[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: 94-1310]


[[Page Unknown]]

[Federal Register: January 20, 1994]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner
[Docket No. N-94-3695; FR-3525-N-02]

 

Multifamily Property Disposition; State Housing Finance Agency 
Demonstration Program

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner, HUD.

ACTION: Notice of demonstration program.

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SUMMARY: This notice announces the effective date of a demonstration 
program for the purpose of developing innovative methods for disposing 
of HUD-owned multifamily projects in a manner that furthers the 
Department's mission to provide decent and affordable housing, and to 
do so in a cost effective manner. The notice also responds to the 
public comments received on a previous notice announcing the program, 
which was published for comment on September 16, 1993 (58 FR 48528). 
Under the demonstration, HUD will enter into agreements with State 
housing finance agencies (SHFAs) to undertake the responsibility for 
the management and disposition of a limited number of HUD-owned 
projects. The results of the demonstration are expected to show 
innovative and cost effective solutions to the problem of the growing 
inventory of distressed multifamily housing, and will help the 
Department determine whether to utilize SHFAs, on a permanent basis, in 
its property disposition program.

EFFECTIVE DATE: January 20, 1994.

FOR FURTHER INFORMATION CONTACT: Audrey Hinton, Deputy Director, Office 
of Multifamily Housing Preservation and Property Disposition, 
Department of Housing and Urban Development, 451 Seventh Street SW., 
Washington, DC 20410; telephone (202) 708-3555; TDD (202) 708-4594. 
(These are not toll free numbers.)

SUPPLEMENTARY INFORMATION:

I. Background and Response to Public Comments

    On September 16, 1993, HUD published a notice announcing a 
demonstration for the development of innovative methods for disposing 
of HUD-owned multifamily projects through agreements with State housing 
finance agencies (SHFAs) for the management and disposition of the 
projects. Readers are invited to refer to the September 16, 1993 notice 
for the full requirements of the program.
    Under the provisions of section 470(a) of the Housing and Urban-
Rural Recovery Act of 1983, the Department was required to invite 
public comments on the demonstration before making it effective. During 
the public comment period, which expired on October 18, 1993, HUD 
received five comments, from a citizens organization in Massachusetts, 
the National Council of State Housing Agencies, the Massachusetts 
Housing Finance Agency, the Washington State Department of Community 
Development, and an individual.
    The citizens organization stated a concern about the lack of a 
requirement for citizen participation in any transfer process, as well 
as a lack of adequate assurance that properties sold under the 
demonstration would remain affordable subsequent to the transfer.
    Citizen, or community, participation has never been a statutory or 
regulatory requirement in connection with the sale of multifamily 
properties by HUD. HUD regulations at 24 CFR part 290, which govern the 
disposition of multifamily properties, do require notice to the 
residents of the properties and an opportunity for their participation 
in the decisionmaking process regarding the sale of the property in 
which they reside. (24 CFR 290.100 and 290.102.) These regulations will 
apply to the disposition of properties under this demonstration. SHFA 
resident and community relations is one of the basic criteria upon 
which decisions of participation in the demonstration program are to be 
made.
    With respect to the organization's concerns regarding continued 
affordability, participants in the demonstration program must comply 
with all relevant statutory requirements. With respect to statutory 
requirements for the disposition of HUD-owned multifamily properties, 
section 203 of the Housing and Community Development Amendments of 
1978, as amended, requires that continued affordability by low- and 
moderate-income families be a condition of the sale of any subsidized 
HUD-owned multifamily property, and in general, of any unsubsidized 
project for units occupied by income eligible tenants. Under this 
demonstration program, the assurances of continued affordability to 
low- and moderate-income families, for the same period of time, are the 
same as if HUD were conducting the dispositions. Since the result is 
the same, regardless of the disposing party, the Department does not 
believe any changes to the demonstration requirements are necessary.
    The comment from the National Council of State Housing Agencies 
stated that FHA insurance and project-based Section 8 assistance are 
necessary to the success of the program. The Department notes that the 
demonstration program does not preclude the use of FHA insurance and 
project-based Section 8 assistance. Further, it is HUD's position that 
the opportunity to explore and utilize other options for assistance is 
also not precluded.
    The Council also suggested that HFAs may be able to assist HUD by 
helping restructure troubled projects in HUD's portfolio before 
foreclosure or sale by HUD, and suggested that HUD consider the 
possibility of HFAs acquiring mortgages, at a discount, to facilitate 
workouts or refundings.
    Section 203(h)(3) of the Housing and Community Development 
Amendments of 1978, as amended, provides that the Secretary may carry 
out negotiated sales of subsidized or formerly subsidized mortgages 
held by the Secretary, without the competitive selection of purchasers 
or intermediaries, to agencies of State or local governments, or groups 
of investors that include at least one such agency, if the negotiations 
are conducted with such agencies. Sometime in the near future, HUD 
intends to ascertain State and local government interest in purchasing 
HUD-held mortgages and will consider offering mortgages for sale to 
interested governments on a negotiated basis.
    The Council also recommended that HUD consider giving participating 
HFAs exclusive prior notice of the availability of potential properties 
before making this information available to other entities. Section 
203(e) of the Housing and Community Development Amendments of 1978, as 
amended, and HUD regulations at 24 CFR 290.109 provide for a right of 
first refusal to units of local government and SHFAs for HUD-owned 
rental housing projects, except in the case of a negotiated sale to a 
State or local government.
    The Washington Department of Community Development expressed 
concern about limiting participation to State HFAs, and recommended 
that any housing agency sponsored or funded by a state government be 
allowed to propose creative solutions that build on experiences, 
expertise, and willingness to help preserve this source of housing 
stock.
    The Department appreciates the comment, but believes that the 
demonstration should be limited to SHFAs principally because their 
common experience includes housing development, management, and 
financing. While there might be other agencies and entities with the 
same expertise, HUD prefers at this time not to have to promulgate 
broad participant requirements and spend staff resources on judging 
capabilities of disparate entities.
    The individual commenter suggested that all agreements between HUD 
and SHFAs participating in the demonstration program should include a 
requirement that a significant number of job training and/or 
apprenticeship opportunities be provided first for interested residents 
and then community members, and that there be some mechanism for 
monitoring by HUD.
    HUD supports SHFAs that have goals for participation by minority 
business enterprises (MBEs), and believes they are sufficient for 
providing opportunities to both community members and residents. A 
large number of specialized skills will be needed to manage these 
properties and to make them, and their communities, better places to 
live. The Department is concerned that including MBE participation as a 
condition would result in so few SHFAs participating that the goals of 
the demonstration would not be realized.
    The comment from the Massachusetts HFA was not directed to the 
demonstration, but rather to the concerns raised in the comment from 
the citizens organization. Consequently, the comment does not require a 
response.

