Assisted Living Conversion Program
On August 11, the U.S. Department of Housing and Urban Development (HUD)/Federal Housing Administration (FHA) released guidance that makes it possible to finance properties eligible under the Assisted Living Conversion Program (ALCP) using FHA mortgage insurance through the Sec. 223(f) and Sec. 221(d)(4) programs.
The ALCP provides grants to nonprofit owners of eligible developments so they can convert a portion of their units into an assisted living (AL) facility or service-enriched housing (SEH). The purpose is to allow low-income seniors that can live independently but still need some assistance the opportunity to age in place. Beginning in 2000, HUD has provided ALCP grants to over 80 seniors housing properties that allow low-income seniors to age in place while receiving AL or SHE services. Grants through the ALCP cover the physical conversion of project units, common and services spaces.
Although Sec. 202 properties have long been able to utilize FHA financing to recapitalize and fund renovations, the memo released on August 11 marks the first time that multifamily accelerated processing (MAP) lenders can utilize the FHA Sec. 223(f) and FHA Sec. 221(d)(4) programs to refinance or rehabilitate these important affordable seniors housing properties. The memo provides multifamily mortgage insurance underwriting guidelines for ALCP properties that largely follow current requirements for Section 202 properties with a few exceptions. The provisions will be incorporated into the final MAP guide expected to be released in the near future, and a waiver process is available until the final MAP guide is published.