Paving A Smoother Road to Permanent Financing

What to Keep in Mind BEFORE Conversion

Conversion to permanent financing usually starts when construction is about 80% complete and may take 6 months. What happens during the construction phase can significantly impact the conversion timeline. To minimize delays and problems:

Expand All Collapse All

Clear all violations as early as possible, especially lead, FDNY, DOB, and other C violations

Lingering violations (including any DOB, ECB or FDNY violations or orders) will cause delays, drive up costs, and impact a project's ability to convert.
Pay special attention to lead violations prior to and during construction. If you don't remove lead according to legally mandated protocols and provide the necessary documentation, you may not be able to remove the violation and convert (even if you can later certify there is no lead).
Also pay attention to FDNY violations, which can be difficult to clear. Check the FDNY owner portal and start working on the violation early in the process.
Violations issued as of the date of closing must be cleared before conversion.
- Many lenders will not convert with C violations and HPD will not waive C violations
Learn more about violation removal
Learn more about lead violation removal

Get things started with HPD Conversions

Reach out to Conversions loanconversions@hpd.nyc.gov when you are about 80% complete to begin the conversion. Notifying HPD when this threshold is met is a sponsor responsibility, no matter who is taking the lead on permanent conversion.
Once HPD is contacted and determines that the project is on track to convert, HPD will then schedule a kick-off meeting to go through the details and timeline.

Rent restructuring

If you expect rents will be restructured as part of a rehabilitation loan, you must have appropriate riders in all applicable leases and obtain tenant signatures. The process cannot start until leases contain the appropriate riders. You should start including riders in renewal leases the day after you close.
If some of the tenants will be offered preferential rents or the opportunity to apply for Section 8 vouchers you must submit an owner certified rent roll, with tenant incomes, to Conversions for review.

Section 610 authorization

Section 610 of the Private Housing Finance Law allows owners of affordable housing projects with tenant- or project-based rental assistance to collect the full rental subsidy amount, even if it is above the legal rent, without affecting the amount the tenant has to pay.
If you are applying for 610 authorization you will need to execute an amendment to the regulatory agreement.
You must also have appropriate 610 riders in leases. To start collecting higher rents, leases must contain the appropriate riders, a request is made to the rent subsidy administrator and approved.
More information on Section 610 procedures is available at: 610-regulatory-agreement.pdf (nyc.gov)

Obtain HPD Certificate of Completion (for City-owned properties)

If your project is on City-owned property that has a Land Disposition Agreement (LDA) with HPD, contact the HPD Legal Department to request an LDA Checklist and start the process for obtaining a Certificate of Completion as soon as possible, as the process can take time.
Part of the LDA process requires a post-construction inspection by HPD's Division of Building and Land Development Services team, which will require additional lead time based on the findings of the inspection.

Don't move anyone without checking with us first

Keep everyone posted

Get your tax exemptions, benefits and bills in order

Tax exemptions and/or benefits must be finalized in order to convert financing. It is your responsibility to complete all tax exemption and benefit applications. Applications should be submitted right away after closing.
All municipal balances (taxes, water, and sewer) must be current and any arrears must be paid off prior to conversion.
If you will contest liens, do so early to avoid having to escrow those amounts at closing.

Work with HPD/HDC Marketing to fill vacant units and homeless set-asides

All projects have a marketing requirement; specifics vary by project size and type.
Contact HPD or HDC Marketing at least 7 months before occupancy to meet and confirm your project's requirements and procedures. Units cannot be leased up outside this process.
The current Marketing Handbook, attachments, and sample Notice of Intent are available on the Marketing page
If you have a homeless requirement you must fill vacancies through HPD's Homeless Placement Unit. This applies to all projects with a homeless set-aside, not just those that are being marketed.

Become a Section 8 Expert

Get the timing right on rent increases for rent restructured projects

Developers/management companies must play an active role in the Section 8 application process. You will lead the way in reaching out to tenants and coordinating (and assisting with) their applications if Section 8 is being made available to your project. HPD will help facilitate the process and provide resources and materials.
Section 8 is subject to federal budget appropriations and tenant and unit eligibility. When available, it takes at least 4-6 months to process.
Efficiencies can be achieved with a building-wide approach, especially regarding inspections and rent approvals. HPD can work with you to streamline these steps.
If you tenant were offered housing choice vouchers as part of the project's rehabilitation or relocation plan, Conversions may be able to assist. Contact Conversions for more information.
More information can be found at: Section 8 Owners - HPD (nyc.gov)

Contacts

Acting Director of Conversions
William Dunn 212-863-6118
dunnw@hpd.nyc.gov

Rental Assistance Applications
Jessica Pellot 212-863-7043
pellotj@hpd.nyc.gov