[Federal Register Volume 61, Number 218 (Friday, November 8, 1996)]
[Rules and Regulations]
[Pages 57960-57964]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28716]
[[Page 57959]]
_______________________________________________________________________
Part III
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Part 245
Tenant Participation in Multifamily Housing Projects; Final Rule
Federal Register / Vol. 61, No. 218 / Friday, November 8, 1996 /
Rules and Regulations
[[Page 57960]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 245
[Docket No. FR-4136-F-01]
RIN 2502-AG83
Tenant Participation in Multifamily Housing Projects
AGENCY: Office of the Assistant Secretary for Housing-Federal Housing
Commissioner, HUD.
ACTION: Final rule.
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SUMMARY: This rule consolidates into one subpart the nearly identical
provisions concerning tenant participation in certain mortgagor
initiated actions that require HUD approval. Currently, these
procedures are found in four subparts. The rule also provides an easier
to follow statement of applicability.
EFFECTIVE DATE: December 9, 1996.
FOR FURTHER INFORMATION CONTACT: Barbara D. Hunter, Director, Program
Management Division, Office of Multifamily Housing Development, Room
6184, Department of Housing and Urban Development, 451 Seventh Street,
SW., Washington, DC 20410-8000, telephone (202) 708-4162. (This is not
a toll-free telephone number.) Hearing- or speech-impaired individuals
may access this number via TTY by calling the Federal Information Relay
Service at 1-800-877-8339.
SUPPLEMENTARY INFORMATION:
Background
On March 4, 1995, President Clinton issued a memorandum to all
Federal departments and agencies regarding regulatory reinvention. In
response to this memorandum, the Department of Housing and Urban
Development conducted a page-by-page review of its regulations to
determine which can be eliminated, consolidated, or otherwise improved.
As a result of this review the Department determined that 24 CFR
part 245 could be streamlined to make it more understandable and easier
to use. Part 245 implements various provisions of section 202 of the
Housing and Community Development Amendments of 1978 (42 U.S.C. 1715z-
1b). It contains provisions on tenants' right to organize, on
noninterference with tenants' efforts to obtain assistance, and the
procedures for tenant participation in several mortgagor initiated
actions that require HUD approval.
Part 245 applies to certain types of multifamily housing projects,
each of which is or has been subsidized by HUD. This includes assisted
projects that are or were insured by HUD under the National Housing
Act, projects with direct loans from HUD under section 202 of the
Housing and Urban Development Act of 1965, and State and local housing
agency financed projects that receive section 236 or Rent Supplement
assistance.
This rule revises Sec. 245.10 to make it easier for the user to
move from the information known to the user, namely, type of project
and financing and get the information the user seeks from the section,
namely, which subparts apply to a specific project.
Under the current rule there are five subparts containing tenant
participation procedures. Subparts D through H concern, respectively,
approvals of: (1) Increase in maximum permissible rents, (2) conversion
from project-paid utilities to tenant paid utilities, (3) conversion of
residential units to a nonresidential use, or to cooperative housing or
condominiums, (4) partial release of mortgage security, and (5) major
capital additions to the project.
This rule consolidates into one subpart (subpart E) the procedures
for the actions described in items (2) through (5), above. It does not
substantively alter the procedures. Rather, it reflects the fact that
each of the current separate procedures are substantially the same and
lend themselves to being consolidated. The Department has retained a
separate subpart (subpart D) for tenant rent increase procedures. While
the overall rent increase process is similar to the other tenant
participation procedures, it is sufficiently different in detail that
it would not be helpful to the user to consolidate it with the other
procedures.
The rule also makes a conforming amendment to Sec. 245.15(a) and
updates cross-references in Sec. 245.205.
