What is Subsidy Layering Review?
A Subsidy Layering Review (SLR) is a process required by the U.S. Department of Housing and Urban Development (HUD) to ensure that affordable housing receiving Project-Based Voucher (PBV) assistance do not receive more government subsidy than necessary to make the project financially feasible.
This review is required when PBV assistance is combined (layered) with other governmental assistance such as Low-Income Housing Tax Credits (LIHTC) or state or local grants.
In Oregon, OHCS completes this review for new construction or rehab housing development projects receiving state resources and/or federal LIHTC as well as an allotment of PBVs. Below are SLR guidelines for housing development owners (project owners) and public housing authorities (PHA).
Subsidy Layering Review Guidelines
In December 2025, Oregon received confirmation from HUD to conduct SLRs for newly constructed and rehabilitated multifamily projects that have two or more forms of governmental assistance (federal, state or local). OHCS will be primary in conducting SLRs for projects receiving state resources and/or a federal LIHTC as well as an allotment of PBVs.
The purpose is to facilitate a streamlined approach to conducting PBV SLRs for affordable housing projects within the state of Oregon. OHCS is required to review and ensure that the amount of public assistance provided by HUD is not in excess when the project combines the Housing Assistance Payments (HAP) subsidy from the PBV program and all other governmental assistance. SLRs are required prior to the execution of an Agreement to Enter into Housing Assistance Payments (AHAP).
SLRs for Mixed-Finance projects cannot be completed by OHCS. All Mixed-Finance SLRs are prepared by HUD.
Mixed-Finance Development: Development or modernization of public housing pursuant to 24 CFR 905 Subpart F, where public housing units are owned by an entity other than a PHA.
Step 1: Project owner gathers and submits project information
The project owner assembles the necessary information to complete the SLR and submits this information to the primary contact person at the PHA. Refer to the “Application Submission Package Detail” section for the required elements of an SLR Application/Submission Package. Sometimes the project owner and the PHA are the same, sometimes they are different.
In the project’s Procorem WorkCenter, the project owner completes the “Project-Based Voucher Subsidy Layering Review” task, notifying OHCS that a SLR analysis is requested. They also enter the name, title and email of the primary PHA contact.
Step 2: PHA reviews and forwards to OHCS
After the PHA has reviewed the package for completeness and accuracy, the PHA will provide the SLR to OHCS, through the PHA’s Procorem WorkCenter during the Financial Eligibility or Commitment stage of the Oregon Centralized Application (ORCA) process.
Please submit the package to OHCS as three uploads:
- Appraisal report (PDF)
- HUD Form 50156 (excel)
- Remainder of the application materials combined into one PDF, with the SLR Application Checklist Coversheet (provided through the PHA's Procorem WorkCenter) at the beginning
Step 3: OHCS reviews
Upon receipt of the package, OHCS will determine if the SLR information submitted by the PHA is complete or if additional information is required. If the package is complete, OHCS will proceed to conduct the SLR analysis the information for potential certification. OHCS will advise the PHA of the status of the review and will provide reasonable direction if additional information or explanation is required to proceed.
Step 4: OHCS notifies HUD
If the SLR information is complete and the relevant project standards are in compliance with the SLR underwriting standards, then OHCS will submit (via email) the SLR certification and supporting documentation to HUD and the PHA. The AHAP/HAP contract may then be executed between the PHA and the project owner if the environmental approval is received. OHCS will only complete the environmental review if the project has both HOME/Housing Trust Fund (HTF) funding and PBV; otherwise, the PHA leads and completes the needed environmental review.
If the SLR evaluation performed by OHCS determines that the public assistance amount is excessive, and the project owner declines to adjust the project budget to bring the project’s development costs or operations standards metrics into compliance with the relevant parameters, then OHCS will notify HUD, in writing, with a copy to PHA. The notification will include either a recommendation to reduce the amount of PBV assistance or the amount of the LIHTC (or other governmental funding) allocation or a determination that PBV assistance cannot be provided. HUD will consult with OHCS and PHA prior to issuing a final determination to adopt OHCS’s recommendation or to revise it. PHA will notify the project owner in writing of the outcome and work to restructure, as needed.
Application Submission Package Details
SLR requests must contain the following information. Incomplete submissions will be returned. The primary contact person at the PHA will provide the SLR to OHCS, through the PHA’s Procorem WorkCenter. Please fill out the Application Checklist Coversheet (provided through the PHA’s Procorem WorkCenter) and use it as a coversheet to the submission.
Note: In some cases, specific forms are required. Do not replace these forms with other items. Doing so will delay the SLR process. Required forms are noted in
bold italic font in the list below. Please check the HUD or Internal Revenue Service (IRS) website for the most recent versions of these forms.
