[Federal Register Volume 59, Number 13 (Thursday, January 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-1307]
[[Page Unknown]]
[Federal Register: January 20, 1994]
_______________________________________________________________________
Part VI
Department of
Housing and
Urban
Development
_______________________________________________________________________
Office of Assistant Secretary for Housing-Federal Housing Commissioner
_______________________________________________________________________
Notice of
Fund Availability for Section 8 Assistance Under the Loan
Management Set-Aside Program
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Housing-Federal Housing
Commissioner
[Docket No. N-94-3694; FR-3599-N-01]
Fund Availability for Section 8 Assistance Under the Loan
Management Set-Aside (LMSA) Program.
AGENCY: Office of the Assistant Secretary for Housing-Federal Housing
Commissioner, HUD.
ACTION: Notice of fund availability for Fiscal Year 1994.
-----------------------------------------------------------------------
SUMMARY: This Notice of Fund Availability (NOFA) announces HUD's
funding for new units of section 8 Loan Management Set-Aside (LMSA)
assistance. In the body of this document is information concerning the
following:
(a) The purpose of the NOFA and information regarding eligibility,
available LMSA assistance, and selection criteria;
(b) Application processing, including how to apply and how
selections will be made; and
(c) A checklist of steps and exhibits involved in the application
process.
DATES: Applications for consideration under the General LMSA Funding
procedures are due on or before March 7, 1994. If submitted on the
application deadline date, the completed application package must be
received by 4:00 PM (local time) in the HUD Field Office having
jurisdiction over the applicant project. The above-stated application
deadline is firm as to date and hour. In the interest of fairness to
all competing applicants, the Department will treat as ineligible for
consideration any application that is received after the deadline,
except for applications made under Emergency procedures described
below. Applicants should recognize this practice and submit materials
early to avoid loss of eligibility brought about by unanticipated
delays or other delivery-related problems. It is not sufficient for the
application to bear a postage date within the submission time period.
Applications must be submitted in an envelope, package, or binding
which includes all parts of the application in their entirety as they
are described in the Application Checklist Section of this NOFA.
Applications submitted by facsimile are not acceptable.
FOR FURTHER INFORMATION CONTACT: The Loan Management Branch in the
local HUD Field Office having jurisdiction over the project(s) in
question for application materials and project-specific guidance.
Policy questions of a general nature may be referred to the Director of
the Office of Housing in the HUD Regional Office having jurisdiction
over the project in question. These are listed as follows:
Region I, Boston, Ken Salk, (617) 565-5102
Region II, New York, Edwin Sprenger, (212) 264-4771
Region III, Philadelphia, Sidney Severe, (215) 597-2654
Region IV, Atlanta, Kenneth Williams, (404) 331-4127
Region V, Chicago, Michael Kulick, (312) 353-6950
Region VI, Ft. Worth, Robert Creech, (817) 885-5531
Region VII, Kansas City, Gerald F. Hayes, Jr. (913) 551-5504
Region VIII, Denver, Ronald Bailey, (303) 844-4959
Region IX, San Francisco, Keith Axtell, (415) 556-0796
Region X, Seattle, Diana Goodwin Shavey, (206) 220-5200
SUPPLEMENTARY INFORMATION:
Information Collection Requirements
The Office of Management and Budget has approved the Loan
Management Set-Aside Program under the provisions of the Paperwork
Reduction Act of 1980 (44 U.S.C. 3501-3520) and has assigned it OMB
control number 2502-0407.
I. Purpose and Substantive Description
(a) Authority
The Loan Management Set-Aside (``LMSA'') program provides special
allocations of Housing Assistance Payments (``HAP'') under Section 8 of
the United States Housing Act of 1937, 42 U.S.C. 1437f. Title 24 of the
Code of Federal Regulations, Part 886, Subpart A sets forth rules for
administration of the LMSA program. Matters addressed in the LMSA
regulation include:
(1) Application contents (Sec. 886.105);
(2) Requirements for HUD approval of applications (Sec. 886.107);
(3) Owner responsibilities under the program (Sec. 886.119); and
(4) Rules governing Federal preferences in the selection of tenants
(Sec. 886.132).
(b) Purpose
The primary purpose of the LMSA program is to reduce claims on the
Department's insurance fund by aiding those FHA-insured or Secretary-
held projects with presently or potentially serious financial
difficulties. First priority is given to insured projects with
presently or potentially serious financial problems which are likely to
result in a claim on the insurance fund in the near future. To the
extent that resources remain available, assistance also may be provided
to HUD-Held and section 202 projects with present or potentially
serious financial problems which, on the basis of financial and/or
management analysis, appear to have a high probability of producing
within approximately the next five years either a claim on the
insurance fund or a loss of direct loan investment in the case of a
section 202 loan.
