[Federal Register Volume 80, Number 61 (Tuesday, March 31, 2015)]
[Rules and Regulations]
[Pages 16963-16970]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-06776]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Chapters VIII and IX

[Docket No. FR-5779-N-01]


HUD Approval of Requests for Transfers of Multifamily Housing 
Project-Based Rental Assistance, HUD-Held or Insured Debt, and Income-
Based Use Restrictions

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

[[Page 16964]]


ACTION: Notice of requirements to transfer assistance.

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SUMMARY: This notice establishes the terms and conditions by which HUD 
will approve a request for the transfer of project-based rental 
assistance, debt held or insured by the Secretary, and statutorily 
required income-based use restrictions from one multifamily housing 
project to another (or between several such projects). The Department 
of Housing and Urban Development Appropriations Act, 2014 and the 
Department of Housing and Urban Development Appropriations Act, 2015 
give the Secretary the authority to approve transfer requests for 
fiscal years 2014 through 2016, provided that the Secretary publish a 
notice in the Federal Register establishing the terms and conditions 
for HUD approval of such transfers no later than 30 days before such 
notice takes effect. HUD believes that publication of the criteria will 
assist project owners to determine whether a transfer is feasible given 
the specific circumstances of their multifamily projects. Publication 
of the criteria will also facilitate HUD's review of transfer requests 
by helping owners formulate their requests in a manner that adequately 
addresses the statutory criteria.

DATES: Effective: April 30, 2015.

FOR FURTHER INFORMATION CONTACT: Nancie-Ann Bodell, Acting Director, 
Office of Asset Management and Portfolio Oversight of Multifamily 
Housing, Office of Housing, Department of Housing and Urban 
Development, 451 7th Street SW., Room 6110, Washington, DC 20410; 
telephone number 202-708-2495 (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: 

A. Background

    Beginning with section 318 of the Department of Housing and Urban 
Development Appropriations Act, 2006 (Pub. L. 109-115, 119 Stat. 2396, 
approved November 30, 2005), HUD appropriations acts have contained a 
general provision authorizing the Secretary to approve requests from 
project owners for the transfer of certain rental assistance, debt, and 
income-based use restrictions between HUD-assisted projects. For fiscal 
years 2014 and 2015, this transfer authority is provided under section 
214 of Title II of Division L of the Consolidated Appropriations Act, 
2014 (Pub. L. 113-76, 128 Stat. 5, approved January 17, 2014) (Section 
214).\1\ Section 214(a) states that ``[n]otwithstanding any other 
provision of law . . . the Secretary of Housing and Urban Development 
may authorize the transfer of some or all project-based assistance, 
debt held or insured by the Secretary and statutorily required low-
income and very low-income use restrictions if any, associated with one 
or more multifamily housing project or projects to another multifamily 
housing project or projects.'' Section 214(b) also allows for phased 
transfers of project-based assistance to accommodate the financing and 
other requirements related to rehabilitating or constructing the 
project or projects to which the assistance is transferred.
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    \1\ Section 212 of Title II of Division K of the Consolidated 
and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235, 
approved December 16, 2014) provides the same authority for fiscal 
years 2015 and 2016. For the sake of simplicity, this notice uses 
``Section 214'' to refer to the authority in both Acts, as the 
language other than the dates is identical.
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    HUD approval of transfers is subject to the conditions enumerated 
in the appropriations act for the applicable fiscal year. These 
statutory terms and conditions have, in general, been consistent from 
one appropriations act to the next. The statutory criteria for fiscal 
years 2014 through 2016 are enumerated in Section 214(c), which 
provides as follows:
     The transfer authorized in subsection (a) is subject to 
the following conditions:
    [cir] NUMBER AND BEDROOM SIZE OF UNITS.--

--For occupied units in the transferring project: The number of low-
income and very low-income units and the configuration (i.e. bedroom 
size) provided by the transferring project shall be no less than when 
transferred to the receiving project or projects and the net dollar 
amount of Federal assistance provided to the transferring project shall 
remain the same in the receiving project or projects.
--For unoccupied units in the transferring project: The Secretary may 
authorize a reduction in the number of dwelling units in the receiving 
project or projects to allow for a reconfiguration of bedroom sizes to 
meet current market demands, as determined by the Secretary and 
provided there is no increase in the project-based assistance budget 
authority.

