HUD 232 Assisted Living Project
THE SITUATION:
Congress was brought in by the HUD lender to provide Construction Management and Pre-Construction Services for this proposed AL/ALZ HUD 232 Construction Project that had the following challenges:
- Absence of a team approach to transparently share information about cost, design and scope alternatives
- Absence of adequate cost information for the lender to underwrite the project effectively
- Lack of clear understanding by the project team of the budget targets and their effect on construction financing, equity requirements, and appraisal information
- A rising construction cost environment
- Limited experience by the owners of the HUD 232 product, mechanics and process, and the absence of in-house development staff
These and related challenges required solid strategic planning and a knowledgeable process and schedule on the part of Congress and the HUD lender.
THE ASSIGNMENT:
The lender asked Congress to manage the project and develop solutions to the challenges listed above in order to bring the project to a buildable and financeable condition, and then build it. This was the construction of a 41,800 SF addition to an existing Assisted Living facility. The addition would more than triple the existing Assisted Living space in an award-winning Senior Care Community.
THE PROGRAM:
Congress conducted a series of meetings with the owner to help clarify their project goals. This planning process allowed the contractor and the architect to make a series of well-informed value engineering and “right scope” project decisions. Congress also worked closely with the owner, the HUD lender and the appraiser to make sure that a clear understanding of the project’s attributes resulted in an accurate appraisal, to optimize the HUD loan.
Congress and the HUD lender worked closely with the owner to navigate the HUD processing queue and the underwriting lead time required to close the loan. With a transparent, team approach Congress was able to deliver a financeable and buildable project to upgrade and expand this Assisted Living facility. Adequate contingencies for rising construction costs, changes in Davis-Bacon Prevailing Wages, and unforeseen conditions were included as part of the overall plan.
THE FINAL RESULT:
The best possible loan structure was obtained in the HUD 232 Loan, owner’s equity was optimized and the project was completed as budgeted, meeting project milestones for completion on schedule.
THE CONGRESS DIFFERENCE:
- Leadership and transparent team work with the owners and other stakeholders. Expertise in working closely with the lender and the design team to meet the owner’s project goals.
- Value-added knowledge and experience to address owner’s goals, business needs, construction scope and budget, within the lender’s parameters, to optimize the outcome of this project.