Fund Availability for Section 8 Assistance Under the Loan Management Set-Aside Program DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

SUMMARY: This Notice of Fund Availability (NOFA) announces HUD's

funding for new units of section 8 Loan Management Set-Aside (LMSA)

assistance. In the body of this document is information concerning the

following:

(a) The purpose of the NOFA and information regarding eligibility,

available LMSA assistance, and selection criteria;

(b) Application processing, including how to apply and how

selections will be made; and

(c) A checklist of steps and exhibits involved in the application

process.

DATES: Applications for consideration under the General LMSA Funding

procedures are due on or before March 7, 1994. If submitted on the

application deadline date, the completed application package must be

received by 4:00 PM (local time) in the HUD Field Office having

jurisdiction over the applicant project. The above-stated application

deadline is firm as to date and hour. In the interest of fairness to

all competing applicants, the Department will treat as ineligible for

consideration any application that is received after the deadline,

except for applications made under Emergency procedures described

below. Applicants should recognize this practice and submit materials

early to avoid loss of eligibility brought about by unanticipated

delays or other delivery-related problems. It is not sufficient for the

application to bear a postage date within the submission time period.

Applications must be submitted in an envelope, package, or binding

which includes all parts of the application in their entirety as they

are described in the Application Checklist Section of this NOFA.

Applications submitted by facsimile are not acceptable.

FOR FURTHER INFORMATION CONTACT: The Loan Management Branch in the

local HUD Field Office having jurisdiction over the project(s) in

question for application materials and project-specific guidance.

Policy questions of a general nature may be referred to the Director of

the Office of Housing in the HUD Regional Office having jurisdiction

over the project in question. These are listed as follows:

Region I, Boston, Ken Salk, (617) 565-5102

Region II, New York, Edwin Sprenger, (212) 264-4771

Region III, Philadelphia, Sidney Severe, (215) 597-2654

Region IV, Atlanta, Kenneth Williams, (404) 331-4127

Region V, Chicago, Michael Kulick, (312) 353-6950

Region VI, Ft. Worth, Robert Creech, (817) 885-5531

Region VII, Kansas City, Gerald F. Hayes, Jr. (913) 551-5504

Region VIII, Denver, Ronald Bailey, (303) 844-4959

Region IX, San Francisco, Keith Axtell, (415) 556-0796

Region X, Seattle, Diana Goodwin Shavey, (206) 220-5200

SUPPLEMENTARY INFORMATION:

Information Collection Requirements

The Office of Management and Budget has approved the Loan

Management Set-Aside Program under the provisions of the Paperwork

Reduction Act of 1980 (44 U.S.C. 3501-3520) and has assigned it OMB

control number 2502-0407.

I. Purpose and Substantive Description

(a) Authority

The Loan Management Set-Aside (``LMSA'') program provides special

allocations of Housing Assistance Payments (``HAP'') under Section 8 of

the United States Housing Act of 1937, 42 U.S.C. 1437f. Title 24 of the

Code of Federal Regulations, Part 886, Subpart A sets forth rules for

administration of the LMSA program. Matters addressed in the LMSA

regulation include:

(1) Application contents (Sec. 886.105);

(2) Requirements for HUD approval of applications (Sec. 886.107);

(3) Owner responsibilities under the program (Sec. 886.119); and

(4) Rules governing Federal preferences in the selection of tenants

(Sec. 886.132).

(b) Purpose

The primary purpose of the LMSA program is to reduce claims on the

Department's insurance fund by aiding those FHA-insured or Secretary-

held projects with presently or potentially serious financial

difficulties. First priority is given to insured projects with

presently or potentially serious financial problems which are likely to

result in a claim on the insurance fund in the near future. To the

extent that resources remain available, assistance also may be provided

to HUD-Held and section 202 projects with present or potentially

serious financial problems which, on the basis of financial and/or

management analysis, appear to have a high probability of producing

within approximately the next five years either a claim on the

insurance fund or a loss of direct loan investment in the case of a

section 202 loan.

(c) Allocation Amounts

This Notice of Funding Availability (NOFA) announces availability

of up to $104 million from Fiscal Year 1994 section 8 LMSA program

funds for purposes of avoiding claims on the Department's insurance

fund. HUD is distributing funds under this NOFA to its ten Regional

Offices on the basis of a formula allocation. The formula takes into

consideration recent requests for assistance, assignments, and

potentially eligible projects in each Region.

LMSA funds available under this NOFA are distributed as denoted

below.

