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.

*** New Reserves for Replacement Procedure Changes ***

Effective January 1, 2008, all reserve for replacement requests will be required to be submitted on-line thru MHDC’s on-line system. Please log on to amrs.mhdc.com to submit your reserve for replacement request. The user name and password are the same as the user name and password used to access the budget and financial statement systems.

Building components generally tend to fall into two categories:

1. Eligible: Those items that are usually considered to be capital items and eligible for reimbursement from the Reserve Fund for Replacements to the extent of the availability of money in that account;

2. Ineligible: Those items that are usually considered to be routine maintenance items. As a guideline, repair/replacement expenditures that are generally capitalized may often be eligible for payment from a project's Reserve Fund, while those expenditures that are expensed are only occasionally eligible for payment from the Reserve Fund.

MHDC will no longer accept the Reserve for Replacement Mortgagor’s Certification in lieu of bids and invoices.

Management Resources: