[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