[Federal Register Volume 59, Number 75 (Tuesday, April 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9392]


[[Page Unknown]]

[Federal Register: April 19, 1994]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Public and Indian Housing

24 CFR Part 941

[Docket No. R-94-1711; FR-3591-F-01]
RIN 2577-AB39

 

PHA Acquisition of Single Family HUD/VA/RTC Properties

AGENCY: Office of the Assistant Secretary for Public and Indian 
Housing, HUD.

ACTION: Final rule.

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SUMMARY: This rule revises existing regulations to expedite public 
housing agency (PHA) acquisition of single family properties (with or 
without rehabilitation) that are secured by an FHA-insured or HUD-held 
mortgage or owned by HUD, VA, or RTC by eliminating the requirements 
for approval by the Assistant Secretary and allowing Field Offices to 
exercise more discretion in determining the nature and scope of 
required technical reviews.

EFFECTIVE DATE: May 19, 1994.

FOR FURTHER INFORMATION CONTACT: Janice Rattley, Director, Office of 
Construction, Rehabilitation and Maintenance, Office of Public and 
Indian Housing, room 4138, 451 Seventh Street SW., Washington, DC 
20410, Telephone (202) 708-1800. A telecommunications device for speech 
and/or hearing impaired persons (TDD) is available at (202) 708-0850. 
(These are not toll-free telephone numbers.)

SUPPLEMENTARY INFORMATION: The current regulation for public housing 
development provides, in part, at 24 CFR 941.206(c), that PHA 
acquisition of properties (with or without rehabilitation) that are 
secured by an FHA-insured or HUD-held mortgage or are owned by HUD may 
not be approved, except with the prior written approval of the 
Assistant Secretary for Public and Indian Housing. This rule amends 
Sec. 941.206(c) by removing the requirement for prior approval by the 
Assistant Secretary and by adding properties owned by the Veterans 
Administration (VA) or the Resolution Trust Corporation (RTC) as 
eligible for acquisition under this section.
    This rule also streamlines the procedure for acquiring such 
properties by expanding the limited proposal procedure for scattered-
site projects to permit the PHA purchase of HUD/VA/RTC properties, any 
combination of such, and/or in combination with the purchase of 
eligible properties on the open market. The limited proposal procedure 
would be the same for any single family acquisition regardless of its 
ownership.
    This rule permits Field Offices to exercise more discretion in 
determining the nature and scope of required reviews. In order to 
enable a Field Office to have the ability to limit its reviews and 
expedite processing, the PHA is required to certify, either as part of 
its limited proposal or at the time the PHA identifies a property it 
wants to acquire and provides the proposed sales contract, that 
compliance with all necessary applicable requirements will be met: 
e.g.,
    (1) Prevailing wages;
    (2) Nondiscrimination requirements;
    (3) Site and neighborhood standards;
    (4) Intergovernmental review;
    (5) Accessibility requirements;
    (6) Relocation requirements;
    (7) Minimum Property Standards (MPS) or Housing Quality Standards 
(HQS);
    (8) If replacement housing under section 18 is involved, that the 
housing to be acquired is consistent with the replacement housing plan 
approved by HUD;
    (9) Generally, properties constructed prior to 1978 should not be 
considered; however, if a proposed property was built prior to 1978, 
that lead-based paint testing and the determination of the cost 
feasibility of abatement will be done before the transfer of title to 
and payment of funds by the PHA or the contract is null and void; and
    (10) Any other Federal requirements listed under 24 CFR 941.202 
through 941.209. These PHA certifications do not provide a basis for 
waiving or dispensing with the applicability of the aforementioned 
requirements, environmental assessments and other Federal requirements 
listed under 24 CFR 941.202 through 941.209.
    Based on the PHA's submission, including the certifications, each 
Field Office is allowed to decide, on its own discretion, whether or 
not to require the submission, technical review and approval of any 
further information. In order to expedite processing, the Field 
Office's Housing Specialist will distribute simultaneously to each of 
HUD's technical offices (in accordance with the recent reorganization 
at the Field Office level) the PHA's submission to determine as soon as 
possible if any technical reviews are necessary. The Field Office is 
responsible for performing the reviews to assure compliance with 
applicable requirements and development within the approved development 
cost limits, while at the same time keeping the number of technical 
reviews at a minimum. Under this rule, there is a target period of 50 
days from the time the PHA indicates it wants to acquire a specific 
property and when the Field Office approves or rejects the request; 
after approval notification, the PHA has an additional 10 day target 
period to close on the property. Properties involving extensive 
rehabilitation, lead-based paint testing and abatement, historic 
preservation requirements and/or an uncompleted environmental 
assessment, may require extension of the target date. The payment of 
Single Family Property Disposition (SFPD) customary extension fees is 
considered an eligible public housing development expense.
    The rule provides guidance on the factors that a Field Office is to 
consider in deciding whether or not to require additional submissions 
for review and approval. The Field Office is to take into account the 
total development cost of the proposed project, and the management and 
development capabilities of the PHA, including the PHA's performance 
rating under the Public Housing Management Assessment Program (PHMAP) 
at 24 CFR part 901. The Field Office can, at its own discretion, accept 
all PHA certifications that required compliances will be met, except 
the environmental assessment; by law, only HUD can certify compliance 
with 24 CFR part 50. If the Field Office is satisfied with the PHA 
submission, including its certifications, additional submissions and 
technical reviews will not be necessary.
    These changes to HUD's development review process are a part of the 
overall effort that the Department is undertaking to promote 
decentralization. More authority is entrusted to the Field Offices to 
exercise discretion with respect to the activities of PHAs that they 
deal with on a close and regular basis. PHAs are themselves empowered 
to act without the prior approval of the Assistant Secretary and with 
the potential for more informal consultations with the Field Office. 
The end result is anticipated to be a more streamlined and efficient 
property acquisition process.
    This rule further specifies that the limited proposal procedure 
under Sec. 941.404(n) for scattered site properties would also be 
followed for acquisition of HUD/VA/RTC properties. PHAs may identify 
such properties to consider for acquisition as described below in the 
succeeding paragraph. Section 941.404(n) is amended to include these 
properties within its scope, and to include the list of certifications 
discussed above. The unnumbered closing paragraph of Sec. 941.404(n) is 
revised to reflect the Department's streamlined review procedures.

