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SECTION 202 AND SECTION 811- DEVELOPMENT TEAM REFERENCE GUIDE
For Project Development and Preservation

Richard Silverblatt Associates, Inc.

Firm Commitment (Application and Issuance)

Introduction to the Firm Commitment Application

The Fund Reservation Letter to each Sponsor establishes an allocation of Section 202 or Section 811 funds for project development as well as the allocation of operating subsidies to be available when the Project Rental Assistance Contract (PRAC) is executed. Funding has been awarded based upon a formula, keyed to the number and type of housing units to be developed.

A key purpose of the Firm Commitment application is for the Owner Corporation to present a comprehensive portrait of the proposed project which, if approved, results in the allocation of funds by HUD for project development and operations. The amount of HUD's funding will be based this time upon an analysis of working drawings, specifications and cost estimates.

Further, the Firm Commitment application includes documents regarding the proposed affirmative fair marketing of the project, how the project will be managed, legal documents regarding the establishment of the Owner corporation and required certifications by the Owner as well as by members of the Sponsor and Owner board of directors.

Additionally, the Firm Commitment will respond to conditions that HUD may have included in the Fund Reservation Letter to the Sponsor.

Firm Commitment Application Requirements and Activities

There are a number of steps that are required prior to the submission of the Firm Commitment application, to include the formation of an Owner corporation, submission of an appraisal of the project property, submission of documents for the housing consultant and, for projects involving substantial rehabilitation, a joint work write-up meeting at the proposed site(s). Use the link below for further information.

• Activities and Decisions Prior to Submission of Request for a Firm Commitment

Requirements for the Firm Commitment application to HUD for Section 202 and Section 811 projects are described in detail in HUD Notice H 2014-10.

See also New York Multifamily HUD-Notes on Section 202 Mixed Finace Projects if your project will include funding with Low Income Housing Tax Credits.

Links to the documents and exhibits for the Section 202 and Section 811 Firm Commitment application are listed below.

• Documents Required for the Section 202 and 811 Firm Commitment Application

• Checklist for Application Submission The Guide recommends this tool for use by the Sponsor to help identify possible discrepancies in certain exhibits. Click here fto view the form.

• State and Local Approvals. As the Development Team begins to prepare documents for the Firm Commitment application, planning should begin on identifying and addressing state and local matters that are to be completed prior to the HUD Initial Closing or later.

HUD Issues the Firm Commitment

Upon the completion of processing of the Firm Commitment application, HUD will issue to the owner the Firm Commitment and Form HUD-92264, Multifamily Summary Appraisal Report, and Form HUD-92264-A, Supplement to Project Analysis. This document will include the approved development budget during construction as well as the approved operating expense budget during occupancy. Note also the Additional Conditions which are appended to the Firm Commitment. A number of them may have to be addressed prior to the Initial Closing.

Financial Requirements for Closing (FRC)

In addition to the Firm Commitment and prior to the Initial Closing, HUD will prepare the Financial Requirements for Closing (FRC). Attached to the FRC will be HUD's Property Insurance Requirements, Form HUD-90164-CA, listing all the required insurances needed during the construction phase (see paragraph 4). In addition, HUD will provide the calculation of the total 100% insurable value of the project in the Temporary Property Insurance Schedule, FHA Form-2329, which is referenced in the required builder's risk insurance for the owner.

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