------------------------------------------------------------------------

HUD region Allocation

------------------------------------------------------------------------

Region I.................................................. $8,835,060

Region II................................................. 4,507,491

Region III................................................ 21,603,346

Region IV................................................. 21,282,394

Region V.................................................. 20,462,492

Region VI................................................. 9,137,675

Region VII................................................ 3,522,971

Region VIII............................................... 1,537,367

Region IX................................................. 12,071,082

Region X.................................................. 971,126

------------------------------------------------------------------------

The Regional Offices will make awards under this NOFA in accordance

with the selection criteria and procedures described herein.

Pursuant to this Notice, HUD is accepting applications for

assistance under the LMSA program from owners of FHA-insured or

Secretary-held multifamily projects with presently or potentially

serious financial difficulties. All LMSA assistance awarded from these

Fiscal Year 1994 program funds will have a term of five years, with no

contractual provision for renewal of the contract at the end of the

five-year term. This NOFA does not govern non-competitive assistance

awards under the section 8 LMSA program pursuant to specific regulatory

authority (e.g., LMSA assistance as a prepayment plan of action

incentive under Sec. 248.231(e) or such assistance under

Sec. 219.325(b)(4) to alleviate the effect of rent increases resulting

from debt service on capital improvement loans).

(d) Eligibility

Projects eligible for LMSA assistance include: (1) Any existing

subsidized or unsubsidized multifamily residential project subject to a

mortgage insured under any section of the National Housing Act; (2) any

such project subject to a mortgage that has been assigned to the

Secretary; (3) any such mortgage acquired by the Secretary and

thereafter sold under a Secretary-held purchase money mortgage; and (4)

a project for the elderly financed under section 202 of the Housing Act

of 1959 (except projects receiving assistance under 24 CFR part 885 or

part 889). References to HUD-Held or Secretary-Held projects throughout

this Notice include any project which meets one of the descriptions in

(2)-(4) above.

Owners meeting these criteria who applied for assistance in a prior

year but did not receive the desired number of units are eligible to

reapply under this NOFA. The FY 1994 application must contain current

information and conform to all requirements outlined in this notice.

(e) Selection Criteria/Ranking Factors

(1) Application Review: Each application for assistance under the

LMSA program will be reviewed by the HUD Field Office having

jurisdiction over the project in question. Within 10 days of receipt of

each application involving more than 12 units, the HUD Field Office

will notify the chief executive of the unit of general local government

in which the project is located and provide the opportunity for non-

binding comments on the application (see 24 CFR 886.106 and 24 CFR part

791). These comments will be considered by the Field Office in

determining whether the application meets regulatory approval

requirements in section 886.107 and described in detail in HUD Handbook

4350.2 REV-1. The Field Office's review of the application will be

based on the following determinations:

(i) HUD's Fair Housing requirements (24 CFR 886.107(a) and 886.114)

are met;

(ii) The HUD-approved unit rents are approvable within the

limitations described in Sec. 886.110, which are based on HUD's Fair

Market Rents;

(iii) The residential units meet the housing quality standards set

forth in Sec. 886.113, except for such variations as HUD may approve;

(iv) A significant number of residents, or potential residents in

the case of projects having a vacancy rate over 10 percent, are

eligible for and in need of section 8 assistance;

(v) The proposed section 8 assistance would not affect other HUD-

related multifamily housing within the same neighborhood in a

substantially adverse manner. Examples of such adverse effects are

substantial move-outs from nearby HUD-related multifamily housing, or

substantial diversion of prospective applicants from such projects to

the subject project;

(vi) The project has serious current financial problems, which are

likely to result in a claim on the insurance fund in the near future,

or the project has potentially serious financial problems which, on the

basis of financial and/or management analysis, appear to have a high

probability of producing a claim on the insurance fund within

approximately the next five years. Current audited financial statements

will be utilized in the determination of project financial position.

Project owners who have not submitted audited annual financial

statements within 60 days of the end of the project fiscal year or by

the deadline of the extension (if one has been granted) are not in

compliance with the Regulatory Agreement. Since the assignment to a

priority category, as well as scoring and ranking (if required within

priority category), cannot be properly performed without current

financial data, a project will be rejected on this basis. The only

exception to this procedure is one in which the Field Office has

granted an indefinite extension due to the inability of the project to

cover the expense of the preparation of the audited statements.

Required data must be available from Field Office sources prior to

scoring and ranking.