(c) Allocation Amounts
This Notice of Funding Availability (NOFA) announces availability
of up to $104 million from Fiscal Year 1994 section 8 LMSA program
funds for purposes of avoiding claims on the Department's insurance
fund. HUD is distributing funds under this NOFA to its ten Regional
Offices on the basis of a formula allocation. The formula takes into
consideration recent requests for assistance, assignments, and
potentially eligible projects in each Region.
LMSA funds available under this NOFA are distributed as denoted
below.
------------------------------------------------------------------------
HUD region Allocation
------------------------------------------------------------------------
Region I.................................................. $8,835,060
Region II................................................. 4,507,491
Region III................................................ 21,603,346
Region IV................................................. 21,282,394
Region V.................................................. 20,462,492
Region VI................................................. 9,137,675
Region VII................................................ 3,522,971
Region VIII............................................... 1,537,367
Region IX................................................. 12,071,082
Region X.................................................. 971,126
------------------------------------------------------------------------
The Regional Offices will make awards under this NOFA in accordance
with the selection criteria and procedures described herein.
Pursuant to this Notice, HUD is accepting applications for
assistance under the LMSA program from owners of FHA-insured or
Secretary-held multifamily projects with presently or potentially
serious financial difficulties. All LMSA assistance awarded from these
Fiscal Year 1994 program funds will have a term of five years, with no
contractual provision for renewal of the contract at the end of the
five-year term. This NOFA does not govern non-competitive assistance
awards under the section 8 LMSA program pursuant to specific regulatory
authority (e.g., LMSA assistance as a prepayment plan of action
incentive under Sec. 248.231(e) or such assistance under
Sec. 219.325(b)(4) to alleviate the effect of rent increases resulting
from debt service on capital improvement loans).
(d) Eligibility
Projects eligible for LMSA assistance include: (1) Any existing
subsidized or unsubsidized multifamily residential project subject to a
mortgage insured under any section of the National Housing Act; (2) any
such project subject to a mortgage that has been assigned to the
Secretary; (3) any such mortgage acquired by the Secretary and
thereafter sold under a Secretary-held purchase money mortgage; and (4)
a project for the elderly financed under section 202 of the Housing Act
of 1959 (except projects receiving assistance under 24 CFR part 885 or
part 889). References to HUD-Held or Secretary-Held projects throughout
this Notice include any project which meets one of the descriptions in
(2)-(4) above.
Owners meeting these criteria who applied for assistance in a prior
year but did not receive the desired number of units are eligible to
reapply under this NOFA. The FY 1994 application must contain current
information and conform to all requirements outlined in this notice.
(e) Selection Criteria/Ranking Factors
(1) Application Review: Each application for assistance under the
LMSA program will be reviewed by the HUD Field Office having
jurisdiction over the project in question. Within 10 days of receipt of
each application involving more than 12 units, the HUD Field Office
will notify the chief executive of the unit of general local government
in which the project is located and provide the opportunity for non-
binding comments on the application (see 24 CFR 886.106 and 24 CFR part
791). These comments will be considered by the Field Office in
determining whether the application meets regulatory approval
requirements in section 886.107 and described in detail in HUD Handbook
4350.2 REV-1. The Field Office's review of the application will be
based on the following determinations:
(i) HUD's Fair Housing requirements (24 CFR 886.107(a) and 886.114)
are met;
(ii) The HUD-approved unit rents are approvable within the
limitations described in Sec. 886.110, which are based on HUD's Fair
Market Rents;
(iii) The residential units meet the housing quality standards set
forth in Sec. 886.113, except for such variations as HUD may approve;
(iv) A significant number of residents, or potential residents in
the case of projects having a vacancy rate over 10 percent, are
eligible for and in need of section 8 assistance;
(v) The proposed section 8 assistance would not affect other HUD-
related multifamily housing within the same neighborhood in a
substantially adverse manner. Examples of such adverse effects are
substantial move-outs from nearby HUD-related multifamily housing, or
substantial diversion of prospective applicants from such projects to
the subject project;
(vi) The project has serious current financial problems, which are
likely to result in a claim on the insurance fund in the near future,
or the project has potentially serious financial problems which, on the
basis of financial and/or management analysis, appear to have a high
probability of producing a claim on the insurance fund within
approximately the next five years. Current audited financial statements
will be utilized in the determination of project financial position.
