[Federal Register Volume 70, Number 150 (Friday, August 5, 2005)]
[Proposed Rules]
[Pages 45492-45495]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-15472]
[[Page 45491]]
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Part II
Department of Housing and Urban Development
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24 CFR Parts 200 and 290
Disposition of Multifamily Housing Projects by HUD; Purchaser's
Compliance With State and Local Housing Laws and Requirements; Proposed
Rule
Federal Register / Vol. 70, No. 150 / Friday, August 5, 2005 /
Proposed Rules
[[Page 45492]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 200 and 290
[Doc. No. FR-4941-P-01; 2005-0015]
RIN 2502-AI24
Disposition of Multifamily Housing Projects by HUD; Purchaser's
Compliance With State and Local Housing Laws and Requirements
AGENCY: Office of the Secretary, HUD.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would revise HUD's regulations governing
the disposition of multifamily projects that are HUD-owned or secured
by a HUD-held mortgage which are being foreclosed to implement
statutory amendments made by the Consolidated Appropriations Act, 2004.
The proposed rule would require a potential purchaser of such a project
to certify that all other properties owned by the purchaser, and
located in the same city or town as the project being purchased, are in
substantial compliance with applicable state or local government
housing statutes, regulations, ordinances, and codes. A potential
purchaser of a multifamily project, from a state or local government
that previously had acquired the property from HUD would also be
required to submit evidence of substantial compliance with applicable
state or local housing requirements. The proposed rule would also
expand the scope of the participation and compliance requirements for
HUD's Federal Housing Administration programs to include purchasers of
multifamily housing projects from state or local governments, in cases
where the property had previously been acquired by the state or local
government from HUD.
DATES: Comment Due Date: October 4, 2005.
ADDRESSES: Interested persons are invited to submit comments regarding
this rule to the Regulations Division, Office of General Counsel,
Department of Housing and Urban Development, 451 Seventh Street, SW.,
Room 10276, Washington, DC 20410-0500. Electronic comments may be
submitted through either:
The Federal eRulemaking Portal: at http://www.regulations.gov; or
The HUD electronic Web site at: http://www.epa.gov/feddocket. Follow the link entitled ``View Open HUD Dockets.''
Commenters should follow the instructions provided on that site to
submit comments electronically.
Facsimile (FAX) comments are not acceptable. In all cases,
communications must refer to the docket number and title. All comments
and communications submitted will be available, without charge, for
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the
above address. Due to security measures at the HUD Headquarters
building, please schedule an appointment to review the public comments
by calling the Regulations Division at (202) 708-3055 (this is not a
toll-free number). Copies of the public comments are also available for
inspection and downloading at http://www.epa.gov/feddocket.
FOR FURTHER INFORMATION CONTACT: Beverly J. Miller, Director, Office of
Multifamily Asset Management, Department of Housing and Urban
Development, 451 Seventh Street, SW., Room 6160, Washington, DC 20410-
8000; telephone (202) 708-3730 (this is not a toll-free number).
Hearing or speech impaired individuals may access this number via TTY
by calling the toll-free Federal Information Relay Service at (800)
877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
Section 203 of the Housing and Community Development Amendments Act
of 1978 (12 U.S.C. 1701z-11) (1978 HCD Act) authorizes the Secretary of
HUD to manage or dispose of multifamily housing projects that are owned
by the Secretary or that are subject to a mortgage held by the
Secretary. Pursuant to section 203(i) of the 1978 HCD Act, state and
local governments have a right of first refusal to purchase a HUD-owned
multifamily project. The purpose of the multifamily housing project
disposition program is to dispose of properties in a way that preserves
the availability of affordable housing, strengthens neighborhoods and
communities, supports fair housing strategies, and protects the
financial interests of the federal government.
HUD's regulations for the multifamily housing project disposition
program are located at 24 CFR part 290, subpart A. These regulations
supplement the requirements of section 203 of the 1978 HCD Act for the
management and disposition of multifamily housing projects. In
addition, a potential purchaser of a multifamily project that is HUD-
owned or secured by a HUD-held mortgage is subject to the participation
and compliance requirements contained in subpart H of 24 CFR part 200.
