Emergency Capital Repair Grants for Multifamily Housing Projects Designated for Occupancy by the Elderly

AGENCY:

Office of the Assistant Secretary for Housing-Federal Housing Commissioner, HUD.

ACTION:

Notice.

SUMMARY:

This notice announces the availability of up to $10 million in grant funds to make emergency capital repairs to eligible multifamily projects that are owned by private nonprofit entities and designated for occupancy by elderly tenants. The capital repair needs must relate to items that present an immediate threat to the health, safety, and quality of life of the tenants. The intent of these grants is to provide one-time assistance for emergency items that could not be absorbed within the project's operating budget, and where the tenants continued occupancy in the immediate near future would be called into question by a delay in initiating the proposed cure. The notice provides instructions for owners to request the funding and instructions for the HUD field offices to process the request.

DATES:

Effective Date: December 16, 2004.

FOR FURTHER INFORMATION CONTACT:

Aretha Williams, Director, Grant Policy and Management Division, Office of Housing, Room 6142, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410; telephone 202-708-3000 (this is not a toll-free number). Persons with hearing or speech impairments may access this number via TTY by calling the toll-free Federal Information Relay Service at 800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

Section 202b of the Housing Act of 1959 (12 U.S.C. 1701q-2) and the Consolidated Appropriations Act, 2004 (Public Law 108-199, approved January 23, 2004) authorize HUD to provide grants for substantial capital repairs to eligible multifamily projects with elderly tenants that are needed to rehabilitate, modernize, or retrofit aging structures, common areas or individual dwelling units. The Consolidated Appropriations Act, 2004 provides $25,000,000 for grants for conversion of eligible units to assisted living “and for emergency capital repairs as determined by the Secretary” of HUD.

This notice announces the availability of up to $10 million in grant funds to make emergency capital repairs to eligible multifamily projects that are owned by private nonprofit entities. The capital repair needs must relate to items that present an immediate threat to the health, safety, and quality of life of the tenants. The intent of these grants is to provide one-time assistance for emergency items that could not be absorbed within the project's operating budget, and where the tenants continued occupancy in the immediate near future would be called into question by a delay in initiating the proposed cure. The notice provides instructions for owners to request the funding and instructions for the HUD field offices to process the request.

II. Definition of “Emergency Capital Repairs''

For purposes of this notice, “emergency capital repairs” are defined as repairs at a project to correct a situation that presents an immediate threat to the life, health and safety of project tenants. Assistance is limited to those projects with emergency problems that are of such a magnitude that:

1. The problem poses an immediate threat to the quality of life of the tenants; and

2. The continuation of the problem could potentially result in an evacuation of the tenants or long-term tenant displacement unless the repairs were rendered.

III. Eligibility Requirements

Only private nonprofit owners of eligible multifamily assisted housing developments designated for occupancy by elderly tenants as specified in sections 683(2)(B), (C), (D), (E), (F), or (G) of the Housing and Community Development Act of 1992 (Public Law 102-550, approved October 28,1992) are eligible for emergency capital repair grants under this notice. Projects must have had final closing on or before January 1, 1999.

To be eligible for an emergency capital repair grant under this notice, a project owner must be in compliance with:

1. Its Loan Agreement, Capital Advance Agreement, Regulatory Agreement, Housing Assistance Payment contract, Project Rental Assistance Contract, Rent Supplement or LMSA contract, or any other HUD grant or contract document.

2. All fair housing and civil rights laws, statutes, regulations, and executive orders as enumerated in 24 CFR 5.105(a).

IV. Grant Requirements

A. Conditions for Assistance

The following conditions apply to emergency capital grants awarded under this notice:

1. The request for funding must clearly identify the emergency and must contain a detailed justification in support of the emergency designation.

2. Funds awarded may only be expended for approved uses.

3. Repairs must be initiated immediately upon receiving the grant award and must be sufficiently completed within six months of the initial start with final repairs completed no later than 12 months after receipt of funding. Unless there are safety concerns, tenants must be able to remain in their units while the repairs are being done.

4. The project owner must demonstrate that: (i) The project accounts have been maintained in accordance with all HUD requirements; and (ii) there are insufficient funds in the operating budget, the reserve for replacement and/or residual receipts to fund emergency capital repairs. HUD encourages owners to use residual receipts when available. Owners are required to rebuild replacement reserves to help ensure that sufficient funds will be readily available for emergency capital repairs that may be required in the future.

5. The project owner's most recent management review rating is “satisfactory” or above.

6. The most recent Real Estate Assessment Center (REAC) physical inspection report for the project must have a score of 60 or above. Developments scoring less than 60 are ineligible.

7. The project is well maintained except for the current emergency capital repair needs.

8. The project does not have a recent history of mortgage defaults.

9. The project owner does not have any material adverse financial or managerial actions or omissions with regard to any project that is federally assisted or financed with a loan or capital advance from or mortgage insured by an agency of the federal government.

10. Tenants must be notified of the request for the grant and must be informed of the overall plan to complete the capital repairs, if at all possible.

11. The owner's Affirmative Fair Housing Marketing Plan (AFHMP) must meet all applicable HUD requirements. If not, the owner must have an acceptable plan in place prior to completion of the repairs.

12. The project owner is in compliance with all fair housing and equal opportunity statutes or has an approved plan for compliance prior to completion of the repairs.