Project owners who have not submitted audited annual financial
statements within 60 days of the end of the project fiscal year or by
the deadline of the extension (if one has been granted) are not in
compliance with the Regulatory Agreement. Since the assignment to a
priority category, as well as scoring and ranking (if required within
priority category), cannot be properly performed without current
financial data, a project will be rejected on this basis. The only
exception to this procedure is one in which the Field Office has
granted an indefinite extension due to the inability of the project to
cover the expense of the preparation of the audited statements.
Required data must be available from Field Office sources prior to
scoring and ranking.
(vii) The proposed section 8 assistance for the project would solve
an identifiable problem and provide a reasonable assurance of long-term
project viability. A determination of long-term viability must be based
on the following findings:
(A) The project is not subject to any serious problems that are
non-economic in nature. Examples of such problems are poor location,
structural deficiencies or disinterested ownership;
(B) The owner is in substantial compliance with the Regulatory
Agreement. Owners have not or are not diverting project funds for
personal use. No dividends have been paid during any period of
financial difficulty;
(C) The current management agent has been approved by HUD and is in
substantial compliance with the management agreement. Financial records
are adequately kept. Occupancy requirements are being met. Marketing
and maintenance programs are being carried out in an adequate manner,
based upon available financial resources;
(D) The project's problems are primarily the result of factors
beyond the control of the present ownership and management;
(E) The major problems are traceable to an inadequate cash flow;
(F) The proposed Section 8 assistance would solve the cash flow
problem by:
(1) Making it possible to grant needed rent increases; and
(2) Reducing turnover, vacancies and collection losses;
(G) The owner's plan for remedying any deferred maintenance,
financial problems, or other problems is realistic and achievable;
there is positive evidence that the owner will carry out the plan.
Examples of such evidence are the owner's past performance in
correcting problems and, in the case of profit-motivated owners, any
cash contributions made to correct project problems.
(viii) For projects with a history of financial default, financial
difficulties or deferred maintenance, any plan for remedying defaulted
or deferred obligations submitted pursuant to Sec. 886.105(d) must be
adequate in HUD's determination.
In its review of an application, the HUD Field Office will consider
recent physical inspections, management reviews, and tenant complaints
and comments. If there is no report of a detailed HUD physical
inspection conducted by either the mortgagee, HUD, or a third-party
contractor of HUD dated within one year of the date an application for
LMSA assistance is received in the reviewing office and containing a
description and estimated cost of required repairs, the HUD Field
Office will schedule a physical inspection and Housing Quality
Standards (HQS) inspection in conjunction with its review and approval
of the application for LMSA assistance. Execution of a subsidy contract
in such case will be contingent upon satisfactory modification of the
owner's plan to include solutions for all additional problems
discovered in the scheduled review(s).
After HUD Field Offices have determined which applications meet
LMSA program requirements, the projects which are both eligible for,
and in need of, new or additional LMSA assistance shall be reported to
the appropriate Regional Office for further consideration under the
competitive selection procedures outlined in this Notice. Projects
awarded subsidy from Fiscal Year 1994 LMSA program funds shall be
selected in accordance with ``general'' or ``emergency'' procedures as
described below. If an application can be approved only on certain
conditions, the HUD Field Office will notify the owner of the
conditions and specify a time limit by which those conditions must be
met. A project recommended for a conditional approval may be reported
to the Regional Office by the HUD Field Office for further processing
under procedures set forth below; however, execution of an LMSA
contract for any units which may be allocated to the project in the
Regional process, will be contingent upon the owner's compliance with
the approval conditions. If the HUD Field Office concludes that an
application will not meet LMSA program requirements, processing of the
application is discontinued, and the applicant will be notified by the
Field Office as soon as possible of the reasons for disapproval.
(2) General LMSA Funding Round:
(i) Annual needs survey:
Fiscal Year 1994 general funding awards will be made from projects
recommended by HUD Field Offices to their Regional Offices in response
to the Fiscal Year 1994 Annual Needs Survey. The Field Offices' needs
survey responses will be forwarded to Regional Offices after the due
date announced in this Notice for program applications. HUD Field
Office staff shall determine and report the minimum number of LMSA
units needed to cure each project's vacancy and cash flow problems,
subject to limitations as described below.
(ii) Limitations on Units:
(A) An allocation may not exceed the difference between total units
in the project and the number of units already assisted under project-
based tenant subsidy contracts (project-based section 8 subprograms,
Rent Supplement and Rental Assistance Payments).
