[Federal Register Volume 65, Number 173 (Wednesday, September 6, 2000)]
[Rules and Regulations]
[Pages 53899-53901]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-22788]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 401

[Docket No. FR-4298-C-08]
RIN 2502-AH09


Multifamily Housing Mortgage and Housing Assistance Restructuring 
Program (Mark-to-Market); Correction

AGENCY: Office of Multifamily Housing Assistance Restructuring, HUD.

ACTION: Final rule; correction.

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

SUMMARY: This document makes various corrections to the March 22, 2000, 
final rule for the Mark-to-Market program administered by HUD's Office 
of Multifamily Housing Assistance Restructuring (OMHAR).

DATES: Effective Date: April 21, 2000.

FOR FURTHER INFORMATION CONTACT: Dan Sullivan, Public Policy Analyst, 
Office of Multifamily Housing Assistance Restructuring, 1280 Maryland 
Ave., SW., Suite 4000, Washington, DC 20024; telephone (202) 708-0001 
(this is not a toll-free number). Hearing or speech impaired 
individuals may access this number via TTY by calling the toll-free 
Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: On March 22, 2000, the Office of Multifamily 
Housing Assistance Restructuring (OMHAR) within HUD published a final 
rule for the Mark-to-Market program authorized by the Multifamily 
Assisted Housing Reform and Affordability Act of 1997 (MAHRA). That 
final rule, which took effect on April 21, 2000, replaced an interim 
rule published on September 11, 1998 (63 FR 48926). The final rule 
contained some errors that need correction.
    The purpose of this document is to make various corrections to the 
final rule, as follows:
    1. Sec. 401.2. ``NHA'' is substituted for ``NA'' as the defined 
term for the National Housing Act. Related corrections are made in 
Secs. 401.450(b), 401.472(a)(3), and 401.473 (heading and text).
    2. Sec. 401.99(a)(2). The word ``or'' is added between ``sale'' and 
``transfer'' to conform to the rest of the rule.
    3. Sec. 401.99(c). A reference to Sec. 402.4 is now identified as a 
reference to Sec. 402.4 ``of this chapter''.
    4. Sec. 401.310(d)(1)(ii). The word ``notices'' is corrected to 
``notification'' to conform to the preceding sentence in the rule.
    5. Sec. 401.450(b). The acronym ``CA'' (referring to a 
comprehensive needs assessment) is corrected to read ``CNA''.

[[Page 53900]]

The same correction is made in Sec. 401.503(a)(1).
    6. Sec. 401.501(b)(2). An extraneous semi-colon is removed.
    7. Sec. 401.502(a). A missing parenthesis is added, the word 
``comparable'' is removed from the phrase ``comparable market rent'' to 
match a forthcoming revision to Sec. 402.6(a)(2), ``of this chapter'' 
is added after three references to sections from part 402, a reference 
to Sec. 400.500 is corrected to refer to Sec. 401.500, and a reference 
to a comprehensive needs assessment is added to conform to a change 
made in Sec. 401.450 of the final rule.
    8. Sec. 401.550(b). The rule is corrected to require a 
Participating Administrative Entity (PAE) to review annually a project 
with an ``executed'' Restructuring Plan rather than an ``approved'' 
Plan, because no annual PAE review is required if a project owner 
refuses to execute a Restructuring Plan approved by OMHAR.
    9. Sec. 401.558. An extraneous comma is removed from the first 
sentence.
    10. Sec. 401.595. The word ``a'' in the first sentence was 
misplaced and this is corrected. Also, we removed ``initial and 
subsequent'' from the phrase ``initial and subsequent contract renewals 
under this part [401]''. The language that is removed was unnecessary. 
In addition, it could cause confusion because the ``subsequent'' 
renewal would be governed by 24 CFR part 402 rather than part 401 if 
the ``initial renewal'' is approved as part of an approved 
Restructuring Plan under part 401.
    11. Sec. 401.600. The references to a section 8 contract 
``extension'' or similar term, in the heading and text of this section, 
are changed to contract ``renewal'' or similar term. MAHRA occasionally 
refers to ``extension'' of an expiring section 8 contract rather than 
``renewal'' of the contract, as in section 514(d) of MAHRA which 
corresponds to Sec. 401.600. However, HUD's use of these terms in part 
401 has not always been consistent with the use in the corresponding 
MAHRA provisions. In practice HUD has found no need to distinguish 
between contract extensions and renewals, and the statutory and 
regulatory definition of ``renewal'' does not exclude extensions. 
Therefore, to avoid confusion and to match the usage in the forthcoming 
related final 24 CFR part 402, part 401 is corrected so that it no 
longer refers to both extensions and renewals, but will only refer to 
renewals. Related changes are made to Secs. 401.408(k), 401.421(b), 
401.554, 401.602(a)(1) and (2), and 401.602(c)(1)(i).
    12. Sec. 401.602(a)(1)(i). A missing parenthesis is added.
    13. Sec. 401.602(a)(2). The parenthetical reference to section 
8(c)(8)(C) of the United States Housing Act of 1937 is removed because 
that provision no longer existed when the final rule was issued. It was 
combined with section 8(c)(8)(A) by recent amendments to that Act and 
section 8(c)(8)(A) is already referenced in this provision of the rule. 
We also added ``of this chapter'' after ``Sec. 402.4'' and removed an 
apostrophe from ``month's''.

