[Federal Register Volume 59, Number 101 (Thursday, May 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-12821]


[[Page Unknown]]

[Federal Register: May 26, 1994]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Community Planning and 
Development
[Docket No. N-94-3783; FR-3710-N-01]

 

Notice of UDAG Retention and Recapture Programs

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, HUD.

ACTION: Notice.

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SUMMARY: This Notice announces the implementation of the HUD Retention 
and Recapture Programs (collectively the ``Program'') described in 
section 119(t) of the Housing and Community Development Act of 1974, as 
amended (the ``Act''). Funds retained through recipient participation 
in the Retention Program shall be used to increase and enhance the use 
of section 108(q) economic development grants (subject to HUD approval 
of such section 108(q) grants and related section 108 loan guarantees) 
or for economic development activities eligible under Title I of the 
Act. Funds available to the Secretary under section 119 of the Act as 
of October 1, 1993, or relinquished to HUD pursuant to the Retention 
and Recapture Agreement, may be used by HUD in accordance with the 
provisions of section 119(o) of the Act, including the making of 
section 108(q) grants in support of section 108 loan guarantees.
    This Notice contains information about the purpose of the Program, 
including its duration; and recipient rights and responsibilities under 
the Program. The Notice also informs UDAG recipients how to respond to 
the Notice.

DATES: The Retention Program is in effect from May 26, 1994, and 
expires on August 24, 1994; (the ``Expiration Date''). Thereafter, 
recipients shall no longer have any right to enter into an agreement 
with the Secretary for the purpose of participating in the Retention 
Program. The Secretary will not recapture any unexpended funds before 
the Expiration Date.

ADDRESSES: The written agreement by the recipient to participate in the 
Retention Program and its unconditional and irrevocable release to the 
Secretary of the remainder of the UDAG funds under its grant in 
accordance with the provisions of section 119(t) of the Act must be 
received at HUD's Office of Economic Development, Office of Community 
Planning and Development, 451 Seventh Street, SW., room 7136, 
Washington, DC 20410, Attn: Mr. Roy O. Priest, Director, on or before 
the Expiration Date.

FOR FURTHER INFORMATION CONTACT: Roy O. Priest, Director, at the above 
address; (202) 708-2290; TDD for the hearing- or speech-impaired, (202) 
708-2565. Inquiries may also be faxed to (202) 708-7543. (These are not 
toll-free numbers.)

SUPPLEMENTARY INFORMATION:

I. Purpose and Substantive Description

    The purpose of this Notice is to establish criteria and grant 
conditions under the Retention Program for the use by UDAG recipients 
of a percentage of the remaining unexpended balance under their UDAG 
grant agreements for economic development activities under a new grant 
agreement under section 119(t). The Notice implements the amendments 
made to section 119 of the Act by section 232(c) of the Multifamily 
Housing Property Disposition Reform Act (Pub. L. 103-233, approved 
April 11, 1994).

II. Affected UDAG Grants

    UDAG grants with unexpended grant funds remaining on the date of 
the issuance of this Notice are affected by this Notice. In particular, 
the following types of grants are directly affected:
    (1) UDAG grants which are in default. These include, for example, 
grants where (i) the required legally binding commitments (LBCs) have 
not been approved by HUD; (ii) the recipient has violated the terms and 
conditions of the UDAG grant agreement pertaining to the payment of 
wages pursuant to the Davis-Bacon requirements, applicable 
environmental laws, rules, regulations, etc., or other requirements of 
the grant agreement; (iii) the recipient/developer of the project has 
failed to complete its work pertaining to the project within the 
timeframe set forth in the grant agreement; (iv) the developer is in 
bankruptcy or is insolvent and unable to proceed with the development 
of the project; or (v) there is a default by the developer under the 
terms of a superior mortgage and/or a foreclosure by a lender on the 
project.
    (2) UDAG grants which are not in default on or before the 
Expiration Date but have not had all the required LBCs approved by HUD.
    (3) UDAG grants which have received HUD approval of all required 
LBCs but which still have unexpended grant funds remaining as of the 
date of the issuance of this Notice, or are in default, and the 
unexpended grant funds cannot be spent before the Expiration Date. This 
does not include active grants which are not in default and for which 
it is expected that the grant funds will be expended after the 
Expiration Date.
    For all such affected grants, the recipient may agree with the 
Secretary on or before the Expiration Date to retain a percentage of 
the unexpended funds for use under a Retention and Recapture Agreement 
in accordance with the provisions of section 119(t) of the Act within a 
timeframe to be established by the Secretary in the agreement (see 
Section III(3) of this Notice), provided the recipient shall relinquish 
any and all claims whatsoever to the balance of the grant funds, which 
will be recaptured by the Secretary.

