[Federal Register Volume 77, Number 172 (Wednesday, September 5, 2012)]
[Notices]
[Pages 54602-54604]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-21840]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5617-N-01]
RIN 2502-ZA13


Notice of Intent To Conduct Affirmatively Furthering Fair Housing 
Demonstration in Baltimore, MD, Standard Metropolitan Statistical Area 
(SMSA)

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, HUD.

ACTION: Notice of Intent To Conduct Affirmatively Furthering Fair 
Housing Demonstration in Baltimore, Maryland, SMSA.

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SUMMARY: Through this proposed demonstration, HUD seeks to encourage 
developers and owners of multifamily housing properties in 
``communities of opportunity''--as defined by Thompson v. HUD--in the 
Baltimore, Maryland, SMSA to make units in these properties affordable 
to low-income persons. HUD seeks to determine if, as proposed in this 
notice, providing developers with financial incentives, to create such 
housing can help reduce segregation in the Baltimore SMSA.

DATES: Comments Due Date: November 5, 2012.

ADDRESSES: Interested persons are invited to submit comments regarding 
HUD's Affirmatively Furthering Fair Housing demonstration, as announced 
in this notice, to the Office of General Counsel, Rules Docket Clerk, 
Department of Housing and Urban Development, 451 7th Street SW., Room 
10276, Washington, DC 20410-0001. Communications should refer to the 
above docket number and title and should contain the information 
specified in the ``Request for Comments'' of this notice.
    Submission of Hard Copy Comments. To ensure that the information is 
fully considered by all of the reviewers, each commenter submitting 
hard copy comments, by mail or hand delivery, should submit comments or 
requests to the address above. Due to security measures at all federal 
agencies, submission of comments or requests by mail often result in 
delayed delivery. To ensure timely receipt of comments, HUD recommends 
that any comments submitted by mail be submitted at least 2 weeks in 
advance of the public comment deadline.
    Electronic Submission of Comments. Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
http://www.regulations.gov. HUD strongly encourages commenters to 
submit comments electronically. Electronic submission of comments 
allows the commenter maximum time to prepare and submit a comment, 
ensures timely receipt by HUD, and enables HUD to make them immediately 
available to the public. Comments submitted electronically through the 
http://www.regulations.gov Web site can be viewed by interested members 
of the public. Commenters should follow instructions provided on that 
site to submit comments electronically.
    No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
    Public Inspection of Comments. All comments submitted to HUD 
regarding this notice will be available, without charge, for public 
inspection and copying between 8 a.m. and 5 p.m. weekdays at the above 
address. Due to security measures at the HUD Headquarters building, an 
advance appointment to review the documents must be scheduled by 
calling the Regulations Division at 202-708-3055 (this is not a toll-
free number). Copies of all documents submitted are available for 
inspection and downloading at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Mary Ann Henderson, Office of Housing, 
U.S. Department of Housing and Urban Development, City Crescent 
Building, 10 South Howard Street, Fifth Floor, Baltimore, Maryland 
21201-2505, telephone number 410-209-6545 (this is not a toll-free 
number). Persons with hearing or speech impairments may access this 
number through TTY by calling the toll-free Federal Relay Service at 
800-877-8339.

SUPPLEMENTARY INFORMATION

I. Background

    Section 808(e) of the Fair Housing Act (42 U.S.C. 3608(e)) requires 
HUD to administer its programs relating to housing and urban 
development in a manner to affirmatively further fair housing (AFFH). 
HUD carries out this obligation by requiring its program participants 
to affirmatively further fair housing. AFFH means undertaking 
affirmative efforts to overcome barriers to fair housing choice and 
reduce segregation of persons on the basis of race, national origin, 
and other protected classifications. HUD has funded a number of voucher 
mobility programs, for example, which pair Housing Choice Vouchers with 
mobility counseling to facilitate greater housing choice and overcome 
the effects of historic patterns of segregation. One such regional 
voucher mobility program

[[Page 54603]]

was established in the Baltimore SMSA in 1996.
    Multifamily housing assisted by or with financing insured by HUD is 
subject to the Fair Housing Act's AFFH requirement. Through this 
proposed demonstration, HUD seeks to encourage investment in 
multifamily housing and promote the availability of affordable housing 
units in a manner that reduces racial segregation and increases 
geographic and economic mobility in the Baltimore SMSA. For its 
multifamily housing programs that insure financing for multifamily 
housing development, HUD will offer incentives to make more affordable 
housing available in mixed-income, integrated communities. In addition, 
HUD will require that this new affordable housing is made available to 
Housing Choice Voucher holders, expanding housing options for these 
families.

