[Federal Register Volume 63, Number 158 (Monday, August 17, 1998)]
[Notices]
[Pages 44102-44111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22029]



[[Page 44101]]

_______________________________________________________________________

Part IV





Department of Housing and Urban Development





_______________________________________________________________________



Fiscal Year 1999 Multifamily Housing Mortgage and Housing Assistance 
Restructuring Program Request for Qualifications; Notice

  Federal Register / Vol. 63, No. 158 / Monday, August 17, 1998 / 
Notices  

[[Page 44102]]



DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4370-N-01]


Fiscal Year 1999 Multifamily Housing Mortgage and Housing 
Assistance Restructuring Program Request for Qualifications

AGENCY: Office of Secretary, HUD.

ACTION: Notice of request for qualifications.

-----------------------------------------------------------------------

SUMMARY: The Department is implementing the Mark-to-Market Program 
authorized by the Multifamily Assisted Housing Reform Act (MAHRA). The 
program is intended primarily to: (1) preserve low-income rental 
housing affordability and availability while reducing the long-term 
costs of project-based assistance; (2) reform the design and operation 
of Federal rental housing assistance programs administered by the 
Secretary, to promote greater multifamily housing project operating and 
cost efficiencies; (3) encourage owners of eligible multifamily housing 
projects to restructure their FHA-insured mortgages and project-based 
assistance contracts in a manner that is consistent with the statute. 
The statute directs the Secretary to enter into ``portfolio 
restructuring agreements'' with ``participating administrative 
entities'' (PAEs) for the implementation of mortgage restructuring and 
rental assistance sufficiency plans to restructure multifamily housing 
mortgages insured or held by the Secretary under the National Housing 
Act.
    A PAE is a public agency, a nonprofit organization, or any other 
entity (including a law firm or an accounting firm), that meets the 
requirements of MAHRA. For purposes of this RFQ, a public agency means 
a State, county, municipality or other governmental or public body (or 
agency or instrumentality thereof) authorized to engage in or assist in 
the development or operation of low-income housing; namely, a public 
agency is either a State housing finance agency or a local housing 
agency. The Department is publishing this Notice as a formal Request 
for Qualifications (RFQ) from entities that seek to become PAEs.
    The statute establishes a priority and directs the Secretary to 
provide a reasonable period during which the Secretary will consider 
proposals only from State housing finance agencies (HFAs) and local 
housing agencies. It further directs the Secretary to select such an 
agency without considering other applicants if the Secretary determines 
the agency is qualified. By the end of the period the Secretary shall 
notify the State HFA or local housing agency regarding the status of 
the proposal. If the proposal is rejected, the Secretary will provide 
reasons for the rejection and the public agency will have an 
opportunity to respond. To comply with these provisions of the statute, 
the selection of qualified PAEs under this RFQ will be completed in two 
phases.

DATES: See Supplementary Information for dates concerning pre-
submission conference, proposal deadlines, and selection schedule.

FOR FURTHER INFORMATION CONTACT: George C. Dipman or William S. 
Richbourg, Program Coordinators, Office of Multifamily Housing, 
Department of Housing and Urban Development, 451 Seventh Street, SW, 
Washington, DC 20410-4000; Room 6272; Telephone (202) 708-2495 Fax 
(202) 708-5494. (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: George__C.__D[email protected] or 
William__S.__R[email protected].

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act Statement

    The information collection requirements contained in this Request 
for Qualifications (RFQ) have been submitted to the Office of 
Management and Budget (OMB) for emergency review and approval in 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520). In accordance with the Paperwork Reduction Act, HUD 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. The OMB control number, when assigned, will be 
published in the Federal Register, together with any changes in the 
information collection requirements that may result from the approval 
process.

Participating Administrative Entities--Request for Qualifications

I. Background: Multifamily Housing Mortgage and Housing Assistance 
Restructuring Program

    The Multifamily Assisted Housing Reform and Affordability Act of 
1997 (MAHRA) was enacted in title V of the Departments of Veterans 
Affairs and Housing and Urban Development, and Independent Agencies 
Appropriations Act, 1998 (FY 1998 Appropriations Act) (Pub. L. No. 105-
65; 111 Stat. 1344, 1384; approved October 27, 1997). Subtitle A of 
MAHRA contains the FHA-Insured Multifamily Housing Mortgage and Housing 
Assistance Restructuring Program. That program provides authority to 
deal with Section 8 contract expirations occurring in FY 1999 and 
later. In accordance with section 522(a) of MAHRA, the new program will 
be initially implemented by an interim rule to be followed by a final 
rule.
    HUD seeks to select Participating Administrative Entities with 
which it will enter into portfolio restructuring agreements for a term 
of one year with optional annual renewals. Compensation is expected to 
include a base fee, a performance-based incentive fee and a provision 
for reimbursable expenses. Responsibilities will include developing and 
implementing mortgage restructuring and rental assistance sufficiency 
plans (Restructuring Plan) to restructure multifamily housing mortgages 
insured or held by the Secretary under the National Housing Act in 
order to:
    (a) Reduce the costs of expiring contracts for assistance under 
section 8 of the US Housing Act of 1937;
    (b) Address financially and physically troubled projects; and
    (c) Correct management and ownership deficiencies.
    This Request for Qualifications is being issued in order to select 
entities that possess sufficient experience, capacity and financial 
strength, either on their own or in conjunction with other experienced 
entities to become PAEs and to efficiently and effectively execute the 
restructuring program.
    Attachment A to this RFQ provides a list of insured, subsidized 
projects with Section 8 rents greater than 90% of the 1997 Fair Market 
Rent. The report shows the number of contracts initially expiring by 
year, by State, for a four year period beginning in Fiscal Year 1999. 
This list is for illustrative purposes only. It is not a definitive 
list of eligible projects. Projects that have already reached their 
initial contract expirations and are on one year renewals are not 
included. There may also be some projects with formerly insured, HUD 
held mortgages that may be eligible. Finally, eligibility will be based 
on a comparison with rents for comparable projects in the same market 
area.
    Selection criteria for PAEs include, among others, experience 
working with tenants and tenant organizations, underwriting FHA-insured 
and conventional mortgages, and negotiating with mortgagees to 
restructure mortgage debt. If an applicant public agency does not 
possess this experience in-house it is encouraged to contract for 
qualified resources that will enhance its response to the RFQ.