III. Retention Program

    This Notice permits UDAG recipients to elect to retain the 
percentages specified below of the grant funds which remain unexpended 
upon the date of the issuance of this Notice for use by the recipient 
as follows:
    (1) Thirty-three percent (33%) of such unexpended amounts if:
    (a) The recipient agrees to expend not less than one-half of the 
amount retained for activities to be authorized pursuant to a grant 
approved by HUD under section 108(q) of the Act and to expend such 
funds in conjunction with a loan guarantee approved by HUD under 
section 108 of the Act at least equal to twice the amount of the funds 
received (application must be made for such loan guarantee within six 
(6) months of the Expiration Date and such approvals must be granted by 
HUD within twelve (12) months after the Expiration Date); and
    (b) (i) The recipient agrees to use the remainder of the amount 
retained for economic development activities eligible under Title I of 
the Act; and
    (ii) Except when waived by the Secretary in the case of a severely 
distressed jurisdiction, not more than one-half of the costs of 
activities under this subparagraph (b) are paid for from such 
unexpended amounts; or
    (2) Twenty-five percent (25%) of such unexpended amounts if:
    (a) The recipient agrees to expend such funds for economic 
development activities eligible under Title I of the Act; and
    (b) Except when waived by the Secretary in the case of a severely 
distressed jurisdiction, not more than one-half of the costs of such 
activities are paid for from such unexpended amount.
    A ``severely distressed jurisdiction'' is one in which (i) the 
family poverty rate was equal to or greater than 125 percent of the 
national family poverty rate during the calendar year for which the 
most recent data are available, as determined according to information 
of the Bureau of the Census, or (ii) per capita income was less than 75 
percent of the national per capita income during the calendar year for 
which the most recent data are available, as determined according to 
information of the Bureau of the Census.
    (3) All UDAG grant funds retained by the recipient under the 
provisions of subparagraph (1)(a) of this Section III must be expended 
by the recipient for the activities set forth therein within the period 
of time to be established under the section 108(q) grants.
    (4) If and when approved by HUD, all funds retained by the 
recipient under the provisions of subparagraphs (1)(b)(i) and (2) of 
this Section III must be actually expended by the recipient for the 
activities set forth therein within twenty-four (24) months from the 
Expiration Date.
    (5) Failure by the recipient to expend such retained grant funds 
for the aforesaid purposes within the applicable time period shall be a 
default under the terms of the Retention and Recapture Agreement.
    (6) The expenditure by the recipient of the retained funds will be 
subject to applicable regulations and requirements for the particular 
use, i.e., for section 108(q) grants, the use will be subject to 
approval of the section 108(q) grant and thereafter to applicable 
regulations and requirements for the activities approved; and for funds 
to be used for economic development activities under Title I, all 
regulations and requirements applicable to the use of CDBG funds for 
such activities will apply.

IV. Retention and Recapture Agreement

    The Retention and Recapture Agreement shall supersede the Grant 
Agreement insofar as the same pertains to the funds retained by the 
recipient. Copies of the form of the Retention and Recapture Agreement 
can be obtained by the recipients from HUD's Office of Economic 
Development, at the address and telephone numbers listed at the 
beginning of this Notice, thirty (30) days after the date of 
publication of this Notice. Recipients who elect to retain a percentage 
of the unexpended grant funds, as set forth above, must indicate in the 
agreement the percentage it elects to retain and cause the signed 
agreement to be received by the Secretary on or before the Expiration 
Date.
    In the event any affected recipient shall fail to elect to 
participate in the Retention Program on or before the Expiration Date, 
the Secretary intends to terminate after the Expiration Date grant 
agreements which are in default, and proceed to recover any unspent 
UDAG funds in accordance with the provisions of the Act. Unspent (or 
unexpended) UDAG funds means UDAG funds not obligated by the recipient 
and/or developer for reimbursement of eligible costs paid or incurred 
on the UDAG project on or before the Expiration Date. UDAGs not in 
default or not being closed out will not be recaptured except as 
permitted by the Act. HUD will make technical assistance available upon 
request by any affected recipient regarding any UDAG grants, to discuss 
the recipient's options under this Notice, or regarding any projects 
proposed to be initiated pursuant to the Retention and Recapture 
Agreement.

    Dated: May 19, 1994.
Andrew Cuomo,
Assistant Secretary for Community Planning and Development.
[FR Doc. 94-12821 Filed 5-25-94; 8:45 am]
BILLING CODE 4210-29-P