NOFA for Intermediaries to Administer Preservation Technical Assistance Grants

SUMMARY: The Department requests applications from intermediaries

seeking to administer grant funds as described in the body of this

NOFA. An intermediary that applies to cover an area smaller than one

State must seek to administer grants in a jurisdiction covering at

least one HUD area office. Intermediaries will receive funding, to be

used as processing fees, from a portion of the $45 million funding that

is available for technical assistance grants to promote the ability of

residents of eligible low-income housing to participate meaningfully in

the preservation process established by the Emergency Low Income

Housing Preservation Act of 1987 (ELIHPA) and the Low-Income Housing

Preservation and Resident Homeownership Act of 1990 (LIHPRHA). The NOFA

describes the technical assistance grants that will be made available

through intermediaries and the selection criteria that will be used for

those grants; however, this is not a request for applications for those

direct technical assistance grants.

Of the available funds, $13.5 million will be available for

Resident Capacity Grants and $31.5 million will be available for

Predevelopment grants. Both of these grant categories are described in

Appendix A of this NOFA. Dollar amounts have been made available by

State, utilizing the Department's estimates of preservation activity.

Any additional amounts made available from the termination of the

September 3, 1992, NOFA, or by appropriation in future years, if any,

will be divided proportionately between the grant categories.

In the body of this document is information concerning eligible

intermediary applicants; the funding available by State; HUD's

processing of the intermediary applications; grant applicants eligible

for technical assistance; and the selection criteria for both the

intermediary applicants and technical assistance grant applicants.

Technical assistance applicants should be aware that the determination

of which regulatory requirements apply to an applicant's purchase

depends on the preservation program under which the owner has filed a

Notice of Intent. Thus, applicants must comply with 24 CFR part 248 and

with either ELIHPA or LIHPRHA, as appropriate. (Applicants should note

that part 248, as codified in the April 1, 1993, revision of the Code

of Federal Regulations (CFR) was amended subsequently in a rule

published on July 13, 1993 (57 FR 3384), which reflects requirements of

the Housing and Community Development Act of 1992.)

DATES: The deadline for submission of intermediary applications is June

6, 1994. Applications must be physically received in the Preservation

Division, Department of Housing and Urban Development, room 6284, 451

Seventh Street, SW., Washington, DC 20410, by 5 p.m., EST, on the due

date.

ADDRESSES: Application kits for intermediaries may be obtained from the

Multifamily Preservation Division, Department of Housing and Urban

Development, room 6284, 451 Seventh Street, SW., Washington, DC 20410;

and from the Multifamily Housing Clearinghouse, P.O. Box 6424,

Rockville, MD 20850, telephone 1-800-955-2232.

FOR FURTHER INFORMATION CONTACT: Kevin J. East, Director, Preservation

Division, Department of Housing and Urban Development, room 6284, 451

Seventh Street, SW., Washington, DC 20410; telephone (202) 708-2300. To

provide service for persons who are hearing- or speech-impaired, this

number may be reached via TDD by dialing the Federal Information Relay

Service on 1-800-877-TDDY (1-800-877-8339) or 202-708-9300. (Except for

the ``800'' number, telephone numbers are not toll-free).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act Statement

The information collection requirements contained in this notice

have been reviewed by the Office of Management and Budget under the

provisions of the Paperwork Reduction Act of 1980 (44 U.S.C. 3501-

3520). The OMB control number is 2502-0502.

Background

On July 13, 1993, the Department took the unusual step of

publishing a draft Notice of Fund Availability (58 FR 37819),

specifically inviting public comments on the Department's proposed

methodology for implementing the provisions of section 312 of the

Housing and Community Development Act of 1992 (Pub. L. 102-550,

approved October 28, 1992) (1992 HCDA), which added sections 251-257 to

the Low-Income Housing Preservation and Resident Homeownership Act of

1990 (Pub. L. 101-625, section 601 of the National Affordable Housing

Act (NAHA), approved November 28, 1990) (LIHPRHA). The comment period

expired on August 28, 1993. The Department received a total of 26

comments. Two comments were from legal/advocacy organizations; eight

were from low-income housing organizations that are involved in

development of and advocacy for affordable housing; nine were from

tenant organizations; three were from community development

corporations; two were from community service organizations; one was

from a local government agency; and one was from an individual housing

consultant.

This NOFA implements sections 251, 252, 253, 255, 256, and 257 of

LIHPRHA, as added by section 312 of the 1992 HCDA. This NOFA does not

implement section 254 of LIHPRHA, which will be implemented soon

through a separate NOFA. Therefore, the comments received on section

254 as a result of the draft NOFA published July 13, 1993, will not be

addressed here, but will be considered in that separate NOFA.