These regulations establish uniform standards for the approval,
disapproval, or withholding of action on principals in projects based
upon their past performance as well as other aspects of their records.
Among other requirements, a potential purchaser of such a multifamily
project must submit a previous participation certification attesting to
its past performance and other relevant facts (for example, that the
potential purchaser is not a HUD employee or a Member of Congress).
Section 219 of the Consolidated Appropriations Act, 2004 (Pub. L.
108-199, approved January 23, 2004) (FY 2004 Appropriations Act),
mandated several changes to the requirements applicable to purchasers
of HUD-owned multifamily housing projects. In enacting section 219, the
Congress required HUD to institute a policy ``to prevent the sale of
HUD properties, from HUD, or from state and local governments, to
people with demonstrated patterns of severe housing code violations''
(see S. Rep. 108-143, at 62 (2004)). Specifically, section 219 requires
the Secretary of HUD to issue a proposed rule to ensure that a
potential purchaser of a multifamily project that is HUD-owned or
secured by a HUD-held mortgage is in substantial compliance with
applicable state or local government housing statutes, regulations,
ordinances, and codes with regard to other properties owned by the
purchaser. Further, under the proposed rule any state or local
government that exercises its right of first refusal to acquire the
project must ensure that any person or entity that subsequently
acquires the project from the state or local government is subject to
the same standards that would otherwise apply if the person or entity
had purchased the project directly from HUD.
II. This Proposed Rule
This proposed rule would amend HUD's regulations to implement
section 219 of the Consolidated Appropriations Act, 2004. The specific
regulatory amendments that would be made by the proposed rule are as
follows:
A. Proposed Changes to FHA Participation and Compliance Requirements
(24 CFR Part 200, Subpart H)
The proposed rule would expand the scope of the regulations in 24
CFR part 200, subpart H to include a potential purchaser of a
multifamily project from a state or local government that previously
had acquired the project by exercising its right of first refusal under
section 203(i) of the 1978 HCD Act. As noted above, potential
purchasers of
[[Page 45493]]
multifamily projects directly from HUD are already subject to these
requirements. Currently, however, the regulations do not apply to
purchasers of multifamily projects from state and local governments
declining to exercise their right of first refusal. The proposed
regulatory change would comply with section 219 of the Consolidated
Appropriations Act, 2004 by ensuring that any person or entity that
subsequently acquires multifamily projects from the state or local
government is subject to the same standards that would otherwise apply
if the person or entity had purchased the project directly from HUD.
The proposed rule would amend Sec. 200.213, which lists the
activities subject to the participation and compliance requirements, to
include purchases of multifamily housing projects from state or local
governments that previously had acquired the property from HUD. The
proposed rule would also revise Sec. 200.217, which establishes the
timing of submission of the previous participation certification.
Proposed purchasers of a project from a state, city, or municipality
that previously had acquired the project, and which declined to
exercise its right of first refusal under section 203 of the 1978 HCD
Act, would be required to submit the required certification prior to
the proposed acquisition.
B. Proposed Changes to Requirements Regarding the Disposition of HUD-
Owned Multifamily Projects (24 CFR Part 290, Subpart A)
As noted above, section 219 of the Consolidated Appropriations Act,
2004 requires that potential purchasers of a multifamily project from
HUD be in substantial compliance with applicable state or local
government housing statutes, regulations, ordinances, and codes with
regard to other properties owned by the purchaser. The proposed rule
would amend the regulations at 24 CFR part 290, subpart A to implement
this requirement.
HUD proposes to add a new Sec. 290.16, which would require that a
potential purchaser of a multifamily project must certify, on a form
prescribed by HUD, that all other properties owned by the potential
purchaser, and located in the same city or town as the project being
purchased, are in substantial compliance with applicable state or local
government housing statutes, regulations, ordinances, and codes. For
purposes of new Sec. 290.16, the term ``potential purchaser'' would be
defined to mean any purchaser of a multifamily project that is HUD-
owned or secured by a HUD-held mortgage that is being foreclosed, with
the exception of a state agency or unit of local government (including
public housing agencies) in the locality in which the project is
located. This certification must be submitted concurrently with the
previous participation certificate required under 24 CFR part 200,
subpart H.