Justification for Final Rulemaking
The Department generally publishes a rule for public comment before
issuing a rule for effect, in accordance with its regulations on
rulemaking in 24 CFR part 10. However, part 10 provides for exceptions
to the general rule if the agency finds good cause to omit advance
notice and public participation. The good cause requirement is
satisfied when prior public procedure is ``impracticable, unnecessary,
or contrary to the public interest'' (24 CFR 10.1). The Department
finds that good cause exists to publish this rule for effect without
first soliciting public comment. This rule clarifies and consolidates
regulatory provisions and does not establish or affect substantive
policy. Therefore, prior public comment is unnecessary.
Findings and Certifications
Paperwork Reduction Act Statement
This rule does not alter existing information collection
requirements. The information collection requirements contained in
Secs. 245.416, 245.417, 245.418, 245.419, and 245.425 of this rule were
previously submitted to the Office of Management and Budget for review
under the Paperwork Reduction Act of 1995 (42 U.S.C. 3501-3520) and
have been approved under the control number 2502-0310. An agency may
not conduct or sponsor, and a person is not required to respond to a
collection of information unless the collection displays a valid
control number.
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)) has reviewed and approved this final rule, and in so
doing certifies that this rule will not have a significant economic
impact on a substantial number of small entities. This rule streamlines
the 24 CFR part 245 by removing redundant provisions. The rule will
have no adverse or disproportionate economic impact on small
businesses.
Environment
A Finding of No Significant Impact with respect to the environment
has been made in accordance with HUD regulations at 24 CFR part 50
implementing section 102(2)(C) of the National Environmental Policy Act
of 1969, 42 U.S.C. 4332. The Finding of No Significant Impact is
available for public inspection and copying between 7:30 a.m. and 5:30
p.m., weekdays, at the Office of the Rules Docket Clerk, 451 Seventh
Street, SW., Room 10276, Washington, DC 20410-0500.
Unfunded Mandates Reform Act
The Secretary has reviewed this rule before publication and by
approving it certifies, in accordance with the Unfunded Mandates Reform
Act of 1995 (2 U.S.C. 1532), that this rule does not impose a Federal
mandate that will result in the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector, of $100
million or more in any one year.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that the policies
contained in this rule do not have federalism implications and, thus,
are not subject
[[Page 57961]]
to review under the Order. No programmatic or policy changes result
from its promulgation which would affect the existing relationship
between the Federal government and State and local government.
Executive Order 12606, The Family
The General Counsel, as the Designated Official under Executive
Order 12606, The Family, has determined that this rule does not have
potential for significant impact on family formation, maintenance, and
general well-being, and, thus, is not subject to review under the
Order. No significant change in existing HUD policies or programs will
result from promulgation of this rule as those policies and programs
relate to family concerns.
List of Subjects in 24 CFR Part 245
Condominiums, Cooperatives, Grant programs--housing and community
development, Loan programs--housing and community development, Low and
moderate income housing, Rent subsidies, Reporting and recordkeeping
requirements, Utilities.
Accordingly, part 245 of title 24 of the Code of Federal
Regulations is amended as follows:
PART 245--TENANT PARTICIPATION IN MULTIFAMILY HOUSING PROJECTS
1. The authority citation for part 245 is revised to read as
follows:
Authority: 12 U.S.C. 1715z-1b; 42 U.S.C. 3535(d).
2. Section 245.10 is revised to read as follows:
Sec. 245.10 Applicability of part.
(a) Except as otherwise expressly limited in this section, this
part applies in its entirety to a mortgagor of any multifamily housing
project that meets the following--
(1) Project subject to HUD insured or held mortgage under the
National Housing Act. The project has a mortgage that--
(i) Has received final endorsement on behalf of the Secretary and
is insured or held by the Secretary under the National Housing Act (12
U.S.C. 1701--1715z-20); and
(ii) Is assisted under:
(A) Section 236 of the National Housing Act (12 U.S.C. 1715z-1);
(B) The Section 221(d)(3) BMIR Program;
(C) The Rent Supplement Program;
(D) The Section 8 Loan Management Set-Aside Program following
conversion to such assistance from the Rent Supplement Program
assistance;
(2) Section 202 project. The project has a direct mortgage loan
from HUD at a below-market interest rate under the Section 202 Loans
for the Elderly or Handicapped BMIR Program. This part applies in its
entirety to the mortgagor if the project is assisted under the Rent
Supplement Program or under the Section 8 LMSA Program following
conversion to such assistance from Rent Supplement Program assistance.