[[Page 44103]]

    The selection of PAEs will be conducted in two phases:
    Phase I: Public Agency Selection: In Phase I, HUD will consider 
only State HFAs and local housing agencies (collectively referred to as 
``public agencies'') and will determine which are qualified to be PAEs.
    Phase II: Public Agency Appeal and Non-Public Entity Selection: 
After HUD has determined which public agencies are qualified in Phase 
I, HUD will consider the proposals from nonprofit organizations and for 
profit entities (collectively referred to as ``non-public entities'') 
and will determine which are qualified to be PAEs. At this time, 
appeals from public agencies that were rejected in Phase I will also be 
considered. At a later date, these qualified non-public entities will 
be provided with specific portfolios of assets and a ``bidding 
package'' and will be required to prepare a competitive bid for the 
right to restructure the assets in one or more of the portfolios.

II. Purpose and Objectives

    The objective of this Request for Qualifications is to select those 
PAEs with which the Secretary will enter into portfolio restructuring 
agreements (PRAs) to implement Restructuring Plans and carry out the 
other purposes of the Mark-to-Market Program.
    A portfolio restructuring agreement:
     Is an agreement between the Secretary and the PAE that 
establishes the obligations and requirements of each party;
     Identifies the eligible multifamily housing projects or 
groups of projects for which the PAE is responsible for developing and 
implementing a HUD-approved Restructuring Plan;
     Requires the PAE to review and certify to the accuracy and 
completeness of the evaluation of rehabilitation needs;
     Identifies the responsibilities of both the PAE and the 
Secretary in implementing Restructuring Plans;
     Requires each Restructuring Plan to be prepared in 
accordance with the requirements of the statute;
     Includes other requirements established by the Secretary 
including a right of the Secretary to terminate the contract;
     Provides for indemnifying the PAE if it is a State HFA or 
local housing agency;
     Includes compensation for reasonable expenses;
     Includes, where appropriate, incentive agreements with the 
PAE to reward superior performance in meeting the purposes of MAHRA.
    In general, the functions that will be performed by the PAE in 
carrying out its responsibilities under the portfolio restructuring 
agreement include, but are not limited to, the following:
    1. Owner eligibility: Reviewing owner data submitted in connection 
with expiring contracts in order to determine eligibility for 
restructuring under the Statute.
    2. Determining initial restructured rent and operating expense 
levels: Based on an analysis of market rent comparables and operating 
expenses from an appraisal from data provided by the owner and 
servicer, other parties as appropriate, and the PAE's independent due 
diligence, the PAE will determine comparable market rents or exception 
rents as well as reasonable operating expenses for projects undergoing 
a Restructuring Plan.
    3. Preservation of affordable housing: Either confirming that the 
project meets the criteria for mandatory project-basing or developing, 
for qualified projects, a rental assistance assessment plan to 
determine whether the renewal of Section 8 assistance should be 
project-based or tenant-based, pursuant to guidance provided by HUD. 
Meeting with tenants and local community groups to obtain their views 
and gain other perspectives that may impact the restructuring process.
    4. Rehabilitation needs. Determining the immediate and long term 
rehabilitation needs of the project based on a review and certification 
of the owner's evaluation of rehabilitation needs and a physical 
condition analysis obtained by the PAE, including sizing contributions 
to the Reserve for Replacement.
    5. Underwriting: Determining the Net Operating Income of the 
project from estimated revenues based on the restructured rent 
determination, and from estimated operating expenses; determining the 
size and structure of sustainable new or modified first mortgages based 
on these estimates, and the size and conditions of the HUD second 
mortgage; ensuring adequate sources of funds are available from project 
accounts, the owner's contribution to rehabilitation, the HUD second 
mortgage, grants, loans, or capital advances to meet approved uses and 
perform an analysis of tax implications for use in analyzing 
restructuring options. The analysis of tax implications will not be for 
the benefit of the owner or constitute legal advice to the owner. The 
owner will be solely responsible for its own analysis of tax 
implications.
    6. Negotiations: Negotiating with owner to reach agreement on 
restructured rental subsidies, restructured debt, and rehabilitation.
    7. Loan/funding approval: Obtaining HUD approval of the HUD funding 
amount (including the amount of the partial or full payment of claim 
and any HUD funding for rehabilitation) and of the HUD held second 
mortgage loan. Assist the owner either to obtain approval of the 
mortgagee to modify the existing mortgage or to obtain new financing.
    8. Closing: Coordinating the time and place of closing, the 
drafting, circulation, execution, and recording of documents, 
establishment of required escrows, and any transfers of funds.
    9. Post-closing document distribution: Ensuring that copies of 
properly executed closing documents are circulated to appropriate 
parties including HUD field offices and/or HUBs, as well as copies for 
the Washington Docket.
    10. Facilitating the voluntary sale or transfer of projects: 
Facilitate the sale or transfer to a qualified purchaser, either of 
properties disqualified from restructuring (before or during the 
restructuring) because of the actions of an owner, or at the request of 
an owner where the PAE determines that sale or transfer may be the best 
means of achieving the purposes of MAHRA.
    Servicing second mortgages and rehabilitation escrow accounts: 
Servicing is a responsibility that will not be initially covered in the 
PRA, as HUD is still considering this matter. This RFQ is not intended 
to obtain information to determine an applicant's qualifications to 
perform ongoing servicing including administering the Section 8 
contracts, monitoring compliance with the terms of the Use Agreements, 
servicing rehabilitation escrows, and servicing the second mortgage. 
HUD will follow an appropriate public procedure in the future to obtain 
necessary information to determine how these responsibilities will be 
handled. (Please indicate your interest in performing these services in 
Section 2 of Attachment B to this document.)
    The following types of entities are invited to apply under this 
RFQ: State housing finance agencies, local housing agencies, nonprofit 
organizations and for-profit entities including law firms and 
accounting firms.
    HUD is seeking responses from all entities that are interested and 
that are potential candidates under the provisions of the statute.
    HUD will not process a response from an entity that (1) has been 
charged with a violation of the Fair Housing Act by the Secretary; (2) 
is the defendant in a Fair Housing Act lawsuit filed by the Department 
of justice; or (3) has

