[Federal Register Volume 62, Number 87 (Tuesday, May 6, 1997)]
[Rules and Regulations]
[Pages 24573-24574]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11729]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 573

[Docket No. FR-4108-C-06]
RIN 2506-AB87


Loan Guarantee Recovery Fund; Technical Amendment to Final Rule

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

ACTION: Technical amendment to final rule.

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SUMMARY: On September 6, 1996 (61 FR 47404), HUD published a final rule 
implementing section 4 of the Church Arson Prevention Act of 1996. 
Specifically, the September 26, 1996 final rule established the 
procedures, terms, and conditions by which HUD will guarantee loans to 
assist nonprofit organizations in financing activities designed to 
rebuild and rehabilitate structures, to replace and restore personal 
property, and to finance other eligible activities as provided for in 
the final rule. The September 6, 1996 final rule inadvertently omitted 
from the list of eligible activities the refinancing of

[[Page 24574]]

existing indebtedness secured by a property which has been constructed, 
rehabilitated, or reconstructed. The purpose of this document is to 
make the necessary correction.

EFFECTIVE DATE: October 7, 1996.

SUPPLEMENTARY INFORMATION: On July 3, 1996, President Clinton signed 
into law the ``Church Arson Prevention Act of 1996'' (Pub. L. 104-155) 
(the Act). The Act provides Federal, State and local law-enforcement 
agencies with the needed additional tools to address violent crimes 
against places of worship, strengthens the penalties for these crimes, 
and authorizes Federal assistance for rebuilding efforts. Section 4 of 
the Act, entitled ``Loan Guarantee Recovery Fund,'' authorizes the 
Secretary of HUD to guarantee loans made by financial institutions to 
assist certain nonprofit organizations (organizations described in 
section 501(c)(3) of the Internal Revenue Code of 1986) that have been 
damaged as a result of acts of arson or terrorism.
    On September 6, 1996 (61 FR 47404), HUD published a final rule 
implementing section 4 of the Act by establishing a new 24 CFR part 
573. Part 573 describes the procedures, terms, and conditions by which 
HUD will guarantee loans to assist eligible nonprofit organizations. 
Under Sec. 573.3, eligible borrowers may use guaranteed loan funds for 
a wide range of activities. Paragraph (i) of Sec. 573.3 permits the use 
of guaranteed loan funds to refinance existing indebtedness secured by 
a property to be constructed, rehabilitated, or reconstructed.
    Unfortunately, Sec. 573.3(i) inadvertently omitted to include the 
refinancing of existing indebtedness secured by a property for which 
construction, rehabilitation, or reconstruction has already begun. As 
evidenced by the preamble to the September 6, 1996 final rule, HUD 
intended to include such refinancings in the list of eligible 
activities. For example, the summary of eligible activities set forth 
in the preamble provided that guaranteed loan funds may be used for the 
``refinancing of existing indebtedness'' (61 FR 47404). The summary did 
not limit such refinancings to indebtedness secured by properties where 
rebuilding was a future event.
    Further, in justifying the need for final rulemaking without prior 
public comment, HUD noted that the Department of Justice had identified 
more than 40 eligible organizations whose properties had been damaged 
or destroyed by acts of arson or terrorism and that those organizations 
were in immediate need of loan guarantee assistance (61 FR 47404). It 
was known to HUD that some of these organizations had already rebuilt 
their damaged properties with loans carrying interest rates that might 
have been lower with HUD loan guarantee assistance.

List of Subjects in 24 CFR Part 573

    Loan programs--housing and community development, Nonprofit 
organizations, Reporting and recordkeeping requirements.

    Accordingly, in title 24 of the Code of Federal Regulations, part 
573 is amended as follows:
    1. The authority citation for part 573 continues to read as 
follows:

    Authority: Pub. L. 104-155, 110 Stat. 1392, 18 U.S.C. 241 note; 
42 U.S.C. 3535(d).

    2. In Sec. 573.3, paragraph (i) is revised to read, as follows:


Sec. 573.3  Eligible activities.

* * * * *
    (i) Loans for refinancing existing indebtedness secured by a 
property which has been or will be acquired, constructed, rehabilitated 
or reconstructed, if such financing is determined to be appropriate to 
achieve the objectives of the Act and this part.
* * * * *
    Dated: May 1, 1997.
Camille E. Acevedo,
Assistant General Counsel for Regulations.
[FR Doc. 97-11729 Filed 5-5-97; 8:45 am]
BILLING CODE 4210-29-P