SS-ResidentalFacilityManagementandPropertyDisposition.pdf

THIS IS A SOURCES SOUGHT NOTICE/REQUEST FOR INFORMATION (RFI)

ONLY. This is not a request for offers, quotes or proposals. This notice does not represent a commitment by the Government to issue a solicitation or award a contract. This is a market research tool only to determine the capability of potential sources.

The Department of Housing and Urban Development (HUD) is contemplating establishing a contract under NAICS Code 541611 (Administrative Management and General Management

Consulting Services), and the Small Business Size Standard is $15.0 million, PSC Code R410

(SUPPORT- PROFESSIONAL: PROGRAM EVALUATION/REVIEW/DEVELOPMENT),

for assistance with HUD’s Office of Healthcare Programs (OHP) for the Management, Claims

Processing and Property Disposition of Residential Care Facilities and is issuing this Sources

Sought notice in order to solicit responses from capable sources and capability statements to ensure sufficient competition exists to meet the government’s requirements.

Teaming arrangements and joint ventures will be considered for any subsequent procurement based on the Government's market research, provided that the prime contract is awarded to an applicable small business and that small businesses provide fifty percent or more of the support.

Please review the General Description of Work and provide any questions or feedback to

Meishoma Hayes at Meishoma.A.Hayes@hud.gov with subject line: Residential Facility

Management and Property Disposition Sources Sought question/feedback.

So, what exactly is HUD contemplating acquiring?

BACKGROUND

This is a new requirement.

GENERAL DESCRIPTION OF WORK

Firms must demonstrate the ability to provide technical assistance to HUD’s Office of

Healthcare Programs in six key areas, as described below:

AREA ONE: Surveillance and Monitoring of Potentially Troubled and Troubled

Residential Healthcare Facilities

Create dashboard reporting for Office of Healthcare Program management. Provide underwriting and valuation support to review values and performance of residential care facilities that are troubled and potentially troubled. Provide residential care appraisal reports based on capitalization of net operating income. Perform on-site reviews of insured residential care facilities that are troubled and potentially troubled.

AREA TWO: Processing Healthcare Claims

Function: Support in processing claims for FHA-insured residential care facilities

Background: When a fully insured mortgage is in default, the mortgagee has the option of foreclosing the loan and conveying the title to HUD or assigning the mortgage to HUD. Once the mortgagee has made its election, HUD processes the claim for insurance benefits making sure that the mortgagee has met all its obligations and has properly supported its claim. After the mortgagee has assigned the mortgage to HUD, the mortgagee's servicing responsibilities cease.

HUD establishes a servicing program and undertakes the collection functions formerly performed by the mortgagee.

Account Executives administer servicing activities immediately upon assignment of the note or in many cases before assignment, such as requiring the owner to submit monthly accounting reports. However, for a period of 3-4 months or longer, HUD processes the claim made by the lender/servicer. Significant steps in the claim processing include:

• receipt of fiscal data package from mortgagee; this must be submitted within 45 days after the date of assignment for final processing and payment of claim, although two 15-day extensions are allowed;

• contractor review of fiscal data (approximately 30 days);

• simultaneous Office of General Counsel (OGC) clearance; and

• final review by the Claims Branch staff (approximately five days).

AREA THREE: Receivership

Function: Managing the Receiver for FHA-insured residential care facilities

Background: The receivership process typically begins when a commercial property owner stops making mortgage payments. The lender submits a petition to the court to appoint a receiver either prior to an action to foreclose or concurrently with the foreclosure. The court-appointed receiver is then responsible for managing the property until the foreclosure is complete. Once appointed, the receiver can:

• manage existing leases or enter into new leases

• collect all rental income

• maintain the property by arranging for repairs and maintenance

• secure the property to protect it from vandalism or damage by tenants

• obtain insurance and pay taxes

• take control of the bank account associated with the commercial property, and

• sell the property, with the court’s permission and if the lender, borrower, and any junior lienholders consent

AREA FOUR: Foreclosure

Function: Managing foreclosure for FHA-insured residential care facilities

Background: Commercial foreclosures are, in most cases, very similar to residential foreclosures. The foreclosure may be nonjudicial or judicial depending on the state where the property is located and what the loan documents dictate.

• With both nonjudicial and judicial commercial foreclosures, the process starts when the borrower defaults on the mortgage. A default occurs when the borrower falls behind in payments or fails to do something that the loan documents require, such as maintaining hazard insurance on the property.

• After the default, the lender may accelerate, or call due, the outstanding balance on the loan. Typically, the lender must first send a breach letter to the borrower that outlines the reason for default and gives a time frame during which the borrower may cure the default and avoid acceleration. Usually, the amount of time given to cure a default is thirty days, but this can vary depending on the terms of the mortgage.

• Once the time period expires, if the borrower has not cured the default, then the lender may commence foreclosure proceedings.

AREA FIVE: Asset Sales

Function: Managing asset sales for FHA-insured residential care facilities

Background: Asset sales transactions are used to mitigate asset-related risk, obtain free-cash flows, for liquidation requirements, and other reasons. At HUD, Asset Sales coordinates the disposition of defaulted FHA-held single family, multifamily, and healthcare mortgage notes.

• Under the Debt Collection Improvement Act of 1996, credit agencies with $100 million in loan assets are expected to sell certain delinquent loans.