Purchase of HUD-Owned Properties

    Acquisition by PHAs of HUD's single family acquired properties must 
routinely follow the established current procedures used by HUD's 
Division of Single Family Property Disposition (SFPD). This includes 
the process by which all other nonprofit organizations and government 
agencies purchase properties. After a PHA receives notice of property 
availability, the PHA has 5 days to indicate interest and then an 
additional 15 days to submit a signed sales contract. Upon execution of 
the contract by SFPD, the PHA will close the sale within the Field 
Office closing timeframe, generally 30-60 days. During this remaining 
period, all regulatory and statutory regulations must be met by the PHA 
before the transfer of title to and payment of funds by the PHA or the 
contract is null and void.
    HUD would like to expedite sales to PHAs and encourages PHAs to 
contact the Director of Housing Management in the HUD field office 
having jurisdiction over the area in which the PHA has authority to 
determine the availability of HUD-owned single family properties, and 
the status of HUD-held mortgages which may be in the process of being 
foreclosed.

Purchase of Properties Owned by the Veteran's Administration (VA) 
and the Resolution Trust Corporation (RTC)

    Pursuant to a Memorandum of Agreement between the Secretary of 
Housing and Urban Development and the Secretary of Veteran Affairs, a 
framework will be established for a continuing working relationship 
between HUD and VA to coordinate the sale of VA-acquired properties to 
PHAs. Upon request, the local VA field office will make available a 
list, by computer or otherwise, of single family (one to four units) 
properties owned by VA and located within the PHA's jurisdiction. PHAs 
will have a right of first option on these properties for a period of 
time from the date the list is furnished to the PHA, and the PHA and VA 
will follow an agreed upon procedure for the property purchase.
    With regard to RTC properties, RTC sells foreclosed single family 
properties in conjunction with its responsibilities for resolving 
failed financial institutions. Under the RTC's Affordable Housing 
Disposition (AHD) Program, public agencies, nonprofit organizations and 
low/moderate-income buyers have an exclusive right for a period of time 
to purchase lower-priced single family properties that the RTC has 
placed on the market. RTC offers these properties at their fair market 
value and publicizes the availability of these properties through 
various state and local housing agencies and Federal Home Loan Banks, 
which serve as property information clearinghouses. PHAs are to contact 
the Affordable Housing Disposition Department Head at the local RTC 
field offices in order to be placed on the RTC property mailing list.
    The Department has determined that the changes made by this rule 
should be adopted without the delay occasioned by requiring prior 
notice and comment. These changes primarily constitute a change in the 
Department's own review procedures and the elimination of a requirement 
to obtain prior approval of the Assistant Secretary before a PHA may 
acquire certain properties. As such, prior notice and comment are 
unnecessary, and the rule is exempt under 24 CFR part 10 from notice 
and comment requirements.

