On April 4, HUD issued a Notice of Funding Availability (“NOFA”) for Section 202 funds. This is the first time since 2010 that HUD has made money available for the development of new Section 202 housing. The Section 202 program provides a Capital Advance and Project Rental Assistance Contract (“PRAC”) to create new affordable housing for seniors (62 and older) who are very low income (50% of AMI or below). Applications are due August 28, 2019 and HUD expects to make awards approximately 90 days later.
There is $50 million available under this NOFA. Pursuant to the FY 2017 Consolidated Appropriations Act, HUD has a total of $110 million available. HUD intends to issue a second NOFA in 2020 for the balance of available funding. The minimum award under this NOFA will be $50,000; the maximum will be $5 million. HUD anticipates awarding funding to approximately 30 projects.
Eligible applicants must be 501(c)(3) non-profit corporations. HUD will allow LP or LLC project ownership if controlled by a non-profit and created to leverage Section 202 monies with other capital sources in a mixed-finance transaction. To this end, HUD may subordinate most of Capital Advance financing documents to other funding sources, except the Section 202 Use Agreement, which must be recorded in first position.
In the past, available Section 202 monies were allocated to each Multifamily Hub office and each office would evaluate the applications they received from their region. For this NOFA, HUD has formed a “Section 202 Capital Advance Team” in HUD Headquarters to review and rate applications. All applications will be uploaded electronically to Grants.gov. HUD intends (subject to receiving applications that attain a minimum acceptable score) to allocate at least 15% of funds to non-metropolitan areas and at least 10% to each of the five Multifamily regions.
The NOFA sets forth application requirements and scoring criteria. Notably:
Meeting the application requirements by August 28, 2019 will be tough. HUD is hosting a webinar on April 25, at 2pm eastern.