allowed Within three years of HAP execution units may be added to the HAP contract by amendment provided that: 8 I. The 25 percent unit limitation in a building is not exceeded; 2. The authorized budget authority of 20% for PBV assistance is not exceeded; and 3. The units must meet PBV requirements C. HAP anniversary date For units added by amendment to the HAP or staged completion of a project, the anniversary date for the HAP is the date the contract was initially executed. The expiration date of the HAP is based on the date that the HAP was initially executed. D. Staged units The difference between units added by amendment to the HAP contract and a staged HAP is that the units in a staged HAP where identified in the AHAP while those added by amendment were not. V1. Rent Determinations and Changes The amount of the initial rent that the owner may collect from its tenants is established at the beginning of the HAP contract term. During the term of the HAP contract, the rent to the owner is redetermined at: A. The owner's request for a rent increase, and B. Any time when there is a 5% or greater decrease in the published HUD Fair Market Rent for the area in which the project-based unit is located. Under the final PBV regulations, the general rule is that the rent an owner may charge for a unit receiving PBV assistance shall not exceed the lower of(i) 110% of the applicable Fair Market Rent for the unit, based on bedroom size, (ii) the reasonable rent as determined by the PHA, or(iii) the rent requested by the owner. C. Rental Units Located in Low Income Housing Tax Credit Projects If the unit receiving PBV assistance is also a Low Income Housing Tax Credit unit, the project is not located in a Qualified Census Tract, the unit is located in a building that has LI.HTC units of the same bedroom size as the PBV units but those comparable LIHTC units do not have any form of rental assistance other than tax credits, and if the tax credit rent exceeds the applicable HUD Fair Market Rent, then the rent to the owner is not to exceed the lower of(i) the tax credit rent minus any utility allowance as established under the rules of the Low Income 9 Housing Tax Credit program, (ii) the reasonable rent as detennined by the PHA, or(iii) the rent requested by the owner. The owner of such an LIHTC unit would be limited to receiving: (i) Rent from the tenant plus (ii) PBV assistance for that unit up to only the maximum tax credit rent, This will also apply to existing HAP contracts at the time of any adjustment in the rents that may be charged under those PBV/LIHTC HAP contracts. Finally, rents for PBV assisted units may not exceed any other rent limitations that may be imposed (for example, under the LIHTC Program for tax credit units or units that were constructed using funds from the federal HOME Investment Partnerships Program). D. PBV Rents Based on Fair Market Rents In determining rents, the HACCC is to use the most recently published HUD Fair Market Rent in effect and the utility allowance schedule in effect as to the execution of the HAP contract for the HACCC's geographic area, or the amounts for each in effect at any time during the 30 day period iirunediately prior to the beginning date of the HAP contract. The HACCC must use the same utility allowance schedule for both its tenant-based and project-based voucher programs. E. Owner Rent Increase Requests If the owner desires to increase the rents charged to the PBV assisted units, the request for an increase in the rents must be made by the owner in writing to the HACCC at least 60 days, but no more than 90 days, prior to the annual anniversary of the HAP contract. HACCC will then determine if the owner is entitled to a rent increase by recomputing the maximum rent that could be charged by an owner under the tests described above. HACCC may determine on its own that there should be a rent decrease if there has been a decrease of five percent (5%) or greater in the HUD Fair Market Rent for the project area. Such a rent decrease will apply even if the owner did not request the rent determination (or in fact asked for a rent increase). The new adjusted rent that may be charged by the owner applies for the period of 12 calendar months from the annual anniversary of the HAP contract. F. PBV Rents Must Be Reasonable—Market Comparability In addition to redeterminations based on changes in HUD's Fair Market Rents or requests by the owner, the HACCC is required to redetermine the reasonable rent that may be charged by the project owner whenever the HAP contract is amended 10 r to substitute different contract units in the same building which is pennitted at any tune during the term of the HAP contract, as would be the case when the owner decides to allow the PBV units in that building to "float" and therefore not designate specific rental units as the PBV units. The option to "float" units is the owner's to declare at initial occupancy. Once selected, the choice is irrevocable. Later exceptions may be granted in extreme circumstances and at the sole discretion of HACCC. In determining the reasonable rent, the HACCC must conduct a comparability analysis (either by its own staff or by another qualified person or entity) and consider at least three comparable units in the private, unassisted market; however, those unassisted units may be units in the same project as the PBV assisted units. The monthly HAP payment by the HACCC to the owner for a PBV contract unit that is leased to a qualifying tenant is the rent that the owner is permitted to charge, minus the rent that the tenant is required to pay to the owner under HUD regulations (which is the tenant rent minus the utility allowance); under Section $(0)(3) of the United States Housing Act of 1937, the tenant's rent contribution is generally limited to forty percent (40%) of the tenant's annual income. if the amount of the utility allowance exceeds the total