    [cir] The transferring project shall, as determined by the 
Secretary, be either physically obsolete or economically nonviable.
    [cir] The receiving project or projects shall meet or exceed 
applicable physical standards established by the Secretary.
    [cir] The owner or mortgagor of the transferring project shall 
notify and consult with the tenants residing in the transferring 
project and provide a certification of approval by all appropriate 
local governmental officials.
    [cir] The tenants of the transferring project who remain eligible 
for assistance to be provided by the receiving project or projects 
shall not be required to vacate their units in the transferring project 
or projects until new units in the receiving project are available for 
occupancy.
    [cir] The Secretary determines that this transfer is in the best 
interest of the tenants.
    [cir] If either the transferring project or the receiving project 
or projects meets the condition specified in subsection (d)(2)(A),\2\ 
any lien on the receiving project resulting from additional financing 
obtained by the owner shall be subordinate to any FHA-insured mortgage 
lien transferred to, or placed on, such project by the Secretary, 
except that the Secretary may waive this requirement upon determination 
that such a waiver is necessary to facilitate the financing of 
acquisition, construction, and/or rehabilitation of the receiving 
project or projects.
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    \2\ Subsection (d)(2)(A) pertains to housing that is subject to 
a mortgage insured under the National Housing Act (12 U.S.C. 1701 et 
seq.).
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    [cir] If the transferring project meets the requirements of 
subsection (d)(2),\3\ the owner or mortgagor of the receiving project 
or projects shall execute and record either a continuation of the 
existing use agreement or a new use agreement for the project where, in 
either case, any use restrictions in such agreement are of no lesser 
duration than the existing use restrictions.
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    \3\ Subsection (d)(2) defines the term ``multifamily housing 
project.''
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    [cir] The transfer does not increase the cost (as defined in 
section 502 of the Congressional Budget Act of 1974, as amended) of any 
FHA-insured mortgage, except to the extent that appropriations are 
provided in advance for the amount of any such increased cost.
    HUD has exercised the transfer authority on a case-by-case basis, 
determining compliance with the statutory criteria based on the 
specific circumstances of the projects. Most of the statutory criteria 
are prescriptive, leaving little room for the exercise of agency 
discretion (for example, the requirement that the transfer not increase 
the cost of any FHA-insured mortgage). Others, however, are more

[[Page 16965]]

generally phrased, allowing for HUD interpretation in applying the 
criteria (for example, the requirement that the transferring project be 
either physically obsolete or economically nonviable, ``as determined 
by the Secretary''). Over time, HUD has developed uniform guidelines to 
facilitate the review of transfer requests and aid in determining 
compliance with the statutory criteria.
    Section 214(e)(1) requires that HUD publish by notice in the 
Federal Register the terms and conditions for HUD approval of 
transfers, no later than 30 days before such notice takes effect. This 
notice is being issued in accordance with the publication requirements 
of Section 214(e)(1). HUD believes that publication of the criteria 
will assist project owners in determining whether a transfer is 
appropriate given the specific circumstances of their multifamily 
projects. Publication of the criteria will also facilitate HUD's review 
of transfer requests by helping owners formulate their requests in a 
manner that adequately address the statutory criteria.
    Owners of multifamily housing projects, as defined by subsection 
(d)(2) of Section 214, who wish to request a transfer of rental 
assistance, debt, or income-based use restrictions under Section 214 
should submit a package containing the relevant materials outlined 
below to the HUD Hub/Program Center or Regional Center/Satellite Office 
for review. Owners can submit packages for review on or after the 
effective date of this notice. HUD will issue a subsequent Housing 
notice detailing procedural submission requirements and will follow 
this notice with a proposed rule to solicit comment before regulatory 
codification of these criteria.

B. Statutory Terms and Conditions for HUD Approval of Transfer Requests

    Commencing for transfer requests submitted pursuant to Section 214, 
HUD will evaluate the request, on a case-by-case basis, in accordance 
with the following criteria. The receiving property must be a 
multifamily housing project prior to or as a result of the Section 214 
transfer. The receiving project may already be HUD-affiliated, meaning 
it has existing HUD project-based rental assistance, an existing use 
restriction, or debt (either HUD-held or FHA-insured). HUD will approve 
a transfer under Section 214 to a HUD-affiliated property if the 
receiving property is in compliance with all business agreements with 
the Department or has a HUD-approved plan in place to correct any 
identified deficiencies. The receiving property may be existing, under 
construction, newly constructed, undergoing substantial rehabilitation, 
or undergoing moderate rehabilitation. Before Section 8 project-based 
rental assistance is transferred to the receiving property, the 
property must exist and be habitable (as demonstrated by a certificate 
of occupancy or like documentation). The numbered items below track the 
statutory criteria and, where HUD has been granted flexibility, 
establishes requirements and guidance on how HUD will assess compliance 
with the statutory factors.