Findings and Certifications

A. Environmental Impact

    A Finding of No Significant Impact with respect to the environment 
has been made in accordance with HUD regulations at 24 CFR part 50, 
which implement section 102(2)(C) of the National Environmental Policy 
Act of 1969. The Finding of No Significant Impact is available for 
public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the 
Office of the Rules Docket Clerk at the above address.

B. Federalism

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order 12612, Federalism, has determined that the policies 
contained in this rule do not have federalism implications and, thus, 
are not subject to review under the Order. This rule removes a layer of 
prior HUD review and approval and allows Field Offices to exercise more 
discretion at multiple processing stages for the acquisition of certain 
properties. It will not have substantial, direct effects on States, on 
their political subdivisions, or on their relationships with the 
Federal government, or on the distribution of power and 
responsibilities between them and other levels of government.

C. Family Impact

    The General Counsel, as the Designated Official under Executive 
Order 12606, the Family, has determined that this rule will have only 
an indirect, though beneficial, impact on family formation, 
maintenance, and general well-being, since it should simplify the 
development of housing by PHAs, and thus, is not subject to review 
under the Order.
    This rule was not listed in the Department's Semiannual Agenda of 
Regulations published on October 25, 1993 (58 FR 56402) under Executive 
Order 12291 and the Regulatory Flexibility Act.

List of Subjects in 24 CFR Part 941

    Grant programs--housing and community development, Loan programs--
housing and community development, Public housing.

    Accordingly, the Department amends 24 CFR part 941 as set forth 
below:

PART 941--PUBLIC HOUSING DEVELOPMENT

    1. The authority citation for 24 CFR part 941 continues to read as 
follows:

    Authority: 42 U.S.C. 1437b, 1437c, 1437g, and 3535(d).

    2. In Sec. 941.206, paragraph (c) is revised to read as follows:


Sec. 941.206  Eligible properties.

