On March 31, 2015, HUD published a Notice in the Federal Register establishing the conditions under which HUD will approve a request for the transfer of project-based rental assistance, debt held or insured by HUD, statutorily required income-based use restrictions from one multifamily housing project to another (or between several such projects). The HUD Secretary has the authority to approve transfer requests for fiscal years 2014 through 2016, provided that the Secretary publish a notice in the Federal Register laying out the terms and conditions for HUD approval of such transfers no later than 30-days before such notice takes effect. The Notice becomes effective April 30, 2015.
HUD approval of such transfers will be contingent on a number of factors, Including (1) Number and bedroom size of units; (2) the transferring project must be either physically obsolete or economically nonviable; (3) the receiving project or projects shall meet or exceed applicable physical standards established by the Secretary; (4) the owner or mortgagor of the transferring project shall notify and consult with the tenants residing in the transferring project and provide a certification of approval by all appropriate local government officials; (5) the tenants of the transferring project who remain eligible for assistance to be provided by the receiving project or projects shall not be required to vacate their units in the transferring project or projects until new units in the receiving project are available for occupancy; (6) HUD determines that the transfer is in the best interest of the tenants; (7) in most cases, any lien on the receiving project resulting from additional financing obtained by the owner shall be subordinate to any FHA-insured mortgage lien transferred to , or placed on, such project by HUD, except that HUD may waive this requirement if it is determined that a waiver is necessary to facilitate the financing of acquisition, construction, and/or rehabilitation of the receiving project or projects; and (8) use restrictions must be recorded that are of no less duration than existing use restrictions; (9) the transfer may not increase the cost of any FHA-insured mortgage, unless appropriations are provided in advance for any such increased cost.
Owners interested in the potential for such transfer should carefully review the notice and contact their HUD Multifamily Hub/Program Center.