(B) Total project-based section 8 assistance for projects with
unsubsidized mortgages is limited to 40 percent of total units in the
project. If the respective HUD Field Office determines that a project
with an unsubsidized mortgage needs section 8 assistance above the 40
percent level, or if the project was developed as a retirement service
center, a recommendation by the Field Office will be subject to further
review by the Regional Office in a process similar to the review of
applications submitted under the emergency procedures described in
paragraph (3) below. In all such cases, the Field Office's
justification for LMSA units must document that project management has
an aggressive and workable plan in place for leasing the market rate
units in the project. A project is considered unsubsidized for the
purpose of LMSA funding selections if the HUD mortgage is unsubsidized.
The definition of subsidized project for purposes of section 203 of the
Housing and Community Development Amendments of 1978, which includes
projects with over 50 percent of total units assisted under certain
section 8 subprograms, pertains to management and disposition of
projects which have been acquired by HUD and is not applicable to
projects eligible for LMSA assistance.
(iii) Determination of Priority Category:
HUD Field Offices will include in their needs survey reports, data
needed by the Regional Offices to classify approved projects into six
priority categories and to establish a funding score for each project.
Fiscal Year 1994 LMSA funds will be allocated in the following
order of priority:
(A) Insured projects with presently serious financial problems
likely to result in a mortgage insurance claim in the near future;
(B) Insured projects with potentially serious financial problems
which appear to have a high probability of producing a mortgage
insurance claim within approximately the next five years;
(C) HUD-held and section 202 projects with presently serious
financial problems likely to result in a loss of loan investment within
the near future; and
(D) HUD-held and section 202 projects with potentially serious
financial problems which appear to have a high probability of producing
a loss of loan investment within approximately the next five years.
The Department of Housing and Urban Development never intended to
provide relief in the form of Loan Management Set Aside assistance for
Retirement Service Centers (RESC) or formerly coinsured projects.
However, it is recognized that if LMSA assistance could be made
available for those types of projects some additional claims on the FHA
Fund might be avoided. Accordingly, the following priority categories
of eligible projects are included, once again, in FY 1994:
(E) Insured Retirement Service Centers and insured formerly
coinsured projects (i.e., projects whose mortgages have been converted
from coinsurance to full insurance), with presently serious financial
problems likely to result in a mortgage insurance claim in the near
future.
(F) HUD-held Retirement Service Centers and HUD-held formerly
coinsured projects with presently serious financial problems.
(iv) Determining the ``presently serious'' classification:
For purposes of determining classification, HUD will consider a
project to have ``presently serious financial problems'' if both of the
following two financial ratios are less than zero:
Income/Expense Ratio, defined as follows:
(Net Income or Loss Before Depreciation LESS Annual Debt Service
and Reserve Payments) Times 100 Divided by: Total Annual Cost of
Operating the Project
and,
Ratio of Surplus Cash (or Deficiency) to Monthly Mortgage Payment,
defined as follows:
Total Cash LESS Total Current Obligations Divided by: Total Monthly
Mortgage Payment
A negative income/expense ratio occurs when there was a net loss
during the period or when net income before depreciation was less than
annual debt service plus reserve payments. The project did not generate
sufficient cash flow from operations in the previous year to cover its
cash requirements, suggesting cash flow difficulties which were
possibly severe and, if left unresolved, are likely to result in
financial problems in the current year. Comparison to the total cost of
operating the project provides an indication of the seriousness of any
negative cash flow, since the size of the problem generally varies
directly with the absolute value of the ratio.
The second ratio approximates the project's Mortgage Payment
Coverage Ratio and is negative when there is a cash deficiency, i.e.,
the surplus cash calculation is less than zero. A cash deficiency means
that cash available to the project at the end of the period, including
any subsidy vouchers due for the period, is less than the amount needed
to cover current obligations. A cash deficiency points to a severe
liquidity problem since the project cannot even meet its past
obligations without some form of relief. Calculation of the ratio of
surplus cash (deficiency) to the total mortgage payment provides an
indication of the project's ability to make the next mortgage payment
after past obligations are met, without depending upon the next month's
rent collections.
The two ratios defined above will be calculated using financial
data contained in the project's most recent annual audited financial
statement submitted to the Field Office in accordance with the
Regulatory Agreement (see par. (e)(1)(vi.), in conjunction with monthly
accounting reports. A result of zero or less on the two ratios suggests
that the project has a current financial problem. These ratios were
selected because they provide a straightforward means of identifying
projects with cash flow difficulties. Projects with either ratio in the
positive range may be added to Category A for insured projects or
Category C for HUD-held projects based on written justifications by HUD
Field Offices documenting appropriate circumstances. For example, a
substantial increase in vacancies in recent months may warrant
elevating the project's priority category. The justifications will be
reviewed by the Regional Housing Director, who will resolve any issues
with the respective Field Offices and approve, or disapprove, the
change in priority.