If the project is not so assisted, only subparts A, D, and E of this
part apply to the mortgagor;
(3) Formerly HUD-owned project. The project--
(i) Before being acquired by the Secretary, was assisted under:
(A) Section 236 of the National Housing Act (12 U.S.C. 1715z-1);
(B) The Section 221(d)(3) BMIR Program;
(C) The Rent Supplement Program; or
(D) The Section 8 LMSA Program following conversion to such
assistance from assistance under the Rent Supplement Program; and
(ii) Was sold by the Secretary subject to a mortgage insured or
held by the Secretary and an agreement to maintain the low- and
moderate-income character of the project; or
(4) State or local housing finance agency project. The project
receives assistance under section 236 of the National Housing Act (12
U.S.C. 1715z-1) or the Rent Supplement Program administered through a
State or local housing finance agency, but does not have a mortgage
insured under the National Housing Act or held by the Secretary.
Subject to the further limitation in paragraph (b) of this section,
only the provisions of subparts A and C of this part and of subpart D
of this part for requests for approval of a conversion of a project
from project-paid utilities to tenant-paid utilities or of a reduction
in tenant utility allowances, apply to a mortgagor of such a project.
(b) Limitation for cooperative mortgagor. Only the provisions of
subparts A and C of this part apply to a mortgagor of any multifamily
housing project described in paragraph (a) of this section if the
mortgagor is a cooperative housing corporation or association.
(c) Definitions.
Rent Supplement Program means the assistance program authorized by
section 101 of the Housing and Urban Development Act of 1965 (12 U.S.C.
1701s).
Section 8 LMSA Program means the Section 8 Loan Management Set-
Aside Program implemented under 24 CFR part 886, subpart A.
Section 202 Loans for the Elderly or Handicapped BMIR Program means
the below-market interest rate loan program authorized under section
202 of the Housing Act of 1959, as in effect before August 22, 1974 (12
U.S.C. 1701q).
Section 221(d)(3) BMIR Program means the below-market interest rate
mortgage insurance program under section 221(d)(3) and the proviso of
section 221(d)(5) of the National Housing Act (12 U.S.C. 1715l(d)(3)
and 1715l(d)(5)).
3. In Sec. 245.15, paragraph (a) is revised to read as follows:
Sec. 245.15 Notice to tenants.
(a) Whenever a mortgagor is required under subparts D or E of this
part to serve notice on the tenants of a project, the notice must be
served by delivery, except, for a high-rise project, the notice may be
served either by delivery or by posting. If service is made by
delivery, a copy of the notice must be delivered directly to each unit
in the project or mailed to each tenant. If service is made by posting,
the notice must be posted in at least three conspicuous places within
each building in which the affected dwelling units are located and,
during any prescribed tenant period, in a conspicuous place at the
address stated in the notice where the materials in support of the
mortgagor's proposed action are to be made available for inspection and
copying. Posted notices must be maintained intact and in legible form
during any prescribed notice period.
* * * * *
Sec. 245.205 [Amended]
4. In Sec. 245.205:
a. Paragraph (b) is amended by removing the words ``under part 215
of this chapter'' and adding, in their place, the words ``under section
101 of the Housing and Urban Development Act of 1965 (12 U.S.C.
1701s)''; and
b. Paragraph (c) is amended by removing the words ``part 882'' and
adding, in their place, the words ``part 982''.
5. Subpart E is revised to read as follows:
Subpart E--Procedures for Requesting Approval of a Covered Action
Sec.
