• HUD Clarifies Issues on Rents for Projects with Section 8 Project-Based Vouchers and Low Income Housing Tax Credits
  • April 12, 2006
  • Law Firm: Nixon Peabody LLP - New York Office
  • HUD issued Notice PIH 2006-16 on March 29, 2006, which clarifies the issues on rents for projects with Section 8 project-based vouchers (PBV) and low income housing tax credits (LIHTC).

    On November 14, 2005, the HUD final rule for PBVs became effective. The final rule generally provides that PBV rents in LIHTC projects could not exceed tax credit rents. This provision was a change from what HUD permitted in PIH Notice 2002-22 (as extended by PIH Notice 2005-20). In accordance with long-standing practice, the Notices had permitted the Section 8 PBV rents in LIHTC projects to be the applicable Section 8 rent even if such Section 8 rent was higher than the LIHTC rent limits. In addition, for projects outside of a LIHTC Qualified Census Tract where the LIHTC rents were above the applicable Section 8 rent, the rents for the Section 8 units could be set at the LIHTC rent.

    There was significant outcry from the industry when the final rule was issued as this change had not been in the proposed rule. HUD had indicated in response to these complaints that the final PBV rule would not be applied retroactively. PIH 2006-16 confirms that the final PBV rule will not be applied retroactively and continues the applicability of the Notices for projects selected by a PHA for PBVs prior to November 14, 2005.