The first section of this NOFA is a discussion of the public

comments and modifications from the draft NOFA that were made in

response to the public comments and as a result of additional HUD

consideration. The actual NOFA follows the discussion of public

comments and begins with the section designated ``II. Purpose and

Substantive Description.''

I. Public Comments

A. Direct Technical Assistance Grants

1. Resident Notification

The proposed NOFA required each applicant for a technical

assistance grant to notify the residents of the property of the

application. Seventeen commenters requested that this requirement be

clarified or strengthened. Six commenters requested that the

notification be in writing, and be required to include a summary of the

proposed plan for the property including items on the development team,

budget, and proposed tasks. The Department has adopted this

recommendation.

A number of commenters requested that the notification advise that

residents themselves can also apply for grant funds and can endorse an

eligible organization of their choice. Several others said this

information should be given, not by the applicant, but by the

Department, possibly as part of current resident notification forms

under 24 CFR part 248. The Department has decided to require, as part

of the applicant's resident notification, a statement that residents

may themselves become eligible grantees. One commenter said the notice

must have a name and contact number for the intermediary and the

applicant. The Department has implemented this requirement. The same

commenter suggested that intermediaries be required to supply a copy of

the application with translations. The Department has decided that this

requirement would be too burdensome on the intermediary and too costly

to the Department. In general, however, translation expenses would be

considered a reimbursable expense under the grant.

Three commenters expressed concern that owners may thwart access to

buildings to prevent distribution of notices and/or resident meetings.

Therefore, HUD should require managers to provide addresses of tenants

to intermediaries, and any costs to owners would be reimbursable. The

Department agrees that this could be a problem in certain cases. If the

applicant is having difficulties getting access to the building, it may

contact the administering intermediary, who will have the authority to

contact the owner for access to the property and the names and

addresses of residents.

Twelve commenters requested, as part of resident notification, an

advance notification of application submission for technical

assistance, followed by a tenant comment period. Many of these

commenters also requested the inclusion of a requirement that the

applicants meet with the residents prior to application submission. The

comments ranged from requiring a 15-day notice prior to application

submission, to a 30-day comment period following a resident meeting,

with a seven-day notification that the meeting itself will take place.

One commenter said at least two resident meetings should be required,

one informational and one for tenant comment. One commenter suggested

that the tenant comment period could partially overlap with the

administering intermediary's review of the application so there would

be less delay in grant awards. Another said that the general

requirement to notify all residents could be too burdensome in large

projects, and when owners are not cooperative, the applicant could

simply certify that a public meeting was held.

The Department seeks to maximize resident participation, where

appropriate, without unduly delaying the grant award process.

Therefore, the Department will require written notification that a

resident meeting will take place. This notification shall include

summary information on the grant proposal and an indication that the

residents will be able to comment on the grant proposal subsequent to

the resident meeting. The meeting shall occur at least 14 days prior to

application submission and resident comments may be submitted to the

intermediary and the applicant during that 14-day period. If there are

substantive objections by the residents, the applicant must provide a

response to the residents and to the intermediary before the grant can

be awarded. If necessary, the applicant will meet again with the

residents to resolve issues. In any case, if a majority of residents

are opposed to the application, the application will be rejected.

2. Applicant Eligibility

Seven commenters were concerned with the requirement that, if the

owner has not submitted a Notice of Intent to sell, the applicant must

have a binding commitment from the owner to sell to the applicant.

Several suggested that a letter of intent to sell should be adequate,

others that a letter to work exclusively with the applicant should be

sufficient. The wording ``binding agreement to sell'' is statutory;

however, the Department agrees that it would be impractical to require

a purchase and sale agreement before the applicant has become an

eligible purchaser under the preservation program and/or has become a

sponsor with the capacity to purchase, own, and manage the property.

Therefore, the Department interprets the binding agreement to sell as

an exclusive agreement to work with the applicant entity towards a sale

unless it subsequently becomes clear that the applicant is not moving

towards that goal in a reasonable and timely manner. If the owner seeks

to work with another entity without the consent of the applicant,

consultation with the intermediary on what constitutes a timely manner

would be required.