tenant payment, the PHA shall pay the amount of such excess utility allowance to the owner as a reimbursement for tenant paid utilities and the tenant rent to the owner shall then be zero. G. Vacancy Loss Provisions and Contract Amendment If a family moves out of its rental unit, the owner inay keep the PBV assistance payment for the month in which the family moves out unless the vacancy was the owner's fault. The HACCC will pay for vacant PBV units for an additional two full months after the tenant vacates the unit. In addition, the HACCC may, but is not required to, amend the HAP contract to reduce the number of PBV contract units for those PBV units that have been vacant for a period of 120 days or more since the owner provided the HACCC a notice of vacancy for such unit(s). Considerations taken into account whether to reduce the number of contract units or not include market conditions, demonstrated efforts to re-rent the unit to qualified applicants, the amount of additional time that may be needed to lease the unit, and any other criteria that would impact the likelihood of being able to rent the unit within another 30 days. However, if the unit remains vacant for 150 days, cancellation of the contract for that unit shall be mandatory. li Y VII. Lease Expiration Upon the expiration of the lease for a PBV assisted unit, which must be for a minimum initial term of one year(and must also contain a HUD-required tenancy addendum), the owner may renew the lease, refuse to renew the lease for "good cause", as defined under 24 CFR Part 982.310, or refuse to renew the lease without good cause. If the owner refuses to renew the lease without good cause, the PHA is obligated to provide the family with tenant-based voucher assistance, and that the PBV unit will be removed from the HAP contract. VIII. Tennination of HAP Contract An owner is allowed to tenninate the HAP contract if the amount of rent to the owner for any PBV contract unit, as adjusted under the project-based voucher rules described above (which are set forth at.24 CFR Parts 983.301, 983.302 and 983.303) is reduced below the amount of the initial rent to the owner established by the HAP contract. In such a case, the families that had received the benefit of the project-based voucher assistance will be entitled to tenant based voucher assistance. Once a family has moved into an apartment that receives the benefit of PBV assistance under a HAP contract, the family, if it moves out voluntarily from that project-based assisted unit after at least one year of residing there, is eligible for assistance under HACCC's tenant-based voucher program or another comparable program for rental assistance provided by that PHA. However, families that leave the PBV assisted unit before having resided there one year or are evicted at any time for cause are not automatically entitled to assistance under the HACCC's tenant-based voucher program. Families residing in project-based units who need to move in the first year because of an increase in family size or because they reside in a special needs units but no special needs exist, will be offered an ultimate preference on the project-based waiting list. Upon funding availability and at HACCC discretion, such families may be offered a tenant- based voucher if comparable project-based housing is not available within 60 days. IX. Organization and Characteristics of the Wait List for Project-Based Vouchers A. Status Changes Independently The project-based voucher wait list may be opened and closed separately from its community-wide tenant-based wait list. The same public opening and closing procedures shall be used for both lists (see chapter 4). 1.2 B. PBV List Based on Geographic Area of County A separate"project-based voucher" wait list based on the three main geographic areas of the Contra Costa County is established for applicants wishing to live in properties subsidized by project-based vouchers in these locations. Applicants for Project-Based Voucher properties will designate their preferred area location as East County, West County, or Central County. Applicants may choose more than one area if they are willing to accept project-based housing in that area, but will be required to prioritize each selection, i.e., 1, 2, or 3. This shall correspond with the number of points granted to the applicant for each waiting list on which they wish to remain. C. Ultimate Preference A household with an Ultimate Preference is always at the top of the waiting list. The Ultimate Preference is granted to existing households of newly designated Project-Based Voucher housing who are otherwise eligible for Section 8 housing. D. Special Needs Units and Housing Types Sufficient information shall be gathered from each family to determine their eligibility for special needs units, i.e., disability(sensory, wheelchair, senior unit, etc.), and special codes developed to allow efficient sorting and identification of such families when special needs units are available. E. Lottery Within Groups The waiting list will be lotterized within the various groups and subgroups. F. Effect of Housing Refusal Families refusing an offer of housing in an area shall have their name removed from the Project-Based wait list for that area only. This does not affect their standing for other areas for which they have applied or on the community-wide tenant-based wait list. Once housed in Project-Based Voucher housing, the applicant's name is removed from the PBV Waiting List. There is no effect on the community-wide tenant-based waiting list. G. Purging the PBV Wait List The Project-Based Wait List will be purged every six months. Failure to respond to a purge letter is cause for removal of their listing from the Project-Based Wait List. 13 � w H. Consistency with Tenant-Based List All other mechanics of wait list management shall mirror the community wide tenant-based wait list (see chapter 4). 14