[Federal Register Volume 63, Number 248 (Monday, December 28, 1998)]
[Rules and Regulations]
[Pages 71372-71374]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34314]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 401 and 402

[Docket No. FR-4298-C-05]
RIN 2502-AH09


Multifamily Housing Mortgage and Housing Assistance Restructuring 
Program (Mark-to-Market) and Renewal of Expiring Section 8 Project-
Based Assistance Contracts; Technical Corrections

AGENCY: Office of the Secretary, HUD.

ACTION: Interim rule; technical corrections.

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SUMMARY: On September 11, 1998, HUD published an interim rule 
implementing the Mark-to-Market Program and the statutory provisions 
for renewals of section 8 project-based assistance contracts expiring 
in Fiscal Year 1999 or later. On October 15, 1998, HUD published a 
first correction to the interim rule to correct the Internet address 
given for submitting public comments. This second correction to the 
interim rule addresses additional matters that were in error when the 
interim rule was published and in need of correction. This document 
also corrects one provision of the interim rule as well as preamble 
language that needs correction because of a change in authorizing 
legislation since issuance of the interim rule.

EFFECTIVE DATE: December 28, 1998.

FOR FURTHER INFORMATION CONTACT: Dan Sullivan, Department of Housing 
and Urban Development, 451 7th St., Washington DC 20410. Telephone: 
202-708-3555. (This is not a toll-free number.) For hearing- and 
speech-impaired persons, this number may be accessed via TTY by calling 
the Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: On September 11, 1998 (63 FR 48926), HUD 
published an interim rule implementing the Mark-to-Market Program and 
the statutory provisions for renewals of section 8 project-based 
assistance contracts expiring in Fiscal Year 1999 or later. The purpose 
of this program is to preserve low-income rental housing affordability 
while reducing the long-term costs of Federal rental assistance, 
including project-based assistance, and minimizing the adverse effect 
on the FHA insurance funds. The program is authorized by the 
Multifamily Assisted Housing Reform and Affordability Act of 1997, 
title V of Pub. L. 105-65 (approved October 27, 1997) (MAHRA).

Corrections Based on Original Legislation (MAHRA)

    HUD is making the following corrections based on the MAHRA:
     Several changes are made to the preamble and the rule to 
eliminate conflicts between the preamble description of the rule and 
the actual rule text (see corrections 2, 3, and 24).
     Several erroneous or incomplete cross-references in the 
preamble and the interim rule are corrected (see corrections 3, 7, 12, 
17, 19, 20, 21, 22, 25, and 28).
     Repetitive or erroneous extraneous language is removed in 
various places in the preamble and the interim rule text to provide 
simplicity and clarity (see corrections 5, 6, 8, 10, and 13).
     One incorrect date in the rule text is corrected (see 
correction 16).

Corrections Based on Recent Legislation (Pub. L. 105-276)

    In addition to the corrections described above, other provisions of 
the interim rule, although correct when published, now require 
correction because of the subsequent enactment of the Departments of 
Veterans Affairs and Housing and Urban Development, and Independent 
Agencies Appropriations Act, 1999, Pub.L. 105-276 (approved October 21, 
1998). Section 597(a)(2) of Pub.L. 105-276 amended MAHRA to change the 
required methodology for determining restructured rents for certain 
section 8 moderate rehabilitation projects under the Mark-to-Market 
Program. This statutory change therefore requires a corresponding 
change to Sec. 402.5(b)(3) of the interim rule and the applicable 
preamble discussion. We have made this correction (see corrections 13 
and 27).
    In the preamble to the interim rule, HUD referred to one pending 
provision of MAHRA which ultimately was not included in Pub.L. 105-276. 
The pending provision would have amended section 515(h) of MAHRA to 
limit the exclusion of projects with State or local primary financing 
from the Mark-to-Market program. We have corrected the preamble by 
removing the two sentences that contained reference to the pending 
provision (see correction 1).
    Other relevant provisions of the Pub.L. 105-276 will require 
corrective rule changes in the future. These changes, however, are not 
appropriate for a technical correction. Those provisions are as 
follows.
    1. Section 549(a) and (b) of Pub.L. 105-276 removed the requirement 
of section 8(c)(8) of the United States Housing Act of 1937 (``the 1937 
Act'') for owner notice to tenants of rent

