HUD Publishes Preservation Workbook and Recapitalization Spreadsheet

October 13, 2017

HUD’s Office of Recapitalization recently published two documents designed to support the exploration and decision-making that you’ll undertake to preserve your site. HUD’s Office of Recapitalization defines “preservation” in terms of three major goals—safeguarding long-term rental assistance for current and future generations; improving and modernizing sites; and stabilizing sites with solid financial footing. And it defines “recapitalization” as a preservation transaction that involves gaining new funds.

HUD’s Office of Recapitalization recently published two documents designed to support the exploration and decision-making that you’ll undertake to preserve your site. HUD’s Office of Recapitalization defines “preservation” in terms of three major goals—safeguarding long-term rental assistance for current and future generations; improving and modernizing sites; and stabilizing sites with solid financial footing. And it defines “recapitalization” as a preservation transaction that involves gaining new funds. For example, new funds can be obtained by refinancing the first mortgage loan; obtaining HOME Investment Partnerships Program funds, Community Development Block Grants (CDBGs), or State Housing Trust funds; or obtaining tax credit equity.

The published documents are intended for multifamily site owners with aging sites, a first mortgage loan that’s an inefficient use of the property’s cash flow, increasing major repair and replacement needs, and concerns about long-term affordability and long-term viability. Each chapter of the HUD Preservation Workbook: Successful Stewardship of Multifamily Housing Recapitalization has exercises and other resources designed to help owners identify issues and opportunities, develop a preservation plan, and do basic financial analyses to determine the viability of potential strategies. This document can be found at https://www.hudexchange.info/resource/5238/recapitalization-workbook.

The Workbook is meant to be used in tandem with the Recapitalization Excel Tool. The tool contains numerous spreadsheets into which the owner may enter baseline information about the property, its current Section 8 contracts and financing structure, financial performance, and physical condition. This information also helps the owner complete subsequent worksheets to determine what capital improvements the site might need and how to schedule these improvements, and ultimately shows what additional funding would be needed to preserve the site. This document can be found at https://www.hudexchange.info/resource/5239/recapitalization-excel-tool.

These documents together will help the owner answer questions about potential preservation strategies, such as how to finance capital improvements, whether the property needs new financing, and what level of rental assistance might be available to the property.

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