245.405 Applicability of subpart.
245.410 Notice to tenants.
245.415 Submission of materials to HUD: Timing of submission.
245.416 Initial submission of materials to HUD: Conversion from
project-paid utilities to tenant-paid utilities or a reduction in
tenant utility allowances.
[[Page 57962]]
245.417 Initial submission of materials to HUD: Conversion of
residential units to a nonresidential use, or to cooperative housing
or condominiums.
245.418 Initial submission of materials to HUD: Partial release of
mortgage security.
245.419 Initial submission of materials to HUD: Major capital
additions.
245.420 Rights of tenants to participate.
245.425 Submission of request for approval to HUD.
245.430 Decision on request for approval.
245.435 Non-insured projects: Conversion from project-paid
utilities to tenant-paid utilities or a reduction in tenant utility
allowances.
Subpart E--Procedures for Requesting Approval of a Covered Action
Sec. 245.405 Applicability of subpart.
The requirements of this subpart apply to any request by a
mortgagor, as provided by Sec. 245.10, for HUD approval of one or more
of the following covered actions:
(a) Conversion of a project from project-paid utilities to tenant-
paid utilities, or a reduction in tenant utility allowances.
(b) Conversion of residential units in a multifamily housing
project to a nonresidential use or to condominiums, or the transfer of
the project to a cooperative housing mortgagor corporation or
association. Conversion of a project to a cooperative or of a portion
of a project to nonresidential use does not constitute a change of use
requiring mortgagee approval.
(c) A partial release of mortgage security. The requirements of
this subpart, however, do not apply to any release of property from a
mortgage lien with respect to a utility easement or a public taking of
such property by condemnation or eminent domain.
(d) Making major capital additions to the project. For the purposes
of this subpart, the term ``major capital additions'' includes only
those capital improvements that represent a substantial addition to the
project. Upgrading or replacing existing capital components of the
project does not constitute a major capital addition to the project.
Sec. 245.410 Notice to tenants.
At least 30 days before submitting a request to HUD for approval of
an action described in Sec. 245.405, the mortgagor must serve notice of
the proposed covered action on the project tenants, as provided in
Sec. 245.15. The notice shall state that--
(a) The mortgagor intends to submit a request to HUD for approval
of the covered action or actions specified in the notice;
(b) The tenants have the right to participate as provided in
Sec. 245.420, and what those rights are, including the address at which
the materials required to be made available for inspection and copying
under that section are to be kept;
(c) Tenant comments on the proposed covered action may be sent to
the mortgagor at a specified address or directly to the local HUD
office, and comments sent to the mortgagor will be transmitted to HUD,
along with the mortgagor's evaluation of them, when the request for
HUD's approval is submitted;
(d) HUD will approve or disapprove the proposed action, based upon
its review of the information submitted and all tenant comments
received. In the case of a proposed reduction in tenant-paid utilities,
the notice must also state that HUD may adjust the proposed reduction
upward or downward;
(e) In the case of a proposed conversion of residential units,
partial release of mortgage security, or major capital additions to the
project, the proposed action may require the owner to request HUD
approval of a rent increase; and
(f) The mortgagor will notify the tenants of HUD's decision and it
will not begin to effect any approved action (in accordance with the
terms of existing leases) until at least 30 days from the date of
service of the notification.
Sec. 245.415 Submission of materials to HUD: Timing of submission.
(a) Initial submission. The mortgagor must submit the materials
applicable to the covered action, as specified in Secs. 245.416 through
245.419, to the local HUD office when the notice required under
Sec. 245.410 is served on the tenants.
(b) Subsequent submission. If additional notice under
Sec. 245.420(c) is required, the mortgagor must submit to HUD any
changes to the materials required under Secs. 245.416 through 245.419
when the notice required under Sec. 245.420(c) is served on the
tenants.