List of Subjects in 24 CFR Part 401

    Grant programs--housing and community development, Housing, Housing 
assistance payments, Housing standards, Insured loans, Mortgage 
insurance, Mortgages.


    Accordingly, the following corrections are made to 24 CFR part 401:

PART 401--MULTIFAMILY HOUSING MORTGAGE AND HOUSING ASSISTANCE 
RESTRUCTURING PROGRAM (MARK-TO-MARKET)

    1. The authority citation for part 401 continues to read as 
follows:

    Authority: 12 U.S.C. 1715z-1 and 1735f-19(b); 42 U.S.C. 1437f 
note and 3535(d).

    2. Revise the definition of ``NA'' in Sec. 401.2(c) to read as 
follows:


Sec. 401.2  What special definitions apply to this part?

* * * * *
    (c) * * *
    NHA means the National Housing Act, 12 U.S.C. 1702 et seq.
* * * * *

    3. Amend Sec. 401.99 by revising paragraphs (a)(2) and (c) to read 
as follows:


Sec. 401.99  How does an owner request a section 8 contract renewal?

    (a) * * *
    (2) The owner is not suspended or debarred or has been notified by 
HUD of any pending suspension or debarment or other enforcement action, 
or, if so, a voluntary sale or transfer of the property is proposed in 
accordance with Sec. 401.480.
* * * * *
    (c) Not eligible for Restructuring Plan. Section 402.5 of this 
chapter addresses renewal of project-based assistance for a 
Restructuring Plan. An owner of such a project may also request renewal 
under Sec. 402.4 of this chapter.

    4. Revise the third sentence of Sec. 401.310(d)(1)(ii) to read as 
follows:


Sec. 401.310  Conflicts of interest.

* * * * *
    (d) * * *
    (1) * * *
    (ii) * * * The potential PAE may, with its notification, 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. * * *
* * * * *

    5. Revise Sec. 401.408(k) to read as follows:


Sec. 401.408  Affordability and use restrictions required.

* * * * *
    (k) Owner obligation to accept project-based assistance. Subject to 
the availability of appropriated funds, the owner of the project must 
accept any offer of renewal of project-based assistance if the offer is 
in accordance with the terms and conditions specified in the 
Restructuring Plan.

    6. Revise Sec. 401.421(b), introductory text, to read as follows:


Sec. 401.421  Rental Assistance Assessment Plan.

     * * *
    (b) Matters to be assessed. The PAE must include an assessment of 
the impact of converting to tenant-based assistance and the impact of 
renewing project-based assistance on: * * *
* * * * *

    7. Revise Sec. 401.450(b), introductory text, to read as follows:


Sec. 401.450  Owner evaluation of physical condition.

* * * * *
    (b) Use of CNA. An owner may comply with paragraph (a) of this 
section by submitting a comprehensive needs assessment in accordance 
with title IV of the Housing and Community Development Act of 1992 (12 
U.S.C. 1715z-1a note) if the CNA: * * *
* * * * *

    8. Revise Sec. 401.501(b)(2) to read as follows:


Sec. 401.501  Delivery of notices and recipients of notices.

* * * * *
    (b) * * *
    (2) The recipient of any Outreach and Training Grant (OTAG) or 
Intermediary Technical Assistance Grant (ITAG) for the project 
location; and * * *
* * * * *

    9. Revise Sec. 401.502(a), introductory text, and (a)(1) to read as 
follows:


Sec. 401.502  Notice requirement when debt restructuring will not 
occur.

