Project-Based Vouchers are Critical to Affordable Housing Cash Flow

In two scenarios, Project-Based Vouchers (PBV) supply funding sources that allow affordable housing properties to maintain the industry standard Debt-Service Coverage Ratio (1.2). Cuts to federal funding of PBV would decrease the Net Operating Income, limiting the owner from covering their debt obligations.

Calculations assume a 100-unit project located in Seattle, Washington. LIHTC rents are set at the maximum allowable rent for 60% AMI households, PBV rents are set at 110% of Fair Market Rate (FMR), and market rents at 110% FMR. Both projects assume 25% of units as Section 8 PBV, a 35% operating expense ratio, $250 per-unit per-year replacement reserves, and existing fixed-rate senior debt such that the project achieved 1.2 DSCR before any cuts. Project financials assume owners attempt to continue serving 30% AMI households after PBV cuts.
Chart: Center for Public EnterpriseCreated with Datawrapper