The certification must identify by name and location all properties
owned by the potential purchaser that are located in the same city or
town as the project being purchased. The certification must also state
whether to the best of the potential purchaser's knowledge and belief,
each such property is currently and materially in violation of any
applicable state or local requirements. If there are material
violations, the certification must specify the nature of each material
violation and state whether, notwithstanding the material violations,
the properties are in substantial compliance with applicable state or
local government housing statutes, regulations, ordinances, and codes.
HUD may verify the accuracy of the certification by requiring
supporting documentation from the potential purchaser.
As noted above, the certification would only apply to other
properties owned by the potential purchaser that are in the same city
or town as the project being purchased. It would be overly burdensome
to require a potential purchaser to identify all properties on a
nationwide basis, and excessive HUD staff time would be required to
review and verify compliance with such a broad certification
requirement. Most purchasers of HUD multifamily projects (competitive
or noncompetitive) are local purchasers. In those cases where the
potential purchaser is a nationwide developer, most of these purchasers
have conducted, or are currently conducting, business with HUD and
submission of the required previous participation certification would
provide HUD with the opportunity to assess the developer's
qualifications to purchase the project.
HUD will notify a potential purchaser of any preliminary
determination that the potential purchaser is not in substantial
compliance. Within 10 business days after receipt of notice of the date
of such a preliminary determination, the potential purchaser may appeal
the preliminary determination to the Deputy Assistant Secretary for
Multifamily Housing or the Deputy Assistant Secretary's designee, and
request an informal HUD conference. If the potential purchaser does not
appeal HUD's preliminary determination within 10 business days, the
preliminary determination shall become final. If HUD makes a final
determination that the potential purchaser is not in substantial
compliance, HUD may elect not to sell the project to the potential
purchaser, such as by terminating any sales contract.
As noted above in this preamble, the Senate Report accompanying
enactment of section 219 of the Consolidated Appropriations Act, 2004
specifies that the focus of the statutory certification requirement is
on the sale of properties ``to people with demonstrated patterns of
severe housing code violations,'' and not on governmental or other
entities (emphasis added). Accordingly, under the proposed rule, state
and local governments purchasing a multifamily project would not be
subject to the certification requirement. HUD agrees with the Senate
Report language and does not believe it would be appropriate, or
consistent with prior HUD practice, to evaluate the experience or
worthiness of another governmental agency's ability to purchase and
operate a HUD-owned project. State and local governmental entities that
purchase HUD-owned projects are presumed to operate and maintain the
projects in a responsible and conscientious manner.
HUD will require, as a condition of the sale, that a person or
entity that seeks to purchase the project from the state or local
government to certify, or otherwise verify, prior to the sale that all
other properties owned by the potential purchaser, and located in the
same city or town as the project being purchased, are in substantial
compliance with applicable state or local government housing statutes,
regulations, ordinances, and codes.
III. Findings and Certifications
Information Collection Requirements
The information collection requirements contained in this proposed
rule have been submitted to the Office of Management and Budget (OMB)
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). In
accordance with the Paperwork Reduction Act, 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 currently valid OMB
control number.
The burden of the information collections in this proposed rule is
estimated as follows:
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Reporting and Recordkeeping Burden
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Estimated
Number of average time Estimated
Section reference Number of responses for annual
parties per requirement burden (in
respondent (in hours) hours)
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Sec. 290.16........................................... 800 1 .10 80
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In accordance with 5 CFR 1320.8(d)(1), HUD is soliciting comments
from members of the public and affected agencies concerning this
collection of information to:
(1) Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of
the proposed collection of information;
(3) Enhance the quality, utility, and clarity of the information to
be collected; and
(4) Minimize the burden of the collection of information on those
who are to respond; including through the use of appropriate automated
collection techniques or other forms of information technology, e.g.,
permitting responses to be submitted electronically.
