3.11.3.2 Meals Service Exceptions

A. By final rule published in 56 FR 42798, central kitchens and the provision of food services in elderly housing projects are prohibited under any rental housing section of the National Housing Act, including Sections 223(f) and 221(d)(4). The Regional Center or Satellite Office Director may approve refinancing transactions for properties, with meal services, in refinanced Section 202 and 202/8 direct loan properties, or properties with Project-Based rental assistance which are currently insured under other Sections of the Act, if and only if the all of the following are true:

1. Meals were provided before September 30, 1991 (the effective date of the regulation) and have been continuously provided since that date;

2. Meals are provided on an optional basis, or with no more than one mandatory meal per day;

3. Income and expenses from the meal service are not included in the underwriting of NOI, and

4. The cost of the meals program is self-sustained by the revenue it generates based on HUD’s review of the project’s financial statements.

B. Non-shelter spaces including formal dining areas with meal services for projects other than those with Project-Based rental assistance and a current Section 202 or HUD-insured loan are not eligible for multifamily mortgage insurance, even if they are provided to residents on an optional basis.