[[Page 71373]]

increases, and amended the requirement of section 8(c)(9) of that Act 
(now redesignated as section 8(c)(8) for owner notice to tenants and 
HUD of section 8 contract termination. Both provisions are referenced 
in Secs. 401.602 and 402.8 of the interim rule and discussed in the 
preamble. Rule references to the notice required by former section 
8(c)(8) should be considered superseded by section 549. Rule changes 
will be needed to respond to the amendment of former section 8(c)(9) 
(now section 8(c)(8)) but the subject is too complex to be addressed 
fully in this correction. We will make appropriate changes in the final 
rule. In this document, we remove some preamble discussion that is 
incorrect under the current law (see corrections 11 and 15).
    2. Section 549(c) of Pub.L. 105-276 added a new final sentence to 
section 514(d) of MAHRA regarding an additional owner notice 
requirement and restrictions on rent increases or evictions. This 
matter is also complicated and will be addressed in the final rule 
instead of this correction.
    3. Section 599 of Pub.L. 105-276 amended section 202 of the Housing 
and Community Amendments of 1978, concerning tenant participation in 
certain multifamily housing projects, to apply to all projects with 
project-based assistance or section 8 enhanced (``sticky'') vouchers 
under the Mark-to-Market Program. Tenant participation under section 
202 is the subject of 24 part 245. We have begun a separate proposed 
rulemaking procedure to amend part 245 to reflect section 599 and to 
make other changes.
    Accordingly, FR Doc. 98-242840, Multifamily Housing Mortgage and 
Housing Assistance Restructuring Program (Mark-to-Market) and Renewal 
of Expiring Section 8 Project-Based Assistance Contracts (FR-4298-I-
01), published in the Federal Register on September 11, 1998 (63 FR 
48926), is corrected as follows:

A. Corrections to the Preamble

    1. On page 48929, first column, the second and third sentences of 
the first full paragraph are removed.
    2. On page 48931, second column, the second to the last sentence of 
the first full paragraph, the following language is added immediately 
after the reference to Sec. 401.453--``and the poor condition of the 
project is not likely to be remedied in a cost-effective manner through 
the Restructuring Plan.''
    3. On page 48932, the last sentence in the first column, which 
continues to the second column, is corrected to read ``An owner should 
also follow this guidance when making a preliminary certification of 
eligibility under Sec. 401.99 and a comparable market analysis under 
Sec. 402.6(a)(1).''
    4. On page 48933, first column, in the first sentence of the first 
full paragraph, the words ``covered by a PRA'' are added immediately 
after the word ``units''.
    5. On page 48933, second column, the fourth full sentence is 
removed, and the third full sentence is revised to read as follows: 
``In addition, the PAE must consider the other matters listed in 
section 515(c)(2)(B) of MAHRA to be assessed as part of the Plan, and 
the applicable Consolidated Plan developed under 24 CFR part 91.''
    6. On page 48933, third column, in the fourth sentence of the first 
full paragraph, the number ``35'' is removed.
    7. On page 48934, second column, in the second sentence of the 
third full paragraph, the reference to ``517(b)(3)'' is corrected to 
read ``517(b)(2)''. On page 48934, second column, in the first sentence 
of the fourth full paragraph, the reference to ``401.700'' is corrected 
to read ``401.310''.
    8. On page 48935, first column, in the first sentence under the 
heading ``Section 401.471 HUD Payment of Section 541(b) Claim,'' the 
words ``or HUD-held'' are removed.
    9. On page 48935, second column, in the first full sentence, the 
word ``than'' is corrected to read ``that''.
    10. On page 48937 in the preamble, first column, in the fourth 
sentence under the heading ``Section 401.500 Required Notices to Third 
Parties; Section 401.501 Who Is Entitled to Receive Notices Under 
Sec. 401.500?'', the term ``by the owner'' is removed .
    11. On page 48937 in the preamble, second column, the second 
sentence in the second full paragraph which begins with the phrase ``In 
particular * * *'' is removed.
    12. On page 48938 in the preamble, second column, in the first 
paragraph under the heading ``Section 401.602 Tenant Protections if an 
Expiring Contract is Not Renewed,'' the regulatory references in the 
last sentence of that paragraph are corrected as follows: 
``Sec. 401.101 or 401.403'' is corrected to read ``Secs. 401.101, 
401.403, or 401.405''.
    13. On page 48939 in the preamble, third column, the parenthetical 
statement that follows numbered paragraph (5) is corrected by removing 
the phrase ``as explained in Part II of this Supplementary Information 
under Sec. 401.100''.
    14. On page 48940 in the preamble, first column, the language in 
the first partial paragraph that follows the designation ``(3)'' is 
corrected to read as follows: ``(3) in the case of a contract under the 
section 8 moderate rehabilitation program (other than for a single room 
occupancy dwelling), the lesser of existing rents adjusted by an OCAF, 
fair market rents (less any amounts allowed for tenant-purchased 
utilities), or comparable market rents.''
    15. On page 48940 of the preamble, second column, the entire 
discussion under the heading ``Section 402.8 Tenant Protections if an 
Expiring Contract is not Renewed'' is corrected to read as follows: 
``Section 402.8 discusses notices that an owner must give when an 
expiring contract is not renewed, and the consequences of failure to 
give notice, in a manner similar to Sec. 402.6. Both sections will be 
revised in the final rule to reflect recent legislation that deleted 
former section 8(c)(8) of the United States Housing Act of 1937 and 
amended section 8(c)(9) of that Act (now redesignated as section 
8(c)(8)).''

