Replacement Reserves

Owners of housing developments with CHFA Multifamily Mortgages or other CHFA-administered financing must follow CHFA's procedures for obtaining reimbursements from their Reserve for Replacement Escrows. In general, withdrawals are subject to CHFA approval and must relate to eligible expenditures for capital improvements or repairs.

CHFA-financed housing developments must have been occupied for at least five (5) years before they are eligible to apply for reimbursements from their Reserve Escrows. HUD-insured developments are required to follow HUD policies and procedures pertaining to escrow disbursements.

Pre-approval is required for an escrow withdrawal for a purchase or contract that exceeds $25,000. Requests for pre-approval are submitted (to a development's Asset Manager) on CHFA form HM 6-21 - Escrow Release Pre-Approval (see Escrow Disbursement Forms Workbook) as a cover sheet, and must be accompanied by the following supporting documentation:

• Three (3) comparable quotations from third-party contractors
• A statement of need
• A detailed description of work needed to be performed
• An anticipated time schedule for completion
• Owner/Agent Signature

Owner and Management Agents must submit a request to release funds from their development's escrow reserves, regardless of the sum being requested. These requests are submitted on form CHFA - HM-6-24 - Request to Release Escrow Funds (see Escrow Disbursement Forms Workbook). Requests to withdraw Reserve for Replacement funds from escrow are expected to range from two (2) times per year to the maximum of four (4) times per year. CHFA may deny or reduce a request if the funds in escrow are insufficient. Requests to release funds are submitted via email to rrdraws@chfa.org and to your Asset Manager. (See CHFA Asset Management Escrow Disbursement Policy for more details on the request for reimbursement process.)

Generally, a development is allowed to withdraw funds for expenditures related to non-routine major repairs or replacements.  (See CHFA form HM 6-22 - Replacement Reserve Descriptive Codes which is within the Escrow Disbursement Forms Workbook for a list of eligible expenditures.) CHFA has the discretion to make exceptions to this general rule on a case-by-case basis.

To assess the long-term capital needs of a development, CHFA may require the owner to commission a capital needs assessment from a qualified independent inspection firm, which is payable from a development's operating account.

HUD-insured developments must obtain pre-approval from HUD for any escrow reimbursements. However, CHFA approval is also required.  

Questions? Contact your CHFA Asset Manager.