Recapitalizing Your HUD Properties: What s New, What s Next? 1
#Connections2015 Greg Chin California Housing Partnership Corporation greg@chpc.net Kathleen Mertz Christian Church Homes kmertz@cchnc.org Dave Kiddoo California Housing Partnership Corporation dkiddoo@chpc.net Alexa Jeffress US Department of Housing and Urban Development Alexandra.Jeffress@hud.gov 2
Agenda HUD Transformation HUD Section 8 Renewal Guide HUD Preservation Incentives Case Studies 8 BB Transfer 202/236 Loan Prepays Section 8 Vouchers Tenant Protection and Project Based Section 8 Subsidy Contract Renewals, AAF, OCAF, SPRAC, PRAC Flexible Subsidy Loans LIPRA Homeless Preference Rental Assistance Demonstration Component I/II Future HUD Preservation Incentives 3
Overview of Multifamily for Tomorrow Transformation October 5, 2015 This document contains pre-decisional opinions, advice, and recommendations that are offered as part of deliberations necessary to the formulation of government policies and processes. It is protected from disclosure under the Freedom of Information Act ( FOIA ) pursuant to the Deliberative Process Privilege under 5 U.S.C. 552(b)(5). This document also contains commercially sensitive and confidential proprietary and trade secret information that is exempt from disclosure under Section (b)(4) of FOIA, 5 U.S.C. 552 et seq. *PRE-DECISIONAL, PROPRIETARY AND CONFIDENTIAL*
Multifamily for Tomorrow Transformation By 2016 the Office of Multifamily Housing (MFH) will complete a transformation of the way we work from a 1970s operating model to a 21st-century model that applies industry best practices, improves our ability to manage risk and deliver excellent customer service, and increases accountability and national consistency. *PRE-DECISIONAL, PROPRIETARY AND CONFIDENTIAL* 5
Multifamily for Tomorrow (MFT) has four components Transform the way we work 1 2 3 Workload sharing Underwriter model and risk-based processing in Production Account Executive and Troubled Specialist model in Asset Management Streamline our structure 4 Streamlined organizational structures in HQ and field *PRE-DECISIONAL, PROPRIETARY AND CONFIDENTIAL* 6
MFH s historic field model had 17 hubs and 50+ offices I 2 I *PRE-DECISIONAL, PROPRIETARY AND CONFIDENTIAL* 7
Through MFT, we are moving to 5 streamlined Regions I 6 I *PRE-DECISIONAL, PROPRIETARY AND CONFIDENTIAL* 8
Each Region will have 1 Regional Center and 1 or 2 Satellite offices. Asset Management staff have the option to remain in existing locations Wave/ Region: 1 2 3 4 5 Southwest Midwest Southeast Northeast West Regional Center: Fort Worth Chicago Atlanta New York San Francisco Satellite Office(s): Kansas City Minneapolis Detroit Jacksonville Boston Baltimore Denver Asset Management: Albuquerque Cleveland Des Moines Columbus Houston Indianapolis Little Rock Milwaukee New Orleans Oklahoma City Omaha San Antonio St. Louis Tulsa Birmingham Columbia Greensboro Jackson Knoxville Louisville Miami Nashville San Juan Buffalo Charleston Hartford Manchester Newark New York Philadelphia Pittsburgh Providence Richmond Washington Anchorage Boise Honolulu Las Vegas Los Angeles Phoenix Seattle Portland DONE DONE FALL 15 SPRING 16 SUMMER 16 *PRE-DECISIONAL, PROPRIETARY AND CONFIDENTIAL* 9
Organization chart for Multifamily s streamlined HQ model Carolyn Cockrell Program Systems Management Office Director Ben Metcalf Deputy Assistant Secretary Office of Multifamily Housing Priya Jayachandran Program Administration Office Director Ted Toon Office of Multifamily Production Director Nancie-Ann Bodell Office of Asset Management and Portfolio Oversight Director Tom Davis Office of Recapitalization Director Peter Duklis Office of Field Support and Operations Director Kelly Haines Director Southwest Region Dan Burke Director Midwest Region Ruben Brooks Director Southeast Region TBA Director Northeast Region TBA Director West Region *PRE-DECISIONAL, PROPRIETARY AND CONFIDENTIAL* 10
Resources Online at: National MFT Website http://portal.hud.gov/hudportal/hud?src=/transforming_hud /multifamily_transformation SF Hub Information for Owners and Agents http://portal.hud.gov/hudportal/hud?src=/states/california/ working/mfownmgmt *PRE-DECISIONAL, PROPRIETARY AND CONFIDENTIAL* 11
HUD Preservation Guidance This document contains pre-decisional opinions, advice, and recommendations that are offered as part of deliberations necessary to the formulation of government policies and processes. It is protected from disclosure under the Freedom of Information Act ( FOIA ) pursuant to the Deliberative Process Privilege under 5 U.S.C. 552(b)(5). This document also contains commercially sensitive and confidential proprietary and trade secret information that is exempt from disclosure under Section (b)(4) of FOIA, 5 U.S.C. 552 et seq. *PRE-DECISIONAL, PROPRIETARY AND CONFIDENTIAL*
Section 8 Renewal Policy Guidebook Updated Issued 8/7/2015; effective 11/5/2015 100+ key changes, highlights include: General Changes Debt Service Coverage and LIHTC Fees Permitted in Budget (Section 2-15) Option 1 Mark Up to Market Clarifying that only Profit Motivated Owners eligible (Section 3-2) Defines Recent Tax Credits to qualify for Option 1B Community Support (within last 5 years) (Section 3-6) No automatic HUD RCS in Option 1 if owner s RCS less than 140 percent of the Median Gross Rent By Zip Code (Section 9-23) Owners Can Request to Terminate Eligible Contracts Early and Renew under MU2M at any time (Section 3-7) *PRE-DECISIONAL, PROPRIETARY AND CONFIDENTIAL* 13
Section 8 Renewal Policy Guidebook Updated Chapter 7: Option 5 Preservation Projects Owners may request to extend Use Agreement to complete Preservation Transaction. (Section 7-6) Chapter 9: Rent Comparability Studies No automatic HUD RCS in Option 1 if owner s RCS less than 140 percent of the Median Gross Rent By Zip Code (Section 9-23) Median Rent Table online: http://portal.hud.gov/hudportal/hud?src=/program_offices/housin g/mfh/mfhsec8 MAP Appraisal may be used in Lieu of HUD RCS in certain cases (Section 9-23) *PRE-DECISIONAL, PROPRIETARY AND CONFIDENTIAL* 14
Section 8 Renewal Policy Guidebook Updated Ch. 15 Capital Repairs and Transfer Program For-profit purchasers must renew under Option 1 MU2M (Section 15-5) RCS must include both as is and after rehab rent. (Section 15-6.A.1) Environmental Review Capital Repairs Program (Section 15-12 & 15-13) If possible, owners must combine multiple contracts. (Section 15-5; 2-10) Clarified language formerly requiring waivers: Eligibility of Profit-Motivated Owners and Purchasers (Section 15-1) Definition of Nonprofit controlled for profit (Section 15-3) Allows after rehab rents at closing in certain cases. (Section 15-6) Remove cap on market rents at use restricted levels. (Section 15-8) *PRE-DECISIONAL, PROPRIETARY AND CONFIDENTIAL* 15
Key HUD Approvals Items to Consider 1. Notice H 2011-05 Deferral of Flexible Subsidy 2. FHA Loan Prepayment 236 Prepayment Centralized in Office of Recap http://portal.hud.gov/hudportal/hud?src=/program_offices/housing/m fh/presrv/presmfh/section236_preserv 202 Prepayment Resources Available Online http://portal.hud.gov/hudportal/hud?src=/program_offices/housing/m fh/presrv/presmfh 3. Availability of Tenant or Project-Based Vouchers Notice PIH 2001-41 Notice H 2015-07 RAD 2 SPRAC 4. Notice H 2012-25 Amend LIHPRHA Use Agreement *PRE-DECISIONAL, PROPRIETARY AND CONFIDENTIAL* 16
Key HUD Approvals New Policies 1. Changes to the Section 8 Renewal Policy Guidebook 2. 2530 Previous Participation New Rule Proposed 3. Notice H 2015-03: Transferring Section 8 Budget Authority (8bb) 4. Notice H 2015-04: Utility Analysis Methodology 5. Notice H 2013-21: Homeless Preference *PRE-DECISIONAL, PROPRIETARY AND CONFIDENTIAL* 17
HUD Preservation Incentives Case Studies 18
Larkley Hotel 19
Larkley Hotel Built 1901 77 Units Family HUD Property Disposition 100% Section 8 Preservation Incentives 8BB Transfer Notice 2014-14 HAP, Option 4, 20 year renewal 20
Rosebush Tower 21
Rosebush Tower Built 1968 196 Units Senior HUD 202 Loan 100 units LMSA HAP Expired Preservation Incentives 202 Prepay Notice 2013-17 RAD Component II TPV TPV Notice 2012-18 Notice 2015-07 22
Carter Commons 23
Carter Commons Built 1964 95 Units Senior HUD 202 Loan Flexible Subsidy Loan 19 LMSA Subsidy Preservation Incentives 202 Prepay Notice 2013-17 Flex Subsidy Deferral Notice 2011-05 HAP, Option 1B, 20 year renewal SPRAC NOFA June 2013 TPV Notice 2012-03 24
Meadow Alley 25
Meadow Alley Built 1973 90 units Family HUD 223(a)(7) loan (previously a 236 and then a 241(f)) 97% Section 8 Preservation Incentives LIHPRHA Notice 2012-25 Amendment to Use Agreement (AAF to OCAF) HAP, Option 5, 20 year renewal 26
Firtree Terrace 27
Firtree Terrace Built 1971 127 Units Senior and Disabled HUD 236 Loan, expired Flexible Subsidy Loan 100% Section 8 Preservation Incentives Flex Subsidy Deferral Notice 2011-05 Homeless Preference Notice 2013-21 HAP, Chapter 15, Option 1B, 20 year renewal 28
What s on the HUD Preservation Incentives Horizon?... Questions? 29