Four commenters requested that HUD clarify what ``seeking to

purchase with a majority of resident support'' means. One suggested it

should be clear that the intention of the applicant is to become an

eligible purchaser in the first six months of the sale period. Several

thought applicants should be required to detail the method for securing

support and adhere to that method. One thought that to require a

majority-supported preferred priority purchase in order to receive

later grant funds is not inconsistent with the statute. The application

kit will require that each applicant detail its method for securing

resident support, and this will be reviewed by the intermediary in

deciding whether the plan to achieve a resident-supported purchase is

reasonable and achievable. In general, applicants must adhere to their

grant plans to receive further funding.

Seven commenters said documented resident opposition to a grantee

should be sufficient to reject or terminate a grant; four of these

commenters also requested that resident withdrawal of support for a

grantee stop all funding. Two commented that HUD should be required to

address the reasons for withdrawal of funding. One commented that

residents should be able to appeal the selection of a Community-Based

Nonprofit Organization (CBO) applicant, and that termination should be

allowed for nonperformance.

The Department reiterates that termination of a grant for

nonperformance has always been the Department's practice. The

Department has included in the NOFA the provision that a majority of

resident opposition to the applicant prior to approval of an

application would be sufficient for the intermediary to reject the

application. In addition, a majority of resident support for another

eligible entity at any time would be sufficient for termination of the

grant.

One commenter stated that Resident Capacity grants should only be

given to groups that will not seek to purchase and recipients should be

disqualified as a priority purchaser. Another, however, said that

potential purchasers should not be categorically prohibited from

receiving Resident Capacity grant funds. One commenter said the NOFA

should maintain the Resident Capacity-applicant concept that RCs,

Resident Groups and Community-Based Nonprofit Housing Developers (CBDs)

are equally eligible.

The Department believes that the statute is clear on eligibility in

this case. Nonprofit community-based housing developers may receive

Resident Capacity grants in order to educate and organize the residents

and resident organizations. However, in the case of competing

applications for Resident Capacity grants, the intermediaries will give

preference to resident groups and resident organizations.

A commenter said that grantees should be required to demonstrate

fiscal standards or to use grant funds to establish them. The

Department has included this requirement in previous grant programs and

will continue to include the requirement.

Four commenters suggested that the threshold for resident

membership in resident groups should be raised to 10% of the units. One

suggested that all recipients should have this support. Another

suggested that a committee structure that involves residents by

building or floor should be required. Another commenter, however, felt

that the proposed NOFA set a realistically low threshold for

demonstrating resident support at an early stage and that, instead, the

requirement should be for ongoing progress toward gaining greater

resident support. The Department has not increased the minimum unit

threshold, but will, through its guidance to intermediaries, require

direct assistance grantees to show continued effort towards gaining

resident support.

One commenter stated that resident groups that are not yet Resident

Councils should not be able to apply for Resident Capacity grants.

Again, the statute is clear on this point--resident groups are eligible

for these grants. Two commenters felt that Resident Capacity grant

applicants should be required to identify persons carrying out

activities and their qualifications. The Department has clarified this

in the NOFA.

One commenter suggested that joint venture applications should be

permitted from any eligible applicants. The Department has clarified

this in the NOFA.

Five commenters wanted clarification that a Notice of Election to

Proceed under the provision of section 604 of LIHPRHA (Form 9610)

should count as a Notice of Intent for purposes of eligibility. The

Department has made this clarification. Two others suggested that the

Form 9610 should make a property eligible regardless of whether or not

the owner is currently proceeding under the program.

The Department will not allow applications in properties when the

owner is not proceeding under the program at this time. A Form 9610

will count as a Notice of Intent under this NOFA only if the owner has

checked box B on that form and is proceeding under the program. Not

many owners have submitted a Form 9610 electing to proceed through the

LIHPRHA appraisal process, but have not subsequently submitted a Notice

to the Department indicating their intent to proceed.

Three commenters suggested expanding the definition of eligible

applicants. One suggested including Community Action Agencies, which

have been servicing the low-income community in all areas for more than

25 years, and Community-Based Nonprofit Organizations. One felt

Statewide organizations should be eligible for Resident Capacity

grants. The third suggested that where there is no existing CBD (in

rural or underserved areas), a new CBO should be able to align itself

with an existing nonprofit that has two years of experience. Again, the

Department believes the statute is clear: these are not eligible

applicants.

One commenter sought clarification that if the owner is not

selling, residents can receive a Resident Capacity grant. Two

commenters sought further clarification that resident capacity grants

are separate from Predevelopment grants and can be awarded concurrently

and to separate organizations. The Department has made both of these

clarifications.

One commenter felt the word ``community'' was vaguely defined in

the NOFA, and that even if an organization has not been active

throughout its entire region for some time, the organization should not

be precluded from applying for a grant. The Department has repeated the

statutory requirement in this case, and believes it is clear.

