[Federal Register Volume 62, Number 136 (Wednesday, July 16, 1997)] [Notices] [Pages 38109-38112] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 97-18780] ----------------------------------------------------------------------- DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT [Docket No. FR-4248-N-01] Fiscal Year 1997 Portfolio Reengineering Demonstration Program Request for Qualifications AGENCY: Office of Assistant Secretary for Housing--Federal Housing Commissioner, HUD. ACTION: Notice of request for qualifications. ----------------------------------------------------------------------- SUMMARY: The Department is carrying out a statutory Demonstration Program that is intended to test approaches that reduce the cost of the ongoing Federal subsidy for FHA-insured, Section 8-assisted housing, while preserving this critical affordable housing resource in good physical and financial condition. The Guidelines for the Demonstration [[Page 38110]] Program were published on January 23, 1997, at 62 FR 3567. One method HUD may use to carry out the Demonstration is to form limited partnerships with nonprofit Designees that are authorized to assume some of the functions, obligations, and responsibilities and to receive some benefits of HUD. The Designee process is detailed in section VII. of the Guidelines (62 FR 3578-3580). In accordance with the Guidelines, the Department is publishing this Notice as a formal Request for Qualifications (RFQ). This RFQ is directed to nonprofit organizations that are interested in participating in the Designee process under section VII. of the Guidelines. In FY 1997, The Department expects to enter into one such participation arrangement with a qualified nonprofit Designee to restructure a portfolio of about 20 to 50 FHA-insured mortgages on Section 8 assisted projects. FOR FURTHER INFORMATION CONTACT: George C. Dipman, Demonstration Program Coordinator, Office of Multifamily Housing, Department of Housing and Urban Development, 451 Seventh Street, S.W., Washington, DC 20410-4000; Room 6106; Telephone (202) 708-3321. (This is not a toll- free number.) Hearing or speech-impaired individuals may call 1-800- 877-8399 (Federal Information Relay Service TTY). Internet address: [email protected]. SUPPLEMENTARY INFORMATION: Paperwork Reduction Act Statement The information collection requirements contained in this Request for Qualifications have been approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), and assigned OMB control number 2502-0519. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a valid control number. Nonprofit Partnership--Request for Qualifications I. Background: Fiscal Year 1997 Portfolio Reengineering Demonstration Program HUD seeks to form a limited partnership with a nonprofit organization to restructure a portfolio of about 20 to 50 FHA insured multifamily mortgages on projects scattered throughout the United States. The project-based Section 8 contracts associated with these projects are expiring. This Request for Qualifications is being issued in order to select nonprofit organizations with sufficient experience, capacity and financial strength, either on their own or in conjunction with other experienced organizations, to become HUD's partner in this effort. II. Purpose and Structure of Partnership The objective of the partnership will be to restructure project debt in a manner that achieves financial stability for the project at the least cost to the Federal Government, while addressing the other goals of the Demonstration Program. The partnership will also provide the Designee the opportunity to earn a financial return. HUD is seeking responses from nonprofit organizations with a history of national or large regional operations because the size of the portfolio of FHA-insured mortgages on projects with Section 8 contracts that expire in FY 1997 is limited and is distributed widely throughout the country. The partnership is expected to terminate when mortgage restructuring work is complete. This should occur before the end of FY 1998, unless mortgages with post-FY-1997 Section 8 contract expirations are added to the pool. The partnership will be structured as a limited partnership with the Designee as managing general partner and HUD as limited partner. The Designee will invest cash or other financial instruments acceptable to HUD in anticipation of a return from the restructuring. The return will be generated by HUD's sharing with its Designee partner a portion of the project restructuring results effected by the partnership, which exceed the threshold established by HUD for the pool. If the Designee is, itself, a partnership, the general partner must be a nonprofit and have tax-exempt status under section 501(a) of the Internal Revenue Code based on section 501(c)(3) of the Internal Revenue Code. III. Request for Qualifications A. Selection Process HUD intends to conclude its selection process on or before August 27, 1997. HUD intends to qualify two or more nonprofit organizations that will bid to become HUD's partner. The qualifications will be based on the selection criteria established by section VII.A. of the Guidelines, which are as follows: 1. Demonstrated experience with multifamily loan restructurings; 2. Demonstrated experience in multifamily financing, and asset/ property management experience relating to affordable multifamily housing; 3. Demonstrated staff experience and capacity for managing a restructuring process for a portfolio of multifamily projects; and 4. A history of stable, financially sound, and responsible administrative performance. These selection criteria may be satisfied solely by the nonprofit organization or in conjunction with other entities with proven experience and capacity in the areas outlined. The final selection of the designated partner, from among the nonprofit organizations who are qualified, will be made by a bid process based on the level of cash or financial instrument acceptable to HUD that the organizations are willing to commit. HUD anticipates that only one partnership will be created during FY 1997. HUD, however, reserves the right not to select any partners from this RFQ, or to select more than one. Additional partnerships may be created in FY 1998 and beyond. In the future, HUD may use the list of qualified nonprofits developed under this RFQ to select Designees, if HUD decides to enter into additional partnerships either under current statutory authority or any similar statutory authority that may be enacted. HUD may seek additional information from respondents during the selection process, in written or oral form. B. Submission Requirements Three copies of the response to the Request for Qualifications should be submitted. C. Pre-Submission Conference HUD will hold a pre-submission conference approximately two weeks after publication of this RFQ. The precise time and place will be posted on the FHA/Housing Multifamily Business Homepage at http:// www.hud.gov/fha/fhamf.html. D. Proposal Deadline The required copies of the response to the Request For Qualifications must be delivered on or before 4:00 P.M. EDT on August 3, 1997 to: Mr. George Dipman, PRe Demonstration Program, Office of the Deputy Assistant Secretary for Multifamily Housing, Room 6106, Department of Housing and Urban Development, 451 Seventh Street, SW, Washington, D.C. 