II. Invitation for Proposals

    The demonstration requirements are unchanged from the September 16 
notice. Upon publication of this notice, the Department will enter into 
discussions with or accept proposals from SHFAs that desire to 
participate in the demonstration, in accordance with the requirements 
in the September 16 notice.

III. Other Matters

    Any information collections that may be required under this 
demonstration program will not add any additional burden than that 
already approved for the multifamily property disposition program by 
the Office of Management and Budget under the Paperwork Reduction Act.
    A Finding of No Significant Impact with respect to the environment 
was made, in accordance with HUD regulations at 24 CFR part 50 
implementing section 102(2)(C) of the National Environmental Policy Act 
of 1969, prior to publication of the September 16 notice. The Finding 
is available for public inspection between 7:30 a.m. and 5.30 p.m. 
weekdays in the Office of the Rules Docket Clerk, Office of the General 
Counsel, Department of Housing and Urban Development, room 10276, 451 
Seventh Street SW., Washington, DC 20410.
    The General Counsel, as the designated official under Executive 
Order 12612, Federalism, finds that this demonstration program will not 
have a substantial, direct effect on the States or on the relationship 
between the Federal government and the States, or on the distribution 
of power or responsibilities among the various levels of government. 
Any terms and conditions imposed by HUD on States that may acquire 
projects under the demonstration will be statutory requirements under 
section 203 of the Housing and Community Development Amendments of 
1978. Such requirements will be clearly the intent of Congress, and 
therefore no further review is necessary or appropriate.
    HUD has determined that this demonstration will not have a 
significant impact on family formation, maintenance, and general well-
being within the meaning of Executive Order 12606, The Family, because 
it does not affect the eligibility of families for admission into 
multifamily housing projects that may be disposed of under the 
demonstration.

    Dated: January 6, 1994.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 94-1310 Filed 1-19-94; 8:45 am]
BILLING CODE 4210-27-P