Housing Authority forms Convent Hill 202 Holdings entity, appoints initial directors to hold HUD Section 202 units

The Housing Authority moved on Dec. 10 to create a new instrumentality—Convent Hill 202 Holdings Inc.—to hold a group of units financed under HUD’s Section 202 program while the loans remain outstanding, and it adopted a resolution to appoint the entity’s initial board of directors.

Tom Gartner of the law firm Michael Best told commissioners that federal HUD rules for Section 202-financed units require an owner that is not the public housing authority while the loan remains in place. Because Friends of Housing (the prior owner) is dissolving and had outstanding audit and HUD compliance matters, the authority proposed forming an instrumentality that meets HUD’s requirements and will hold title to the 35 units until HUD approves the transfer and the loan is satisfied.

Gartner said HUD required the holding entity to have a seven-member board so it can hold organizational meetings and elect officers. He noted there remain outstanding HUD compliance and audit items related to Friends of Housing that are still being addressed; staff said the 2023 audit is nearly complete and the housing authority is preparing the 2024 audit.

Commissioners asked whether the new entity would create liability for the authority and whether Friends of Housing with only two remaining board members can legally act; counsel said the new entity is intended not to create liability for HACM, and that Friends of Housing could act with two members but losing one more member could prevent action — underlying audit approvals by HUD remain the gating item.

After discussion, the board adopted the resolution to appoint the initial directors for Convent Hill 202 Holdings Inc. by roll-call vote.

Representative quote: "The benefit for this approach is that it gives the housing authority a little bit more control of the long term future of those units," Tom Gartner said.