(vii) The proposed section 8 assistance for the project would solve

an identifiable problem and provide a reasonable assurance of long-term

project viability. A determination of long-term viability must be based

on the following findings:

(A) The project is not subject to any serious problems that are

non-economic in nature. Examples of such problems are poor location,

structural deficiencies or disinterested ownership;

(B) The owner is in substantial compliance with the Regulatory

Agreement. Owners have not or are not diverting project funds for

personal use. No dividends have been paid during any period of

financial difficulty;

(C) The current management agent has been approved by HUD and is in

substantial compliance with the management agreement. Financial records

are adequately kept. Occupancy requirements are being met. Marketing

and maintenance programs are being carried out in an adequate manner,

based upon available financial resources;

(D) The project's problems are primarily the result of factors

beyond the control of the present ownership and management;

(E) The major problems are traceable to an inadequate cash flow;

(F) The proposed Section 8 assistance would solve the cash flow

problem by:

(1) Making it possible to grant needed rent increases; and

(2) Reducing turnover, vacancies and collection losses;

(G) The owner's plan for remedying any deferred maintenance,

financial problems, or other problems is realistic and achievable;

there is positive evidence that the owner will carry out the plan.

Examples of such evidence are the owner's past performance in

correcting problems and, in the case of profit-motivated owners, any

cash contributions made to correct project problems.

(viii) For projects with a history of financial default, financial

difficulties or deferred maintenance, any plan for remedying defaulted

or deferred obligations submitted pursuant to Sec. 886.105(d) must be

adequate in HUD's determination.

In its review of an application, the HUD Field Office will consider

recent physical inspections, management reviews, and tenant complaints

and comments. If there is no report of a detailed HUD physical

inspection conducted by either the mortgagee, HUD, or a third-party

contractor of HUD dated within one year of the date an application for

LMSA assistance is received in the reviewing office and containing a

description and estimated cost of required repairs, the HUD Field

Office will schedule a physical inspection and Housing Quality

Standards (HQS) inspection in conjunction with its review and approval

of the application for LMSA assistance. Execution of a subsidy contract

in such case will be contingent upon satisfactory modification of the

owner's plan to include solutions for all additional problems

discovered in the scheduled review(s).

After HUD Field Offices have determined which applications meet

LMSA program requirements, the projects which are both eligible for,

and in need of, new or additional LMSA assistance shall be reported to

the appropriate Regional Office for further consideration under the

competitive selection procedures outlined in this Notice. Projects

awarded subsidy from Fiscal Year 1994 LMSA program funds shall be

selected in accordance with ``general'' or ``emergency'' procedures as

described below. If an application can be approved only on certain

conditions, the HUD Field Office will notify the owner of the

conditions and specify a time limit by which those conditions must be

met. A project recommended for a conditional approval may be reported

to the Regional Office by the HUD Field Office for further processing

under procedures set forth below; however, execution of an LMSA

contract for any units which may be allocated to the project in the

Regional process, will be contingent upon the owner's compliance with

the approval conditions. If the HUD Field Office concludes that an

application will not meet LMSA program requirements, processing of the

application is discontinued, and the applicant will be notified by the

Field Office as soon as possible of the reasons for disapproval.

(2) General LMSA Funding Round:

(i) Annual needs survey:

Fiscal Year 1994 general funding awards will be made from projects

recommended by HUD Field Offices to their Regional Offices in response

to the Fiscal Year 1994 Annual Needs Survey. The Field Offices' needs

survey responses will be forwarded to Regional Offices after the due

date announced in this Notice for program applications. HUD Field

Office staff shall determine and report the minimum number of LMSA

units needed to cure each project's vacancy and cash flow problems,

subject to limitations as described below.

(ii) Limitations on Units:

(A) An allocation may not exceed the difference between total units

in the project and the number of units already assisted under project-

based tenant subsidy contracts (project-based section 8 subprograms,

Rent Supplement and Rental Assistance Payments).

(B) Total project-based section 8 assistance for projects with

unsubsidized mortgages is limited to 40 percent of total units in the

project. If the respective HUD Field Office determines that a project

with an unsubsidized mortgage needs section 8 assistance above the 40

percent level, or if the project was developed as a retirement service

center, a recommendation by the Field Office will be subject to further

review by the Regional Office in a process similar to the review of

applications submitted under the emergency procedures described in

paragraph (3) below. In all such cases, the Field Office's

justification for LMSA units must document that project management has

an aggressive and workable plan in place for leasing the market rate

units in the project. A project is considered unsubsidized for the

purpose of LMSA funding selections if the HUD mortgage is unsubsidized.

