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Policy Basics: Project-Based Vouchers

December 7, 2015

What Are Project-Based Vouchers?

Project-based vouchers (PBVs) are part of the Housing Choice Voucher program, which helps more than 5 million people in 2.2 million low-income families rent modest housing in the private market. 

Most Housing Choice Vouchers are “tenant-based,” meaning families can use them to rent any private apartment that meets program guidelines.  PBVs, in contrast, are attached to a specific unit whose landlord contracts with the local public housing agency to rent the unit to low-income families.  If a family in a project-based voucher unit moves out, the voucher stays with the unit and another low-income family moving in benefits from the rent subsidy it provides.

Families in units with PBVs contribute 30 percent of their income for rent and utilities; the voucher pays the difference between the tenant contribution and the unit’s total rent and utility costs. 

PBVs, administered by state and local housing agencies, are distinct from Section 8 Project-Based Rental Assistance (PBRA), a program through which property owners have contracted directly with the Department of Housing and Urban Development (HUD) to rent units to low-income families.  Congress has ended HUD’s authority to sign new PBRA contracts, so PBVs are the largest, most available tool to create new project-based rental assistance.  Unlike old-style project-based rental assistance, PBVs do not require families to live in a particular location in order to receive help paying the rent. Families in PBV units may move to a new location with an available tenant-based vouchers.

Who Is Eligible for Project-Based Vouchers?

Federal rules ensure that Housing Choice Vouchers — whether tenant- or project-based — are targeted at the families who need them most.  Seventy-five percent of new households admitted each year to an agency’s Housing Choice Voucher program must be “extremely low income,” with incomes not exceeding 30 percent of the local median or the poverty line, whichever is higher.  Other new households may have incomes up to 80 percent of the area median.

Only 1 in 4 families that are eligible for federal rental assistance actually receives it due to funding limitations, so most housing agencies maintain waitlists of families eligible for vouchers.  Agencies can maintain separate waitlists for PBVs and tenant-based vouchers or a single waitlist for all vouchers. 

How Are Project-Based Vouchers Funded?

Housing agencies can use up to 20 percent of their Housing Choice Voucher funds for PBVs.  The agency enters into a contract with a property owner for up to 15 years initially, with the option to renew.  Project-based vouchers can generally be attached to no more than 25 percent of the units in a given property. 

What Are the Benefits of Project-Based Vouchers?

PBVs are not widely used but are gaining popularity, as they have multiple benefits for agencies and communities.  Project-basing some of its vouchers can help an agency:

  1. Provide supportive services to voucher tenants.  Some tenants, like the elderly, people with disabilities, or the formerly homeless might need additional services to maintain stable housing and their health.  Attaching PBVs to a number of units in the same property can enable service providers to work more efficiently with residents and improve access to services.  PBVs are particularly well suited to create supportive housing, since properties that provide services to residents can have PBVs attached to more than 25 percent of their units and agencies can set waitlist preferences to prioritize people who need the services offered.
  2. Help families secure units where it may be hard to use vouchers.  Living in lower-poverty neighborhoods can benefit both voucher holders and their children, for example, but families with vouchers may be unfamiliar with such neighborhoods or have difficulty finding willing landlords, or their voucher may not pay the going rent in these neighborhoods.  In neighborhoods with low vacancy rates, stiff competition for available units exacerbates these problems.  PBVs lower many of those barriers by creating dedicated units for low-income families.  Also, PBVs may be more attractive to landlords than tenant-based vouchers since they provide more stable income and may provide higher payments. 

    PBVs can also lock in lower rents in neighborhoods with fast-rising housing costs if the contract limits rent increases to changes in the landlord’s cost to operate the building rather than changes in market rents.

  3. Create more affordable and mixed-income housing.  Agencies can attach PBVs to newly constructed or rehabilitated units as well as existing units.  And, by guaranteeing a future source of stable income for a development, PBVs can be integral to the financing package that makes constructing or rehabilitating affordable housing possible.  Also, since properties generally cannot use PBVs in more than 25 percent of the units, these projects can serve tenants with a mix of incomes.