[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]


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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.

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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