[Federal Register Volume 59, Number 133 (Wednesday, July 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16916]


[[Page Unknown]]

[Federal Register: July 13, 1994]


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Part IV





Department of Housing and Urban Development





_______________________________________________________________________



Office of the Assistant Secretary for Public and Indian Housing



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24 CFR Part 941




Public Housing Development; Major Reconstruction of Obsolete Public 
Housing; Proposed Rule
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Public and Indian Housing

24 CFR Part 941

[Docket No. R-94-1737; FR-3621-P-01]
RIN 2577-AB41

 
Public Housing Development; Major Reconstruction of Obsolete 
Public Housing (MROP)

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would add a new subpart F to the 
Department's regulations at 24 CFR part 941, which govern public 
housing development by public housing agencies. The new subpart F would 
set forth the requirements and procedures applicable to the major 
reconstruction of obsolete public housing (MROP) projects. This 
proposed rule also would implement the provisions of section 111 of the 
Housing and Community Development Act of 1992 which pertain to MROP 
projects. The specific provisions that would comprise subpart F are 
discussed in the Supplementary Information section of this document.

DATES: Comment Due Date: September 12, 1994.

ADDRESSES: Interested persons are invited to submit comments regarding 
this rule to the Office of General Counsel, Rules Docket Clerk, Room 
10276, Department of Housing and Urban Development, Washington, DC 
20410-0500. Comments should refer to the above docket number and title. 
Facsimile (FAX) comments are not acceptable. A copy of each 
communication submitted will be available for public inspection and 
copying on weekdays between 7:30 a.m. and 5:30 p.m. at the above 
address.

FOR FURTHER INFORMATION CONTACT: Janice Rattley, Director, Office of 
Construction, Rehabilitation, and Maintenance, Public and Indian 
Housing, Department of Housing and Urban Development, Room 4230, 451 
Seventh Street, SW., Washington, DC 20410-5000, telephone (202) 708-
1015. (This is not a toll-free number.) Hearing- or speech-impaired 
individuals may contact this office via TDD by calling (202) 708-9300 
(which is not a toll-free number) or 1-800-877-8339 (which is a toll-
free number).

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act Statement

    The information collection requirements contained in part 941 have 
been previously approved by the Office of Management and Budget under 
the Paperwork Reduction Act of 1980, and assigned the stated OMB 
approval numbers: 

                                                                        
------------------------------------------------------------------------
   New rule section           Rule section             Approval No.     
------------------------------------------------------------------------
941.606................  941.302, 402, 403, 406.  2577-0033, 0164, 0104.
941.607................  941.404................  2577-0033, 0024, 0036.
------------------------------------------------------------------------