The definition of subsidized project for purposes of section 203 of the

Housing and Community Development Amendments of 1978, which includes

projects with over 50 percent of total units assisted under certain

section 8 subprograms, pertains to management and disposition of

projects which have been acquired by HUD and is not applicable to

projects eligible for LMSA assistance.

(iii) Determination of Priority Category:

HUD Field Offices will include in their needs survey reports, data

needed by the Regional Offices to classify approved projects into six

priority categories and to establish a funding score for each project.

Fiscal Year 1994 LMSA funds will be allocated in the following

order of priority:

(A) Insured projects with presently serious financial problems

likely to result in a mortgage insurance claim in the near future;

(B) Insured projects with potentially serious financial problems

which appear to have a high probability of producing a mortgage

insurance claim within approximately the next five years;

(C) HUD-held and section 202 projects with presently serious

financial problems likely to result in a loss of loan investment within

the near future; and

(D) HUD-held and section 202 projects with potentially serious

financial problems which appear to have a high probability of producing

a loss of loan investment within approximately the next five years.

The Department of Housing and Urban Development never intended to

provide relief in the form of Loan Management Set Aside assistance for

Retirement Service Centers (RESC) or formerly coinsured projects.

However, it is recognized that if LMSA assistance could be made

available for those types of projects some additional claims on the FHA

Fund might be avoided. Accordingly, the following priority categories

of eligible projects are included, once again, in FY 1994:

(E) Insured Retirement Service Centers and insured formerly

coinsured projects (i.e., projects whose mortgages have been converted

from coinsurance to full insurance), with presently serious financial

problems likely to result in a mortgage insurance claim in the near

future.

(F) HUD-held Retirement Service Centers and HUD-held formerly

coinsured projects with presently serious financial problems.

(iv) Determining the ``presently serious'' classification:

For purposes of determining classification, HUD will consider a

project to have ``presently serious financial problems'' if both of the

following two financial ratios are less than zero:

Income/Expense Ratio, defined as follows:

(Net Income or Loss Before Depreciation LESS Annual Debt Service

and Reserve Payments) Times 100 Divided by: Total Annual Cost of

Operating the Project

and,

Ratio of Surplus Cash (or Deficiency) to Monthly Mortgage Payment,

defined as follows:

Total Cash LESS Total Current Obligations Divided by: Total Monthly

Mortgage Payment

A negative income/expense ratio occurs when there was a net loss

during the period or when net income before depreciation was less than

annual debt service plus reserve payments. The project did not generate

sufficient cash flow from operations in the previous year to cover its

cash requirements, suggesting cash flow difficulties which were

possibly severe and, if left unresolved, are likely to result in

financial problems in the current year. Comparison to the total cost of

operating the project provides an indication of the seriousness of any

negative cash flow, since the size of the problem generally varies

directly with the absolute value of the ratio.

The second ratio approximates the project's Mortgage Payment

Coverage Ratio and is negative when there is a cash deficiency, i.e.,

the surplus cash calculation is less than zero. A cash deficiency means

that cash available to the project at the end of the period, including

any subsidy vouchers due for the period, is less than the amount needed

to cover current obligations. A cash deficiency points to a severe

liquidity problem since the project cannot even meet its past

obligations without some form of relief. Calculation of the ratio of

surplus cash (deficiency) to the total mortgage payment provides an

indication of the project's ability to make the next mortgage payment

after past obligations are met, without depending upon the next month's

rent collections.

The two ratios defined above will be calculated using financial

data contained in the project's most recent annual audited financial

statement submitted to the Field Office in accordance with the

Regulatory Agreement (see par. (e)(1)(vi.), in conjunction with monthly

accounting reports. A result of zero or less on the two ratios suggests

that the project has a current financial problem. These ratios were

selected because they provide a straightforward means of identifying

projects with cash flow difficulties. Projects with either ratio in the

positive range may be added to Category A for insured projects or

Category C for HUD-held projects based on written justifications by HUD

Field Offices documenting appropriate circumstances. For example, a

substantial increase in vacancies in recent months may warrant

elevating the project's priority category. The justifications will be

reviewed by the Regional Housing Director, who will resolve any issues

with the respective Field Offices and approve, or disapprove, the

change in priority.