(v) Determination of Ranking Within Priority Category
The number of projects which can be funded from Fiscal Year 1994
resources will depend upon the units and budget authority designated in
Field Office recommendations. If LMSA program funds are available to
fund some, but not all of the projects in a given priority category
(after funding all projects in higher priority categories), any project
selections from the given category will follow from a ranking of
projects within that category using a funding score. A maximum score of
115 points (110 points for HUD-held projects) may be accumulated on the
basis of the following project characteristics and maximum point
potentials:
(A) Occupancy--25 points.
Calculation: No. of occupied units Divided by Total units in the
project. Lower values yield higher points.
(B) Owner advances or contributions since October 1, 1990-- 25
points.
Calculation: Total of owner advances or contributions during the
period Divided by Total Units in the project. Larger values yield
higher points.
(C) Tenants paying in excess of 40 percent of their income for
rent--15 points.
Calculation: No. of units occupied by tenants paying over 40
percent of their income for rent Divided by Total units in the project.
Larger values yield higher points.
(D) Income/Expense Ratio--15 points.
Calculation: As defined above. Smaller values yield higher points.
(E) Ratio of Surplus Cash (Deficiency) to Total Monthly Mortgage
Payment--15 points.
Calculation: As defined above. Smaller values yield higher points.
(F) For HUD-insured projects only, Mortgage balance per dollar of
additional subsidy--5 points.
Calculation: Mortgage principal balance Divided By Proposed LMSA
annual contract authority. Larger values yield higher points.
(G) Resident Initiatives--15 points.
Evidence in the form of a contract, or other written commitment, to
transfer title to the property to a resident organization, cooperative
association, non-profit entity, public body including an
instrumentality thereof, public housing agency or Indian Housing
Authority, for the purpose of resident ownership or management of the
project.
(vi) LMSA/Flexible Subsidy Program Coordination
Pursuant to section 405(f) of the Housing and Community Development
Act of 1992 (Pub. L. 102-550), assistance under this NOFA will be
coordinated with assistance made available under the NOFA for the
Flexible Subsidy Program. Projects seeking assistance under both
programs will be reviewed to evaluate the effect on cash flow and
ability to fund repair items from the increased operating income. By
taking into account all funding sources, HUD can determine whether the
infusion of Flexible Subsidy assistance together with the LMSA
represents the appropriate solution for project stabilization.
(vii) Funding for Selected Projects
If the Regional Office confirms that all program requirements have
been met and selects the project for funding, notification of a general
funding award will be made through the HUD Field Office. If an
application can be approved only on certain conditions, HUD will notify
the owner of the conditions and specify a time limit by which those
conditions must be met. Disapproved applicants will also be notified
with a statement of the grounds for disapproval.
(3) Emergency LMSA Funding
Up to five percent of the LMSA funds announced in this Notice may
be made available to fund projects recommended by the respective HUD
Field Office subsequent to the Annual Needs Survey reporting deadline
for the general funding round. After this deadline, only emergency
requests will be accepted. In all cases governed by these emergency
procedures, consideration will be given to the extent that sufficient
resources are available.
To qualify for emergency LMSA assistance, the project must be
Insured with presently serious financial problems (as described in
paragraph (2)(iii) above), and must meet one of the conditions listed
below:
(i) The applications (or corrections to the applications) were
received too late by the Field Office to be included in the Annual
Needs Survey.
(ii) Projects were recommended by the Field Office during this
general funding round, but were not approved by the Regional Office or
did not score a sufficient number of points in the ranking process.
All application and Field Office review procedures pertaining to
the LMSA program will be followed for emergency recommendations. In
addition, an emergency recommendation must have a full written
justification signed by the Field Office Manager. HUD Field Offices are
required to demonstrate that provision of the proposed LMSA units is
likely to avert a mortgage default or assignment in the near future,
and the request to the Regional Office will explain why funds are
needed on an emergency basis. The Region will not consider any
emergency funding request which does not have written justification
signed by the Manager.
The Region will review Field Office justifications and will
determine whether provision of LMSA units is an appropriate response to
the circumstances documented by HUD Field staff. If an emergency
request is approved, notification of the subsidy award will be made
through the HUD Field Office.