II. Background

    Sections 4 and 5 of the United States Housing Act of 1937 (42 
U.S.C. 1437b, 1437c and 1437g) (the Act) authorize the Department to 
provide technical and financial assistance to public housing agencies 
(PHAs) for the development of low income housing projects, including 
the major reconstruction of obsolete public housing projects. The 
Department's regulations at 24 CFR part 941 establish: the requirements 
and procedures for the development of low-income housing (excluding 
Indian housing) by PHAs; development methods to be utilized for public 
housing projects; PHA eligibility requirements; the application and 
proposal procedures and other program requirements, which include a 
number of Federal statutory and administrative requirements applicable 
to public housing development.
    The Department will in the future publish under a separate proposed 
rule comprehensive changes to part 941 that reflect the Department's 
redesign of the public housing development program.
    This proposed rule is more limited and would only add a new subpart 
F to the existing part 941 to address the requirements and procedures 
applicable to the major reconstruction of obsolete public housing 
(MROP) projects. Section 111(a) of the Housing and Community 
Development Act of 1992 (Pub. L. 102-550, approved October 28, 1992) 
(the 1992 Act) amends section 5(j)(2) of the Act regarding MROP 
projects. Section 5(j)(2), among other things, provides a definition 
for ``obsolete public housing project or building''; specifies that 
funding for MROP will be distributed on the basis of competition; and 
lists the criteria by which PHAs will be awarded funds. In accordance 
with sections 111(c) and 191 of the 1992 Act, which provide for 
rulemaking to implement section 111, this proposed rule would implement 
the provisions of section 111(a). The regulatory sections that would 
comprise subpart F are as follows:
    Section 941.601. This section would provide that subpart F sets 
forth the basic policies and general requirements applicable to MROP 
projects. With respect to applicability, this section would provide 
that, unless otherwise stated, subpart F would apply to all MROP 
projects funded in Federal Fiscal Year 1995 and thereafter.
    Section 941.602. This section would address MROP funding by 
providing that any notice of funding availability (NOFA) issued under 
24 CFR part 941, subpart F, will reflect the current statutory 
requirements applicable to MROP projects.
    Section 941.603. This section would describe the criteria a project 
must meet to be eligible for MROP funding. Some of the eligibility 
requirements, listed in this section, include the following: the 
project must be a rental project, and not a homeownership project; the 
project must have been financed under section 5 of the Act and be under 
an Annual Contributions Contract (ACC), or be a section 23 bond 
financed leased housing project which meets certain conditions; the 
existing project must have had an approved actual development cost 
certificate (ADCC) for five years before the application submission 
deadline; and the project must be determined to be obsolete. With 
respect to the determination of obsolete, the requirements of section 
5(j)(2) of the Act, as added by section 111 of the 1992 Act are being 
incorporated.
    In accordance with section 5(j)(2)(E) of the Act, Sec. 941.603 
would prohibit MROP assistance to any project or building assisted 
within five years of the MROP application by Comprehensive Improvement 
Assistance Program (CIAP) or Comprehensive Grant Program (CGP) 
modernization funds under section 14 of the Act (through inclusion in 
an approved ``annual statement of work''). A proposed MROP which 
received emergency modernization funding within the time frame is 
excluded from the five-year prohibition stated above.
    Section 941.604. This section would address the limitations imposed 
on the use of MROP funds.
    Section 941.605. This section would describe the general 
requirements applicable to the MROP program; these include (1) those 
set forth in subpart A of part 941, with the exception that MROP 
projects may only be developed by: (a) sealed bid method with award to 
the lowest responsible bidder; or (b) competitive proposal method 
whereby the PHA would execute a fixed price contract in which the 
contractor would be responsible for design of specific work items in 
the Request for Proposals, soliciting and contracting for construction 
work, contract administration and construction administration and 
construction inspection; the contract would either provide progress 
payments, or a lump sum payment after successful completion of all 
work; and (2) the requirements set forth in subpart B, with certain 
exceptions. With respect to the new MROP cost limit system required by 
section 5(j)(2)(D) of the Act, a methodology is proposed in this 
section.
    Section 941.606. This section would describe the application 
submission requirements of the MROP program.
    Section 941.607. This section would address the MROP proposal and 
would provide that MROP proposals must comply with the provisions of 
Sec. 941.404.
    Section 941.608. This section would address MROP project 
development and would provide for compliance with the procedures and 
requirements of subpart E, except as modified by Sec. 941.608.
    In the regulatory text that follows the preamble section ``Other 
Matters,'' the reader should note that the terms ``Act'' and ``ACC'' 
are not defined in subpart F, because these terms are defined in 
subpart A of part 941. The ``Act'' refers, as previously noted, to the 
United States Housing Act of 1937, and ``ACC'' refers to Annual 
Contributions Contract.

Other Matters

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 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.

Impact on Small Entities

    The Secretary, in accordance with the Regulatory Flexibility Act (5 
U.S.C. 605(b)), has reviewed this proposed rule before publication, 
and, by approving it, certifies that this proposed rule will not have a 
significant economic impact on a substantial number of small entities. 
The rule's major effect is on public housing agencies (PHAs) which are 
state and local governmental entities. The proposed rule adds a new 
subpart for the major reconstruction of obsolete public housing 
projects, as required by the Act, and incorporates provisions requested 
by industry groups; as such, it is anticipated that it will be 
considered beneficial to PHAs.

Federalism Impact

    The General Counsel, as the Designated Official under section 6(a) 
of Executive Order No. 12612, Federalism, has determined that this 
proposed rule would not have a substantial, direct effect on the States 
or their political subdivisions 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. No significant 
change in the relationships or responsibilities of the various levels 
of government will result from this proposed rule.

Impact on the Family

    The General Counsel, as the Designated Official under Executive 
Order 12606, The Family, has determined that this proposed rule would 
not have a potential for significant impact on family formation, 
maintenance, and general well-being and thus is not subject to review 
under the Order. No significant change in existing HUD policies or 
programs will result from promulgation of this rule, as those policies 
and programs relate to family concerns.