(v) Determination of Ranking Within Priority Category

The number of projects which can be funded from Fiscal Year 1994

resources will depend upon the units and budget authority designated in

Field Office recommendations. If LMSA program funds are available to

fund some, but not all of the projects in a given priority category

(after funding all projects in higher priority categories), any project

selections from the given category will follow from a ranking of

projects within that category using a funding score. A maximum score of

115 points (110 points for HUD-held projects) may be accumulated on the

basis of the following project characteristics and maximum point

potentials:

(A) Occupancy--25 points.

Calculation: No. of occupied units Divided by Total units in the

project. Lower values yield higher points.

(B) Owner advances or contributions since October 1, 1990-- 25

points.

Calculation: Total of owner advances or contributions during the

period Divided by Total Units in the project. Larger values yield

higher points.

(C) Tenants paying in excess of 40 percent of their income for

rent--15 points.

Calculation: No. of units occupied by tenants paying over 40

percent of their income for rent Divided by Total units in the project.

Larger values yield higher points.

(D) Income/Expense Ratio--15 points.

Calculation: As defined above. Smaller values yield higher points.

(E) Ratio of Surplus Cash (Deficiency) to Total Monthly Mortgage

Payment--15 points.

Calculation: As defined above. Smaller values yield higher points.

(F) For HUD-insured projects only, Mortgage balance per dollar of

additional subsidy--5 points.

Calculation: Mortgage principal balance Divided By Proposed LMSA

annual contract authority. Larger values yield higher points.

(G) Resident Initiatives--15 points.

Evidence in the form of a contract, or other written commitment, to

transfer title to the property to a resident organization, cooperative

association, non-profit entity, public body including an

instrumentality thereof, public housing agency or Indian Housing

Authority, for the purpose of resident ownership or management of the

project.

(vi) LMSA/Flexible Subsidy Program Coordination

Pursuant to section 405(f) of the Housing and Community Development

Act of 1992 (Pub. L. 102-550), assistance under this NOFA will be

coordinated with assistance made available under the NOFA for the

Flexible Subsidy Program. Projects seeking assistance under both

programs will be reviewed to evaluate the effect on cash flow and

ability to fund repair items from the increased operating income. By

taking into account all funding sources, HUD can determine whether the

infusion of Flexible Subsidy assistance together with the LMSA

represents the appropriate solution for project stabilization.

(vii) Funding for Selected Projects

If the Regional Office confirms that all program requirements have

been met and selects the project for funding, notification of a general

funding award will be made through the HUD Field Office. If an

application can be approved only on certain conditions, HUD will notify

the owner of the conditions and specify a time limit by which those

conditions must be met. Disapproved applicants will also be notified

with a statement of the grounds for disapproval.

(3) Emergency LMSA Funding

Up to five percent of the LMSA funds announced in this Notice may

be made available to fund projects recommended by the respective HUD

Field Office subsequent to the Annual Needs Survey reporting deadline

for the general funding round. After this deadline, only emergency

requests will be accepted. In all cases governed by these emergency

procedures, consideration will be given to the extent that sufficient

resources are available.

To qualify for emergency LMSA assistance, the project must be

Insured with presently serious financial problems (as described in

paragraph (2)(iii) above), and must meet one of the conditions listed

below:

(i) The applications (or corrections to the applications) were

received too late by the Field Office to be included in the Annual

Needs Survey.

(ii) Projects were recommended by the Field Office during this

general funding round, but were not approved by the Regional Office or

did not score a sufficient number of points in the ranking process.

All application and Field Office review procedures pertaining to

the LMSA program will be followed for emergency recommendations. In

addition, an emergency recommendation must have a full written

justification signed by the Field Office Manager. HUD Field Offices are

required to demonstrate that provision of the proposed LMSA units is

likely to avert a mortgage default or assignment in the near future,

and the request to the Regional Office will explain why funds are

needed on an emergency basis. The Region will not consider any

emergency funding request which does not have written justification

signed by the Manager.

The Region will review Field Office justifications and will

determine whether provision of LMSA units is an appropriate response to

the circumstances documented by HUD Field staff. If an emergency

request is approved, notification of the subsidy award will be made

through the HUD Field Office.

II. Application Process

(a) Completed applications must be submitted to the HUD Field

Office having jurisdiction over the multifamily property for which

assistance is requested. Application kits containing copies of required

HUD forms and Notices are available from HUD Field Offices.

(b) For consideration under the General LMSA Funding procedures set

forth previously in this Notice, a completed LMSA application must be

received in the Field Office on or before 4 p.m. March 7, 1994.