    (a) PAE responsibility. If an owner of an eligible project requests 
a renewal of

[[Page 53901]]

a section 8 contract without a Restructuring Plan under Sec. 402.4 of 
this chapter, HUD or the PAE must notify, or ensure that the owner 
notifies, all parties identified in Sec. 401.501 of the request and of:
    (1) The availability (as provided in Sec. 401.500(c)(3)) of the 
following information:
    (i) The owner evaluation of physical condition (OEPC), or a 
comprehensive needs assessment (CNA) if used instead of an OEPC, as 
required by Sec. 401.450 and Sec. 402.6(a)(3) of this chapter;
    (ii) The market analysis required by Sec. 402.6(a)(2) of this 
chapter, but without addresses (or other specific information 
indicating location) for comparable properties; and
    (iii) The items identified in Sec. 401.500(b)(1)(i), (ii), and 
(iv); and
* * * * *

    10. Revise the first sentence of Sec. 401.550(b) to read as 
follows:


Sec. 401.550  Monitoring and compliance agreements.

* * * * *
    (b) Periodic monitoring and inspection. At least once a year, a PAE 
must review the status of each project for which it developed an 
executed restructuring Plan. * * *
* * * * *

    11. Revise the first sentence of Sec. 401.554 to read as follows:


Sec. 401.554  Contract renewal and administration.

    HUD will offer to renew or extend section 8 contracts as provided 
in each Restructuring Plan, subject to the availability of 
appropriations and subject to the renewal authority available at the 
time of each contract expiration (Sec. 402.5 of this chapter or another 
appropriate renewal authority). * * *

    12. Revise the first sentence of Sec. 401.558 to read as follows:


Sec. 401.558  Physical condition standards.

    The Restructuring Plan must require the owner to maintain the 
project in a decent and safe condition that meets the applicable 
standards under this section. * * *

    13. Revise Sec. 401.595 to read as follows:


Sec. 401.595  Contract and regulatory provisions.

    The provisions of chapter VIII of this title will apply to renewal 
of a section 8 project-based assistance contract under this part only 
to the extent, if any, provided in the contract. Part 983 of this title 
will not apply. The term of the contract renewals under this part will 
be determined by the appropriate HUD official.

    14. Revise Sec. 401.600 to read as follows:


Sec. 401.600  Will a section 8 contract be renewed if it would expire 
while an owner's request for a Restructuring Plan is pending?

    If a section 8 contract for an eligible project would expire before 
a Restructuring Plan is implemented, the contract may be renewed at 
rents not exceeding current rents for up to the earlier of 1 year or 
closing on the Restructuring Plan under Sec. 401.407. HUD may terminate 
the contract earlier if the PAE or HUD determines that an owner is not 
cooperative under Sec. 401.402 or if an owner's request is rejected 
under Sec. 401.403 or Sec. 401.405. Any renewal of the contract beyond 
1 year for a pending Restructuring Plan must be at comparable market 
rents or exception rents. A renewal at comparable market rents or 
exception rents under this section will not affect a project's 
eligibility for the Mark-to-Market Program once it has been initially 
established under this part.

    15. Amend Sec. 401.602 by revising the first sentence of paragraph 
(a)(1)(i), paragraph (a)(2), and paragraph (c)(1)(i) to read as 
follows:


Sec. 401.602  Tenant protections if an expiring contract is not 
renewed.

    (a) Required notices. (1)(i) The owner of an eligible project who 
has requested a Restructuring Plan and contract renewal must provide a 
12-month notice as provided in section 514(d) if MAHRA, if the owner 
later decides not to renew an expiring contract (except due to a 
rejection under Secs. 401.101, 401.403, 401.405, or 401.451.) * * *
    (2) The owner of an eligible project who has requested a 
Restructuring Plan but who has been rejected under Secs. 401.101, 
401.403, 401.405, or 401.451 must provide 12 months advance notice 
under section 8(c)(8)(A) of the United States Housing Act of 1937, 
unless project-based assistance is renewed under Sec. 402.4 of this 
chapter.
* * * * *
    (c) * * *
    (i) If the owner of an eligible project does not renew the project-
based assistance, any eligible tenant residing in a unit assisted under 
the expiring contract on the date of expiration will be eligible to 
receive assistance on the later of the date of expiration or the date 
the owner's obligations under paragraph (b) of this section expire; and
* * * * *

    Dated: August 30, 2000.
Camille E. Acevedo,
Assistant General Counsel for Regulations.
[FR Doc. 00-22788 Filed 9-5-00; 8:45 am]
BILLING CODE 4210-01-P