Regulatory Agenda

    This proposed rule was listed as sequence number 1684 in the 
Department's Semiannual Agenda of Regulations published on April 25, 
1994 (59 FR 20424, 20469) under Executive Order 12866 and the 
Regulatory Flexibility Act.

Catalog of Federal Domestic Assistance Programs

    The Catalog of Federal Domestic Assistance Program title and number 
is 14.850, Public and Indian Housing.

List of Subjects in 24 CFR Part 941

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

    Accordingly, 24 CFR part 941 would be amended as follows:

PART 941--PUBLIC HOUSING DEVELOPMENT

    1. The authority citation for part 941 would continue to read as 
follows:

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

    2. A new subpart F, consisting of Secs. 941.601-941.608, would be 
added to read as follows:

Subpart F--Major Reconstruction of Obsolete Public Housing (MROP) 
Projects

Sec.
941.601  Scope and applicability.
941.602  MROP funding.
941.603  MROP eligibility criteria.
941.604  Uses of MROP funding.
941.605  General program requirements.
941.606  MROP application.
941.607  MROP proposal.
941.608  MROP project development.

Subpart F--Major Reconstruction of Obsolete Public Housing (MROP) 
Projects


Sec. 941.601  Scope and applicability.

    (a) Scope. This subpart F sets forth the basic policies and general 
requirements for the public housing Major Reconstruction of Obsolete 
Public Housing (MROP) projects program originally instituted pursuant 
to the FY 1986 HUD-Independent Agencies Appropriations Act, and 
thereafter covered by section 5(j), as amended by section 111 of the 
Housing and Community Development Act of 1992 (42 U.S.C. 1437c(j)(2)). 
Unless otherwise stated in this subpart F, subparts A through E of part 
941 apply to MROPs.
    (b) Applicability. Unless otherwise stated herein, this subpart 
applies in its entirety to all MROP projects funded in FY 1995 and 
thereafter, beginning with their current development processing and 
monitoring stage. All MROP projects funded prior to the effective date 
of this regulation shall continue to comply with the criteria on which 
their selection for funding was based.
    (c) PHA Eligibility. PHAs eligible for MROP funding are those which 
have the required legal authority and local cooperation stated under 
Sec. 941.201. An eligible PHA may include a troubled PHA, and if 
included, the criteria which a troubled PHA must meet to be eligible 
for funding will be specified in the notice of funding availability 
issued in accordance with this subpart.


Sec. 941.602  MROP funding.

    While section 5(j)(2) of the Act limits MROP funding to no more 
than 20 percent of available funding, recent Appropriation Acts have 
provided that HUD may approve applications for development and/or MROP 
based on applications submitted, or pursuant to a statutory funding 
set-aside. As a result, any notice of funding availability (NOFA) 
issued pursuant to 24 CFR part 941 will reflect the applicable 
statutory requirements.


Sec. 941.603  MROP eligibility criteria.