Applications received after this deadline will be considered for LMSA

assistance only if the Secretary determines that such assistance is

needed immediately in response to emergency circumstances and only to

the extent that sufficient Fiscal Year 1994 LMSA budget authority

remains to satisfy the subsidy requirement.

III. Checklist of Application Submission Requirements

(a) LMSA applications must meet the requirements set forth in

section 886.105 of the LMSA regulations and HUD Handbook 4350.2 REV-1

(6/92). All requirements have been incorporated into form HUD-52530,

Application for Loan Management Set-Aside, Section 8 Program, and the

ancillary forms cited therein. The application form can be reproduced

from appendix 1 of Handbook 4350.2. Regulatory requirements are cited

below.

(1) Information on gross income, family size and amount of rent

paid to the project by families currently in residence;

(2) Information on vacancies and turnover;

(3) Total number of units by unit size (by bedroom count) for which

section 8 assistance is requested;

(4) Affirmative Fair Housing Marketing Plan on Form HUD-935.2.

(5) Estimate of effect of the availability of the requested section

8 LMSA assistance on marketability of units in the project;

(6) For projects having a history of financial default, financial

difficulties or deferred maintenance, a plan and a schedule for

remedying such defaulted or deferred obligations. To be credible, the

owner must clearly state each problem being addressed and enumerate

proposed actions for curing each problem. Proposed actions must be

presented in trackable form, with the specific dates that each action

would begin and end if the requested LMSA subsidy were awarded.

(7) A Statement of the Sources and Uses of all financial resources

needed to complete the plan, including any cash contributions from the

owner. Please note: If Low Income Housing Tax Credits have been or are

planned for this project, a special Sources and Uses format is

required. See Item 11 below.

(8) Since HUD's approval must be based in part on evidence that the

plan will be carried out, certification by the owner that the plan will

be executed as presented and that sources of funds identified in the

plan, other than the LMSA assistance applied for, will be available by

the scheduled dates (any conditions must be stated, e.g. ``subject to

HUD approval of Flexible Subsidy'').

(9) Certification by the owner that every effort has been made to

secure funding from all possible funding sources; supporting

documentation of those efforts must be attached.

(10) Certification by the owner that he/she agrees to modify the

plan, prior to execution of an LMSA contract, for the purpose of

including any changes which the HUD Field Office determines are

necessary to address problems not identified or inadequately addressed

in the plan, as indicated by recent HUD physical inspections,

management reviews or records of tenant complaints and comments, or by

HUD physical inspections and/or management reviews which may be

scheduled in conjunction with review of the LMSA application. Changes

required by HUD may also include requirements for carrying out Resident

Initiatives activities where it is determined that it could be

beneficial to the management of the project.

(11) All documentation needed to conduct a subsidy layering review

as required by HUD Notice 90-17, ``Combining Low-Income Housing Tax

Credits (LIHTC) with HUD Programs'', and by the Notice of

administrative guidelines to be applied to assistance programs of the

Office of Housing published on April 9, 1991 (56 FR 14436). The

Department is obligated by law to reduce the amount of assistance it

will provide if the review discloses a certain level of excess. These

may include the Sources and Uses Statement which can be reproduced from

appendix F of HUD Handbook 4350.1, REV-1, Insured Project Servicing;

evidence of issuance of tax credits from the State Housing Finance

Agency; the terms and conditions for all mortgages (interest rates,

etc.), and Income and Expense Statement (Statement of Profit/Loss Form

HUD-92410).

(12) Form HUD-2880, Applicant/Recipient Disclosure/Update Report,

as required under subpart C of 24 CFR part 12, Accountability in the

Provision of HUD Assistance.

(13) Disclosures and verification requirements for Social Security

and Employer Identification Numbers, as required by 24 CFR part 750.

(14) Certification and disclosure according to HUD Notice H-90-27

entitled ``OMB's Guidance on New Government-wide Restrictions on

Lobbying'' issued April 13, 1990.

(15) Form HUD-2530, Previous Participation Certificate(s) for all

principals (including management agents) requiring clearance under

those procedures.

(16) A certification stating that the owner will comply with the

provisions of the Fair Housing Act, Title VI of the Civil Rights Act of

1964, Executive Orders 11063 and 11246, section 504 of the

Rehabilitation Act of 1973, the Age Discrimination Act of 1975, section

3 of the Housing and Urban Development Act of 1968, as well as with all

regulations issued pursuant to these authorities.