1. Number and Bedroom Size of Units

    For occupied units in the transferring project: The number of low-
income and very low-income units and the configuration (i.e. bedroom 
size) provided by the transferring project shall be no less than when 
transferred to the receiving project or projects. The receiving owner 
\4\ must provide detailed information about the number of units and the 
corresponding unit size occupied by low-income and very-low income 
families respectively, as well as the proposed number of units for low 
and very-low income families and the corresponding unit configuration 
at the receiving project. In determining compliance with this 
requirement, HUD will consider the number of units occupied by low and 
very low-income families and their respective unit sizes, as well as 
whether the size of the occupied units is appropriate for the family 
size occupying those units. The net dollar amount of Federal assistance 
provided to the transferring project shall remain the same in the 
receiving project or projects. HUD Multifamily Hub/Program Center or 
Regional Center/Satellite Office staff will verify that the net dollar 
amount of Federal assistance transferred remains the same in the 
receiving project or projects.
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    \4\ The term ``owner'' refers to either the transferring or 
receiving owner unless specified.
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    For unoccupied units in the transferring project: HUD may authorize 
a reduction in the number of dwelling units in the receiving project or 
projects to allow for a reconfiguration of bedroom sizes to meet market 
demands, as demonstrated by the transferring owner, provided there is 
no increase in the project-based assistance budget authority. HUD 
Multifamily Hub/Program Center or Regional Center/Satellite Office 
staff will verify that the net dollar amount of Federal assistance 
transferred remains the same in the receiving project or projects. The 
transferring owner shall provide justification for a reduction in the 
number of dwelling units in one or more of the following ways:
    a. Evidence of all efforts to market the unit type proposed for 
reduction and evidence of the demand within the geographic market area 
for the proposed new unit type. The documentation may include evidence 
of the transferring owner's efforts, including:
    i. Property traffic reports.
    ii. Advertising details.
    iii. Age and/or income waivers requested.
    iv. Local housing authority wait list information or other 
affordable housing provider contacts made demonstrating that there is 
minimal or no demand for the unit type.
    b. Documentation that the average vacancy at the transferring 
property has been 25 percent or more over the past 24 months.
    c. Any other documentation that a reduction in the number of 
dwelling units is necessary to meet market demand, and approved by HUD.

2. Physical Obsolescence or Economic Nonviability

    Physical obsolescence shall be shown in one or more of the 
following ways:
    a. A Real Estate Assessment Center (REAC) physical inspection score 
of 30 or below.
    b. Two or more consecutive REAC physical inspection scores of below 
60.
    c. Condemnation or other such notice by the local or state 
government rendering the property uninhabitable.
    d. A taking through eminent domain.
    e. Evidence that needed capital repairs cannot be made without the 
property losing financial viability.
    f. Any other proof of physical obsolescence provided by the owner 
and approved by HUD.
    Economic non-viability must be shown in one or more of the 
following ways:
    a. A market analysis justifying the inability of the property to 
meet current HUD-imposed affordability restrictions.
    b. A market analysis indicating limited to no market for the unit 
type(s).
    c. A demonstrated average vacancy of 25 percent or more over the 
past 24 months.
    d. Any other proof of economic non-viability provided by the owner 
and approved by HUD.
    The transferring owner is required to certify in writing that the 
material submitted to demonstrate compliance with this criterion is 
true and accurate. The Multifamily Hub/Program Center will review all 
submitted information and verify its accuracy.

[[Page 16966]]

3. Applicable Physical Standards

    The receiving project or projects must have a REAC physical 
inspection score of 60 or above. If the project does not have a current 
REAC physical inspection score, an inspection must be conducted prior 
to the transfer and the project must score 60 or above or have a HUD-
approved plan in place to correct any deficiencies.
    The receiving project must also meet all applicable accessibility 
requirements, including, but not limited to the accessibility 
requirements of the Fair Housing Act, section 504 of the Rehabilitation 
Act, and Title II of the Americans with Disabilities Act. The owner 
must provide documentation acceptable to HUD that the receiving project 
is in compliance with all applicable accessibility requirements. The 
HUD Hub/Program Center or Regional Center/Satellite Office will review 
the submitted documentation and verify acceptability.