• The asset sales program provides another disposition option for defaulted FHA notes to the conveyance claim process that requires foreclosure on the borrower and the sale of the acquired property.

• The Healthcare Loan Sale program is intended to reduce claim costs, minimize the holding costs of defaulted healthcare facilities, and maximize recoveries to the FHA insurance fund.

AREA SIX: Accounts Receivable Lender

Function: Managing Accounts Receivable Lender for FHA-insured residential care facilities

Background: Accounts Receivable (AR) Financing is a working capital loan secured by

Medicare, Medicaid, other governmental healthcare insurance program receivables, and private pay and commercial insurance receivables. Many healthcare facilities need this type of financing to make up for delays in timing of reimbursements to ensure continuity of operations. However, the AR lender has a first lien on this account, which is pivotal because they then have access to repay themselves from the accounts before the funds may be used for any other purposes (e.g.

mortgage payments, payroll, operating expenses, etc.).

• Government Healthcare Receivables (Medicare, Medicaid, VA) are paid into an account controlled via a Deposit Account Instructions and Service Agreement (DAISA), which is executed by the project, the AR lender, and the bank.

• The above receivables are then swept daily into another account that also receives private pay and commercial insurance receivables—this account is controlled via a Deposit

Account Control Agreement (DACA) and executed by the same three parties.

• All funds are then also swept daily into a concentration account.

• HUD and the FHA lender are not parties to the DACA and DAISA forms, but due to their involvement with the projects and underlying mortgages, an Intercreditor Agreement

(ICA) is then executed to further regulate the cash flow and ensure proper usage, as well as set forth responsibilities and requirements in the event of a default. This ICA is to be executed by the AR lender, FHA lender, Owner, Operator, and Master Tenant.

CONTEMPLATED MAGNITUDE OF THE PROJECT

$3 to $5 Million Dollars

CONTEMPLATED PLACE OF PERFORMANCE

Performance will be at the contractor’s location and potentially residential care facilities.

RESPONSE REQUESTED

Small Businesses are encouraged to respond.

This synopsis is a market research tool being used to determine the availability and capability of potential sources prior to determining the method of acquisition and whether the government will proceed with this acquisition. The Government will not pay for any information solicited. If a contract is ultimately pursued, responses to this synopsis will be used to aid in determining whether the acquisition is set-aside for small business or in establishing small business subcontracting goals. All qualified firms are encouraged to respond.

The capability statement shall address, at a minimum, the following for the past three years:

1. Name and address of company and or companies (if there is a teaming arrangement or joint venture);

2. Technical expertise relevant to the requirement;

3. Technical approach relevant of the requirement (1 to 2 paragraphs);

4. Management approach relevant to the requirement (1 to 2 paragraph);

5. Corporate experience relevant to the requirement (1 to 2 paragraph);

6. Indicate if you are a small business or any other socio-economic categories that apply to your firm under the designated NAICS code;

7. Whether you have had unequal access to any information relevant to the acquisition that could provide an unfair competitive advantage;

8. Relevant past performance. Your capability statement needs to include a list of three customers (Government/non-Government) within the past three (3) years highlighting similar work in nature, scope, complexity, and difficulty and a brief description of the scope of work. Your submission for relevant past performance must include for each customer:

• Contract name;

• Contracting Agency or Department, POC and contact information;

• Yearly contract value (in $$);

• Whether your firm was the prime or a subcontractor;

• Period of performance;

• Description of work and how it relates to the requirements.

9. Relevant skills and experience

• A minimum of 15 years of nursing home administration experience with a strong working knowledge of relevant local, state and federal regulation.

• A minimum of 10 years of FHA Section 232 insured experience in underwriting, closing, valuing and/or asset management of residential healthcare projects.

• A minimum of $500 million dollars of senior housing and skilled nursing loan workout experience supported by actual past loan workout examples

• A minimum of $500 million of senior housing and skilled nursing asset management and loan surveillance experience supported by actual examples

• A minimum of $500 million of senior housing and skilled nursing underwriting experience with FHA section 232 insured facilities.

• A minimum of $500 million of senior housing and skilled nursing underwriting expertise with specialization in senior care families across the entire core continuum – independent living, assisted living and skilled nursing.

Interested firms responding to this market survey must provide a capability statement demonstrating their experience, skills and capability to fulfill the Governments requirements as described above. The capability statement shall be in sufficient enough detail, but not exceed 5 pages TOTAL, so that the Government can determine the experience and capability of your firm to provide the requirements above. Please specify one primary and one alternate Point of

Contact (POC) within your firm, including telephone numbers and email addresses in case clarifications of your submission are needed.

Only electronic copies of capability statements will be accepted and should be emailed to

Meishoma.A.Hayes@hud.gov. The e-mail shall contain the following subject line: Response to

Sources Sought Notice – OHP Management and Property Disposition Requirement. The

Government may use the responses received to determine whether to proceed with the acquisition as a set-aside, or in the absence of a least two small business responses to this notice, may determine to proceed with a full and open competition. This decision and whether to proceed with the acquisition is at the sole discretion of the Government.

All interested contractors should submit their capability statements by 5:00 PM Eastern Daylight

Time on Wednesday, July 25, 2018, attention POC Meishoma Hayes. Late responses will not be considered.