B. Funding

The following requirements apply to emergency capital grant amounts awarded under this notice:

1. The maximum amount an individual project owner may apply for is $500,000.

2. HUD will fund all approved applications on an as submitted basis until funds have been fully expended.

3. HUD retains the right to adjust the amount of the grant up to the maximum grant of $500,000 or down based upon review of the reasonableness of the costs for completing the repairs.

4. Project owners should be aware as they prepare their request that the prevailing wage rate requirements of the Davis-Bacon Act may be applicable.

C. Eligible Uses of Funds

Grant funds are available only for emergency capital repairs that relate to immediate health/safety needs that impact upon the quality of life of the tenants if the repairs are not made. The project owner must submit a description of the proposed use of the funds and demonstrate how the repairs relate to eliminating the immediate emergency for the tenants. The award is a one-time opportunity for correction of the threat to the tenants. Funds may be used to repair or replace systems including, but not limited to:

1. Major building and structural components that are in critical condition; and

2. Repairs or replacements to mechanical equipment to the extent they are necessary for health and safety reasons.

D. Ineligible Uses of Funds

Emergency capital repair grants may not be used for the following costs:

1. Deferred maintenance items.

2. Lead-based paint abatement.

3. Demolition and reconstruction activities.

4. Security systems.

E. Use Agreement

If there are less than 10 years remaining on the existing mortgage, owners must enter into a Use Agreement (Attachment I) to extend the remaining affordability of the project for up to 10 years. For example, if the maturity date of the mortgage is three years from the execution of the Grant Agreement, the owner must enter into a Use Agreement for seven years beyond the term of the mortgage; if the maturity date of the mortgage is 15 years, the owner will not need to execute a Use Agreement unless the mortgage is prepaid. All Use Agreements must be recorded.

V. Request Process

A. Owner Submission Requirements

An emergency categorization is critical to qualifying for participation in this program. Priority will be given to areas subject to a current declaration of “Federal Disaster Assistance.” Requests for grants must be submitted in accordance with the procedures described below:

1. The request must be made in writing and submitted by the project owner to the local field office (Attachment II). The request must clearly identify all repairs of an emergency nature for which funding is requested, the basis for the emergency declaration and how it impacts upon the health and safety of the tenants as well as what would happen if the emergency repair was not done immediately. Requests signed by a consultant or management agent on behalf of the owner are not acceptable.

Note:

Repair items identified on the REAC physical inspection report are not sufficient to be classified as emergency in nature.

2. Action items should be written in a manner that specifically describes the scope of work to be performed, provides an estimate of the cost of the work to be performed, and an explanation of the basis for the estimate. The estimate provided for the cost of each action item must be reasonable.

3. The request must demonstrate that the repairs cannot be corrected at a cost that can be absorbed within the operating budget or use of the reserve for replacement and/or residual receipts funds.

4. The request must provide a project plan for completing the repairs within six months but no longer than one year from the date of the grant award.

5. The project owner must notify the tenants of the plans to apply for this grant, if possible. If applicable, the request must provide evidence that the tenants were notified and given the opportunity to make comments. Any comments received from the tenants must be submitted to the local HUD field office along with the repair request.

6. The request must provide a description of all unsuccessful attempts (if any) the owner has made to acquire funds from other sources, including letters of denial from funding sources, to complete the outstanding emergency capital repairs.

7. The request must provide a description of any previous grants or loans received by the project for repairs.

B. Field Office Processing

1. The Hub Director/Program Center Director is responsible for ensuring that the requests are promptly and thoroughly reviewed and submitted to HUD headquarters.

2. Incomplete applications will not be processed and will be returned to the owner. Owners may re-submit a revised application, but it will be processed as a new request in the order in which it is received the second time.

3. Each field office has the responsibility for conducting a comprehensive review of the project's files that may include an on-site review. The review should consist of completion of the questions in Attachment IV and may include any other concerns the field office may have about the project.

C. Approval Process

1. All approvable requests along with the Certifications from the Program Centers (Attachment III) should be sent to the Multifamily Hub Director. Hub Directors will fax the approvable request to the Office of Housing Assistance and Grant Administration in Headquarters, Attention: Willie Spearmon at (202) 708-3104. In addition, an original copy of the request should be mailed to Willie Spearmon.

2. Once Headquarters receives the approval of the request for emergency capital repairs from the Hub Director, the Office of Housing Assistance and Grant Administration will process the request and award the funds.

Note:

Due to limitations of funding, approval of such recommendations are strictly based on an as submitted basis until the exhaustion of funds. HUD Headquarters reserves the right to deny or reduce any request for funds. Priority will be given to areas subject to a current declaration of “Federal Disaster Assistance.”

3. Once the grant funds have been reserved, Headquarters will notify the Multifamily Director in the field office who will notify the owner of the grant award.

4. Headquarters will notify field staff by electronic mail at the time the reservation documents are sent to the Fort Worth Accounting Center to assign the funds. Field staff should check in LOCCS to confirm reservation of the funds. Once funds have been reserved, the Multifamily Hub/Program Center Director should execute the Grant Agreement.

VI. Environmental Review

In accordance with 24 CFR 50.19(b)(10) of HUD's regulations, this notice provides assistance for temporary or permanent improvements that do not alter environmental conditions and are limited to protection, repair or restoration activities necessary only to control or arrest the effects from disasters or imminent threats to public safety including those resulting from physical deterioration. Therefore, emergency capital repair grants provided under this notice are categorically excluded from the requirements of the National Environmental Policy Act (42 U.S.C. 4332 et seq.).