Operating Assistance for Troubled Multifamily Housing Projects

To provide loans to restore or maintain the physical and financial soundness, to assist in the management and to maintain the low-to moderate-income character of certain projects assisted or approved for assistance under the National Housing Act or under the Housing and Urban Development Act of 1965.
Examples of Funded Projects

Section 202 projects for the elderly or disabled with emergency health and safety problems whose sponsors do not have the necessary funds available to cure the immediate problems.

Agency - Department of Housing and Urban Development

The Department of Housing and Urban Development's mission is to increase homeownership, support community development and increase access to affordable housing free from discrimination. HUD fulfills this mission through high ethical standards, management and accountability, and by forming partnerships with community organizations.

Office - Persons are encouraged to communicate with the nearest local HUD Multifamily Hubs and Program Centers listed at http://www.hud.gov/fha/mfh/fhamie/mieforms/lkmfdirs.html or the nearest HUD Field Office listed in the Appendix IV of the Catalog.

Program Accomplishments

No activity is anticipated in Fiscal Year 2008.

Uses and Use Restrictions

Flexible Subsidy funds can be lent to eligible projects in an amount based on the project's total needs.

It may be used to correct physical deficiencies resulting from deferral of regular maintenance; to reduce deficiencies in replacement reserve funds; and to fund operating deficits.

Flexible Subsidy assistance is limited to projects assisted under Section 236 or Section 221 (d) (5) of the National Housing Act; those assisted under Section 101 of the HUD Act of 1965 (Rent Supplement) or when the Section 101 assistance has been converted to Section 8 Loan Management Set Aside (LMSA); direct loans at below market interest rates made under Section 202 of the Housing Act of 1959; housing assistance payments made under Section 23 of the U. S. Housing Act of 1937 or Section 8 of the U. S. Housing Act of 1937 after conversion from assistance under the Section 236 Rental Assistance Payments Program or the Rent Supplement Program.

Some of the Flexible Subsidy resources are being used in connection with Safe Neighborhood Action Plans.

Eligibility Requirements

Applicant Eligibility

Eligible owners are nonprofits, with existing loans from HUD under the Section 202 program.

Public bodies do not qualify for this program.

Field Offices recommend projects to be assisted.

Beneficiary Eligibility

Tenants will benefit because this will allow decent, safe and sanitary conditions in projects. Additionally, this program will guarantee good management in those projects selected.


Documentation regarding the characteristics of the property and the qualifications of managing agents and owners are assembled by the owners and submitted to the Field Office . This program is excluded from coverage under OMB Circular No. A-87.

Aplication and Award Process

Preapplication Coordination

Assurance must be gained from the appropriate unit of local government that essential services will be provided to the project; the real estate taxes will be assessed in a manner consistent with normal assessment procedures; and that assistances not inconsistent with local plans and priorities.

This program is excluded from coverage under OMB Circular No.


This program is excluded from coverage under E.O.


Application Procedures

Because of the limited funding, Flexible Subsidy funds are strictly reserved for the emergency needs of 202 projects. Such projects, must have been in occupancy for at least fifteen (15) years and have emergency health and safety needs. Deferred maintenance or items that did not exist at the time the project was finally endorsed, e.g., adding air conditioning to an entire project, will not be approved for Flexible Subsidy Operating Assistance funding.

Award Procedures

For most of the Flexible Subsidy assistance, funds are assigned from HUD Headquarters to the HUD Field Offices, for specific projects identified by the Field Offices as having priority based on established criteria.


Funds are awarded until exhausted.


Housing and Community Development Amendments of 1978, as amended, Public Law 95-557, 12 U.S.C. 17152-1.

Range of Approval/Disapproval Time



Not applicable.


Not applicable.

Assistance Considerations

Formula and Matching Requirements

No contribution is required for nonprofit sponsors.

Length and Time Phasing of Assistance

Generally on a monthly basis. Operating Assistance is usually for a one year period and is paid according to pre-approved work schedule. Capital Improvement Loan proceeds are disbursed until construction is completed.

Post Assistance Requirements


Quarterly assessment and review of owner performance.

Monthly reporting of individual disbursements and action items.

Periodic on-site visits.

Owners must electronically file an annual financial statement with HUD, audited and prepared in accordance with Generally Accepted Accounting Principals and Generally Accepted Auditing Standards.


Federal audits will be made in accordance with the policies of FMC 73-2 to ensure that funds have been applied efficiently, economically, and effectively.


Owner keeps all records relating to MIO Plan transactions for at least 5 years. Field Office retains all records relating to assistance for 5 years.

Financial Information

Account Identification



FY 07 est not avaialbe; FY 08 est not available; and FY 09 est not available.

Range and Average of Financial Assistance

See Uses and Use Restrictions.

Regulations, Guidelines, and Literature

24 CFR part 219, HUD Handbook 4355.1.

Information Contacts

Regional or Local Office

Persons are encouraged to communicate with the nearest local HUD Multifamily Hubs and Program Centers listed at http://www.hud.gov/fha/mfh/fhamie/mieforms/lkmfdirs.html or the nearest HUD Field Office listed in the Appendix IV of the Catalog.

Headquarters Office

Office of Housing Assistance and Grants Administration, Department of Housing and Urban Development, Washington, DC 20420. Telephone: (202) 708-2866. Use the same number for FTS.

Criteria for Selecting Proposals

First and foremost the applicant must be able to demonstrate that the requested items meet the guideline for emergency. After which, assistance will be granted only if the: (1) assistance, in concert with one or more other relief tools, will restore or maintain physical and financial soundness and the low-or moderate-income nature of the project; (2) assistance is less costly to the Federal government than any other available; (3) project owner, except for nonprofit projects, agrees to provide assistance to the project; (4) project can be made structurally sound with this assistance; (5) project management is at least satisfactory; and (6) project is operated and managed in accordance with the terms of the Management Improvement and Operation (MIO) Plan designed to reduce the operating costs of the project.

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