(17) Certification that the applicant will comply with the Uniform

Relocation Assistance and Real Property Acquisition Policies Act of

1970, as amended, (URA), implementing regulations at 49 CFR part 24,

and HUD Handbook 1378, Tenant Assistance, Relocation and Real Property

Acquisition.

(18) Anti-lobbying Certification for contracts, grants, loans and

cooperative agreements for grants exceeding $100,000; and Disclosure of

Lobbying Activities (SF-LLL), if applicable. Standard Form-LLL is

required if funds other than federally appropriated funds will be or

have been used to lobby the Executive or Legislative branches of the

Federal government regarding specific contracts, grants, loans or

cooperative agreements.

IV. Corrections to Deficient Applications

(a) After the submission date for applications, no owner-initiated

changes to application documents will be accepted, except for

correction of curable technical deficiencies which do not alter the

substance of the application materials. Curable technical deficiencies

are items that are not necessary for HUD review under the selection

criteria (e.g., failure to submit a required certification). Applicants

may not submit items that would improve the substantive quality of the

application after the application deadline.

(b) HUD will notify an applicant in writing, shortly after the

application response deadline, of any curable technical deficiencies in

the application. The applicant must submit corrections to the Field

Office within 14 calendar days from the date of HUD's letter notifying

the applicant of any such deficiency. The applicant must submit the

corrected document(s) with a separate written summary of all changes

from the original submission.

V. Other Matters

(a) HUD regulations in 24 CFR part 50, implementing section

102(2)(C) of the National Environmental Policy Act of 1969, contain

categorical exclusions from their requirements for the actions,

activities, and programs specified in Sec. 50.20. Since the activities

set forth in this Notice are within the exclusion set forth in

Sec. 50.20(d), no environmental assessment is required, and no

environmental finding has been prepared.

(b) Executive Order 12612, Federalism. The General Counsel, as the

Designated Official under section 6(a) of Executive Order 12612,

Federalism, has determined that this NOFA does not have ``federalism

implications'' because it does not have substantial direct effects on

the States (including their political subdivisions), or on the

distribution of power and responsibilities among the various levels of

government.

(c) Executive Order 12606, the Family. The General Counsel, as the

Designated Official under Executive Order 12606, the Family, has

determined that this NOFA does not have potential significant impact on

family formation, maintenance, and general well-being.

(d) Section 13 of the Department of Housing and Urban Development

Act contains two provisions dealing with efforts to influence HUD's

decisions with respect to financial assistance. The first imposes

disclosure requirements on those who are typically involved in these

efforts--those who pay others to influence the award of assistance or

the taking of a management action by the Department and those who are

paid to provide the influence. The second restricts the payment of fees

to those who are paid to influence the award of HUD assistance, if the

fees are tied to the number of housing units received or are based on

the amount of assistance received, or if they are contingent upon the

receipt of assistance.

Section 13 was implemented by final rule published in the Federal

Register on May 17, 1991 (56 FR 22912). If readers are involved in any

efforts to influence the Department in these ways, they are urged to

read the final rule at 24 CFR part 86, particularly the examples

contained in appendix A of the rule.

Any questions regarding the rule should be directed to the Office

of Ethics, room 2158, Department of Housing and Urban Development, 451

Seventh Street, SW., Washington, DC 20410. Telephone: (202) 708-3815;

TDD: (202) 708-1112. (These are not toll-free numbers.) Forms necessary

for compliance with the rule may be obtained from the local HUD office.

(e) Section 103 of the HUD Reform Act. HUD's regulation

implementing Section 103 of the Department of Housing and Urban

Development Reform Act of 1989 (42 U.S.C. 3537a) was published May 13,

1991 (56 FR 22088) and became effective on June 12, 1991. That

regulation, codified as 24 CFR part 4, applies to the funding

competition announced today. The requirements of the rule continue to

apply until the announcement of the selection of successful applicants.

HUD employees involved in the review of applications and in the

making of funding decisions are restrained by part 4 from providing

advance information to any person (other than an authorized employee of

HUD) concerning funding decisions, or from otherwise giving any

applicant an unfair competitive advantage. Persons who apply for

assistance in this competition should confine their inquiries to the

subject areas permitted under 24 CFR part 4.