4. Notification and Consultation With Tenants and Local Governmental 
Officials

    The transferring owner must give the tenants and legitimate tenant 
organization(s) written notification of the proposed transfer and 
provide a minimum 30-day comment period. HUD will not accept a Section 
214 request for any project unless the transferring owner has notified 
the tenants of the proposed transfer and has provided the tenants with 
an opportunity to comment on the proposed transfer.
    a. The notification should include the address and phone of the 
appropriate HUD office, including the specific division and/or name and 
phone number of a contact at the appropriate HUD office. The 
notification should be provided in appropriate formats as necessary to 
meet the needs of all, including persons with limited English 
proficiency and formats for persons with vision, hearing, and other 
communication-related disabilities (e.g., Braille, audio, and large 
type, sign language interpreters, assistive listening devices, etc.).
    b. The notification will include a description of the impact of the 
request on tenants' rental assistance and tenant contributions. The 
notification must also explain the tenants' relocation rights and 
responsibilities, including the assistance that tenants may become 
eligible to receive under the Uniform Relocation Act if acquisition, 
rehabilitation or demolition are involved (see section five below). In 
addition, the notification must inform the tenants that if a Section 8 
project-based rental assistance contract will be transferred, and it 
assists the unit they inhabit, they may be eligible for tenant 
protection vouchers if they choose not to relocate (see Section C 
below).
    c. The notice must be delivered directly to each unit in the 
project or mailed to each tenant and posted in at least 3 places/common 
areas throughout the project, including any project office. In a 
project greater than 4 stories, the notice may be served either by 
delivery to each unit or by posting. If the posting method is used, the 
notice must be posted in at least three conspicuous places within each 
building in which the affected dwelling units are located.
    i. The tenants (including any legal or other representatives acting 
for the tenants individually or as a group) have the right to inspect 
and copy the materials that the owner is required to submit to HUD for 
a period of 30 days from the date on which the notice is served to the 
tenants. Any tenant comments must be available in the project office 
during normal business hours for public reading and copying.
    ii. The tenants have the right, during this period, to submit 
written comments on the transfer to the transferring owner and the 
appropriate HUD office. Tenant representatives may assist tenants in 
preparing these comments.
    d. The transferring owner must hold a meeting with the tenants and 
legitimate tenant organizations to discuss the details of the 
notification and answer questions.
    e. Upon completion of the tenant comment period, the transferring 
owner must review the comments submitted by the tenants and their 
representatives and prepare a written evaluation of the comments. Any 
negative comments must be addressed. The transferring owner must then 
submit the following materials to the appropriate HUD office at the 
time of submission of the request for transfer under Section 214:
    i. A copy of the transferring owner's Notification to the tenants;
    ii. A sign-in sheet from the tenant meeting;
    iii. A copy of all the tenant comments;
    iv. The transferring owner's evaluation of the tenant comments and 
any responses the owner gave to negative comments; and
    v. A certification by the transferring owner that it has complied 
with all of the requirements of 24 CFR 245.410, 245.415, 245.416 
through 245.419, as applicable, and 245.420. The transferring owner 
must identify any Fair Housing litigation settlement agreements, 
voluntary compliance agreements, or other remedial agreements signed by 
the owner and HUD. The Office of Fair Housing and Equal Opportunity 
(FHEO) will ensure there is no conflict between the agreements and the 
proposed transfer. If there is a conflict, the transferring owner may 
propose modifications to the remedial agreement as part of the transfer 
proposal.
    The owner must also provide a certification of approval from the 
relevant local government officials, which may include but are not 
limited to the:
    a. Local Mayor.
    b. City Council.
    c. Planning Commission.
    d. Health and Human Services Commission.
    e. Any other pertinent local government official or government 
body.
    Although in some cases, a certification of approval may be required 
from multiple local governmental officials, there must be at least one 
certification of approval from at least one local government official 
in all cases to warrant approval of a request for transfer of 
assistance, debt, or use restrictions.

5. Relocation of Tenants

    The tenants of the transferring project who remain eligible to 
receive assistance will not be required to vacate their units in the 
transferring project until new units in the receiving project are 
available for occupancy. If tenants must move as a direct result of 
acquisition, rehabilitation or demolition in connection with a transfer 
of assistance under Section 214, the Uniform Relocation Assistance and 
Real Property Acquisition Policies Act of 1970, as amended (URA) may 
apply.
    HUD will review tenant relocations and protections on a case-by 
case-basis to ensure tenants are protected from permanent displacement. 
Under no circumstances shall the residents pay for any relocation costs 
incurred as a result of the transfer and the resulting move to the 
receiving property. It is within the owner's discretion whether to pay 
relocation costs for relocations to locations other than the receiving 
property. A Section 214 transaction where the tenants' relocation 
expenses are not paid, will not be approved by HUD.

6. Best Interest of the Tenants

    HUD will determine that the transfer is in the best interest of the 
tenants based on criteria including, but not limited to, the following:
    a. The transfer will preserve affordable and/or assisted housing in 
a

[[Page 16967]]

market area in need of such assistance/affordability.
    b. The transfer complies with section C of this notice. The site 
and neighborhood requirements ensure that the receiving property is in 
a location that affords the tenants at the transferring property the 
same or a better property location than the transferring site.
    c. All current tenants will receive the same level of assistance 
they are currently receiving. Tenants that move from the transferring 
project to the receiving project remain subject to their existing lease 
requirements and all occupancy rules. The receiving owner may not seek 
to terminate the lease of a tenant from the transferring project for 
actions that occurred prior to the Section 214 transfer but the tenant 
will be subject to ongoing eligibility requirements for actions that 
occur after the transfer. Any eviction procedures currently underway at 
the transferring project will not be affected by the transfer of budget 
authority.
    d. In scenarios where a Section 8 HAP contract will be transferred, 
and a tenant assisted by the HAP contract objects to relocating to the 
receiving property, the tenant may be eligible to receive a tenant 
protection voucher, subject to the availability of appropriations. A 
tenant may receive a TPV, if they meet the eligibility requirements for 
voucher assistance and the unit that they currently reside in is 
supported by a Section 8 project-based rental assistance contract that 
is subject to transfer as part of the Section 214 transfer. The owner 
will notify the tenant of their potential eligibility to receive a TPV 
at the time of tenant notification and subsequently notify the 
Multifamily Hub/PC regarding how many TPVs are requested. If TPVs are 
needed, the Multifamily Hub/PC should work with the Public and Indian 
Housing (PIH) field office to follow the procedures outlined in PIH 
Notice 2001-41.
    e. To determine if the Section 214 transfer is in the best interest 
of the tenants, the transferring owner must provide documentation that 
all tenants residing at the property at the time of the transfer are 
relocating to a property of greater economic solvency or better 
physical condition, or accepting a tenant protection voucher to move to 
a property that best meets their housing needs.
    f. If the transferring property is not fully assisted by a Section 
8 project-based rental assistance contract, HUD will approve or 
disapprove the transfer based upon its review of the information 
submitted and all tenant comments received.
    g. If the transferring property is not fully assisted by a Section 
8 project-based rental assistance contract, the transfer will only be 
approved if:
    i. There are no tenants at the transferring property; or
    ii. The property is occupied but the transfer will be to an 
immediately adjacent property; or
    iii. The unassisted tenants would have to move in the absence of 
the Section 214 transfer (e.g., the site is contaminated, the property 
is or will be condemned, the property is being taken via eminent 
domain, etc.); or
    iv. The transfer involves a 202 Direct Loan or a 202/811 Capital 
Advance or PRAC contract that must be transferred as a result of a 
state's response to the Olmstead Decision or state Medicaid/Medicare 
policies on congregate housing make it economically impossible to 
continue operating the property as originally conceived.
    h. If the tenants must be relocated, they will/did receive the 
protections provided under the URA, or other assistance if the URA is 
not triggered. No tenants will be displaced as a result of the 
transfer.