Sec. 245.416 Initial submission of materials to HUD: Conversion from
project-paid utilities to tenant-paid utilities or a reduction in
tenant utility allowances.
In the case of a conversion from project-paid utilities to tenant-
paid utilities or a reduction in tenant utility allowances, the
mortgagor must submit the following materials to the local HUD office:
(a) A copy of the notice to tenants;
(b) In the case of a proposed conversion from project-paid
utilities to tenant-paid utilities--
(1) A statement indicating:
(i) The type of utility or utilities involved;
(ii) The number of units in the project by type and size;
(iii) The average utility consumption data by unit type and size
for comparable projects, and utility rate information, as obtained from
the utility supplier;
(iv) The estimated monthly cost of the utilities to be paid by the
tenants by unit type and size, based upon the consumption data and rate
information described in paragraph (b)(1)(iii) of this section;
(v) The monthly cost for the past year of paying for the utility or
utilities involved on a project basis (actual cost) and by unit type
and size (estimated breakdown);
(vi) An estimate of the cost of conversion, as obtained from the
utility supplier or from bids from contractors;
(vii) The source and terms of financing for the conversion (to the
extent known); and
(viii) The estimated effect of the conversion on the total housing
costs of the tenants by unit type and size, taking into account the
estimated cost of conversion (including the cost of its financing), the
estimated monthly cost of utilities to be paid by the tenants by unit
type and size, the proposed utility allowances, and the estimated
change in the rents paid to the mortgagor resulting from the
conversion; and
(2) A copy of the portion of the project's Energy Conservation Plan
which addresses the cost-effectiveness determination associated with
converting the project to tenant-paid utilities; and
(c) In the case of a proposed reduction in tenant utility
allowances, a statement indicating the information described in
paragraphs (b)(1)(i), (b)(1)(ii), (b)(1)(iii) and (b)(1)(iv) of this
section, the utility allowances proposed for reduction, and a
justification of the proposed reduction.
(Approved by the Office of Management and Budget under control
number 2502-0310)
Sec. 245.417 Initial submission of materials to HUD: Conversion of
residential units to a nonresidential use, or to cooperative housing or
condominiums.
In the case of a conversion of residential units to a
nonresidential use, or to cooperative housing or condominiums, the
mortgagor must submit the following materials to the local HUD office
in accordance with Secs. 245.415 and 245.419:
(a) In the case of a proposed conversion of residential rental
units to nonresidential use:
[[Page 57963]]
(1) A statement describing the proposed conversion;
(2) A statement describing the estimated effect of the proposed
conversion on the value of the project, the project rent schedule, the
number of dwelling units in the project, a list of the units to be
converted and their occupancy, the amount of subsidy available to the
project, and the project income and expenses (including property
taxes);
(3) A statement assessing the compatibility of the proposed
nonresidential use with the residential character of the project;
(4) Written approval of the mortgagee if required;
(5) An undertaking by the mortgagor to pay all relocation costs
that may be required by HUD for tenants required to vacate the project
because of the conversion; and
(6) A copy of the notice to tenants.
(b) In the case of a proposed transfer of the project to a
cooperative housing mortgagor corporation or association (conversion of
residential rental units to residential cooperative housing), the
materials specified in paragraphs (a)(1), (a)(2) and (a)(3) of this
section and the following additional materials:
(1) An estimate of the demand for cooperative housing, including an
estimate of the number of present tenants interested in purchasing
cooperative housing;
(2) Estimates of downpayments and monthly carrying charges that
will be required; and
(3) Copies of proposed organizational documents, including By-Laws,
Articles of Incorporation, Subscription Agreement, Occupancy Agreement,
and Sale Document.
(c) In the case of a proposed conversion of residential rental
units to condominium units, the materials specified in paragraphs
(a)(1), (a)(4), and (a)(6) of this section and the following additional
materials:
(1) An estimate of the demand for condominium housing, including an
estimate of the number of present tenants interested in purchasing
units;
(2) Estimates of downpayments, monthly mortgage payments and
condominium association fees that will be required; and
(3) A list of the units to be converted and their occupancy.
