HUD 232 funding has traditionally been thought of as a product that is available strictly to licensed senior care facilities. However, a recent senior living deal in Florida may have opened the door for unlicensed facilities to access HUD funding, according to Cambridge Realty Capital chair Jeffrey Davis.

The Florida facility owner tapped into an existing but rarely-referenced statute of HUD 232 which states that applicants must “be in compliance with Section 1616(e) of the Social Security Act.” Section 1616(e), also known as the “Keys Amendment,” was added to the SSA in 1976. It was enacted to foster a higher standard of care in non-licensed facilities, particularly those in which a majority of residents received SSI benefits. Because its client fit the “board and care model” and complied with the Keys Amendment, the owner was able to obtain approval on its HUD loan application.

The facility is comprised of 128 licensed assisted living and memory care units, as well as more than 500 unlicensed independent living units.

Although the majority of the campus’s units were unlicensed, the owner was able to demonstrate that the 500-plus independent living units met the definition of a “board and care” facility, as defined by the US Department of Health and Human Services (Board and Care, 2009. claim was also bolstered by the fact that the average age of the facility’s residents was 87. Based on this, the owner was able to obtain a $94.3 million dollar loan at about 3.5% interest.

The rigid criteria for obtaining a HUD loan, the tedious application process and the historical perception that HUD loans are only for licensed facilities has largely discouraged unlicensed facility operators from considering HUD funding. This deal may change that perception and make the low-interest HUD loan look more favorable than traditional funding options to such operators.

When the HUD “Lean” application process was introduced in 2009, it made the HUD loan more attractive to non-profit and smaller operators. HUD Lean streamlined the application process and reduced processing times for applications, making the overall experience less daunting than it had been prior to 2009.

Davis thinks that this deal may set a new precedent that may attract other non-licensed senior facility owners to HUD funding. Non-licensed board and care facilities must provide annual proof of compliance with the Keys Amendment to the state in which it is located. “As long as a facility remains in compliance, can demonstrate that it is a board and care facility and meets all of the other HUD criteria, it appears that being unlicensed is no longer a barrier to HUD funding.”

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