B. Corrections to the Rule


Sec. 401.99  [Corrected]

    16. On page 48944, third column, in Sec. 401.99(b), introductory 
text, ``January 1'' is corrected to read ``January 13''.


Sec. 401.100  [Corrected]

    17. On page 48944, third column, in Sec. 401.100, the heading--
``General eligibility.''--for the introductory paragraph is removed.


Sec. 401.201  [Corrected]

    18. On page 48945, first column, in Sec. 401.201, the term ``State 
Housing Finance Agencies'' in Sec. 401.201(b) is corrected to read 
``State housing finance agencies''.


Sec. 401.301  [Corrected]

    19. On page 48945, first column, in Sec. 401.300, the reference to 
``401.309'' is corrected to read ``401.314''.


Sec. 401.400  [Corrected]

    20. On page 48947, first column, in Sec. 401.400(b), ``Section 
514'' is corrected to read ``section 514(e)''.


Sec. 401.403  [Corrected]

    21. On page 48947, second column, in Sec. 401.403(b)(2), the words 
``and (b)'' are removed.


Sec. 401.411  [Corrected]

    22. On page 48948, second column, in Sec. 401.411(a), the reference 
to ``514(g)'' is corrected to read ``514(g)(2)''.


Sec. 401.461  [Corrected]

    23. On page 48950, second column, in Sec. 401.461(b)(4), the phrase 
``or the owner'' is corrected to read ``or if the owner''.

[[Page 71374]]

Sec. 401.472  [Corrected]

    24. On page 48950, third column, in Sec. 401.472(a)(1), the phrase 
``residual receipts account, surplus cash account, residual receipts 
account'' is corrected to read ``residual receipts account, surplus 
cash account, replacement reserve account''.


Sec. 401.552  [Corrected]

    25. On page 48952, second column, in Sec. 401.552, the reference to 
``401.461(b)(2)'' is corrected to read ``401.461(b)(3)(ii)(A)''.


Sec. 402.1  [Corrected]

    26. On page 48954, first column, in Sec. 402.1, the word 
``eligible'' is added immediately before the word ``projects'' in the 
second sentence of that section.


Sec. 402.5  [Corrected]

    27. On page 48954, second column, Sec. 402.5(c)(3) is corrected to 
read: ``In the case of a contract under the section 8 moderate 
rehabilitation program (other than single room occupancy dwellings 
under section 441 of the Stewart B. McKinney Homeless Assistance Act), 
the lesser of existing rents adjusted by an OCAF, fair market rents 
(less any amounts allowed for tenant-purchased utilities), or 
comparable market rents.''


Sec. 402.6  [Corrected]

    28. On page 48954, third column, in Sec. 402.6(b), the reference to 
``Sec. 401.4 or Sec. 401.5(b)(2)'' is corrected to read ``Sec. 402.4 or 
Sec. 402.5(b)(2)''.

    Dated: December 21, 1998.
Camille E. Acevedo,
Assistant General Counsel for Regulations.
[FR Doc. 98-34314 Filed 12-24-98; 8:45 am]
BILLING CODE 4210-32-P