CARH’s BROADCAST EMAIL—Regulatory Alert
December 11, 2024
On December 6th, Rural Development (RD) published a Notice in the Federal Register announcing an extension of the “Simple Transfer Pilot Program” through December 9, 2025. As stated in a December 9, 2022, Newsroom post on CARH’s website, RD initially announced the new pilot program to improve the transfer application process for Section 515 properties. The pilot program was originally slated to run for two years, starting on December 9, 2022, and focused on simple transfers that can be expedited through the application progress with a reduction in requirements, such as third-party reports. The pilot program offers three alternative pathways to the standard transfer process.
The first alternative transfer process offered through the pilot program is for simple transfers of projects in acceptable physical condition. This process requires purchasers to provide a plan for the long-term viability of the project and specifically seeks out financing plans that include no additional debt added to the project. The purchaser is not required to provide a property condition report or a new valuation of the property.
The second alternative transfer process focuses on projects with a need for rehabilitation. This path does allow for new non-amortizing debt, however, does require a project condition report to show whether the project’s rehabilitation needs are for major redevelopment or more simple maintenance, and whether the rehabilitation needed is immediate or long-term. While no new valuation is required, a financing plan for the rehabilitation must be provided.
The third and final new pathway for transfer through the pilot program offers nonprofits and governmental agencies an option to purchase projects for properties in need of preservation and rehabilitation even if the resources are not yet available for full redevelopment. The purchaser nonprofit or governmental agency is required to pursue a plan for redevelopment within two years of the transfer and the rehabilitation must be funded with financing other than the existing reserves. Applicants must submit an appraisal and property condition report to apply for this transfer pathway.
In addition to extending the program through December 9, 2025, RD also updated the program to include Section 514 properties and under Option 1, an exception for extending terms for imminent maturing mortgages has been added.
For other news and information affecting the affordable rural housing industry, please visit the Newsroom on CARH’s website, www.carh.org.