7. Subordination of Liens

    To demonstrate compliance, the receiving owner must submit one or 
more of the following as documentation:
    a.Verification from the FHA lender that any lien on the receiving 
project is subordinate to any FHA-insured mortgage lien.
    b. Other documentation as applicable.
    A receiving owner may submit a waiver request if the receiving 
owner believes it is necessary that a lien(s) not be subordinate to the 
FHA insured mortgage to facilitate the financing of acquisition, 
construction, or rehabilitation of the receiving project or projects. 
Such a request must demonstrate that the waiver is necessary to finance 
the transaction and that there is minimal risk to the FHA as a result 
of the waiver. HUD must approve all waiver requests.

8. Use Restrictions

    If a use restriction is in place at the receiving project, the 
receiving owner must sign a new or amended use restriction that 
includes all income and eligibility restrictions of the transferring 
use restriction and runs for the duration of the transferring project's 
existing use restriction or the use restriction at the receiving 
project, whichever is longer.

9. No Increased FHA-Insured Mortgage Costs

    Transfers must not increase the cost (as defined in section 502 of 
the Congressional Budget Act of 1874) of any FHA-insured mortgage. HUD 
will consider the transfer of an FHA-insured mortgage, or Secretary-
held formerly insured mortgage that is subsidized under either Section 
221(d)(3)-(d)(5) with below market interest rates or Section 236. In 
addition, in order to avoid a claim against the General Insurance Fund, 
HUD may approve the transfer of a non-subsidized FHA-insured mortgage 
in combination with the transfer of a project-based rental assistance 
contract and/or a use restriction to a receiving project. However, HUD 
will only consider the transfer of a non-subsidized FHA-insured 
mortgage when the transferring project is in danger of imminent default 
on its FHA-insured mortgage due to a finding that the project is 
physically obsolete and/or economically nonviable in compliance with 
the criteria and process set forth in this notice.

C. Site and Neighborhood Standards for the Receiving Property

    1. Transfers that involve Section 202 assistance must comply with 
the site and neighborhood requirements at 24 CFR 891.125.
    2. Transfers that involve Section 811 assistance must comply with 
the site and neighborhood requirements at 24 CFR 891.125 and 24 CFR 
891.320.
    3. All other receiving sites must comply with the site and 
neighborhood requirements below. The receiving owner must submit the 
address of the proposed property with their proposal and HUD will 
determine whether the site meets the following requirements:
    a. The site and neighborhood is suitable from the standpoint of 
facilitating and furthering full compliance with the applicable 
provisions of Title VI of the Civil Rights Act of 1964, Title VIII of 
the Civil Rights Act of 1968, Executive Order 11063, and HUD 
regulations issued pursuant thereto.
    b. The neighborhood must not be one that is seriously detrimental 
to family life or in which substandard dwellings or other undesirable 
conditions predominate, unless there is actively in progress a 
concerted program to remedy the undesirable conditions.
    c. The housing must be accessible to social, recreational, 
educational, commercial, and health facilities and services, and other 
municipal facilities and services that are at least equivalent to those 
typically found in neighborhoods consisting largely of unassisted, 
standard housing of similar market rents.
    d. If the receiving project is new construction, and is not covered 
by the