II. Application Process
(a) Completed applications must be submitted to the HUD Field
Office having jurisdiction over the multifamily property for which
assistance is requested. Application kits containing copies of required
HUD forms and Notices are available from HUD Field Offices.
(b) For consideration under the General LMSA Funding procedures set
forth previously in this Notice, a completed LMSA application must be
received in the Field Office on or before 4 p.m. March 7, 1994.
Applications received after this deadline will be considered for LMSA
assistance only if the Secretary determines that such assistance is
needed immediately in response to emergency circumstances and only to
the extent that sufficient Fiscal Year 1994 LMSA budget authority
remains to satisfy the subsidy requirement.
III. Checklist of Application Submission Requirements
(a) LMSA applications must meet the requirements set forth in
section 886.105 of the LMSA regulations and HUD Handbook 4350.2 REV-1
(6/92). All requirements have been incorporated into form HUD-52530,
Application for Loan Management Set-Aside, Section 8 Program, and the
ancillary forms cited therein. The application form can be reproduced
from appendix 1 of Handbook 4350.2. Regulatory requirements are cited
below.
(1) Information on gross income, family size and amount of rent
paid to the project by families currently in residence;
(2) Information on vacancies and turnover;
(3) Total number of units by unit size (by bedroom count) for which
section 8 assistance is requested;
(4) Affirmative Fair Housing Marketing Plan on Form HUD-935.2.
(5) Estimate of effect of the availability of the requested section
8 LMSA assistance on marketability of units in the project;
(6) For projects having a history of financial default, financial
difficulties or deferred maintenance, a plan and a schedule for
remedying such defaulted or deferred obligations. To be credible, the
owner must clearly state each problem being addressed and enumerate
proposed actions for curing each problem. Proposed actions must be
presented in trackable form, with the specific dates that each action
would begin and end if the requested LMSA subsidy were awarded.
(7) A Statement of the Sources and Uses of all financial resources
needed to complete the plan, including any cash contributions from the
owner. Please note: If Low Income Housing Tax Credits have been or are
planned for this project, a special Sources and Uses format is
required. See Item 11 below.
(8) Since HUD's approval must be based in part on evidence that the
plan will be carried out, certification by the owner that the plan will
be executed as presented and that sources of funds identified in the
plan, other than the LMSA assistance applied for, will be available by
the scheduled dates (any conditions must be stated, e.g. ``subject to
HUD approval of Flexible Subsidy'').
(9) Certification by the owner that every effort has been made to
secure funding from all possible funding sources; supporting
documentation of those efforts must be attached.
(10) Certification by the owner that he/she agrees to modify the
plan, prior to execution of an LMSA contract, for the purpose of
including any changes which the HUD Field Office determines are
necessary to address problems not identified or inadequately addressed
in the plan, as indicated by recent HUD physical inspections,
management reviews or records of tenant complaints and comments, or by
HUD physical inspections and/or management reviews which may be
scheduled in conjunction with review of the LMSA application. Changes
required by HUD may also include requirements for carrying out Resident
Initiatives activities where it is determined that it could be
beneficial to the management of the project.
(11) All documentation needed to conduct a subsidy layering review
as required by HUD Notice 90-17, ``Combining Low-Income Housing Tax
Credits (LIHTC) with HUD Programs'', and by the Notice of
administrative guidelines to be applied to assistance programs of the
Office of Housing published on April 9, 1991 (56 FR 14436). The
Department is obligated by law to reduce the amount of assistance it
will provide if the review discloses a certain level of excess. These
may include the Sources and Uses Statement which can be reproduced from
appendix F of HUD Handbook 4350.1, REV-1, Insured Project Servicing;
evidence of issuance of tax credits from the State Housing Finance
Agency; the terms and conditions for all mortgages (interest rates,
etc.), and Income and Expense Statement (Statement of Profit/Loss Form
HUD-92410).
(12) Form HUD-2880, Applicant/Recipient Disclosure/Update Report,
as required under subpart C of 24 CFR part 12, Accountability in the
Provision of HUD Assistance.
(13) Disclosures and verification requirements for Social Security
and Employer Identification Numbers, as required by 24 CFR part 750.
(14) Certification and disclosure according to HUD Notice H-90-27
entitled ``OMB's Guidance on New Government-wide Restrictions on
Lobbying'' issued April 13, 1990.
(15) Form HUD-2530, Previous Participation Certificate(s) for all
principals (including management agents) requiring clearance under
those procedures.