* * * * *
    (c) Single family properties secured by an FHA-insured or HUD-held 
mortgage, or owned by HUD, the Veterans Administration (VA), or the 
Resolution Trust Corporation (RTC). (1) Proposals for the acquisition 
of single family properties (with or without rehabilitation) that are 
secured by an FHA-insured or HUD-held mortgage or are owned by HUD, the 
Veterans Administration (VA), or the Resolution Trust Corporation 
(RTC), must be submitted to the Field Office for approval. The limited 
proposal procedure for scattered-site projects, as set forth at 24 CFR 
941.404(n), may be followed to facilitate the PHA purchase for 
scattered-site projects of HUD/VA/RTC properties, any combination of 
such, and/or in combination with the purchase of eligible properties on 
the open market.
    (2) After approval of the limited proposal and execution of the 
ACC, Field Offices will determine the nature and scope of required 
technical reviews, taking into consideration the PHA submission 
identifying a property it wants to acquire that includes the proposed 
sales contract and PHA certifications that compliance with all 
necessary requirements will be met. If the PHA has provided the 
certifications as part of its limited proposal, the Field Office can, 
at its own discretion, accept all PHA certifications that required 
compliances will be met except the environmental assessment; by law, 
only HUD can certify compliance with 24 CFR part 50. The PHA 
certifications do not waive or dispense with the applicability of other 
Federal requirements pursuant to 24 CFR 941.202 through 941.209, but 
only serve to facilitate the approval process. These certifications 
shall address, but are not limited to:
    (i) Prevailing wages;
    (ii) Nondiscrimination requirements;
    (iii) Site and neighborhood standards;
    (iv) Intergovernmental review;
    (v) Accessibility requirements;
    (vi) Relocation requirements;
    (vii) Minimum Property Standards (MPS) or Housing Quality Standards 
(HQS);
    (viii) If replacement housing under section 18 is involved, that 
the housing to be acquired is consistent with the Replacement Housing 
Plan approved by HUD;
    (ix) Generally, properties constructed prior to 1978 should not be 
considered; however, if a proposed property was built prior to 1978, 
that lead-based paint testing and the determination of the cost 
feasibility of abatement will be done before the transfer to and 
payment of funds by the PHA or the contract is null and void; and
    (x) Any other Federal requirements listed under 24 CFR 941.202 
through 941.209.
    (3) After receiving a PHA's submission in accordance with paragraph 
(c) (2) of this section, each Field Office will decide whether or not 
to require the review and approval of any further information, based on 
its consideration of the PHA's submission, the acquisition cost of the 
property, and the management and development capabilities of the PHA, 
including the PHA's performance rating, under the Public Housing 
Management Assessment Program (PHMAP) at 24 CFR part 901.
    (4) The Field Office will perform all necessary reviews to assure 
all compliance requirements are met.
    (5) Under this section, there is a target period of 50 days from 
the time the PHA indicates it wants to acquire a specific property and 
when the Field Office approves or rejects the request; after approval 
notification, the PHA has an additional 10 day target period in which 
to close on the property. Properties involving additional requirements, 
such as acquisition with extensive rehabilitation, lead-based paint 
testing and abatement, historic preservation requirements and/or an 
uncompleted environmental assessment, may require extension of the 
target date.
    3. In Sec. 941.404, paragraph (n) is amended by designating the 
introductory text as paragraph (n)(1); by revising the section heading 
and the newly designated paragraph (n)(1); by redesignating existing 
paragraphs (n)(1) through (n)(9) as paragraphs (n)(1)(i) through 
(n)(1)(ix), respectively; by adding a new paragraph (n)(1)(x); by 
designating the undesignated paragraph as paragraph (n)(2); and by 
revising the newly designated paragraph (n)(2), to read as follows:


Sec. 941.404  Proposal content.

* * * * *
    (n) Special procedures for HUD/VA/RTC properties and scattered site 
projects. (1) PHAs may, in lieu of submission of the complete proposal 
described in this section, submit a limited proposal if: the proposal 
is for the acquisition of properties secured by an FHA-insured or HUD-
held mortgage, or owned by HUD, the Veterans Administration (VA), or 
the Resolution Trust Corporation (RTC); or the proposal is for a 
project involving scattered-site acquisition or a scattered-site 
conventional new construction or rehabilitation development, and the 
proposal has been determined to be eligible for front-end funding 
pursuant to Sec. 941.402(c) or Sec. 941.403(c), and the diversity of 
ownership of the properties is expected to make site control difficult.
* * * * *
    (x) Certification that the PHA will comply with the following HUD 
requirements:
    (A) Prevailing wages;
    (B) Nondiscrimination requirements;
    (C) Site and neighborhood standards;
    (D) Intergovernmental review;
    (E) Accessibility requirements;
    (F) Relocation requirements;
    (G) Minimum Property Standards (MPS) or Housing Quality Standards 
(HQS);
    (H) If replacement housing under section 18 is involved, that the 
housing to be acquired is consistent with the Replacement Housing Plan 
approved by HUD;
    (I) Generally, properties constructed prior to 1978 should not be 
considered; however, if a proposed property was built prior to 1978, 
that lead-based paint testing and the determination of the cost 
feasibility of abatement will be done before the transfer to and 
payment of funds by the PHA or the contract is null and void; and
    (J) Any other Federal requirements listed under 24 CFR 941.202 
through 941.209.
    (2) HUD will review the limited proposal, in accordance with 
Sec. 941.405, and upon approval of the proposal, HUD will execute the 
ACC and permit advances for the purposes and amounts described in 
Sec. 941.406(b)(3). The PHA will select individual properties in 
accordance with its approved limited proposal, but will not acquire a 
property or make a commitment to acquire without specific HUD site 
approval, and a determination that the property, including the 
resulting total development cost, is consistent with the approved 
limited proposal.

    Dated: April 11, 1994.
Joseph Shuldiner,
Assistant, Secretary for Public and Indian Housing.
[FR Doc. 94-9392 Filed 4-18-94; 8:45 am]
BILLING CODE 4210-33-P