Transcript Preserving Multifamily Housing HUD Policy Update NALHFA Conference May 20, 2011 Matt Schwartz, President, California Housing Partnership.

Preserving Multifamily Housing
HUD Policy Update
NALHFA Conference
May 20, 2011
Matt Schwartz, President, California Housing Partnership
WHAT DO WE MEAN BY “PRESERVATION”?
Maintaining the affordability, rental assistance (if applicable) and physical
viability of Multifamily and public housing properties, and protecting tenants
from displacement.
In the last 15 years we have lost nearly 170,000 Section 8 units due
to opt-out, foreclosure or abatement. Another 450,000 units are “at risk.”
Major risks include:
• Opt-Outs and other contract terminations (Rent Supplement and RAP)
• Maturing mortgages and expiring Use Agreements
• Physical deterioration
• Financial trouble/default
THE MULTIFAMILY PRESERVATION AGENDA
HUD’s Office of Multifamily Housing has a comprehensive agenda to
preserve properties and address these issues.
Major areas include:
•
New flexibilities for Nonprofit owners
•
Updated guidance for prepayment and refinance of 202s
•
Pairing HUD programs with LIHTC and secondary financing
•
Freeing up resources under Section 8 HAP Contracts
•
Improving awareness of Owners, tenants and stakeholders
PARTNERING WITH NONPROFIT OWNERS
Proposed Regulation change allowing distributions to Nonprofits
•
Interim rule strikes clause restricting Nonprofits from receiving distributions
•
Creates procedure to re-calculate “initial equity”
•
Owners may today receive a waiver under Section 8 Renewal Guide to receive
distributions as part of a mark-up-to-budget request.
Incentives to sell and preserve properties prior to mortgage maturity
•
Notice will authorize Nonprofit Owners to receive proceeds from the sale of a
property to an experienced owner and operator of assisted housing.
•
Sale must involve execution of 20 year Use Agreement and HAP Contract
renewal, rents capped at market.
•
Applies to Section 221(d)(3), Section 236 and Section 231 properties
FLEXIBILITIES WITH PROJECT RESOURCES
Freeing up access to Residual Receipts when affordability is extended
•
Change to Chapter 25 of HUD Handbook 4350.1 forthcoming
•
Allows “new reg” owners (post-1979) to access Residual Receipts with Hub
approval for project improvements including energy efficiency.
•
Residual Receipts may also pay the transaction costs on an acquisition
•
Owner/purchaser must sign a 20 year HAP Contract renewal
Deferral of Flexible Subsidy Debt
•
Notice 11-05 allows Owners to defer Flexible Subsidy Debt as part of a
preservation transaction.
•
Applies to Operating Loans which unlike Capital Loans may be deferred to
the term of the new financing.
SECTION 202 PREPAYMENT AND REFINANCE
New Guidance on the prepayment and refinance of Section 202 properties.
1. Notice 11-03 allows conversion of efficiency units to one-bedrooms to address
obsolete housing and reduce vacancies.
2. Notice 10-14 allows for the refinance of pre-1975 properties with interest rates of
6% or less to complete needed repairs. Enhanced Vouchers may be provided to
unassisted residents. This notice in effect until Notice implementing 118 is issued.
3. Notice 10-26 allows for the subordination of Section 202 loans when required for a
preservation transaction.
4. Implementing S. 118, Supportive Housing for the Elderly Act of 2010.
•
Under S. 118, rental assistance contracts are authorized but no appropriations.
•
Proceeds from refinance may be used in other HUD-assisted senior projects.
PRESERVING HUD-ASSISTED PROPERTIES WITH
TAX CREDITS AND SECONDARY FINANCING
Assisting Owners to use LIHTCs and other secondary financing
1. Section 8 Renewal Policy Guide
•
Tax Credit expenses may be included in project budgets
•
Projects may be underwritten using Section 8 market rents rather than
restricted LIHTC rents
•
HUD may approve “post-rehab” rents for rehab transactions
2. Revised HUD Closing Documents facilitate approval of subordinate financing.
3. FHA Tax Credit Pilot will expedite the review and approval of preservation
transactions using FHA insurance and LIHTCs.
BUILDING THE TOOLBOX: ENGAGING PARTNERS
Working with Owners, tenants and stakeholders
1. Multifamily Preservation Training. Comprehensive 3-day training for Owners in
8 cities nationwide. Nuts and bolts of HUD programs including refinance, IRP
decoupling, HAP Contract renewals, financing options. Launching Fall 2011.
2. Making information available for local partners. Updated Multifamily Portfolio
data now posted monthly.
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/mfh/pres
ervation/mfhpreservation
3. Making tenants and Owners aware of potential for Tenant Protection
Vouchers. Outreach to Owners to encourage them to prepay prior to maturity.
4. Preservation goals in place for field to offer 20 year HAP contracts, execute FHA
loans on affordable properties, and track the loss of affordable units.
CONTACT INFORMATION
Margaret Salazar,
Senior Housing Program Specialist
Office of Multifamily Housing Programs
US Department of Housing and Urban Development
[email protected]
(202) 402-2423
Updated Handbooks and Notices available online:
http://portal.hud.gov/hudportal/HUD?src=/program_of
fices/administration/hudclips/notices/hsg