Capital Fund Financing Program (CFFP)


Under the Capital Fund Financing Program (CFFP), a PHA may borrow private capital to make improvements and pledge, subject to the availability of appropriations, a portion of its future year annual Capital Funds to make debt service payments for either a bond or conventional bank loan transaction.

PHAs may anticipate a review time generally between 60 and 90 days. The overall review timeline will depend upon the completeness of the Proposal and the responsiveness of the PHA team. Generally, PHAs should receive HUD comments on their initial submittal within 30 to 45 days. To the extent that a Proposal is approvable, approval should occur within 30 to 45 days after HUD?s comments are provided, depending upon the completeness of the initial submittal, and the responsiveness of the PHA team. To the extent that the approval of the CFFP is needed to meet deadlines associated with the use of the CFFP proceeds (such as a mixed finance transaction that uses LIHTCs that have carryover or PIS requirements), PHAs should be conservative in projecting HUD review timelines. PHAs are advised to allow for unforeseen issues that might present themselves during the review process and challenge the PHA team?s ability to resolve in a timely manner.

The loans or bonds are obligations of the PHA. HUD does not guarantee or insure these loans or bonds. The PHA obligation is subject to the availability of appropriations by Congress and compliance with statutory and regulatory requirements.

Written HUD approval is required for all Capital Fund financing transactions which pledge, encumber, or otherwise provide a security interest in public housing assets or other property, including Capital Funds, and use Capital Funds for the payment of debt service or other financing costs. In order to receive HUD approval, a PHA must submit a financing proposal that includes a term sheet, financial documents, and a justification for the use of Capital Funds for financing.

General guidelines for the CFFP program include:

  1. Approval - PHAs must request approval from the Deputy Assistant Secretary, Office of Public Housing Investments.

  2. CF Pledges - Generally no more than 33% of the PHA's current annual CF grant adjusted for any proposed or planned demolition or disposition or other activity that would result in a reduction of the PHA units count or otherwise reduce CFP Funds appropriated or available to the PHA such as a voluntary compliance agreement. All pledges are subject to the availability of appropriations. A PHA may pledge up to 100 percent of any projected replacement housing factor (RHF) grants for debt service payments, provided that not more than 50 percent of its overall projected Capital Fund grants (including formula funds and RHF funds) are pledged.

  3. Term - Generally, no more that 20 years.

  4. Public Housing Requirements - Since the proceeds from a CFFP transaction are generated via the pledge and use of Capital Funds, HUD considers CFFP Proceeds to be, for all intents and purposes, Capital Funds. PHAs pursuing any type of CFFP transaction must follow all statutory and regulatory requirements related to the Capital Fund Program in regard to the development and implementation of their CFFP Proposal. The financing is subject to mandatory prepayment prior to the obligation end date and expenditure end date of the CFFP proceeds to the extent necessary for the CFFP proceeds to comply with section 9(j) of the 1937 Act (42 U.S.C. 1437g(j)).

  5. Public Housing Assessment System (PHAS) Designation - Generally a PHA should be designated at least a Standard Performer under PHAS (24 CFR 902) and at least a standard performer on the financial and management indicators. HUD will consider request from troubled PHAS if they are able to demonstrate adequate management and financial capability and controls to successfully undertake it's CFFP.