[[Page 44104]]

received a letter of noncompliance findings under title VI of the Civil 
Rights Act, section 504 of the Rehabilitation Act, or section 109 of 
the Housing and Urban Community Development Act unless the charge, 
lawsuit, or letter of findings have been resolved to the satisfaction 
of the Secretary.

III. Process for Selecting Qualified PAES

A. Selection Schedule

    Subject to publication of the interim rule for effect, HUD intends 
to conclude its selection process according to the following schedule:
     By September 16, 1998, proposals are due from State HFAs 
and local housing agencies and non-public entities. Proposals from the 
latter will be held by the Office of General Counsel (OGC) until the 
conclusion of Phase I.
Phase I--Public Agency Selection
     After reviewing the public agency proposals, the Secretary 
shall announce the preliminary selections of the State HFAs and local 
housing agencies that are qualified as PAEs with a determination of 
both technical qualifications and estimated workload capacity. If a 
public agency proposal is rejected at this time, the Secretary shall 
provide the reasons and an opportunity for the applicant to respond. 
HUD intends to make these announcements on or about October 1, 1998.
Phase II--Public Agency Appeal and Non-Public Entity Selection
     After the announcement of preliminary selections of the 
State HFAs and local housing agencies is made, proposals from non-
public entities, that meet the requirements of MAHRA shall be released 
by OGC for review and evaluation.
     Within three weeks after the rejection is sent, a public 
agency applicant that was rejected in Phase I and chooses to appeal 
must submit its revised application.
     On or after October 29, 1998, the Secretary intends to 
issue final determinations concerning selection and estimated workload 
capacity of State HFAs and local housing agencies as well as all other 
entities qualified to be PAEs. HUD intends to allocate assets to a 
qualified public agency PAE, up to its numerical capacity, before 
allocating assets in the same jurisdiction to a qualified non-public 
entity PAE. The Secretary shall also notify all entities that were 
rejected and provide the reasons for the rejection. There is no appeal 
process for these rejections.

B. Evaluation Procedures

    For all applicants HUD will review each application against the 
selection criteria in section III.D. of this RFQ. HUD will review each 
applicant's qualifications and will assign points for each selection 
criterion up to the maximum indicated in section III.D. for the 
respective selection criterion. If HUD determines an applicant fails to 
meet a selection criterion it will assign zero points for that 
criterion which will result in the rejection of the application. HUD 
will rank all applicants that have received points on each selection 
criterion. Qualified applicants must have at least 70 points. HUD will 
select applicants that HUD determines clearly meet each of the five 
selection criteria based on the scoring. From the information 
submitted, in accordance with selection criterion E, HUD will determine 
the number of assets the applicant will be assigned at any given time. 
HUD will negotiate and execute Portfolio Restructuring Agreements (PRA) 
with only those applicants determined to be qualified.
    HUD may select fewer than all non-public entity applicants that 
receive the minimum qualifying score. Selection may be based upon the 
projected size of the portfolio in States where there is no public 
agency PAE.
    At a later date, the selected non-public entity applicants will be 
provided with specific portfolios of assets and a bidding package and 
will be required to prepare a competitive bid for the right to 
restructure the assets in one or more portfolios. These portfolios will 
include projects that are located in jurisdictions where there are no 
qualified public agency PAEs or projects that are not included in a PRA 
of any public agency PAE.
    HUD will form a limited partnership with each non-public entity 
that is a successful bidder.