(Approved by the Office of Management and Budget under control
number 2502-0310)
Sec. 245.418 Initial submission of materials to HUD: Partial release
of mortgage security.
In the case of a partial release of mortgage security, the
mortgagor must submit the following materials to the local HUD office:
(a) A statement describing the portion of the property that is
proposed to be released and the transaction requiring the release;
(b) A statement describing the estimated effect of the proposed
release on the value of the project, the number of dwelling units in
the project, the project income and expenses (including property
taxes), the amount of subsidy available to the project, and the project
rent schedule;
(c) A statement describing the proposed use of the property to be
released and the persons who will have responsibility for the operation
and maintenance of that property, and assessing the compatibility of
that use with the residential character of the project;
(d) A statement describing the proposed use of any proceeds to be
received by the mortgagor as a result of the release; and
(e) A copy of the notice to tenants.
(Approved by the Office of Management and Budget under control
number 2502-0310)
Sec. 245.419 Initial submission of materials to HUD: Major capital
additions.
In the case of major capital additions, the mortgagor must submit
the following materials to the local HUD office:
(a) The general plans and sketches of the proposed capital
additions;
(b) A statement describing the estimated effect of the proposed
capital additions on the value of the project, the project income and
expenses (including property taxes), and the project rent schedule;
(c) A statement describing how the proposed capital additions will
be financed and the effect, if any, of that financing on the tenants;
(d) A statement assessing the compatibility of the proposed capital
additions with the residential character of the project; and
(e) A copy of the notice to tenants.
(Approved by the Office of Management and Budget under control
number 2502-0310)
Sec. 245.420 Rights of tenants to participate.
(a) The tenants (including any legal or other representatives
acting for tenants individually or as a group) must have the right to
inspect and copy the materials that the mortgagor is required to submit
to HUD pursuant to Sec. 245.415, for a period of 30 days from the date
on which the notice required under Sec. 245.410 is served on the
tenants. During this period, the mortgagor must provide a place (as
specified in the notice) reasonably convenient to tenants in the
project where tenants and their representatives can inspect and copy
these materials during normal business hours.
(b) The tenants have the right during this period to submit written
comments on the proposed conversion to the mortgagor and to the local
HUD office. Tenant representatives may assist tenants in preparing
these comments.
(c) If the mortgagor, whether at HUD's request or otherwise, makes
any material change during a tenant comment period in the materials
submitted to HUD pursuant to Sec. 245.415, the mortgagor must notify
the tenants of the change, in the manner provided in Sec. 245.15, and
make the materials as changed available for inspection and copying at
the address specified in the notice for this purpose. The tenants have
a period of 15 days from the date of service of this additional notice
(or the remainder of any applicable comment period, if longer) in which
to inspect and copy the materials as changed and to submit comments on
the proposed covered action, before the mortgagor may submit its
request to HUD for approval of the covered action.
Sec. 245.425 Submission of request for approval to HUD.
Upon completion of the tenant comment period, the mortgagor must
review the comments submitted by tenants and their representatives and
prepare a written evaluation of the comments. The mortgagor must then
submit the following materials to the local HUD office:
(a) The mortgagor's written request for HUD approval of the covered
action;
(b) Copies of all written tenant comments;
(c) The mortgagor's evaluation of the tenant comments on the
proposed conversion or reduction;
(d) A certification by the mortgagor that it has complied with all
of the requirements of Sec. 245.410, Sec. 245.415, Secs. 245.416
through 245.419, as applicable, Sec. 245.420, and this section; and
(e) Such additional materials as HUD may have specified in writing.
(Approved by the Office of Management and Budget under control
number 2502-0310)
Sec. 245.430 Decision on request for approval.
