HUD Announces Competition for $150M New Section 202 Funds

Posted on January 20, 2021 by Bobbie Guidry

On January 11, HUD announced its competition for $150 million in new Section 202 Supportive Housing for the Elderly funds. The application deadline for these funds is May 26, 2021.

The Notice of Funding Opportunity (NOFO) is similar in many ways to the last HUD Section 202 NOFO issued in April 2019. That NOFO was for $51 million and ultimately provided Section 202 Capital Advance and Project Rental Assistance Contract (PRAC) funding for 575 units via 18 nonprofit-controlled communities when the awards were announced in February 2020.

According to the January 11th Notice of Funding Opportunity (NOFO) HUD seeks to fund Section 202 properties that advance housing for older adults as a platform for living independently and aging in community even as residents may require more assistance with activities of daily living over time.

For the new $150 million in awards, HUD expects to make approximately 45 awards. In the 2018 NOFA, per-project awards were capped at $5 million. For these 2021 awards, per-project awards are capped at $20 million, per the NOFO.

In addition to the 2018’s NOFO’s threshold requirements for applications to be timely, be complete, and to demonstrate need, the 2021’s NOFO adds a threshold requirement that outstanding civil rights matters must be resolved to HUD’s satisfaction prior to grant award, provided that all applicable legal processes have been satisfied.

As part of its announcement of the NOFA, HUD has also released a “Section 202 NOFA Toolkit,” which gives potential applicants the ability to self-score applications, using the scoring rubric in the NOFA: 41 points for capital, leverage, and committed funding, 10 points for land use and zoning, 14 points for market conditions, 33 points for physical design and supportive services, and 2 possible preference points for being in an Opportunity Zone.

This NOFO could have announced competition for about $190 million in new Section 202 funding. LeadingAge understands that HUD decided to hold back about $40 million for the next Section 202 NOFO to keep new 202 funds flowing at a somewhat regular pace and to give prospective nonprofit applicants time to prepare the extensive predevelopment necessary to garner the NOFO’s leveraging and capital advance ratio points. As part of its fiscal year 2021 HUD funding bill enacted on December 27, 2021, Congress provided another $52 million for new Section 202 homes. In total, HUD currently has $90 million for its next Section 202 NOFO.

Tom Davis, director of HUD’s Office of Recapitalization who oversaw this NOFO’s development, will join LeadingAge on Tuesday, February 2, at 1 p.m. CST to review and discuss this NOFO. HUD is expected to announce its own webinar about the new Section 202 NOFO.