C. Conflicts of Interest

1. PAE Applicants
    All PAE applicants shall identify the procedures they use, or will 
use, to identify conflicts of interest.
     Definitions. Conflict of interest. A conflict of interest 
is a situation in which a PAE or other restricted person has: a 
financial interest in a matter relating to the PRA; one or more 
personal, business, or financial interests or relationships which would 
cause a reasonable person with knowledge of the relevant facts to 
question the integrity or impartiality of those who are or will be 
acting under the PRA; or is taking an adverse position to HUD or to an 
owner whose project is covered by a PRA in a lawsuit, administrative 
proceeding or other contested matter.
    Control means the power to vote, directly or indirectly, 25 percent 
or more of any class of the voting stock of a company; the ability to 
direct in any manner the election of a majority of a company (or other 
entity's) directors or trustees; or the ability to exercise a 
controlling influence over the company or entity's management and 
policies. For purposes of this definition, a general partner of a 
limited partnership is presumed to be in control of that partnership.
    Restricted person means a PAE; any management official of the PAE; 
any legal entities that are under the control of the PAE, are in 
control of the PAE or are under common control with the PAE; or any 
employee, agent or contractor of the PAE, or employee of such agent or 
contractor, who will perform or have performed services under a PRA 
with HUD.
     General prohibitions. The PAE may not permit conflicts of 
interest to exist without obtaining a waiver from HUD.
    The PAE must establish procedures to identify conflicts of interest 
and ensure that conflicts of interest do not arise or continue, subject 
to waiver.
    HUD will not enter into PRAs with potential PAEs who have conflicts 
of interest associated with a particular PRA or identified asset, or 
permit PAEs to continue performance under existing PRAs when such PAEs 
have conflicts of interest, unless such conflicts have been eliminated 
to HUD's satisfaction by the PAE or potential PAE or are waived by HUD.
    The PAE has a continuing obligation to take all action necessary to 
establish whether it or any other restricted person has a conflict of 
interest.
     Waivers. HUD will waive conflicts of interest only when, 
in light of all relevant circumstances, the interests of HUD in the 
PAE's participation outweigh the concern that a reasonable person may 
question the integrity of HUD's operations.
     Conflicts of interest arising prior to PAE selection. 
Request for review of conflicts of interest. A potential PAE may, with 
its request to HUD for consideration for selection as a PAE, must 
identify existing conflicts of interest and may make a written request 
for a determination as to the existence of a conflict of interest, may 
request that the conflict of interest, if any, be waived, or may 
propose how it could eliminate the conflict.
    If, after submitting request but prior to selection, a potential 
PAE discovers that it has a conflict, it must notify HUD in writing 
within 10 days of submitting the

[[Page 44105]]

request or prior to selection, whichever is earlier. The potential PAE 
may, with its notices, request that the conflict be waived or may 
propose how it may eliminate the conflict. The potential PAE may also 
request a determination as to the existence of the conflict.
    Review by HUD. Subject to the restrictions set forth in this 
section, HUD in its sole discretion may determine whether a conflict of 
interest exists, may waive the conflict of interest, or may approve in 
writing a PAE's proposal to eliminate a conflict of interest.
     Reconsideration of decisions. Decisions concerning 
conflicts of interest may be reconsidered by HUD upon application by 
the PAE. Such requests must be in writing and must contain the bases 
for the request. HUD may, at its discretion and after determining that 
it is in its best interests, stay any corrective or other actions 
previously ordered by pending reconsideration of a decision.
     PAEs will be subject to such additional conflicts of 
interest requirements and requirements concerning standards of conduct 
and confidentiality as HUD may prescribe by regulation.
2. Reviewers and Technical Advisors
    Consultants or experts assisting HUD in rating and ranking 
applicants under this RFQ are subject to 18 U.S.C. 208, the Federal 
criminal conflict of interest statute, and to the Standards of Ethical 
Conduct for Employees of the Executive Branch regulation published at 5 
CFR part 2635. As a result, individuals who have assisted or plan to 
assist applicants with preparing applications for this RFQ may not 
serve on a selection panel or as a technical advisor to HUD for this 
RFQ. All individuals involved in rating and ranking this RFQ, including 
experts and consultants, must avoid conflicts of interest or the 
appearance of conflicts. If the selection or non-selection of any 
applicant under this RFQ affects the individual's financial interests 
set forth in 18 U.S.C. 208 or involves any party with whom the 
individual has a covered relationship under 5 CFR 2635.502, that 
individual must, prior to participating in any matter regarding this 
RFQ, disclose this fact to the General Counsel or OGC's Ethics Law 
Division.

