A project funded for acquisition, rehabilitation or new construction operates as homeless housing for 15 years under a recorded Declaration of Restrictive Covenants, with repayment before 10

coc.affordability_period.fifteen_year_operation_and_repayment_on_early_conversion · v1.0.0

All recipients and subrecipients receiving grant funds for acquisition, rehabilitation or new construction must operate the housing or provide the supportive services in accordance with 24 CFR part 578 for AT LEAST 15 YEARS from the date of initial occupancy or initial service provision, and must execute and record a HUD-approved DECLARATION OF RESTRICTIVE COVENANTS before receiving payment of grant funds. A recipient may ask HUD to convert the project to the direct benefit of very low-income persons, but the request must be made while the project is still operating as homeless housing or services, must be in writing, and must explain why the project is no longer needed; the primary factor in HUD's decision is the unmet need in the Continuum's geographic area. If a project is not operated as transitional or permanent housing for 10 years following initial occupancy HUD will require repayment of the ENTIRE grant amount used for acquisition, rehabilitation or new construction unless a conversion was authorised, and beyond 10 years the repayment is reduced by 20 percentage points for each additional year. On any sale or disposition of a project site before the 15-year period the recipient must comply with terms HUD prescribes to prevent undue benefit, subject to four exceptions including one that turns on the portion of the project continuing to meet the tenant income and rent restrictions for low-income units under section 42(g) of the Internal Revenue Code. Projects receiving grant funds only for acquisition, rehabilitation or new construction must submit Annual Performance Reports for 15 years from initial occupancy or initial service provision.

Confidence

high

Effective from

2012-08-30

Consequence model

contract remedy

Last reviewed

2026-08-29