I consult with owners and managers on the full range of 515 issues:
appeals related to OIG audits; Workout Plans; appeals of adverse RHS
decisions; issues with the Agency; and prepayments and equity loans.
AGING PORTFOLIO. The Agency has estimated rehab needs of up to $1
Billion, but hasn’t figured out how to address the needs. OIG was upset that
the Agency has not focussed on the solution. The big hurdle is that it will
cost real money.
SECTION 538. Changes to the program make it ideal for projects which will
break ground in a matter of months. With perhaps 13 loans actually closed in
5 or 6 years and the backlog of applications dumped, it is just waiting to be
discovered.
SUPREME COURT. The Supreme Court will issue a decision on Jeff Eckland’s
suit by June 2002. When (or if) he wins, additional suits may be in the offing.
INSURANCE. Insurance cost increases need to be monitored closely, even as
the Agency tries to push the costs down.
LEGISLATION. The thought that RD could be transferred to HUD gets at the
point that RD has not figured out how to work with borrowers, the
Administration or Congress to tell its story. That Section 8 could replace
RA could be a boon to good projects in good locations.
GAO REPORT ON 515 PREPAYMENT. It will address the issue of how best to
preserve affordable housing while balancing the interests of tenants, owners
and Taxpayers. Expect a sound report on very difficult issues.
RENTAL ASSISTANCE. Best to convert RA tenants to Section 8 vouchers and give up
RA ASAP. Given the present large number of unused RA units, the Agency can
then focus on using RA
to support projects as part of a rehab strategy.
RENT INCREASES. Request realistic rent increases to cover maintenance and
capital needs, and cure any physical deficiencies. The request can help
support your position as a responsible owner and manger, even if the Agency
rejects it.
3560. The Agency still intends to publish it, first for comment and later
for effect. Watch for Mark-to-Market provisions for rent increases, rehab
loans and transfers in the proposed rule and handbook. The Aging Portfolio
issues may make it unworkable.
THIRD PARTY EQUITY LOANS. The Agency permits an equity loan to be funded
by a conventional lender. Thus, it is not necessary to wait for an equity
loan. With the Agency outlook on RA and enforcement, however, it may be best
to consider prepaying.