D. Selection Criteria

    In both Phase I and Phase II, all applications will be considered 
based on the following selection criteria established under section 
513(b) of MAHRA. Please note that the applicant must demonstrate prior 
experience and/or a relevant plan that satisfies all five selection 
criteria. Failure to satisfy one or more of the selection criteria will 
result in the rejection of the application.
    1. Selection Criterion A: Demonstrated experience in, and an 
adequate plan for, working directly with residents of low-income 
housing projects and with tenants and other community-based 
organizations. (15 Points)
    In rating this criterion HUD will consider demonstrated experience 
with residents, tenant organizations, and community-based groups that 
have worked with the applicant as well as the plan to work with these 
groups in the restructuring process.
    2. Selection Criterion B: Demonstrated experience with, and 
capacity for successful multifamily restructuring and multifamily 
financing (which may include risk-sharing arrangements and 
restructuring eligible multifamily housing properties under the fiscal 
years 1997 and 1998 Federal Housing Administration multifamily housing 
demonstration programs) (25 points).
    a. Multifamily Restructurings (15 of the 25 points): HUD will 
consider the extent of the applicant's experience within the last five 
years in restructuring mortgages secured by multifamily properties. 
Restructuring includes loan modifications, workouts, or other forms of 
restructuring for both portfolios and single assets. Indicate specific 
experience in restructuring affordable multifamily projects involving 
Section 8 subsidies and projects with low income housing tax credits or 
other affordable housing financing mechanisms. Experience with the 
analysis of the tax consequences of restructuring will also be 
considered.
    b. Multifamily Financing: (10 of the 25 points): HUD will consider 
the applicant's demonstrated experience in underwriting multifamily 
loans and providing financing for multifamily properties particularly 
with regard to affordable multifamily housing utilizing Section 8 
subsidies or other public subsidies, including low income housing tax 
credits and tax exempt bonds.
    3. Selection Criterion C: A history of stable, financially sound, 
and responsible administrative performance (which may include the 
management of affordable low-income rental housing) (15 points).
    HUD will evaluate the administrative and management performance of 
the applicants and its partners through the review of its 
organizational history, mission, and administrative performance with 
specific emphasis on its management of multifamily projects or loans.
    4. Selection Criterion D: Demonstrated financial strength in terms 
of asset quality, capital adequacy, and liquidity (15 points).
    HUD will consider:
    Applicant's audited financial statements for most recent two years;
     Auditor's key findings;
     Applicant's most recent annual report; and
     Findings of Bond Rating Agencies.
    5. Selection Criterion E: Demonstrated ability and capacity to 
carry out the specific transactions and other responsibilities under 
subtitle A of the statute in a timely, efficient, and cost effective 
manner (30 points).
    HUD will review and evaluate applicant and applicant's partners, 
subcontractors, and other team members' organization and staffing, 
including individual roles and responsibilities, and the experience of 
key personnel. The applicant's capacity to manage the anticipated 
workload will be determined based on information provided.
    HUD will consider applicant's workplan and its administrative and 
management systems, policies, and procedures to ensure timely and 
effective implementation of the plan.

E. Submission Requirements

    Three (3) copies of the response to the Request for Qualifications 
should be submitted in the format set out in Attachment B to this RFQ.

F. Questions and Further Information

    Respondents' questions to this RFQ must be submitted in writing, 
either by fax or e-mail, and received by HUD by August 24, 1998. The 
questions will be answered at the pre-submission conference. Questions 
should be submitted to George C. Dipman or William S. Richbourg, 
Program Coordinators, Office of Multifamily Housing, Department of 
Housing and Urban Development, 451 Seventh Street, SW, Washington, DC 
20410-4000; Room 6272; Telephone (202) 708-2495 Fax (202) 708-5494. 
(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: George__C.__D[email protected] or 
William__S.__R[email protected].

G. Pre-submission Conference

    HUD will hold a pre-submission conference in Washington, DC, on or 
about September 27, 1998. The precise time and place will be posted on 
the FHA/Housing Multifamily Business Homepage at http://www.hud.gov/
fha/mfh/pre/premenu.html. Further

[[Page 44106]]

questions raised as a result of the pre-submission conference should be 
submitted either by fax (202) 708-5494 or e-mail to 
George__C.__D[email protected] or William__S.__R[email protected] within 24 
hours after the pre-submission conference. Within 3 business days after 
the pre-submission conference, HUD will post responses to questions 
raised at the pre-submission conference on the FHA/Housing Multifamily 
Business Homepage at http://www.hud.gov/fha/mfh/pre/premenu.html.

H. Proposal Deadline

    The required copies of the response to the Request For 
Qualifications must be delivered on or before 5:15 P.M. EDT on 
September 16, 1998.

I. Submission Addresses

    Proposals must be submitted to the appropriate address as follows:

State HFAs and Local Housing Agencies: M2M Program-Public Agencies, 
Office of the Deputy Assistant Secretary for Multifamily Housing, 
George Dipman, HFA Coordinator, Room 6272, Department of Housing and 
Urban Development, 451 Seventh Street, SW, Washington, DC 20410
Non-Public Entities: Office of the General Counsel, John J. Daly, 
Associate General Counsel for Insured Housing, Attn: M2M Program--Non-
Public Entities, Room 9226, Department of Housing and Urban 
Development, 451 Seventh Street, SW, Washington, DC 20410.

IV. Response Contents

    The response should address each of the items described in the 
template provided in Attachment B to this RFQ and should follow 
precisely the format of the template.

    Dated: August 11, 1998.
Andrew Cuomo,
Secretary.

BILLING CODE 4210-32-P

[[Page 44107]]

[GRAPHIC] [TIFF OMITTED] TN17AU98.041



BILLING CODE 4210-32-C

[[Page 44108]]

ATTACHMENT B.--FISCAL YEAR 1999 MULTIFAMILY HOUSING MORTGAGE AND 
HOUSING ASSISTANCE RESTRUCTURING PROGRAM REQUEST FOR 
QUALIFICATIONS--RESPONSE FORMAT

Section 1, Selection Criteria Information
Selection Criterion A: TENANT AND COMMUNITY GROUPS (15 points)
Selection Criterion B1: MULTIFAMILY RESTRUCTURING, COMPREHENSIVE 
EXPERIENCE (25 points criteria B1-B5)
Selection Criterion B2: MULTIFAMILY RESTRUCTURING, PROJECT-SPECIFIC 
EXPERIENCE
Selection Criterion B3: MULTIFAMILY FINANCING
Selection Criterion B4: MULTIFAMILY FINANCING, PROJECT-SPECIFIC 
EXPERIENCE
Selection Criterion B5: MULTIFAMILY RENT & EXPENSE ANALYSIS
Selection Criterion C: HISTORY OF ADMINISTRATIVE PERFORMANCE (15 
points)
Selection Criterion D: FINANCIAL STRENGTH (15 points)
Selection Criterion E: DEMONSTRATED CAPACITY TO CARRY OUT TRANSACTIONS 
AND ORGANIZATION STRUCTURE & RESPONSIBILITIES (30 points)
Section 2, Additional Response Information
Selection Criterion A: TENANT AND COMMUNITY GROUPS: Provide a summary 
of your experience working with residents of low-income housing 
projects and the tenant groups and other resident-based organizations. 
Identify the concerns and the actions taken regarding the tenant 
issues.