    To be eligible for MROP funding, a project must meet the following 
criteria:
    (a) Rental. The project must be rental and not homeownership.
    (b) Federally assisted PHA-owned. The project must have been 
financed under section 5 of the Act and under ACC; or be a section 23 
bond financed leased housing project which was converted to public 
housing by ACC amendment and is now covered by a cooperation agreement, 
has clear title vested in the PHA, and there are no legal obstacles 
affecting the PHA's use of the project during the required additional 
40-year term of the ACC.
    (c) Five-year ADCC. The existing project must have had an approved 
actual development cost certificate (ADCC) for five years or more prior 
to the application submission deadline of the NOFA.
    (d) Obsolete project. The existing project must be determined to be 
obsolete; i.e., the project, or that portion designated to comprise the 
MROP project, must have design or marketability problems that have 
resulted in:
    (1) Current vacancies of more than 25 percent of the units 
available for occupancy; or
    (2)(i) Estimated costs for redesign, reconstruction or 
redevelopment (including any costs for lead-based paint abatement 
activities) that exceed 70 percent of the total current development 
cost limits for new construction of similar units in the area, but not 
more than 100 percent of the maximum cost based on the most recently 
issued MROP limits issued pursuant to section 5(j)(2)(D) of the Act 
(see Sec. 941.605(b)(2)); and
    (ii) The project or building has: an occupancy density or a 
building height that is significantly in excess of that which prevails 
in the neighborhood; or a bedroom configuration that could be altered 
to better serve the needs of families seeking occupancy to public 
housing; significant security problems in and around the project; or 
significant physical deterioration or inefficient energy and utility 
systems.
    (3) The deficiencies must have been determined correctable under 
the Comprehensive Grant Program (CGP) or the Comprehensive Improvement 
Assistance Program (CIAP) procedures (see 24 CFR part 968 and related 
issuances to ensure long-term viability).
    (e) Long-term viability. The project must be determined to have 
long-term viability (i.e., a useful life with full occupancy) of more 
than 20 years after completion of reconstruction, and the ACC for the 
MROP project must remain in effect for 40 years.
    (f) MROP project composition. (1) An MROP project may consist of 
one or more or all of the buildings of a single existing public housing 
project, provided that the funds reserved are sufficient to complete 
all the necessary redesign, reconstruction, or redevelopment for the 
entire structure(s) designated for the MROP project. Where funds 
available in a given year are insufficient or would require a 
disproportionate amount to fund all of the buildings of an existing 
project, staging over several years is not permitted, and the existing 
project must be separated by buildings (individually or in a 
combination) into portions to establish separate MROP projects, each to 
be funded separately, and each having a separate project number. The 
funds for each MROP project must be kept separate and may not be 
commingled.
    (2) If a PHA submits an MROP application for an entire project and 
it is determined to be approvable under a NOFA published after the 
effective date of this regulation, but because of funding limitations 
only a part of the project is funded, if funds become available in a 
future fiscal year, additional buildings of the project may be approved 
for MROP without regard to vacancy, cost and viability criteria of 
paragraph (e) of this section under a subsequent NOFA, provided that:
    (i) An application for a separate MROP project, or any portion of 
the project not funded, is submitted in response to a subsequent NOFA, 
and meets threshold approvability, and all other NOFA requirements, 
except for vacancy, cost and viability requirements; and
    (ii) Is selected on the basis of its rating and ranking among other 
MROP applications submitted in response to the NOFA.
    (g) MROP with modernization. MROP assistance may not be provided 
for any project or building assisted within five years of the MROP 
application by CGP or CIAP modernization funds under section 14 of the 
Act (through inclusion in an approved ``annual statement of work'') or 
HOPE VI under the FY 1993 and 1994 Appropriation Acts.
    (h) MROP with Demo/Dispo. Demolition/disposition (demo/dispo) of 
existing units may be included as part of an MROP only if required to 
meet the long-term viability requirement; however, 75 percent of the 
units in the project or portion of the project which comprise the MROP 
application must be reconstructed. An MROP application which involves 
partial demo/dispo must either indicate the date that a demo/dispo 
application was approved by HUD, or the date the demo/dispo application 
was submitted. If the demo/dispo application was not approved by the 
date of the MROP application, the MROP application must be accompanied 
by evidence of the approval by the unit of general local government in 
which the project is located; this approval may be obtained from the 
Chief Executive Officer.
    (i) MROP with unit conversions. Conversions are not subject to 
section 18 of the Act; however, a proposed conversion must be approved 
before an MROP involving a conversion may be approved, or an 
application for said conversion must have been submitted (see 
Sec. 941.604(d)).


Sec. 941.604   Uses of MROP funding.

    The following establish limitations on the use of MROP funds:
    (a) Management improvements. Management improvements limited to the 
MROP project are eligible costs under MROP to the extent that such 
proposed management improvement is necessary for the viability of the 
project; i.e., to maintain the proposed physical improvements of the 
MROP project.
    (b) Development and property acquisition. Development of additional 
units is an ineligible cost under MROP.
    (c) Demo/dispo and replacement. The MROP project may include the 
cost of approved demo/dispo pursuant to Sec. 941.603(h). MROP funds may 
not be used for replacement housing.
    (d) MROP conversion of units. Costs of converting existing dwelling 
units to different bedroom sizes or to nondwelling space are eligible 
MROP costs only as follows:
    (1) It must be demonstrated that the units proposed for conversion 
are in excess of the needs of the PHA and there is a greater need for 
the proposed converted units; and
    (2) The proposed conversion must not result in a net reduction 
greater than that permitted under Sec. 941.603(h).
    (e) MROP conversion of non-dwelling space. Conversion from non-
dwelling use to dwelling use is permitted under MROP. Conversion in use 
of non-dwelling space (e.g., community to management or vice versa) is 
eligible under MROP.
    (f) Duplicate funding. The PHA shall not receive duplicate funding 
for the same work item or activity under any circumstance, and shall 
establish controls to assure that any activity, program, or project 
that is funded under any other HUD program, shall not be funded by 
MROP.