[[Page 16968]]

existing regulations cited above for Section 202/811 properties, it may 
not be located in a racially mixed area if the project will cause a 
significant increase in the proportion of minority to nonminority 
residents in the area and may not be located in an area of minority 
concentration. If HUD determines that the receiving project will be 
located in an area of minority concentration, the receiving Owner must 
submit supporting data (e.g. census data, evidence of local 
revitalization efforts, etc.) in order for HUD to determine that they 
meet one of the exceptions below:
    i. Sufficient, comparable opportunities exist for housing for 
minority households in the income range to be served by the proposed 
project, outside areas of minority concentration. Sufficient does not 
require that in every locality there be an equal number of assisted 
units within and outside of areas of minority concentration. Rather, 
application of this standard should produce a reasonable distribution 
of assisted units each year which over a period of several years will 
approach an appropriate balance of housing opportunities within and 
outside areas of minority concentration. An appropriate balance in any 
jurisdiction must be determined in light of local conditions affecting 
the range of housing choices available for very low-income minority 
households and in relation to the racial mix of the locality's 
population.
    (A) Units may be considered to be comparable opportunities if they 
have the same household type and tenure type (owner/renter), require 
approximately the same total tenant payment, serve the same income 
group, are located in the same housing market, and are in standard 
condition.
    (B) Application of this sufficient, comparable opportunities 
standard involves assessing the overall impact of HUD-assisted housing 
on the availability of housing choices for very low-income minority 
households, in and outside areas of minority concentration, and must 
take into account the extent to which the following factors are 
present, along with any other factor relevant to housing choice:
    (1) A significant number of assisted housing units are available 
outside areas of minority concentration.
    (2) There is significant integration of assisted housing projects 
constructed or rehabilitated in the past ten years, relative to the 
racial mix of the eligible population.
    (3) There are racially integrated neighborhoods in the locality.
    (4) Programs are operated by the locality to assist minority 
households, as applicable, that wish to find housing outside areas of 
minority concentration.
    (5) Minority households have benefitted from local activities 
(e.g., acquisition and write-down of sites, tax relief programs for 
homeowners, acquisitions of units for use as assisted housing units) 
undertaken to expand choice for minority households (or families) 
outside of areas of minority concentration.
    (6) A significant proportion of minority households, have been 
successful in finding units in nonminority areas under the Section 8 
Certificate and Housing Voucher programs.
    (7) Comparable housing opportunities have been made available 
outside areas of minority concentration through other programs.
    ii. The project is necessary to meet overriding housing needs that 
cannot be met in that housing market area. Application of the 
overriding housing needs criterion, for example, permits approval of 
sites that are an integral part of an overall local strategy for the 
preservation or restoration of the immediate neighborhood and of sites 
in a neighborhood experiencing significant private investment that is 
demonstrably changing the economic character of the area (a 
``revitalizing area''). An overriding housing need, however, may not 
serve as the basis for determining that a site is acceptable if the 
only reason the need cannot otherwise be feasibly met is that 
discrimination on the basis of race, color, creed, sex, or national 
origin renders sites outside areas of minority concentration 
unavailable, or if the use of this standard in recent years has had the 
effect of circumventing the obligation to provide housing choice.
    4. All Section 214 transactions (including those involving Section 
202/811 properties) will be reviewed by HUD's Office of Policy 
Development and Research to assess whether there is sufficient demand 
for affordable rental housing in the receiving market area and to 
ensure that the transfer does not occur in neighborhoods with highly 
concentrated poverty.

------------------------------------------------------------------------
                                Inter-Fair Market     Intra-Fair Market
                                 Rent (FMR) area       Rent (FMR) area
                                    transfers             transfers
------------------------------------------------------------------------
                              For Inter-FMR Area    For Intra-FMR
                               transfers, there      transfers, there
                               can be two types:     can be three types:
                               (1) Transferring to   (1) Within a metro
                               a new metropolitan    area to a new
                               (metro) area; or      neighborhood (Small
                               (2) transferring to   Area Fair Market
                               a new non-metro       Rent (SAFMR)/Zip);
                               county.               (2) within a metro
                                                     area, in the same
                                                     neighborhood (SAFMR/
                                                     Zip code); and (3)
                                                     within a non-metro
                                                     county.
New Metro Neighborhood......  For moves into a      Within a metro area
                               metro area, the       to a new
                               receiving             neighborhood (SAFMR/
                               property's            Zip code), the
                               neighborhood must     receiving
                               be in a SAFMR area    property's
                               with a poverty rate   neighborhood must
                               of less than 30       be in a SAFMR area
                               percent, unless:      with a poverty rate
                              a. The receiving       of less than 30
                               property is in a      percent, unless:
                               neighborhood         a. The receiving
                               receiving a Choice    property is in a
                               Neighborhoods Grant   neighborhood
                               or is part of a       receiving a Choice
                               significant state     Neighborhoods Grant
                               or local              or is part of a
                               revitalization        significant state
                               initiative that       or local
                               will result in new    revitalization
                               construction and      initiative that
                               substantial           will include and
                               rehabilitation of     result in new
                               mixed income          construction and
                               housing; or.          substantial
                              b. The receiving       rehabilitation of
                               property is in a      mixed income
                               SAFMR area with a     housing; or
                               poverty rate         b. The receiving
                               between 30 and 40     property is in a
                               percent; and          SAFMR area with a
                               either:.              poverty rate
                              1. Housing market      between 30 and 40
                               activity within the   percent; and either
                               SAFMR.