Applicants who have questions should contact the HUD Office of

Ethics (202) 708-3815. (This is not a toll-free number.) The Office of

Ethics can provide information of a general nature to HUD employees, as

well. However, a HUD employee who has specific program questions, such

as whether particular subject matter can be discussed with persons

outside the Department, should contact his or her Regional or Field

Office Counsel, or Headquarters counsel for the program to which the

question pertains.

(f) Accountability in the Provision of HUD Assistance--Section 102

of the HUD Reform Act. HUD has promulgated a final rule to implement

section 102 of the Department of Housing and Urban Development Reform

Act of 1989 (HUD Reform Act) The final rule is codified at 24 CFR part

12. Section 102 contains a number of provisions that are designed to

ensure greater accountability and integrity in the provision of certain

types of assistance administered by HUD. On January 14, HUD published

at 57 FR 1942, additional information that gave the public including

applicants for, and recipients of, HUD assistance) further information

on the implementation, public access, and disclosure requirements of

section 102. The documentation, public access, and disclosure

requirements of section 102 are applicable to assistance awarded under

this NOFA as follows:

(1) Documentation and public access. HUD will ensure that

documentation and other information regarding each application

submitted pursuant to this NOFA are sufficient to indicate the basis

upon which assistance was provided or denied. This material, including

any letters of support, will be made available for public inspection

for a five-year period beginning not less than 30 days after the award

of the assistance. Material will be made available in accordance with

the Freedom of Information Act (5 U.S.C. 552) and HUD's implementing

regulations at 24 CFR part 15. In addition, HUD will include the

recipients of assistance pursuant to this NOFA in its quarterly Federal

Register notice of all recipients of HUD assistance awarded on a

competitive basis. (See 24 CFR 12.14(a) and 12.16(b), and the notice

published in the Federal Register on January 16, 1992 (57 FR 1942), for

further information on these requirements.)

(2) Disclosures. HUD will make available to the public for five

years all applicant disclosure reports (HUD Form 2880) submitted in

connection with this NOFA. Update reports (also Form 2880) will be made

available along with the applicant disclosure reports, but in no case

for a period less than three years. All reports--both applicant

disclosures and updates--will be made available in accordance with the

Freedom of Information Act (5 U.S.C. 552) and HUD's implementing

regulations at 24 CFR part 15. (See 24 CFR subpart C, and the notice

published in the Federal Register on January 16, 1992 (57 FR 1942), for

further information on these disclosure requirements.)

(3) Subsidy-layering determinations. 24 CFR 12.52 requires HUD to

certify that the amount of HUD assistance is not more than is necessary

to make the assisted activity feasible after taking account of other

government assistance. HUD will make the decision with respect to each

certification available to the public free of charge, for a three-year

period. (See the notice published in the Federal Register on January

16, 1992 (57 FR 1942) for further information on requesting these

decisions.) Additional information about applications, HUD

certifications, and assistance adjustments, both before assistance is

provided or subsequently, are to be made under the Freedom of

Information Act (24 CFR part 15).

(g) The Byrd Amendment. Prohibition Against Lobbying Activities.

The use of funds awarded under this NOFA is subject to the disclosure

requirements and prohibitions of Section 319 of the Department of

Interior and Related Agencies Appropriations Act for Fiscal Year 1990

(31 U.S.C. 1352) (the ``Byrd Amendment'') and the implementing

regulations at 24 CFR part 87. These authorities prohibit recipients of

Federal contracts, grants, or loans from using appropriated funds for

lobbying the Executive or Legislative branches of the Federal

government in connection with a specific contract, grant, or loan. The

prohibition also covers the awarding of contracts, grants, cooperative

agreements, or loans unless the recipient has made an acceptable

certification regarding lobbying. Under 24 CFR part 87, applicants,

recipients, and subrecipients of assistance exceeding $100,000 must

certify that no Federal funds have been or will be spent on lobbying

activities in connection with the assistance.

Required Reporting

A certification is required at the time application for funds is

made that Federally appropriated funds are not being or have not been

used in violation of section 319 and that disclosure will be made of

payments for lobbying with other than Federally appropriated funds.

Also there is a standard disclosure form, SF-LLL, ``Disclosure Form to

Report Lobbying'', which must be used to disclose lobbying with other

than Federally appropriated funds.

Authority: Section 8 of the United States Housing Act of 1937,

42 U.S.C. 1437f.

Dated: January 10, 1994.

Nicolas P. Retsinas,

Assistant Secretary for Housing-Federal Housing Commissioner.

[FR Doc. 94-1307 Filed 1-19-94; 8:45 am]

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