Sec. 941.605   General program requirements.

    (a) Subpart A. Subpart A of part 941 is applicable to the MROP 
program, except that MROP projects may only be developed by:
    (1) Sealed bid procurement method with award to the lowest 
responsible bidder; or
    (2) Competitive proposal method, whereby the PHA would execute a 
fixed price contract in which the contractor would be responsible for 
design of specific work items identified in the Request for Proposals, 
soliciting and contracting for construction work, contract 
administration and construction inspection; the contract could either 
provide for progress payments, as in the sealed bid method, or a lump 
sum after successful completion of all work.
    (b) Subpart B. Subpart B of this part applies to the MROP program, 
except:
    (1) Since the site is already owned and the structures are already 
present, the following provisions of subpart B are not applicable to 
the MROP program: Sec. 941.202 (concerning site and neighborhood 
standards); Sec. 941.203 (a), (e) and (f) (concerning certain 
requirements of the design and construction standards); Sec. 941.206 
(concerning eligible properties); and Sec. 941.405(b)(1) (concerning 
the section 213 review). Instead, the modernization and energy 
conservation standards set forth in 24 CFR part 968 are applicable and 
the environmental requirements must be met before an MROP application 
may be approved, as under CIAP (24 CFR part 968). The Intergovernmental 
Review under Executive Order 12372 (see Sec. 941.405(b)(2)) must be 
completed before an MROP application may be approved.
    (2) Pursuant to section 5(j)(2)(D) of the Act, HUD will establish 
limitations on the total costs for MROP recognizing the higher direct 
costs of MROP work as related to new development and modernization, and 
the requirements of Sec. 941.204 are therefore modified. The total MROP 
cost (TMC) limitations which HUD establishes will be used as a maximum 
for the purpose of reserving the funds for MROP projects and represent 
the maximum TMC that may be approved and included in the ACC for an 
MROP project.
    (i) As in the case of the total development cost (TDC) limitations 
under Sec. 941.204, the TMC limitations are established for specific 
unit sizes (i.e., number of bedrooms) and structure types (i.e., 
detached, semi-detached, row, walk-up and elevator), and market areas 
(which are areas where trade conditions and economic influences tend to 
make costs substantially the same); they will be issued periodically by 
notice sent to all PHAs; and any donations will be treated in the same 
way as stated in Sec. 941.204(d).
    (ii) The TMC limitations shall be determined by doubling the 
average of two nationally recognized residential construction cost 
indices for good and sound quality housing.
    (3) Since eligibility for MROP is based on different cost 
requirements, Sec. 941.406(a)(1), which concerns maximum TDC at fund 
reservation, is modified to provide that the total MROP project cost 
that may be approved with HUD funds at the time of initial fund 
reservation, is limited to at least 70 percent of the maximum TDC based 
on the most recently issued TDC limitations for new construction of 
similar units in the area, but not more than 100 percent of the maximum 
TMC based on the MROP limitations most recently issued pursuant to 
section 5(j)(2)(D) of the Act (see Sec. 941.605(b)(2)), except that the 
reservation amount will be trended by projected construction cost 
increases over the next 18 months. In addition, Sec. 941.406(a)(2) 
which concerns maximum TDC after fund reservation, is inapplicable; 
there will be no amendment funds to increase the original amount of the 
MROP activities fund reservation.
    (4) A development project for MROP activities must have long-term 
viability (see Sec. 941.603(e)) after completion of reconstruction and 
the annual contributions contract (ACC) for the MROP project must 
remain in effect for 40 years. In determining viability, the PHA must 
have a comprehensive plan (funded from other sources such as CIAP, CGP 
or donations, etc.) for the project for which the development funds for 
MROP activities are being requested. The comprehensive plan for the 
project may be part of the PHA's comprehensive plan for modernization. 
The comprehensive plan must demonstrate a strategy which will assure 
that the entire development will be viable for a minimum period of 20 
years. This strategy may include, but not be limited to, an estimate of 
the required amount needed for rehabilitation of the remaining portion 
of the development to the extent additional rehabilitation is required; 
sources of funding for any additional work; any proposed demolition/
disposition that may be planned; and written evidence of local 
government and resident support for the strategy.