------------------------------------------------------------------------
                                              PAE Experience (Note the  
                                               tenant issue(s) and how  
                 Criteria                     resolved. Provide dates,  
                                                duration, and current   
                                                      status.)          
------------------------------------------------------------------------
Experience working directly with                                        
 individual residents of low-income                                     
 housing projects.                                                      
------------------------------------------------------------------------
Experience working with tenant                                          
 organizations and other community-based                                
 organizations.                                                         
------------------------------------------------------------------------
Describe how you plan to work with                                      
 tenants, tenant organizations and                                      
 communities in the restructuring process.                              
------------------------------------------------------------------------

Selection Criterion B, Part 1: MULTIFAMILY RESTRUCTURING: Demonstrated 
experience with, and capacity for successful multifamily restructuring 
which may include loan workouts, loan modifications and bond 
refundings. You may also include risk-sharing arrangements and 
restructuring of eligible multifamily housing properties under years 
1997 and 1998 FHA multifamily housing demonstration programs. HUD will 
consider the applicant's experience within the last five (5) years for 
restructuring mortgages secured by multifamily assets. In particular, 
specific experience in affordable multifamily restructuring including 
projects involving FHA insured mortgages and Section 8 subsidies. 
Restructuring explanation should include determining the eligibility of 
a mortgage requiring loan modifications, workouts or other forms of 
debt and/or subsidy restructuring for multifamily assets.

----------------------------------------------------------------------------------------------------------------
           Criteria                        PAE                   Teaming partner                 Total          
----------------------------------------------------------------------------------------------------------------
Multifamily Debt                                                                                                
 Restructurings in last 5                                                                                       
 years:                                                                                                         
    Total number of units                                                                                       
    Total number of projects                                                                                    
    Total dollar amount                                                                                         
----------------------------------------------------------------------------------------------------------------
Multifamily Subsidy (for                                                                                        
 example, Section 8)                                                                                            
 Restructurings in last 5                                                                                       
 years:                                                                                                         
    Total number of units                                                                                       
    Total number of projects                                                                                    
    Total dollar amount                                                                                         
----------------------------------------------------------------------------------------------------------------
Defaulted Loans Foreclosed:                                                                                     
    Total number of units                                                                                       
    Total number of projects                                                                                    
    Total dollar amount                                                                                         
----------------------------------------------------------------------------------------------------------------
Bond Refundings:                                                                                                
    Total number of units                                                                                       
    Total number of projects                                                                                    
    Total dollar amount                                                                                         
----------------------------------------------------------------------------------------------------------------

Selection Criterion B, Part 2: MULTIFAMILY RESTRUCTURING: Provide 
information for at least 5 projects that have been restructured by the 
PAE or teaming partner in the last 5 years. Please note the request to 
identify key personnel who did the restructuring; the firm if different 
than the PAE and the time required to complete the restructuring.

[[Page 44109]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Description and                                                                                                     
                                       nature of                                                                                                        
                                  restructuring (e.g.,                                                                                                  
                                     workout, loan                                                                                                      
          Project name               modifications,       Status of Restructuring        Key Personnel         Time to complete        Date completed   
                                  foreclosure, ongoing   (complete, ongoing, etc.)                                 (months)                             
                                    litigation, and                                                                                                     
                                     associated tax                                                                                                     
                                       analysis)                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.                                                                                                                                                      
--------------------------------------------------------------------------------------------------------------------------------------------------------
2.                                                                                                                                                      
--------------------------------------------------------------------------------------------------------------------------------------------------------
3.                                                                                                                                                      
--------------------------------------------------------------------------------------------------------------------------------------------------------
4.                                                                                                                                                      
--------------------------------------------------------------------------------------------------------------------------------------------------------
5.                                                                                                                                                      
--------------------------------------------------------------------------------------------------------------------------------------------------------

Selection Criterion B, Part 3: MULTIFAMILY FINANCING: Demonstrated 
experience with financing multifamily properties to include 
underwriting multifamily loans, providing financing for affordable 
multifamily housing utilizing Section 8 subsidies or other public 
subsidies, including low income tax credits and tax exempt bonds (may 
include risk sharing).

----------------------------------------------------------------------------------------------------------------
   Criteria for multifamily                                                                                     
          financing                        PAE                   Teaming partner                 Total          
----------------------------------------------------------------------------------------------------------------
Total Number of multifamily                                                                                     
 loans financed 1992-1998:                                                                                      
----------------------------------------------------------------------------------------------------------------
    Total Dollar Amount                                                                                         
----------------------------------------------------------------------------------------------------------------
    Total Number of Units                                                                                       
----------------------------------------------------------------------------------------------------------------
    Total Number of                                                                                             
     Affordable Housing Units                                                                                   
----------------------------------------------------------------------------------------------------------------
    Percentage (%) of Loans                                                                                     
     Defaulted                                                                                                  
----------------------------------------------------------------------------------------------------------------

Selection Criterion B, Part 4: MULTIFAMILY FINANCING: Provide 
information for at least 5 projects that have been financed by the PAE 
or teaming partner. Please identify key personnel, their firm if 
different than the PAE, and the time required to complete the 
financing.