One commenter requested that HOPE 2 grantees not be required to

wait for notification of termination of HOPE 2 grant before applying

for a technical assistance (resident capacity or predevelopment) grant

because there might be HUD delays. Because an owner cannot file a

Notice of Intent (NOI) until HOPE 2 is terminated, the criterion for

previous HOPE selectees should be an owner's filing of a NOI. The

Department has adopted this suggestion.

One commenter requested that existing owner/sellers (including

nonprofits) should not be able to apply for Resident Capacity grants.

In general, this is the Department's requirement, with the exception of

nonprofit general partners seeking to buy out their limited partners.

Substantive objections from residents in the case of an application

from a nonprofit general partner, however, will be considered by

intermediaries.

One commenter was concerned that grantees under the 1992 NOFA may

not be eligible to apply for additional funds under this NOFA because

they are not Community-Based Nonprofit Housing Developers. The

Department considers the statute clear and finds no reason to change

the statutory requirement or the NOFA. Community-Based Nonprofit

Organizations funded under the previous NOFA are not necessarily

eligible under this NOFA.

3. Eligible Activities

Seven commenters sought clarification on eligible activities for

Resident Capacity grants. Suggestions for additional eligible

activities included: providing training on rights and opportunities

under LIHPRHA; training on resident issues if an owner is not selling;

hiring architect or other consultants to advise residents during the

Preservation Capital Needs Assessment (PCNA)/appraisal process; hiring

a tenant coordinator or a project manager; expense to cover phone and

copying; and legal services to interpret preservation documentation.

The Department has made these clarifications.

Seven commenters sought clarification on eligible activities for

Predevelopment grants. Suggestions for additional eligible activities

included: obtaining a financial feasibility analysis; preparing a Plan

of Action or Resident Homeownership Plan; preparing a Transfer of

Physical Assets package; tenant and board training on ``development''

and the preservation process; legal expenses; and hiring a project

manager. The Department has made these clarifications.

Six commenters felt tenant-related expenses, such as child care,

bus fare to meetings, and beverages at meetings, should be allowable.

The Department has made this clarification. However these expenses are

only allowable to the extent that they support residents in their

ability to participate in resident meetings and in planning for the

grant.

Two commenters suggested that newly formed resident groups should

be required to ensure a democratic process developed in conjunction

with the National Alliance of HUD Tenants, that residents should have

oversight authority over recipients, and that tenant input should be a

criterion in receiving additional funds. The Department decided that a

requirement to work with a specific national organization would be too

burdensome on the grantees. The Department is clarifying that residents

should be notified of the progress of the grant, but requiring resident

oversight will be too burdensome on the grantee and the intermediaries.

One commenter requested that HUD consider the administrative

structure necessary for providing the grants, given that the nonprofit

grantees may not end up being purchasers/sponsors. The Department

considered this issue and believes the statutory intent is clear. The

creation of an eligible Community-Based Nonprofit Organization (CBO)

purchaser is a requirement of a Community-Based Nonprofit Housing

Developer (CBD) seeking a grant to purchase a property under LIHPRHA.

The Department will work with intermediaries to ensure that grant fund

release is not delayed due to the creation of a new entity. Funds for

activities subsequent to a purchase offer may be released to the new

entity. However, that new entity is expected to continue working with

the Community-Based Nonprofit Housing Developer through the term of the

grant.

A commenter suggested that the requirement that grantees be in

conformance with appropriate program regulations and guidelines is too

burdensome on grantees and, rather, should be a requirement of HUD or

intermediaries as part of monitoring. The Department believes this

requirement is not too burdensome. A grantee may use the grant to fund

administrative activities in order to conform with the grant and the

preservation programs.

Three commenters felt HUD should spell out a clear priority to

maximize grant funds to tenant-controlled coalitions. Two others

requested a requirement that all grantees obtain tenant group approval,

to ensure maximum tenant control over the eventual purchaser. While the

Department has clarified that resident organizations have preference

for Resident Capacity grants, the Department believes that the other

priorities listed by the commenters are contrary to statutory intent.

