6 key differences between PBV and HCV

Samantha Sowards discusses differences between PBV and HCVNOTE: This article was originally written in 2013 and updated in 2017 to reflect changes mandated under the Housing Opportunity Through Modernization Act (HOTMA).

Many PHAs are turning to the project-based voucher (PBV) program to help improve their voucher utilization, expand special needs housing, and/or potentially increase neighborhood choice for families. A PHA may provide project-based assistance for existing housing that does not need rehabilitation, as well as for newly constructed or rehabilitated housing.

There’s often confusion about the differences between PBV and HCV, but the good news is that if you understand the housing choice voucher (HCV) program, PBV will seem very familiar to you. In both programs, the PHA has a contractual relationship with an owner and operates as a subsidy provider for families who pay income-based rent. Both programs follow regulations under 24 CFR 982, so eligibility and occupancy requirements are very similar. However, there are also some key differences.

#1: Tenant-based assistance vs. project-based assistance

The biggest difference between the two programs is that HCV is tenant-based assistance, which means that the subsidy is tied to the family, not the unit. Since tenant-based assistance is tied to the voucher holder, the assistance is portable, meaning it may be used within the jurisdiction where the family lives or within any jurisdiction with an HCV program.

With project-based vouchers, however, the subsidy is tied to the unit, not the family. An example of this type of assistance that may be familiar to you is public housing. After one year of assistance in a project-based unit, however, the family may switch to the tenant-based voucher program and exercise portability if they choose, with some restrictions.

#2: Regulations

Both PBV and HCV follow regulations at 24 CFR 982. As a result, the role of the PHA and owner in both programs is very similar. For example, in both programs the PHA maintains the waiting list and refers eligible families to the owner, who determines the family’s suitability as a tenant.

However, since PBV is project-based assistance, the regulations at 24 CFR 983 specifically describe the provisions of 982 that do not apply to PBV. For example, the regulations on portability only apply to HCV tenant-based assistance.

#3: Funding

One of the key concepts in understanding project-based vouchers is understanding how they’re funded. Under the regulations, a PHA may project-base up to 20 percent of its authorized units. No additional funding is provided by HUD.

If you imagine your agency’s HCV funding as a pie, project-basing some of your vouchers is equivalent to setting aside up to a 20 percent slice towards particular units. Under the Housing Opportunity Through Modernization Act (HOTMA), the PHA may now project-base an additional 10 percent of their vouchers above the 20 percent program limitation for units for homeless families, families with veterans, supportive housing for persons with disabilities or elderly persons, or in areas where vouchers are difficult to use. Further, certain units do not count toward the 20 percent limitation such as units that convert to PBV under RAD and HUD-VASH PBV set-aside units.

#4: The HAP contract

In both programs, a HAP contract regulates the relationship between the PHA and the owner. However, HCV and PBV use different HAP contracts with different terms. In the HCV program, the effective date of the owner’s lease for a particular unit and the effective date of the HAP contract for that unit are the same. There is no limit on the length of that HAP contract, and if the lease terminates, so does the HAP contract.

In PBV, however, the PHA may initially enter into a PBV HAP contract for all units with an owner for 20 years, subject to the availability of funding. The HAP contract may further be extended for an additional 20 years. An owner’s lease with different families and the PBV HAP contract do not run concurrently. 

#5: Rent reasonableness

While both programs have a rent reasonableness component, the process works slightly differently. In the tenant-based HCV program, reasonable rent is the maximum amount of the contract rent.

In PBV, rents cannot exceed the lower of a reasonable rent, or 110 percent of the FMR/SAFMR (unless an exception is granted), or, for units with tax credits, the tax credit rent (except under certain circumstances). So unlike the tenant-based program, rent reasonableness is a component of setting rents in PBV, rather than the only limit on those rents.

#6: Housing Quality Standards (HQS) inspections

The main difference between the PBV and HCV programs is that in HCV all units must be inspected annually/biennially, while in PBV only 20 percent of the contract units in each building must be inspected annually/biennially. This feature is attractive to many PHAs because it reduces their inspection burden.

Remember, while PBV and HCV follow some of the same regulations, and PBV is funded through the HCV program, understanding the key differences between the programs is essential to running a successful PBV program.