----------------------------------------------------------------------------------------------------------------
                                 Financing type; project                                                        
                                 description; and role of                                     Time required to  
         Project name           PAE or teaming partner in           Key personnel            complete (months)  
                                      the financing                                                             
----------------------------------------------------------------------------------------------------------------
1.                                                                                                              
----------------------------------------------------------------------------------------------------------------
2.                                                                                                              
----------------------------------------------------------------------------------------------------------------
3.                                                                                                              
----------------------------------------------------------------------------------------------------------------
4.                                                                                                              
----------------------------------------------------------------------------------------------------------------
5.                                                                                                              
----------------------------------------------------------------------------------------------------------------

Selection Criterion B, Part 5: MULTIFAMILY RENT AND EXPENSE ANALYSIS:

------------------------------------------------------------------------
                                                                        
-------------------------------------------------------------------------
(a) In determining Market rents and expenses, an owner might not agree  
 with your position based on the appraisal, market study and your       
 inspection. Provide an example of how you would determine and support  
 your rents and expenses in resolving rent and expense disputes with the
 owner.                                                                 
(b) Explain what database or other resources you have in completing a   
 rent and expense comparability analysis.                               
------------------------------------------------------------------------

Selection Criterion C (Part 1): HISTORY OF ADMINISTRATIVE PERFORMANCE: 
A history of stable, financially sound, and responsible administrative 
performance (which may include the management of low-income rental 
housing).

------------------------------------------------------------------------
          Criteria                    PAE              Teaming partner  
------------------------------------------------------------------------
General History and Mission                                             
 of Applicant                                                           
------------------------------------------------------------------------
Property Acquisition and                                                
 Operations (include                                                    
 description of current                                                 
 operations)                                                            
------------------------------------------------------------------------
Management of Multifamily                                               
 Portfolios (include                                                    
 description of current                                                 
 portfolio)                                                             
------------------------------------------------------------------------


[[Page 44110]]

Selection Criterion C (Part 2): List at least 5 properties that have 
been acquired, developed or managed or loans that have been originated 
or serviced by the proposed PAE and/or Teaming Partner. Please 
illustrate how you have effectively administered or managed these 
assets. Note if the properties are for low-income, elderly, or 
handicapped.

------------------------------------------------------------------------
                               Description (noting if properties are for
          Property                    low-income or handicapped)        
------------------------------------------------------------------------
1.                                                                      
------------------------------------------------------------------------
2.                                                                      
------------------------------------------------------------------------
3.                                                                      
------------------------------------------------------------------------
4.                                                                      
------------------------------------------------------------------------
5.                                                                      
------------------------------------------------------------------------

Selection Criterion D: FINANCIAL STRENGTH: Demonstrate financial 
strength in terms of asset quality, capital adequacy & liquidity.
    The following is a checklist of items to be provided by the PAE and 
Teaming Partner, if applicable.
    ________1. Applicant's Audited Financial Statements for last two 
(2) years
    ________2. Annual Report
    ________3. Most recent credit rating report published in either 
Moody's Weekly Credit Perspective or Week in Review; and/or Standard 
and Poor's Credit Perspective or Week in Review; and/or Standard and 
Poor's Credit Week or other comparable rating agency report.
Selection Criterion E: DEMONSTRATED CAPACITY TO CARRY OUT TRANSACTIONS 
AND ORGANIZATION STRUCTURE & RESPONSIBILITIES: Provide information to 
demonstrate that the PAE and Teaming Partner will carry out the 
specific transactions and other responsibilities under this subtitle in 
a timely, efficient, and cost-effective manner. Provide information 
regarding the organization including staff responsibilities and the 
following:
    The following is a checklist of items to be provided by the PAE and 
Teaming Partner:
    ________1. Provide organization and staffing chart for proposed PAE 
and other team members
    ________2. Provide resumes for each team member
    ________3. Describe method by which organization will provide 
project management and oversight
    ________4. Provide matrix of relevant experience of key personnel 
in the following format:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Knowledge of                
                                                                                                                            alternative                 
                                                                                                                             financing      Multifamily 
                                  Community         Data            Deal       Loan review    Closing and    Knowledge of  Source (FNMA,   construction 
                                 involvement   collection and   negotiations   and approval   post-closing   HUD programs    FHLMC, tax         and     
                                                underwriting                                                                credits, tax  rehabilitation
                                                                                                                           exempt bonds,     expertise  
                                                                                                                                etc.                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
Individual 1                                                                                                                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------
Individual 2                                                                                                                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------
Individual 3                                                                                                                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Check appropriate boxes to indicate relevant experience of each of the key personnel listed.                                                      

    5. Restructuring Capacity: Based on a projected timeline of 180 
days to complete the restructuring process, from assignment of the 
asset to closing, indicate in the following table your quarterly 
capacity to accept projects and the estimated number of restructurings 
you can complete annually.

