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Resolutions Adopted at the
67th Annual Conference of Mayors
New Orleans, Louisiana
June 11-15, 1999 |
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COMMUNITY DEVELOPMENT AND HOUSING
SECTION 202/811 GAP FUNDING
WHEREAS, the Department of Housing and Urban Development (HUD) Section 202/811
Capital Advance Program has been considered a 100% financing program reserved for non
profit 501 c (3) sponsors/developers; and
WHEREAS, local high cost adjustments factors are applied where required to make
project economically feasible; and
WHEREAS, in the Housing Market, it is difficult to develop Section 202/811
projects with the initial fund reservation amount, even with the application of the high
cost factor; and
WHEREAS, projects in cities like Chicago have typically required further
increases in HUD funding between award of a fund reservation and issuance of a commitment,
which were permitted under the Section 202/811 regulations; and
WHEREAS, as of November 1996, the program was modified to limit the available
HUD funds to the amount originally reserved until after the initial closing of Capital
Advance and commencement of construction; and
WHEREAS, unless the formula by which funds are reserved is revised to be more
realistic for the housing market, it is unlikely that Section 202/811 projects funded will
be able to achieve initial closing without secondary financing or owner’s equity; and
WHEREAS, because many of the Section 202/811 sponsors/owners are lightly
capitalized nonprofits, such as churches, a significant amount of the owner’s equity
is not likely to be available; and
WHEREAS, the Section 202/811 programs only permits secondary financing from
another public source, such as a state or local agency; and
WHEREAS, Section 202/811 sponsors will be turning to the local governments for
secondary financing because a significant amount of owners equity is not available; and
WHEREAS, the funds will allow cities to assist these critically important
developments without taking away from other necessary affordable housing,
NOW, THEREFORE, BE IT RESOLVED, that the U.S. Conference of Mayors urges the
106th Congress to pass legislation that would apply high cost adjustments factors to the
current Section 202 Capital Advance Program formula to make projects economically
feasible; and
BE IT FURTHER RESOLVED, that the U.S. Conference of Mayors supports legislation
that would revise the current formula by which funds are reserved to be more realistic for
the current housing market; and
BE IT FURTHER RESOLVED, that the U.S. Conference of Mayors supports earmark
requests made by cities for the purpose of filling the gap in Section 202/811 financing
for projects for these special populations.
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