(16) A certification stating that the owner will comply with the
provisions of the Fair Housing Act, Title VI of the Civil Rights Act of
1964, Executive Orders 11063 and 11246, section 504 of the
Rehabilitation Act of 1973, the Age Discrimination Act of 1975, section
3 of the Housing and Urban Development Act of 1968, as well as with all
regulations issued pursuant to these authorities.
(17) Certification that the applicant will comply with the Uniform
Relocation Assistance and Real Property Acquisition Policies Act of
1970, as amended, (URA), implementing regulations at 49 CFR part 24,
and HUD Handbook 1378, Tenant Assistance, Relocation and Real Property
Acquisition.
(18) Anti-lobbying Certification for contracts, grants, loans and
cooperative agreements for grants exceeding $100,000; and Disclosure of
Lobbying Activities (SF-LLL), if applicable. Standard Form-LLL is
required if funds other than federally appropriated funds will be or
have been used to lobby the Executive or Legislative branches of the
Federal government regarding specific contracts, grants, loans or
cooperative agreements.
IV. Corrections to Deficient Applications
(a) After the submission date for applications, no owner-initiated
changes to application documents will be accepted, except for
correction of curable technical deficiencies which do not alter the
substance of the application materials. Curable technical deficiencies
are items that are not necessary for HUD review under the selection
criteria (e.g., failure to submit a required certification). Applicants
may not submit items that would improve the substantive quality of the
application after the application deadline.
(b) HUD will notify an applicant in writing, shortly after the
application response deadline, of any curable technical deficiencies in
the application. The applicant must submit corrections to the Field
Office within 14 calendar days from the date of HUD's letter notifying
the applicant of any such deficiency. The applicant must submit the
corrected document(s) with a separate written summary of all changes
from the original submission.
V. Other Matters
(a) HUD regulations in 24 CFR part 50, implementing section
102(2)(C) of the National Environmental Policy Act of 1969, contain
categorical exclusions from their requirements for the actions,
activities, and programs specified in Sec. 50.20. Since the activities
set forth in this Notice are within the exclusion set forth in
Sec. 50.20(d), no environmental assessment is required, and no
environmental finding has been prepared.
(b) Executive Order 12612, Federalism. The General Counsel, as the
Designated Official under section 6(a) of Executive Order 12612,
Federalism, has determined that this NOFA does not have ``federalism
implications'' because it does not have substantial direct effects on
the States (including their political subdivisions), or on the
distribution of power and responsibilities among the various levels of
government.
(c) Executive Order 12606, the Family. The General Counsel, as the
Designated Official under Executive Order 12606, the Family, has
determined that this NOFA does not have potential significant impact on
family formation, maintenance, and general well-being.
(d) Section 13 of the Department of Housing and Urban Development
Act contains two provisions dealing with efforts to influence HUD's
decisions with respect to financial assistance. The first imposes
disclosure requirements on those who are typically involved in these
efforts--those who pay others to influence the award of assistance or
the taking of a management action by the Department and those who are
paid to provide the influence. The second restricts the payment of fees
to those who are paid to influence the award of HUD assistance, if the
fees are tied to the number of housing units received or are based on
the amount of assistance received, or if they are contingent upon the
receipt of assistance.
Section 13 was implemented by final rule published in the Federal
Register on May 17, 1991 (56 FR 22912). If readers are involved in any
efforts to influence the Department in these ways, they are urged to
read the final rule at 24 CFR part 86, particularly the examples
contained in appendix A of the rule.
Any questions regarding the rule should be directed to the Office
of Ethics, room 2158, Department of Housing and Urban Development, 451
Seventh Street, SW., Washington, DC 20410. Telephone: (202) 708-3815;
TDD: (202) 708-1112. (These are not toll-free numbers.) Forms necessary
for compliance with the rule may be obtained from the local HUD office.
(e) Section 103 of the HUD Reform Act. HUD's regulation
implementing Section 103 of the Department of Housing and Urban
Development Reform Act of 1989 (42 U.S.C. 3537a) was published May 13,
1991 (56 FR 22088) and became effective on June 12, 1991. That
regulation, codified as 24 CFR part 4, applies to the funding
competition announced today. The requirements of the rule continue to
apply until the announcement of the selection of successful applicants.
HUD employees involved in the review of applications and in the
making of funding decisions are restrained by part 4 from providing
advance information to any person (other than an authorized employee of
HUD) concerning funding decisions, or from otherwise giving any
applicant an unfair competitive advantage. Persons who apply for
assistance in this competition should confine their inquiries to the
subject areas permitted under 24 CFR part 4.