--------------------------------------------------------------------------------------------------------------------------------------------------------
             Criteria                  1st quarter FY 99       2nd quarter FY 99       3rd quarter FY 99      4th quarter FY 99            Total        
--------------------------------------------------------------------------------------------------------------------------------------------------------
(a) Multifamily Restructuring                                                                                                                           
 Capacity: Based upon the proposed                                                                                                                      
 team, indicate the number of                                                                                                                           
 properties you can accept during                                                                                                                       
 the next twelve (12) months, by                                                                                                                        
 quarter, for restructuring before                                                                                                                      
 you have reached your multifamily                                                                                                                      
 restructuring capacity                                                                                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
(b) Closing Capacity: Based on the                                                                                                                      
 projected 180 day timeline, the                                                                                                                        
 proposed staffing capacity as                                                                                                                          
 presented, estimate the number of                                                                                                                      
 multifamily restructurings you                                                                                                                         
 can close in the first twelve                                                                                                                          
 (12) months, by quarter                                                                                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
(c) Increasing Capacity: What is                                                                                                                        
 your plan for increasing                                                                                                                               
 capacity, beyond the proposed                                                                                                                          
 team, if there is an increase in                                                                                                                       
 the volume of assets eligible for                                                                                                                      
 assignment?                                                                                                                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------

    6. Preliminary Determination of Cost-Effectiveness: To both comply 
with Section 513(b)(1)(e) of MAHRA, and to help in establishing 
appropriate PAE compensation, HUD is requesting an estimate of your fee 
to perform the restructuring

[[Page 44111]]

of properties. This will include only your fee to perform the 
restructuring and should not include reimbursables. The request is for 
information purposes only and does not bind the respondent or HUD to 
any commitment with respect to the fee estimates provided. This 
information will be confidential.
    The steps involved in the restructure process for which you are 
asked to estimate your costs, are summarized as follows:
Owner Eligibility, Determining Rent Levels:
     perform due diligence and collect financial information 
for each property including: market rents, appraisal, operating 
expenses;
Preservation of Affordable Housing:
     meet with the tenants and local community groups to gain 
perspectives that may impact the restructuring process;
Rehabilitation Needs:
     obtain a Physical Condition Analysis (PCA) report 
(reimbursable);
Underwriting:
     obtain an environmental review (to be provided by HUD)
     perform analysis of potential restructuring options;
     perform analysis of tax implications for use in developing 
restructuring options;
     perform financial modeling to underwrite the property at 
market rents; while ensuring that any current and long term repairs, 
replacement, maintenance, and rehabilitation are provided for in the 
restructuring;
Negotiations with Owner:
     conduct negotiations with the owner;
     reach agreement on restructured rental subsidy, 
restructured debt, and rehabilitation;
Loan/Funding Approval:
     coordinate final deal terms and closing documentation with 
HUD and obtain HUD's final approval;
Closing
     coordinate closing and distribution of closing documents.

----------------------------------------------------------------------------------------------------------------
                                                                       Estimated restructuring fees             
                                                        --------------------------------------------------------
                    Number of loans                       Unpaid principal                                      
                                                              balance        In basis points       In dollars   
------------------------------------------------------------------------------------**--------------------------
1......................................................         $1,600,000  .................  .................
5......................................................         $8,000,000  .................  .................
25.....................................................        $40,000,000  .................  .................
50.....................................................        $80,000,000  .................  .................
75.....................................................       $120,000,000  .................  .................
----------------------------------------------------------------------------------------------------------------
** Stated as a percentage of the Unpaid Principal Balance.                                                      

    In completing these costs estimates, please use the following 
assumptions:
    1. Negotiations could result in several different restructuring 
scenarios. Sample scenarios include: (a) projects which are viable once 
restructured and result in partial payment of claim on the mortgage 
insurance, (b) projects with negative NOI after marking the rents to 
market levels--where tax implications for the ownership entity will be 
a driving factor in negotiations, and (c) projects with negative NOI 
after marking the rents to market levels--where project costs and other 
factors (such as rehabilitation needs) will require rent levels which 
are above market levels.
    2. The majority of the loans are currently performing and thus this 
process would not involve taking control of the property, hiring 
property managers, or initiating and managing a foreclosure process.
    3. Certain asset related subcontractor costs including the cost of 
the appraisal and the PCA are reimbursable costs by HUD.
    4. Responsibilities for this phase will end after closing documents 
have been distributed.
    5. Projects are distributed around the country, except for Public 
Agency assets that will be restricted geographically.
    6. Loans can vary in size from $200,000 to over $10,000,000 and 
average approximately $1,600,000.
    7. Once an asset is assigned to a PAE, it must go through the 
restructuring process through closing.
    8. Information that will be provided by HUD will include: the asset 
management file, project file, loan documentation, payment history, and 
project financial statements.
    9. Level of reporting requirements to HUD will be moderate. HUD 
will be providing reporting systems and financial models for the use of 
the PAEs.
    10. [The HFA participants in the fiscal years 1997 and 1998 
demonstration programs received a minimum base fee of $25,000 for each 
mortgage restructured.]
    Section 2  Additional Response Information: Please provide the 
following information.
    The following is a checklist of items to be provided by the PAE and 
Teaming Partner, if applicable.

    ________1. PAE conflicts of interest: Disclose any conflict of 
interest as defined in Section C.(1) of this RFQ.
    ________2. Describe the geographic area in which you will assume 
the restructuring responsibility.
    ________3. If you are a State Housing Finance Agency and plan to 
work with local housing agencies, please indicate the name of the local 
agency and how you would work with them if they are selected as a 
qualified PAE.
    ________4. Provide evidence of your ability (either with your 
existing organization or through team partner) to evaluate the tax 
implications of the restructuring.
    ________5. Indicate if you would like to be considered for future 
solicitations to provide the following services:
    ________(a) Servicing of second mortgages.
    ________(b) Servicing of Rehabilitation Escrow Accounts.
    ________(c) Monitoring Use Agreement.

[FR Doc. 98-22029 Filed 8-14-98; 8:45 am]
BILLING CODE 4210-32-P