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State/Local Approvals

By the time the project is ready for Initial Closing at HUD, a building permit for the entire job from the project's municipality must be presented to the HUD closing attorney. In addition to HUD requirements spelled out in the Guide, sponsors and members of the development team must be mindful of non-HUD approvals relating to land use matters, such as zoning and site plan approvals, ULURP (in New York City), site selection (for certain Section 811 projects), disclosure forms on sponsor and owner board members and supportive services. Obtaining required local approvals can take considerable time. Understanding the tasks required and allowing sufficient time to obtain approvals is critical to being ready for the HUD closing.

New York City Projects

Sponsors of Section 202 and 811 projects in New York City should be in contact with the New York City Department of Housing Preservation and Development (HPD) in respect to the following items:

1. For Section 202, approval of the Certification of Incorporation of the Owner corporation, if HPD is named as the review agency in the certificate. An alternate is the New York State Division of Housing and Community Renewal (DHCR).

2. Review of disclosure forms for the sponsor and owner entity organizations and board members of the sponsor and owner.

3. HPD submits an application to the City Council on behalf of the owner corporation to obtain approval for the following:

Application to the City Council for approval of the sale of City-owned property to the owner corporation.

Application to the City Council for approval of real property tax exemption. Typically, for projects that involve the sale of City-owned sites, the City grants 100% property tax exemption during the construction period. At the time of the issuance of the temporary certificate of occupancy or permanent certificate of occupancy, whichever comes first, the owner is required to make payments to the City, in lieu of taxes, according to a schedule agreed to by HUD and the City. Payment under the schedule is known as 10% gross shelter rent.

4. For City-owned properties, issuance by the City of a Land Disposition Agreement. If applicable, this is a required document for the HUD Initial Closing.

It is recommended that the sponsor be in contact with HPD early on following the issuance of the fund reservation to review the specific steps that must be taken and required documents to be submitted.

ULURP

Projects that are on City-owned sites must undergo a review of the project by the local community board, Borough President, City Planning Commission and City Council under the Uniform Land Use Review Procedure, known as ULURP. This process can take at least seven months to complete and if there are other issues, such as environmental problems, concerns raised by the Landmarks Preservation Commission or zoning matters, for example, those items may have to be resolved before ULURP begins. If required, ULURP must be completed, and resolutions from the City Council cited above must be in hand before the HUD Initial Closing.

Section 811 Projects

A sponsor of a Section 811 projects forms an owner corporation under Article 75 of the New York State Mental Hygiene Law. Contact either the New York State Office of Mental Health or the New York Sate Office of Mental Retardation and Developmental Disabilities for guidance of review and approval procedures. If the project is in New York City, a resolution must be obtained from the City Council if it is on City-owned land and for tax abatement (see above). Some Section 811 projects must undergo local community review under the State's site selection process (the Padavan Law) and this must be completed prior to the Initial Closing at HUD. Following the issuance of the firm commitment and prior to the Initial Closing, HUD will require a letter from the appropriate state agency indicating whether an operating certificate will be issued and that any funds provided by the state will not duplicate HUD funding.