(a) After considering the mortgagor's request for approval and the
materials submitted in connection with the request, HUD must notify the
mortgagor in writing of its approval or disapproval of the proposed
covered action, including, if applicable, its adjustment
[[Page 57964]]
upward or downward of the proposed reduction in tenant-paid utilities.
HUD must provide its reasons for its determination.
(b) The mortgagor must notify the tenants of HUD's decision in the
manner provided in Sec. 245.15. If HUD has approved the proposed
covered action, the notice must state:
(1) The effective date of the covered action (which must be at
least 30 days from the date of service of the notice and in accordance
with the terms of existing leases);
(2) In the case of HUD's approval of a conversion from project-paid
utilities to tenant-paid utilities or a reduction in tenant utility
allowances, the amount of the rent to be paid to the mortgagor and the
utility allowance for each unit; and
(3) In the case of HUD's approval of a conversion of residential
units in a multifamily housing project to a nonresidential use or the
transfer of the project to a cooperative housing mortgagor corporation
or association, which residential rental units are to be converted and
whether the conversion is to nonresidential use or to cooperative or
condominium units.
Sec. 245.435 Non-insured projects: Conversion from project-paid
utilities to tenant-paid utilities or a reduction in tenant utility
allowances.
(a) In the case of a proposed conversion from project-paid
utilities to tenant-paid utilities or a reduction in tenant utility
allowances involving a project that is assisted under section 236 of
the National Housing Act (12 U.S.C. 1715z-1) or section 101 of the
Housing and Urban Development Act of 1965 (12 U.S.C. 1701s) but that
does not have a mortgage insured by HUD or held by the Secretary, the
provisions of this section and of Secs. 245.405 through 245.425 apply
to the mortgagor (project owner), except that--
(1) The notice to tenants required under Sec. 245.410 must be
modified to reflect the procedural changes made by this section;
(2) The materials (including tenant comments) required to be
submitted to HUD under Secs. 245.415 and 245.425 must be submitted to
the State or local agency administering the Section 236 assistance or
rent supplement assistance contracts, rather than to HUD; and
(3) The State or local agency must certify that the mortgagor has
complied with the requirements of Secs. 245.410, 245.415, 245.416,
245.420, and 245.425.
(b) After the State or local agency has considered the request for
approval of a conversion or reduction that meets the requirements of
Sec. 245.425, it must make a determination to approve or disapprove the
conversion, or to approve, adjust upward or downward, or disapprove the
reduction. If the agency determines to approve the conversion or
reduction (as originally proposed or as adjusted), it must submit to
the appropriate local HUD office the mortgagor's request for approval
of the conversion or reduction, along with the comments of the tenants
and the mortgagor's evaluation of the comments, and must certify to HUD
that the mortgagor is in compliance with the requirements of this
subpart. HUD must review the agency's determination and certification
and notify the agency of its approval or disapproval of the proposed
conversion or of its approval, adjustment upward or downward, or
disapproval of the proposed reduction. HUD will not unreasonably
withhold approval of a conversion or reduction approved by the State or
local agency.
(c) If the agency determines to disapprove the conversion or
reduction, there is no HUD review of the agency's determination.
(d) The agency must notify the mortgagor of the final disposition
of the request, and it must furnish the mortgagor with a written
statement of the reasons for its approval or disapproval. The mortgagor
must make the reasons for approval or disapproval known to the tenants,
by service of notice on them as provided in Sec. 245.15. If the agency
has approved the proposed conversion or a reduction, the notice must
set forth the information prescribed in Sec. 245.430(b) (1) and (2).
Subparts F, G, and H [Removed]
6. Subpart F (Secs. 245.505 through 245.530), subpart G
(Secs. 245.605 through 245.630), and subpart H (Secs. 245.705 through
245.730) are removed.
Dated: October 31, 1996.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 96-28716 Filed 11-7-96; 8:45 am]
BILLING CODE 4210-27-P