PRAC Task Force Update
Senior housing developments built with HUD Section 202 financing, that also have Project Rental Assistance Contracts (PRACs), are in a sort of financing limbo-- they cannot be refinanced through traditional mechanisms, yet they face growing capital needs and have increasingly stretched operating budgets. In many cases, restructuring rents would mean that the rents would be above market rates for many regions --which HUD takes great pains to avoid.
LeadingAge has formed a task force to study the subject and propose solutions that would work for 202/PRAC properties in different parts of the country. The task force, chaired by Cheryl Wickersham of United Church Homes (Marion, OH), met for the first time last week in Boston, during the LeadingAge Annual Meeting and Expo.
The group, which includes representatives of some of the largest nonprofit senior housing organizations in the country, was joined by Tom R. Davis, the director of the recently created HUD Office of Recapitalization.
Task force members have created several financial models, using actual examples of 202/PRAC properties in different areas. The affected properties vary widely. Some are functioning well with existing rents, and have modest capital needs. Others will require substantial reinvestment if they are survive well into the future.
There was broad agreement in the room that there will not be one solution. Fixing the PRAC dilemma will require creative solutions that will likely be as varied as the properties themselves.
The task force expects to finalize recommendations in the coming months. In the meantime, PRAC owner/operators in New York should be in contact with HUD representatives sooner rather than later to discuss options.
Contact: John Broderick, firstname.lastname@example.org, 518-867-8835