1. Subsidy Layering Review Request Memorandum
Clearly identify:
- PHA
- PHA number
- HUD field office number
- Project name
- Project's total number of units
- Number of PBV units requested
2. Project Description
Short narrative identifying:
- Ownership
- Type of activity (rehabilitation or new construction)
- Location (address, county, census tract)
- Total units
- Requested PBV units
- PBV type (Rental Assistance Demonstration (RAD), Veterans Affairs Supportive Housing (VASH), regular)
- Utility allowances
- Bedroom distributions
- Supportive services (if applicable)
- Residential population (homeless, veteran, elderly, low-income families)
The narrative should also identify any exceptions applicable to the project (e.g., number of PBV exceeding project cap), and details of any interim financing or construction loan(s).
3. Accounting Statement of Sources and Uses of Funds
Identify each source and indicate type (loan, grant, syndication proceeds, contributed equity). Sources generally include only permanent financing and grants. If interim financing or a construction loan is proposed, provide details in the project description. Separately identify detailed uses, avoiding broad categories such as “soft costs”.
Under acquisition costs, identify purchase price separately from related costs such as appraisal, survey, title, recording, and legal fees. Include separate line items representing construction contract amount, builder's profit, builder's overhead, and total project costs.
- Amounts in the Sources and Uses Statement must match the amounts of commitment letters for each funding source.
4. Description of Funding Sources
- Loans including principal, interest rate, amortization, term, and any accrual, deferral, balloon, or forgiveness provisions.
- Describe any lender, grantor, or syndicator requirements for reserves or escrows requirements.
- Describe if a lender receives a portion of the net cash flow, either as an additional debt service or in addition to debt service.
- Identify the amount of LIHTC.
5. Commitment Letters
Lenders and other funding sources evidence their commitment to provide funding and disclose significant terms. Signed loan agreements and grant agreements meet this requirement. However, proposal letters and letters of interest do not meet this requirement – it must be a clear commitment. If the phrase “this is not a letter of commitment” or “this is a letter of interest” appears in the text, request an updated letter omitting this verbiage.
6. Developer's Commitment Letter
Delineate any arrangements, contributions, donations, significant terms or transfer of funds from the developer and/or participating partners such as deferred developer's fees, cash contributions, and equity investments. Signed, dated, and on letterhead.
7. HOME Commitment Letter (when applicable)
Signed document clearly identifying requirements of the HOME designated units and intended rents.
8. Supportive Service Commitment (when applicable)
A signed Memorandum of Understanding that describes the type of services to be provided, frequency, terms of service and resident eligibility.
9. Appraisal Report
Based on the “as is” value of the property, before construction or rehabilitation, and without consideration of any financial implications of tax credits or project-based voucher assistance. An appraisal establishing value after the property is built or rehabilitated is not acceptable unless it also includes an “as is” valuation. The date of the appraisal is to be within 18 months of the date of SLR submission.
10. Stabilized Operating Pro Forma
Include projected rental, commercial, and miscellaneous gross income, vacancy loss, operating expenses, debt service, reserve contributions, with cash-flow projections, and debt service ratios; income and expenses trended at a consistent percent. Complete HUD Form 50156.
- Must be projected over a 20-year period with each individual year listed.
11. Low-Income Housing Tax Credit Allocation Letter (when applicable)
Issued by the authorized tax credit allocation agency, identifying the amount of LIHTCs reserved for the project and include
IRS Form 8609.
12. Historic Tax Credit Letter (when applicable)
Issued by an authorized historic credit agency, disclosing the estimated historic tax credit amount awarded to a project located in a designated historical area.
13. Equity Contribution Schedule (when applicable)
If equity contributed to the project is paid in installments over time, provide a schedule showing the amount and timing of planned contributions.
14. Bridge Loans (when applicable)
Provide details if the financing plan includes a bridge loan where equity contribution proceeds planned over an extended time can be paid upfront.
15. Disclosure, Perjury, and Identity of Interest Statement
Completed by the owner. Complete and submit HUD Form 2880.
- Box 4, “Amount of HUD Assistance Requested/Received” should match the total amount of Housing Assistance income listed in the property’s pro forma for years 1-20.
16. PBV Award Letter
Identify the housing authority's approval of project-based voucher assistance for the project by number of units and bedroom distribution.
17. PHA Rent Certification Letter
Document proposed contract rents, utility allowances, and gross rental amounts for assisted units. Include rent reasonableness documentation or comparability analysis as evidence of rent determination and certification.
18. Environmental Clearance
Complete the environmental review and environmental approval is required before AHAP approval can be granted. At the time of initial submission of the SLR request, submit evidence that a request for a Part 58 review has been submitted to the entity responsible or a Part 50 review has been submitted to the HUD field office.