Interested persons are invited to submit comments regarding the
information collection requirements in this rule. Under the provisions
of 5 CFR part 1320, OMB is required to make a decision concerning this
collection of information between 30 and 60 days after today's
publication date. Therefore, a comment on the information collection
requirements is best assured of having its full effect if OMB receives
the comment within 30 days of today's publication. This time frame does
not affect the deadline for comments to the agency on the interim rule,
however. Comments must refer to the proposal by name and docket number
(FR-4941) and be sent to both:
HUD Desk Officer, Office of Management and Budget, New Executive Office
Building, Washington, DC 20503, Fax number: (202) 395-6947, and
Kathleen McDermott, Reports Liaison Officer, Office of Housing-Federal
Housing Commissioner, Department of Housing and Urban Development, 451
Seventh Street, SW., Room 9116, Washington, DC 20410-8000.
Regulatory Planning and Review
OMB reviewed this rule under Executive Order 12866 (entitled
``Regulatory Planning and Review''). OMB determined that this rule is a
``significant regulatory action'' as defined in section 3(f) of the
Order (although not an economically significant regulatory action, as
provided under section 3(f)(1) of the Order). Any changes made to the
rule subsequent to its submission to OMB are identified in the docket
file, which is available for public inspection in the Regulations
Division, Office of General Counsel, Department of Housing and Urban
Development, 451 Seventh Street, SW., Room 10276, Washington, DC 20410-
0500. Due to security measures at the HUD Headquarters building, please
schedule an appointment to review the docket file by calling the
Regulations Division at (202) 708-3055 (this is not a toll-free
number).
Environmental Impact
A Finding of No Significant Impact with respect to the environment
has been made, 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)). That finding is available for
public inspection between the hours of 8 a.m. and 5 p.m. weekdays in
the Regulations Division, Office of General Counsel, Department of
Housing and Urban Development, 451 Seventh Street, SW., Room 10276,
Washington, DC 20410-0500.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.),
generally requires an agency to conduct a regulatory flexibility
analysis of any rule subject to notice and comment rulemaking
requirements unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
The proposed rule would revise HUD's regulations governing the
disposition of multifamily projects by HUD to implement statutory
amendments made by the Consolidated Appropriations Act, 2004. As
discussed above in this preamble, these changes concern compliance by
purchasers of multifamily housing projects from HUD with applicable
state and local housing requirements, and the applicability of HUD
requirements to persons or entities seeking to purchase multifamily
projects from state or local governments that previously had acquired
the property from HUD. To the extent that the rule would impose any
burdens on small entities participating in HUD's multifamily project
disposition program, it would be as a result of statutory mandate.
Accordingly, the undersigned certifies that this rule will not have a
significant economic impact on a substantial number of small entities.
Notwithstanding HUD's determination that this rule will not have a
significant economic effect on a substantial number of small entities,
HUD specifically invites comments regarding less burdensome
alternatives to this rule that will meet HUD's objectives as described
in this preamble.
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has federalism implications if the rule
either imposes substantial direct compliance costs on state and local
governments and is not required by statute, or the rule preempts state
law, unless the agency meets the consultation and funding requirements
of section 6 of the Executive Order. This rule will not have federalism
implications and would not impose substantial direct compliance costs
on state and local governments or preempt state law within the meaning
of the Executive Order.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) (UMRA) establishes requirements for federal agencies to
assess the effects of their regulatory actions on state, local, and
tribal governments, and on the private sector. This rule will not
impose any federal mandates on any state, local, or tribal governments,
or on the private sector, within the meaning of the UMRA.
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance Numbers for HUD's
Multifamily Property Disposition program is 14.199.
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List of Subjects
24 CFR Part 200
Administrative practice and procedure, Claims, Equal employment
opportunity, Fair housing, Home improvement, Housing standards, Lead
poisoning, Loan programs--housing and community development, Mortgage
insurance, Organization and functions (Government agencies), Penalties,
Reporting and recordkeeping requirements, Social security, Unemployment
compensation, Wages.
24 CFR Part 290
Low and moderate income housing, Mortgage insurance.
Accordingly, for the reasons described in the preamble, HUD
proposes to amend 24 CFR parts 200 and 290 as follows:
PART 200--INTRODUCTION TO FHA PROGRAMS
1. The authority citation for 24 CFR part 200 continues to read as
follows:
Authority: 12 U.S.C. 1702-1715z-21; 42 U.S.C. 3535(d).
