[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]
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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