Senior trainer Samantha Sowards has been a part of the NMA team since 2008. As NMA’s manager of curriculum development, Samantha oversees publications from concept and creation through the ongoing revision process, including NMA Master Books, model policies, and handbooks. She co-designed NMA’s PBV class, Developing and Managing Project-Based Vouchers.

12 comments on “6 key differences between PBV and HCV

  • Ebony Thomas says:

    I noticed that you all said after a year “in a project-based unit a family may switch to the tenant-based voucher”. The key word being MAY does a housing authority have a obligation — is it a MUST or a MAY.

    • Terri Smith says:

      I understood that, as a result of HERA, PBV rents COULD exceed tax credit rents, 982.507. #5 above makes it sound like PBV rents cannot exceed tax credit rents.

    • Good question! It is a must, not a may. The regulation at 24 CFR 983.260 states that any time after the first year the family may terminate the assisted lease. They must first contact the PHA to request a voucher and then give the owner and the PHA advance written notice. The PHA MUST offer the family continued tenant-based assistance (a voucher). If you don’t have a voucher available when they terminate their lease, you must give the family priority to receive the next available voucher. If the family terminates their lease before one year has passed, they give up their ability to get a tenant-based voucher.

      —Samantha Pratter

  • Regarding the issue of the PHA being required to give a tenant-based voucher to PBV-project tenants after one year, we have a proposed project serving special needs tenants who may be admitted one-year after having committed a crime. Our requirements for tenant-based vouchers is three years after committing a crime, and never for certain crimes. Does 24 CFR 983.260 trump our policy? Or, will such tenants have to wait the full-three years after committing a crime to be eligible for a tenant-based voucher? In other words, if we follow our policy, they may have to wait up to two years in PBV housing before becoming eligible for our tenant-based voucher upon leaving the PBV project.

    • Thanks for your question, Bruce. Indeed, 24 CFR 983.260 trumps your policy, for the following reasons:

      1) Screening criteria do not apply to families that have already been admitted to the voucher program, and

      2) The PBV right to move after 12 months is statutory.

  • Can the PHA enter into a MOU with the owner/management company to administer the S8(PBV) intake (waiting lists) and recertification process by the owner? If so, does the PHA must have a quality control plan in place?

    • Thanks for your question, Idalia. The regulations place those responsibilities on the PHA, but PHAs can and have contracted others to perform those responsibilities. And yes, the PHA is required to conduct quality control on those activities, including the SEMAP compliance testing.

      However, you may run into a possible conflict if the owner of the PBV property is also managing the waiting list and conducting reexams. The regs (at 983.251(c)) require the PHA to select applicants from the PHA’s wait list. In fact, one of the OIG audits that we discuss in the NMA PBV class contains a finding against the PHA for allowing the owner to operate the wait list. (You can view it at http://www.hudoig.gov/sites/default/files/documents/audit-reports//ig1051008.pdf)

      Short answer: While the PHA may contract for these services, to have the owner of the PBV property serve as the contractor is a conflict.

    • I’m assuming you’re talking about a new construction or substantial rehabilitation development since it would seem the units are currently vacant. While the regulations absolutely require that the units pass HQS before a HAP contract is executed and HAP is paid (24 CFR 983.204(a)(2)), they don’t specify that units must be vacant prior to the execution of the HAP contract. However, I wouldn’t recommend moving families in prior to HAP contract execution. How would the owner know what amount to charge the family in rent? If the units are ready for occupancy, why wouldn’t the PHA just inspect the units and have families move in once the contract was executed? If these units are layered with LIHTC there might be a reason the owner wants to move families in immediately, but otherwise, it doesn’t make a lot of sense to move families in prior to HAP contract execution.


      • Maureen Brown says:

        Thank you Samantha-
        I agree with your response. It makes sense that an owner would not move tenants in before HQS and contract execution. This is just a matter of scheduling the inspection and the tenants will need to wait a couple of days before they can move in. It’s a project for homeless so I understand the need for housing them. The owner was not going to charge them rent until the contract is executed so basically the owner was going to eat 2 days of rent. Our HUD office was also of the opinion that the tenants could not move in before HQS passes. I see it more as a potential liability for the owner and PHA.

  • Sheena Herron says:

    So how do and when do you need to request for a Housing choice e voucher? I have reached a year and a half in my Project Based Voucher unit.


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