20410. [[Page 38111]] IV. Response Contents The response should address each of the items described in paragraphs A. through C. of this section IV. A. Organizational Structure For the entity proposed to be HUD's partner, provide: 1. A list of all principals and, if applicable, Board members, with their individual corporate affiliations; certification that the organization has a voluntary Board of Directors; 2. Evidence of nonprofit status and of tax-exempt status under section 501(a) of the Internal Revenue Code based on section 501(c)(3) of the Internal Revenue Code; and 3. A summary of current organization structure and staffing. B. Financial Strength and History For the nonprofit organization and any other entity that will be in the partnership with the nonprofit organization provide: 1. Documentation of a history of stable, financially sound, and responsible administrative performance, including prior relevant financial management experience; 2. Audited financial statements for the most recent two years including balance sheet and income statements. These materials should include unrestricted cash availability, net worth as a percent of assets, and current and long term liabilities, and a summary of key balance sheet, income statement, and cash flow trends over the last three years; 3. A summary of a certified independent auditor's key findings in its most recent annual letter to management and of management's subsequent actions. A copy of the most recent auditor's letter to management and of management's response is desirable but not required. If none of the above is available, provide a certification of adequacy of the applicant's internal management controls from an independent certified public accountant who has examined the current internal management controls, or is establishing those systems for a new entity; and 4. A description of any significant unresolved financial problems, or outstanding audit findings, and an explanation of how these problems are being resolved. C. Capacity Describe the capacity of the nonprofit organization and, if applicable, of its current or future team members or partners to undertake the restructuring of a portfolio of mortgages on subsidized multifamily projects. If a team approach is chosen, the primary nonprofit must provide evidence of its ability to manage the team. The response must address the following: 1. Experience With Multifamily Properties Experience with multifamily properties, for the past five years, in each of the following activities, stating the annual volume for each activity: a. Loan modifications, workouts, or other aspects of asset management; b. Underwriting of debt or investment of equity, particularly for affordable housing, including delinquency/default rates on debt and return received and losses recognized on equity; c. Property acquisition, ownership and/or management, indicating whether each property has operated at, above, or below ``breakeven'' and showing any increases or decreases in value during the period during which the property was managed or owned; and d. Management of loan portfolios, describing systems developed to ensure quality management, including how the organization assesses risk and how it provides for reserves against potential loss. For each of the four areas in paragraphs a. through d., above, that apply: i. Describe the number and type of projects. Highlight experience with Section 8 or other publicly subsidized projects, Low Income Housing Tax Credit projects, etc. ii. For each individual with responsibility for carrying out partnership activities, explain the extent of their participation in each of the four areas. What expertise did they contribute? Were they responsible for analysis, management, or decision making? Describe the contributions of non-staff team members. State whether the same experienced individual on the proposed team will be responsible for each of these four areas. 2. Geographic Area of Operation a. Proven experience in operating nationally and/or regionally: Address the largest geographic area in which the organization has operated. Describe the number of units owned, managed, financed, and sold in various locations. State whether and, if so, how the results described in section C.1.a. through C.1.d. vary by geographic area. b. If the organization does not now operate nationally, describe how the organization would undertake and manage restructurings on a national level. 3. Ability To Provide Capital to Demonstration Projects a. Describe experience in obtaining debt and/or equity for projects, and state which projects involved HUD lending programs. b. Describe experience in leveraging state and local financial support and other resources for projects. 4. Ability To Provide Equity Contribution to Partnership Submit evidence of the availability of funds needed to participate in the partnership. If funds are not currently available, indicate whether the equity investment will be provided by a partner. If so, show evidence of that partner's commitment to provide equity. Describe any other method that will be used to provide equity. V. Project Team A. Identify key members of the team; the team leader; key decision makers; and the time commitment planned for each member. Include an organization chart. Explain the role of each member and expertise to be contributed. Provide detailed resumes for each team member. B. Describe ability to commit experienced staff, including partners or consultants, to the Demonstration program, both immediately and for the duration of the partnership. C. Describe ability to perform functions listed below, as outlined in resumes of key personnel and key contractors/partners, which detail prior related experience. The following are among the areas of expertise expected to be required: 1. Loan modifications or workouts for multifamily properties; 2. Underwriting of debt or equity for multifamily properties; 3. Portfolio management; 4. Valuation of multifamily properties; 5. Physical Needs Assessment; and 6. Resident and Community Involvement. D. Describe the method by which the organization will provide Demonstration Program management and oversight. E. Describe demonstrated staff experience and capacity for managing a team responsible for the restructuring of multiple multifamily financings. VI. Draft Workplan A. Provide a description of anticipated tasks required by the restructuring effort and a schedule for completing them. B. Describe the organization's plan to bring new financing to projects being [[Page 38112]] restructured, either directly or through the private sector partner. C. Describe your approach for involving tenants and communities in the restructuring effort. D.i. For nonprofits operating nationally with a network of local affiliations, explain how the participation of this local network would complement the organization's role as HUD's partner. ii. Explain how the organization will identify and resolve potential conflicts between the organization's other activities and its role as managing general partner of the partnership with HUD; for example, in its relationships with property owners, lenders, and contractors. Dated: July 10, 1997. Nicolas P. Retsinas, Assistant Secretary for Housing-Federal Housing Commissioner. [FR Doc. 97-18780 Filed 7-11-97; 5:04 pm] BILLING CODE 4210-27-U