Applicants who have questions should contact the HUD Office of
Ethics (202) 708-3815. (This is not a toll-free number.) The Office of
Ethics can provide information of a general nature to HUD employees, as
well. However, a HUD employee who has specific program questions, such
as whether particular subject matter can be discussed with persons
outside the Department, should contact his or her Regional or Field
Office Counsel, or Headquarters counsel for the program to which the
question pertains.
(f) Accountability in the Provision of HUD Assistance--Section 102
of the HUD Reform Act. HUD has promulgated a final rule to implement
section 102 of the Department of Housing and Urban Development Reform
Act of 1989 (HUD Reform Act) The final rule is codified at 24 CFR part
12. Section 102 contains a number of provisions that are designed to
ensure greater accountability and integrity in the provision of certain
types of assistance administered by HUD. On January 14, HUD published
at 57 FR 1942, additional information that gave the public including
applicants for, and recipients of, HUD assistance) further information
on the implementation, public access, and disclosure requirements of
section 102. The documentation, public access, and disclosure
requirements of section 102 are applicable to assistance awarded under
this NOFA as follows:
(1) Documentation and public access. HUD will ensure that
documentation and other information regarding each application
submitted pursuant to this NOFA are sufficient to indicate the basis
upon which assistance was provided or denied. This material, including
any letters of support, will be made available for public inspection
for a five-year period beginning not less than 30 days after the award
of the assistance. Material will be made available in accordance with
the Freedom of Information Act (5 U.S.C. 552) and HUD's implementing
regulations at 24 CFR part 15. In addition, HUD will include the
recipients of assistance pursuant to this NOFA in its quarterly Federal
Register notice of all recipients of HUD assistance awarded on a
competitive basis. (See 24 CFR 12.14(a) and 12.16(b), and the notice
published in the Federal Register on January 16, 1992 (57 FR 1942), for
further information on these requirements.)
(2) Disclosures. HUD will make available to the public for five
years all applicant disclosure reports (HUD Form 2880) submitted in
connection with this NOFA. Update reports (also Form 2880) will be made
available along with the applicant disclosure reports, but in no case
for a period less than three years. All reports--both applicant
disclosures and updates--will be made available in accordance with the
Freedom of Information Act (5 U.S.C. 552) and HUD's implementing
regulations at 24 CFR part 15. (See 24 CFR subpart C, and the notice
published in the Federal Register on January 16, 1992 (57 FR 1942), for
further information on these disclosure requirements.)
(3) Subsidy-layering determinations. 24 CFR 12.52 requires HUD to
certify that the amount of HUD assistance is not more than is necessary
to make the assisted activity feasible after taking account of other
government assistance. HUD will make the decision with respect to each
certification available to the public free of charge, for a three-year
period. (See the notice published in the Federal Register on January
16, 1992 (57 FR 1942) for further information on requesting these
decisions.) Additional information about applications, HUD
certifications, and assistance adjustments, both before assistance is
provided or subsequently, are to be made under the Freedom of
Information Act (24 CFR part 15).
(g) The Byrd Amendment. Prohibition Against Lobbying Activities.
The use of funds awarded under this NOFA is subject to the disclosure
requirements and prohibitions of Section 319 of the Department of
Interior and Related Agencies Appropriations Act for Fiscal Year 1990
(31 U.S.C. 1352) (the ``Byrd Amendment'') and the implementing
regulations at 24 CFR part 87. These authorities prohibit recipients of
Federal contracts, grants, or loans from using appropriated funds for
lobbying the Executive or Legislative branches of the Federal
government in connection with a specific contract, grant, or loan. The
prohibition also covers the awarding of contracts, grants, cooperative
agreements, or loans unless the recipient has made an acceptable
certification regarding lobbying. Under 24 CFR part 87, applicants,
recipients, and subrecipients of assistance exceeding $100,000 must
certify that no Federal funds have been or will be spent on lobbying
activities in connection with the assistance.
Required Reporting
A certification is required at the time application for funds is
made that Federally appropriated funds are not being or have not been
used in violation of section 319 and that disclosure will be made of
payments for lobbying with other than Federally appropriated funds.
Also there is a standard disclosure form, SF-LLL, ``Disclosure Form to
Report Lobbying'', which must be used to disclose lobbying with other
than Federally appropriated funds.
Authority: Section 8 of the United States Housing Act of 1937,
42 U.S.C. 1437f.
Dated: January 10, 1994.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 94-1307 Filed 1-19-94; 8:45 am]
BILLING CODE 4210-27-P