Sec. 941.606  MROP application.

    Eligibility for MROP application approval shall be determined using 
the CIAP application and procedures under 24 CFR part 968, as modified 
by the regulations of this part.
    (a) Application submission. To apply for MROP funds, an eligible 
PHA shall submit a CIAP application in the form prescribed by HUD to 
the appropriate HUD Office in response to an issued NOFA. The 
application must identify the entire existing project, the portion 
proposed as the MROP project, explain how the PHA and the requested 
MROP meet the eligibility, rating and other criteria of the NOFA, 
identify the proposed physical and management improvement needs, 
estimated costs and funding sources.
    (1) The application must include a statement of the PHA's 
priorities for receiving funding, and if it is submitting more than one 
application, whether it will accept funding for fewer units than 
requested (refusal to accept fewer units may result in application non-
funding due to a disproportionate requirement for funds), and indicate 
whether the application should be considered for CIAP funding, if 
appropriate, if the project is determined ineligible for MROP.
    (2) The application must be accompanied by a PHA Resolution and 
certifications required under the NOFA that the PHA will comply with 
the requirements of 24 CFR part 941.
    (3) If demo/dispo or conversion is needed for long-term viability 
after reconstruction, the PHA must so state in its MROP application and 
advise as to the status of its demo/dispo or conversion application 
(see 24 CFR 941.603 (h) and (i)).
    (b) Application receipt and processing. HUD Offices will receive, 
screen applications, and notify PHAs under the deficiency notice 
procedure set forth in the NOFA issued for fund availability under 24 
CFR part 941.
    (1) Review, rating and ranking, and selection for funding shall 
occur in accordance with the criteria stated in the published NOFA, 
which for MROP shall be largely based on the PHA's management 
capability to carry out the proposed MROP activities (considering the 
PHA's latest rating under the Public Housing Management Assessment 
Program), the expected term of useful life of the project or building 
after completion of proposed MROP activities, the likelihood of 
achieving full occupancy within the project or building after 
completion of MROP activities, and such other factors as the Secretary 
may determine, including statutory provisions which may cause the above 
factors to change.
    (2) Funds shall be reserved in accordance with Sec. 941.605(b)(2), 
and PHAs shall be notified in accordance with the NOFA issued for 
funding availability under 24 CFR part 941.


Sec. 941.607   MROP proposal.

    Following application approval and fund reservation, MROP projects 
will be processed under the development procedures and a project 
planning conference to discuss program requirements and the time 
schedule shall be held. The PHA shall incorporate its approved 
application into a proposal described in Sec. 941.404, and upon its 
approval, an ACC will be executed in the form prescribed by HUD.


Sec. 941.608   MROP project development.

    MROP project development shall proceed in accordance with subpart 
E, with the following modifications:
    (a) No site/property acquisition. Since the property is already 
owned, Sec. 941.501 is inapplicable.
    (b) Development method. If the sealed bid method is used (as 
described in Sec. 941.605) only Secs. 941.502 (a) and (b) are 
applicable; however, no cost adjustments shall be made. If the 
competitive proposal method is used, Sec. 941.502 is inapplicable, and 
Sec. 941.605(a)(2) shall be followed.
    (c) Reconstruction, acceptance of contract work, and completion. 
Sections 941.503 (concerning reconstruction requirements), 941.504 
(concerning acceptance of contract work), and 941.505 (concerning 
completion of development) are applicable to MROP projects, except that 
there shall be no initial operating period or cost as under 
Sec. 941.505(a) since the PHA will be receiving operating subsidy for 
the units under the original project until completion of the MROP 
project. A Date of Full Availability (DOFA) shall be established as the 
last day of the month in which substantially all the units in the MROP 
project are available for occupancy after reconstruction; the PHA and 
HUD will execute an amendment to the ACC to remove the units of the 
MROP project from the original development project, and initiate the 
operating subsidy for the MROP project units, both effective as the end 
of the quarter in which DOFA was achieved. Changes to applicable data 
systems shall also be effective as of that date.

    Dated: June 13, 1994.
Michael B. Janis,
General Deputy, Assistant Secretary for Public and Indian Housing.
[FR Doc. 94-16916 Filed 7-12-94; 8:45 am]
BILLING CODE 4210-33-P