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The fruits of our labor: telling HUD’s story of proactive engagement, one partner at a time
[Author, HUD Nebraska Field Office Director Kitty Amaya, worked with federal partners at the regional U.S. Department of Health and Human Services and HUD program office experts to help improve the financial position of several Omaha-based senior housing properties.]
Author, HUD Nebraska Field Office Director Kitty Amaya, worked with federal partners at the regional U.S. Department of Health and Human Services and HUD program office experts to help improve the financial position of several Omaha-based senior housing properties.

One benefit of federal interagency collaboration is that it builds and strengthens coalitions, so when called to act, partners are better prepared to address community needs holistically. In April of 2023, HUD and the U.S. Department of Health and Human Services (HHS), collaborated to help a North Omaha-based church, navigate some financial concerns at a HUD Section 202 assisted property it helped sponsor the development of in the past. Under Section 202, a sponsor is the non-profit entity that provides the pledge of support and experience that assists a separate owner-entity in the construction of the units and that organizes the supportive services that benefit and empower the tenants. HHS’s Regional Director Joseph Palm, to whom the church made its initial contact about their financial concerns, contacted HUD’s Nebraska Field Office Director, Kitty A. Amaya, to address the matter as a resident expert on housing and the 202 program.

So what was the problem exactly?

The city of Omaha allows various property tax waivers for eligible entities. This helps non-profit and mission-oriented organizations to lower the cost of building and operating affordable housing. However, its tax waiver policy does not always cover Section 202 assisted properties like the church in question, when they are not operating as a non-profit, as defined by local ordinance. Because the church in this instance was not exempt from local taxes, it took action to pay more than $10,000 in annual property taxes on the project - for three years and totaling $30,000 – out of its own church funds. Why? Because the Section 202 property was operating with more expenses and lower revenue due to such things as higher repair expenses, property insurance, and other normal operating costs. Not helping the property to stay solvent would put the safety and security of elderly adults at-risk of losing their home and sense of community.

As a bit of background, to create a Section 202 property, HUD provides interest-free capital advances to private, nonprofit sponsors to finance the development of supportive housing for the elderly. Those funds are then loaned to separate eligible ownership-entities that build, repair and operate the property. The capital advance does not have to be repaid if the project serves very low-income elderly persons for 40 years. Some of the benefits of Section 202 are that newly developed housing is provided to very low-income elderly persons and there is an accompanying rental subsidy contract that helps provide options for independently aging-in-place but in an environment that provides support activities such as cleaning, cooking, and transportation.

How was the problem solved?

Leaning on her many years of experience in the industry at HUD and in local housing administration, Director Amaya contacted HUD’s Office of Housing that oversees the Section 202 program, to discuss collaboration opportunities and ways to address the affordability concerns of the property. Director Amaya, along with Charles Miller, a branch chief in the Office of Housing’s Multifamily Southwest Region, convened a meeting with four local Section 202 church sponsors in Omaha and their respective management company to discuss operational and budgetary concerns.

During the meeting, Miller provided an overview of asset management options, including:

  • allowable program expenses, includes local taxes; and
  • emphasized how the owner of the property and management company could stabilize operations and bolster monthly financial reserves in a sustainable but responsible manner.

The training on how to incorporate local tax payments in the property rental expenses and how to make budget-based rental increase requests to HUD, was to the benefit of all the sponsors involved. The technical assistance provided by HUD’s Office of Housing resulted in an increase in the rental assistance per unit in the Housing Assistance Payment (HAP) contracts used by Section 202 owners working in North Omaha. While this was an operational improvement for the owners and their respective management companies, it was an even better outcome for the tenants. Had the sponsors and the property owners not worked with HUD to properly integrate local taxes into the rental subsidy contract, the tenants may have had to absorb some of that cost through higher rents. Instead, tenants continue to have an affordable and quality living situation, and the property is operating with a sustainable budget.

The technical assistance that HUD provided to these Section 202 properties in North Omaha has fortified them with valuable information and the federal partner relationship between HUD and HHS was deepened by working together to unpack and cure a difficult and unstainable situation.

Like any good story, one hopes for a happy ending. In this case, the originally impacted church reported to HHS Director Palm their immense joy and appreciation for Director Amaya’s insight and willingness to leverage internal HUD relationships to ensure timely reductions in their organizational expenses. Moreover, the sponsor reported that the $30,000 in local taxes initially paid by the church on behalf of the property, has been returned.

At HUD, our Office of Field Policy and Management, represented by 80 Regional and Field Offices nationwide, is often the first door our partners go through to ask for assistance, but it is the concept of ONE-HUD and seamless federal interagency collaboration that turns a problem into a solution, and a solution into a great story.