II. Proposed Demonstration

    HUD proposes to make available incentives for Federal Housing 
Administration (FHA) insured financing to developers in order to 
encourage the production and availability of more affordable housing 
units in areas identified as communities of opportunity in the 
Baltimore SMSA. Eligible areas are those in which the regional mobility 
program, established under the Thompson v. HUD settlement, operates, 
and which are identified as ``communities of opportunities'' in the 
Thompson v. HUD settlement. HUD believes that the proposed incentives 
will contribute to reducing racial segregation and increasing 
opportunities for low-income families to live in areas identified as 
communities of opportunity throughout the Baltimore SMSA.
    This demonstration would be open to multifamily owners and 
developers pursuing FHA mortgage insurance under the section 221(d)(4) 
program or other FHA multifamily finance programs for properties to be 
developed in eligible areas in the Baltimore SMSA. For such owners and 
developers who agree to set aside a percentage of newly constructed or 
rehabilitated two- or three-bedroom units for nonelderly families 
holding Housing Choice Vouchers, either under a project-based voucher 
contract or offered at rents less than or equal to the Fair Market Rent 
(FMR) for the Baltimore SMSA, and in order to encourage the 
construction of more affordable housing for these voucher holders, HUD 
proposes to offer one or a combination of the following incentives:
     Lowering the mortgage insurance premium (MIP);
     Lowering the occupancy/vacancy rate when establishing the 
project's anticipated budget; or
     Establishing a procedure that results in greater or more 
frequent surplus cash distributions for projects containing a specified 
number of affordable units. The incentives offered would be subject to 
any constraints of current and future program and budget authorities 
and would be commensurate with the number of affordable units set aside 
in the property, which in no case would be less than 10 percent of the 
newly constructed or rehabilitated units in that property. HUD will 
provide, in the notice soliciting applications, which incentives will 
be available based on the percentage of affordable units that are set 
aside.
    Owners, developers, and lenders seeking to participate in the 
demonstration described in this notice must: \1\
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    \1\ Published elsewhere in today's Federal Register is HUD's 60-
day notice soliciting comment on the burden hours of the proposed 
information collection requirements as set forth in this section.
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     Certify that they meet all other requirements for FHA-
insured financing, comply with the terms of the demonstration, and 
comply with HUD's nondiscrimination and equal opportunity requirements;
     Submit an affirmative fair housing marketing plan 
satisfactory to HUD for both the market-rate units and the units that 
will be affordable to Housing Choice Voucher holders in Baltimore City 
and throughout the Baltimore SMSA (a satisfactory affirmative fair 
housing marketing plan must include marketing of affordable units to 
Housing Choice Voucher holders in Baltimore City through the Thompson 
regional mobility program);
     Agree to not establish local residency preferences for 
properties that receive incentives pursuant to this demonstration; and
     Maintain statistics on the race and ethnicity of 
applicants and occupants for both the affordable and market rate units
    HUD has estimated that a total of 1,200 to 1,500 units in 
multifamily housing properties may be made available per year in the 
Baltimore SMSA. If 10 percent of those units were set aside as 
affordable and available for vouchers holders under HUD's Housing 
Choice Voucher program, the demonstration would yield approximately 120 
to 150 affordable units per year. HUD will offer the above incentives 
for not more than 300 affordable units per year, and will carefully 
monitor the demonstration to determine whether it is succeeding in 
increasing available affordable housing units in Thompson v. HUD 
settlement communities of opportunity in the Baltimore SMSA. If, in any 
year during this demonstration fewer than 300 affordable units are 
created through the demonstration, the unused allocation of units would 
roll over and be available in subsequent years, not to exceed 500 units 
created through these incentives in any given year. To enable it to 
evaluate the success of the demonstration, HUD proposes to operate the 
program for a minimum of 7 years, as long as continued operation of the 
demonstration is consistent with prudent fiscal management of the FHA 
insurance fund. If the demonstration indicates that it is succeeding in 
increasing the number of affordable housing units in areas identified 
as communities of opportunity in the Baltimore SMSA, HUD will consider 
if the demonstration should be expanded to other SMSAs.

III. Evaluating the Demonstration

    One of the principal purposes of the demonstration is to determine 
whether the incentives that HUD is proposing to provide developers and 
owners of multifamily housing properties results in the availability of 
more affordable housing to low-income persons in a manner that reduces 
racial segregation and increases geographic and economic mobility. HUD 
will, therefore, undertake an evaluation of the demonstration to 
determine whether the demonstration could serve as a model that could 
be successful nationwide or, alternatively, whether modifications to 
the demonstration are needed.

IV. Solicitation of Public Comment

    In accordance with section 470 of the Housing and Urban-Rural 
Recovery Act of 1983 (42 U.S.C. 3542), HUD is seeking comment on the 
demonstration for a period of 60 days, before commencing the 
demonstration. After the close of the public comment period, and 
following full consideration of comments submitted, HUD will publish 
another notice that will advise of the commencement of the 
demonstration, the specific incentives that HUD would offer multifamily 
housing owners and developers for properties to be developed in 
communities of opportunity in the Baltimore SMSA, as identified for the 
Thompson regional mobility program, and other features or requirements 
of the demonstration that HUD may prescribe.
    During the comment period, HUD invites comment on all aspects of 
the demonstration, but specifically solicits

[[Page 54604]]

comment on the incentives, and the criteria for receiving them, that 
are proposed to be offered to multifamily owners and developers under 
the demonstration, and seeks suggestions on specific parameters for 
these incentives and additional incentives that may be helpful to HUD 
in achieving the goals of the demonstration.

    Dated: August 28, 2012.
Carol J. Galante,
Acting Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2012-21840 Filed 9-4-12; 8:45 am]
BILLING CODE 4210-67-P