[[Page 16969]]

 
                               area would indicate       1. The proposed
                               that the area is           receiving site
                               revitalizing; or           has a higher
                              2. The poverty rate         SAFMR than the
                               has seen                   current site;
                               significant recent         or
                               decline.             2. The proposed
                                                     receiving site is
                                                     considered
                                                     immediately
                                                     adjacent (within \1/
                                                     2\ mile) to the
                                                     current site; or
                                                    3. Housing market
                                                     activity within the
                                                     SAFMR area would
                                                     indicate that the
                                                     area is
                                                     revitalizing; or
                                                    4. The poverty rate
                                                     has seen
                                                     significant recent
                                                     decline.
Old Metro Neighborhood......  N/A: By definition a  Within a metro area,
                               transfer to a new     and in the same
                               FMR area will be a    neighborhood (SAFMR/
                               transfer to a new     Zip code), the
                               neighborhood.         receiving
                                                     property's
                                                     neighborhood must
                                                     be in a SAFMR area
                                                     with a poverty rate
                                                     of less than 30
                                                     percent, unless:
                                                    a. The receiving
                                                     property is in a
                                                     neighborhood
                                                     receiving a Choice
                                                     Neighborhoods Grant
                                                     or is part of a
                                                     significant state
                                                     or local
                                                     revitalization
                                                     initiative that
                                                     will result in new
                                                     construction and
                                                     substantial
                                                     rehabilitation of
                                                     mixed income
                                                     housing; or
                                                    b. The SAFMR area is
                                                     between 30 and 40
                                                     percent and at
                                                     least 50 percent of
                                                     the units at the
                                                     receiving property
                                                     are unassisted and
                                                     either:
                                                    1. The proposed
                                                     receiving site is
                                                     considered
                                                     immediately
                                                     adjacent (within \1/
                                                     2\ mile) to the
                                                     current site; or
                                                    2. Housing market
                                                     activity within the
                                                     SAFMR area would
                                                     indicate that the
                                                     area is
                                                     revitalizing; or
                                                    3. The poverty rate
                                                     has seen
                                                     significant recent
                                                     decline.
Non-Metro...................  For moves to a non-   Within the same non-
                               metro county, the     metro county, the
                               receiving property    receiving property
                               must be in a county   must be in a county
                               that has a poverty    that has a poverty
                               rate less than 30     rate of less than
                               percent, unless:      30 percent, unless:
                              The county poverty    The county poverty
                               rate is between 30    rate is between 30
                               and 40 percent,       and 40 percent and:
                               and:.                1. The housing
                              1. The housing         market activity
                               market activity       within the county
                               within the county     would indicate that
                               would indicate that   the area is
                               the area is           revitalizing; or
                               revitalizing; or.    2. The poverty rate
                              2. The poverty rate    has seen
                               has seen              significant recent
                               significant recent    decline; or
                               decline; or.         3. The transaction
                              3. The transaction     is part of a
                               is part of a          statewide portfolio
                               statewide portfolio   preservation
                               preservation          strategy operated
                               strategy operated     by a Housing
                               by a Housing          Finance Agency or
                               Finance Agency or     is part of a
                               is part of a          significant state
                               significant state     or local
                               or local              revitalization
                               revitalization        initiative that
                               initiative that       will result in new
                               will result in new    construction and
                               construction and      substantial
                               substantial           rehabilitation of
                               rehabilitation of     mixed income
                               mixed income          housing.
                               housing.
------------------------------------------------------------------------

D. Additional Requirements of the Receiving Owner Prior to Approval

    The submission to HUD requesting a transfer under Section 214 must 
include the following information from the receiving owner:
    1. Written confirmation of acceptance of the Housing Assistance 
Payments (HAP) contract, Use Agreement, and/or debt, as applicable, and 
confirmation that the transfer is warranted by local demand for 
affordable housing.
    2. If the transfer involves project-based section 8 assistance, 
written evidence that the transfer of the HAP contract is warranted by 
local demands for affordable housing. Supporting documentation may 
include a market analysis showing eligible families in the area, a list 
of current tenants who are eligible for Section 8 assistance, or 
prospective tenants on waiting lists.
    3. If applicable, a written tenant selection plan, Tenant 
Relocation Plan and an Affirmative Fair Housing Marketing Plan approved 
by HUD.
    4. A narrative detailing the capacity of the proposed owner and 
management agent of the receiving property to own, operate, manage, and 
if applicable, renovate affordable housing.
    5. The receiving owner must not be subject to any of the following 
actions that have not been resolved to HUD's satisfaction: (1) A charge 
from HUD concerning a systemic violation of the Fair Housing Act or a 
cause determination from a substantially equivalent state or local fair 
housing agency concerning a systemic violation of a substantially 
equivalent state or local fair housing law proscribing discrimination 
because of race, color, religion, sex, national origin, disability, or 
familial status; and (2) A Fair Housing Act lawsuit filed by the 
Department of Justice alleging a pattern or practice of discrimination 
or denial of rights to a group of persons raising an issue of general 
public interest pursuant to 42 U.S.C. 3614(a); or (3) A letter of 
finding identifying systemic noncompliance under Title VI of the Civil 
Rights Act of 1964, Section 504 of the Rehabilitation Act of 1973, or 
Section 109 of the Housing and Community Development Act of 1974. HUD 
will determine if actions to resolve the charge, cause determination, 
lawsuit, or letter of findings are sufficient to resolve the matter.

