In accordance with MHDC’s Operating Reserve Agreement, MHDC must approve all releases from the property’s Operating Reserve account maintained by MHDC. Operating Reserve Agreements are required by MHDC to assist the property in meeting their operating expenses over the life of the loan.
Operating Reserves are intended to cover operating expenses that cannot be paid by the property when experiencing a cash flow issue. Properties must be able to demonstrate that they are experiencing an operating shortfall in order for operating reserves to be used. Request for the use of Operating Reserve must be submitted online through the Asset Management Reporting System (AMRS) https://amrs.mhdc.com. MHDC will not accept mailed or emailed operating reserve requests.
Reserves for Replacements
MHDC maintains the reserve for replacement for projects funded by MHDC or HOME programs. MHDC also processes some reserve for replacement requests for some Section 8 projects that are a part of the MHDC/HUD risk share program. The Reserve Fund for Replacements was established to help ensure that the physical life of the buildings and structures would extend through the economic life of the project. It was not the original purpose of this Reserve Fund to provide for a complete, dollar for dollar, capability of replacing all the building structural components and equipment as these wear out, but rather to provide a readily available source of capital that will help defray these costs in the latter years of amortization of the mortgage note. All reserve for replacement requests must be submitted in the Asset Management Reporting System (AMRS). MHDC will not accept the Reserve for Replacement Mortgagor’s Certification in lieu of bids and invoices.