Section 202 Supportive Housing for the Elderly Program

On April 4, 2019, HUD published the FY 2018 Notice of Fund Availability (NOFA) for the Section 202: Supportive Housing for the Elderly Program. This is the first time the program has been funded since the 2010/2011 round. There have been a number of notable changes since the last round of funding.

What’s New In The FY2018 NOFA

  • Mixed Financing Required: A HUD Section 202 capital advance will no longer serve as the primary source of construction funding. Owners will need to determine a significant source of funding (i.e. tax credits, state grant funds, Sponsor contribution) to fund the majority of construction. It appears that HUD now anticipates the 202 capital advance being used as a secondary source (i.e. like HOME, CDBG, FHLB AHP, etc.).
  • This round of funds is setup as a demonstration/pilot program. HUD seeks to fund properties that will be at the forefront of design, service delivery and efficient use of federal resources that will provide models for replication by other providers of supportive housing for very-low-income elderly persons across the country. To meet this outcome, HUD expects successful applicants to demonstrate best practices and innovation in both physical design and supportive services.
  • Proposed sites must meet threshold criteria for absorption ratio and minority elderly concentration.
  • Grants.gov and SAM.gov have both seen significant changes since the last time the Notice was published.
  • Mixed Financing Required: A HUD Section 202 capital advance will no longer serve as the primary source of construction funding. Owners will need to determine a significant source of funding (i.e. tax credits, state grant funds, Sponsor contribution) to fund the majority of construction. It appears that HUD now anticipates the 202 capital advance being used as a secondary source (i.e. like HOME, CDBG, FHLB AHP, etc.).
  • This round of funds is setup as a demonstration/pilot program. HUD seeks to fund properties that will be at the forefront of design, service delivery and efficient use of federal resources that will provide models for replication by other providers of supportive housing for very-low-income elderly persons across the country. To meet this outcome, HUD expects successful applicants to demonstrate best practices and innovation in both physical design and supportive services.
  • Proposed sites must meet threshold criteria for absorption ratio and minority elderly concentration.
  • Grants.gov and SAM.gov have both seen significant changes since the last time the Notice was published.

Overview

  • $50 million available, awarded via a national competition. HUD expects to fund approx. 30 awards, making the average award size $1.5 million.
  • In addition to supplying construction gap funding, Section 202 awards will continue to offer Project Rental Assistance Contracts (PRACs) for any units constructed with 202 funds.
  • Maximum award: $5 million (to fund capital advance and first year of PRAC)
  • Applications are due August 28, 2019

Key Scoring Criteria For Submitting a Competitive Application

Applicants must score a minimum of 75 out of a possible 100 points to be considered for a 202 award. In conjunction with HUD’s priorities for this NOFA, the following notable scoring sections apply:

  • Applicant’s ability to demonstrate a high level of leveraging and firm commitments for these funds= 25 points
  • Soundness of Approach (innovative concept supported by research) = 10 points
  • Replicability and Scalability of proposed concept= 5 points
  • Land-Use/Zoning= 10 points, awarded on a sliding score, as follows:
    • Fully permitted- Zoning and land use approval in place and no further design review necessary= full 10 points
    • Partially permitted- Evidence that the project, as proposed, is permissible under applicable zoning ordinances but requires discretionary approvals. = 4 points
    • Not land use compliant= 0 points

Costs Associated with Submitting a Section 202 Application

  • Phase I Environmental Site Assessment (and Phase II and Phase III, if necessary) conducted and prepared by an Environmental Professional in accordance with ASTM Standard E 1527-13. The Phase I must include a Tier 1 Vapor Encroachment screen pursuant to ASTME E 2600-15.
  • Completion and submission of environmental reports in the HUD Environmental Review Online System (HEROS)
  • Construction cost estimate performed by a professional estimator
  • Title Report
  • Consultant Fee Retainer
  • Architect Fees
  • Attorney Fees (Zoning)
  • Market Study- Appears to be optional (we expect clarification on this)

Upcoming 2020 Round of 202 Funding

  • An additional NOFA for another $50 million is expected to be published in 2020.
  • If Sponsors are not positioned to be competitive in this round, but are interested in participating, we encourage them to start preparing for the 2020 round using the current NOFA’s priorities as a guide. 

Source: FY 2018 Section 202 Supportive Housing for the Elderly Program NOFA. U.S. Department of Housing and Urban Development. Published August 28, 2019.