[[Page 16970]]

Examples of actions that would normally be considered sufficient to 
resolve the matter include, but are not limited to, current compliance 
with:
    a. A voluntary compliance agreement (VCA) signed by all the 
parties;
    b. A HUD-approved conciliation agreement signed by all the parties;
    c. A conciliation agreement signed by all the parties and approved 
by the state governmental or local administrative agency with 
jurisdiction over the matter;
    d. A consent order or consent decree; or
    e. A final judicial ruling or administrative ruling or decision.
    6. Documentation to assist HUD in an environmental review of the 
transfer request in accordance with environmental regulations and 
requirements at 24 CFR part 50. HUD will conduct the environmental 
review as required by part 50 prior to approving a transfer. HUD will 
document compliance on Form HUD-4128, ``Environmental Assessment and 
Compliance Findings for the Related Laws.'' Applicants are responsible 
for submitting environmental information and reports, and should use 
Chapter 9 of the MAP Guide and the HUD Environmental Review Web site 
(available at https://www.onecpd.info/environmental-review/) for 
guidance on environmental review information requirements. If the 
transfer is to a site that is currently HUD-assisted, HUD-insured or 
HUD-held, a new Phase I Environmental Site Assessment (ESA) in 
accordance with ASTM E 1527-13 (or the most recent edition), including 
a Vapor Encroachment Screen in accordance with ASTM E 2600-10 (or the 
most recent edition), is not required, unless the transfer involves:
    a. Significant ground disturbance (digging) or construction not 
contemplated in the original application or incompatible with current 
engineering or institutional controls;
    b. Site expansion or addition;
    c. Transfer to a site for which a Phase I ESA in accordance with 
ASTM E 1527-05 (or a more recent edition) has not been prepared 
previously; or
    d. Any other activities which may result in contaminant exposure 
pathways not contemplated in the original application or incompatible 
with current engineering or institutional controls.
    After a request has been submitted to HUD, the requestor and other 
participants in the proposed transfer, including owners and contractors 
on the receiving project, may not undertake or commit funds for 
acquisition, rehabilitation, conversion, or construction of the 
receiving property until HUD has completed the environmental review and 
notified the requestor that the transfer to the receiving property is 
acceptable.

E. Post Approval Requirements

    Once HUD has received and reviewed the materials above and approved 
the transfer under Section 214, the owner of the receiving project must 
do the following as applicable:
    1. If there is a use restriction at the transferring property, sign 
a new or amended use restriction that includes all income and 
eligibility restrictions of the transferring use restriction and runs 
for the duration of the transferring project's existing use restriction 
or the use restriction at the receiving project, whichever is longer.
    2. If the transfer involves project based section 8 assistance, 
renew the HAP contract for a 20-year term at the time of the transfer 
and attach the Preservation Exhibit agreeing to the automatic renewal 
of the Section 8 HAP contract at the end of the 20-year term, subject 
to annual appropriations, for a minimum of the time remaining on the 
HAP contract that was in effect prior to the transfer under Section 
214.
    3. Receive approval through the Previous Participation Process 
including a 2530 review. The receiving owner must be in compliance with 
all business agreements for the receiving project and for any other HUD 
insured or assisted projects owned.
    4. Comply with all Departmental statutes, regulations, policies and 
procedures related to any assignment or amendment of a Section 8 HAP 
contract or other project-based rental assistance contract, required 
modification of loan documents and legal descriptions, or other 
necessary changes as a result of a Section 214 transfer.

F. Environmental Review

    A Finding of No Significant Impact (FONSI) with respect to the 
environment has been made for this notice in accordance with HUD 
regulations at 24 CFR part 50, which implement section 102(2)(C) of the 
National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The 
FONSI is available for public inspection between 8 a.m. and 5 p.m. 
weekdays in the Regulations Division, Office of General Counsel, 
Department of Housing and Urban Development, 451 7th Street SW., Room 
10276, Washington, DC 20410-0500. Due to security measures at this HUD 
Headquarters Building, an advance appointment to review the FONSI must 
be scheduled by calling the Regulations Division at 202-708-3055 (not a 
toll free number).

G. Information Collection Requirements

    The information collection requirements contained in this document 
have been approved by the Office of Management and Budget (OMB) under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned 
OMB Control Number 2502-0608. 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 currently valid OMB control number.

H. Implementation

    This notice will become effective April 30, 2015. HUD will begin 
accepting requests for transfers pursuant to this notice on or after 
the effective date. For questions regarding the submission or status of 
a transfer request, interested parties should contact their HUD 
Multifamily Hub/Program Center. The list of HUD Multifamily Hubs and 
Program Centers is available at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/mfh/hsgmfbus/abouthubspcs.

    Dated: March 17, 2015.
Biniam Gebre,
Acting Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2015-06776 Filed 3-30-15; 8:45 am]
 BILLING CODE 4210-67-P