2. Add Sec. 200.213(e) to read as follows:
Sec. 200.213 Applicability of procedure.
* * * * *
(e) Projects purchased from a state, city, or municipality that had
previously acquired the project by exercising its right of first
refusal for the purchase of a multifamily housing project under section
203 of the Housing and Community Amendments Act of 1978 (12 U.S.C.
1701z-11).
3. Add Sec. 200.217(a)(15) to read as follows:
Sec. 200.217 Filing of previous participation certificate on
prescribed form.
(a) * * *
(15) Purchase of a project acquired from a state, city, or
municipality that had previously acquired the project by exercising its
right of first refusal for the purchase of a multifamily housing
project under section 203 of the Housing and Community Amendments Act
of 1978 (12 U.S.C. 1701z-11)--Prior to the proposed acquisition.
* * * * *
PART 290--DISPOSITION OF MULTIFAMILY PROJECTS AND SALE OF HUD-HELD
MULTIFAMILY MORTGAGES
4. The authority citation for 24 CFR part 290 continues to read as
follows:
Authority: 12 U.S.C. 1701z-11, 1701z-12, 1713, 1715b, 1715z-1b,
1715z-11a; 42 U.S.C. 3535(d), 3535(i).
5. Add Sec. 290.16 to read as follows:
Sec. 290.16 Purchaser compliance with state and local housing laws
and requirements.
(a) Definition of ``potential purchaser''. For purposes of this
section, the term ``potential purchaser'' means any purchaser of a
multifamily project that is HUD-owned or secured by a HUD-held mortgage
that is being foreclosed pursuant to this part and 24 CFR part 27, with
the exception of a state agency or unit of local government (including
public housing agencies) in the locality in which the project is
located.
(b) Certification of substantial compliance with state and local
laws and requirements. (1) A potential purchaser of a multifamily
project pursuant to this part shall certify, on a form prescribed by
HUD, that all other properties owned by the potential purchaser, and
located in the same city or town as the project being purchased, are in
substantial compliance with any applicable state or local government
housing statutes, regulations, ordinances, and codes.
(2) The certification must identify by name and location all
properties owned by the potential purchaser and located in the same
city or town as the project being purchased. The certification must
also state whether, to the best of the potential purchaser's knowledge
and belief, each such property is currently and materially in violation
of any applicable state or local government requirement. If there are
material violations, the certification must specify the nature of each
material violation and state whether, notwithstanding the material
violations, the properties are in substantial compliance with
applicable state or local government statutes, regulations, ordinances,
and codes.
(3) This certification shall be submitted concurrently with the
previous participation certificate required under Sec. 200.217 of this
chapter.
(4) HUD may verify the accuracy of the certification by requiring
supporting documentation from the potential purchaser.
(c) HUD determinations. (1) HUD will notify the potential purchaser
of its preliminary determination that the potential purchaser is not in
substantial compliance.
(2) Within 10 business days after receipt of notice of the date of
HUD's preliminary determination, the potential purchaser may appeal the
preliminary determination to the Deputy Assistant Secretary for
Multifamily Housing or the Deputy Assistant Secretary's designee, and
request an informal HUD conference. If the potential purchaser does not
appeal HUD's preliminary determination within 10 business days, the
preliminary determination shall become final.
(3) If HUD determines that the potential purchaser is not in
substantial compliance, HUD may elect not to sell the project to the
potential purchaser, such as by terminating any sales contract.
(d) State and local government purchasers. State and local
governments purchasing a multifamily project pursuant to this part are
not subject to the certification requirements described in paragraph
(b) of this section. However, HUD will require, as a condition of the
sale, that a person or entity subsequently seeking to purchase the
project from the state or local government certify, or otherwise
verify, prior to the sale that all other properties owned by the
potential purchaser, and located in the same city or town as the
project being purchased, are in substantial compliance with applicable
state or local government housing statutes, regulations, ordinances,
and codes.
Dated: July 8, 2005.
Brian D. Montgomery,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 05-15472 Filed 8-4-05; 8:45 am]
BILLING CODE 4210-27-P