4. Conflicts of Interest

The Department received six comments on the proposed NOFA's

conflict of interest requirements. One commenter believed that the

requirements should be stronger. Another felt the requirement should

involve disclosure rather than strict guidelines, so groups could

continue to work with current consultants. Three commenters believed

that the conflict of interest requirements should require grant

recipients to certify that there is no violation of the Related Party

rule, as defined in 24 CFR 248.101. Further, to prevent ``straw''

buyers, the Related Party Rule should: apply to entities other than

individuals (e.g., corporations and partnerships); prohibit an identity

of interest with a for-profit owner; not prohibit use of consultants

and attorneys who are arms length; and require all related parties to

make disclosures. One commenter felt the applicant should also disclose

any intent to be involved in management, development, or provision of

services for money, but that continued use of architects, management

agents, development consultants, etc., should not be prohibited after

acquisition. Another felt there should not be a blanket prohibition on

a grantee contracting with owner consultants, as long as full

disclosure is made and residents, through these disclosures, are able

to have a say in personnel decisions. One commenter suggested a

requirement that the applicant submit: Forms 2530 for the applicant and

all board members; articles of incorporation; statements of officers

and directors; financial statements for the last five years; and a

listing of properties owned and operated in the last ten years. This

commenter felt that conflicts with current management as well as the

owner should be disclosed.

The Department has decided to tighten the proposed NOFA's conflict

of interest requirements. The required certification will state that

there has been no conflict of interest relationship during the previous

five years, and it will include a requirement that the applicant not

seek any financial benefit from project ownership. The Department has

further clarified that nonprofit general partners seeking to buy out

their limited partners are exempt from this rule. In addition, the NOFA

will require disclosure to tenants and to the intermediary to include

any relationship with owners, management, or any other parties to the

sale. The Department will also require certification by the applicant

that it will not interfere with the tenants' right to organize.

5. Funding

Six commenters requested that the Department allow funding for

activities conducted prior to grant award. Two of these specifically

made this suggestion to prevent lack of assistance where there are

delays in funding that are not the fault of the grantee--suggesting

funding of activities beginning at the earlier of award approval or 30

days after application submission, which is the date by which funds

should have been awarded. One suggestion was to allow funding for

activities conducted prior to the grant award and after NOI submission

because this would be consistent with other HUD programs--specifically

the Department's Section 202 (12 U.S.C. 1701q) program. Under the

Section 202 program, previous expenses must be fully documented and

fall within application budget.

The Department has decided to allow reimbursement of funds back to

the time when the applicant became eligible for grant funds. For

Resident Capacity grants this will be the time the owner files any

Notice of Intent to Proceed. For Predevelopment grants this will be the

time the owner has indicated an intent to sell the property. This

decision was based in part on the increased resident notification

period, which will inherently delay the time which grant funds are

awarded and received by the recipient. While grantees may be reimbursed

for eligible activities, they undertake these activities at their own

risk. If a grant is not subsequently awarded, there will be no

mechanism for compensating the applicant. To qualify for reimbursement,

activities performed prior to the grant award must be eligible

activities under the NOFA and must be clearly identified in the

application submission package.

One commenter requested that residents be informed when grant is

awarded. The Department has adopted this requirement.

The Department has rejected a suggestion that the grants be

competitive with quarterly awards, rather than ongoing awards, in order

to give residents more time to get applications and formally comment.

The statute allows applications on a rolling basis, and requiring a

grantee to wait several months for an award could hinder a resident-

supported purchase for the property.

One commenter was concerned that $200,000 would not be enough to

cover predevelopment costs for most projects. This funding limit is

statutory, and the Department has no discretion to alter the limit.

Four commenters sought clarification on what terminating the

current grant program means. In order to ensure continuity of the

program, they suggest that: awardees under the September 3, 1992, NOFA

should be able to apply for new funds as soon as old funds are

obligated; grantees should not be able to receive grants over the total

of this NOFA; and, because it is an ongoing process, grantees should

not be required to expend all funds awarded in the 1992 NOFA. In this

NOFA the Department is allowing applications from grantees with active

grants under the September 3, 1992, NOFA; however, as awards are made

by the intermediary, the previous awards shall be terminated. It is

impractical for grantees to report to both the HUD field office and the

intermediary on ongoing grant status. The total grant award from both

NOFAs must not be greater than the total allowed in this NOFA.

There were ten comments on the Department's method for funding

technical assistance grants on a State-by-State basis. One concern was

that basing fund allocation solely on active Notices of Intent, plus

active Plans of Action, will be skewed, because this does not directly

correlate with preservation sales activity. The Department should not

include cases where owners have not yet indicated an intention to sell;

rather, funding for predevelopment grants should be tied to the number

of NOIs to sell plus binding sales commitments. Another suggested that

the same allocation formula should not be used for both Resident

Capacity and Predevelopment grants. Several commented that the formula

should remain flexible to reflect actual activity levels in States, and

suggested a hold-back so that funds could be reallocated according to

actual participation levels. Several others suggested a reallocation

method between States. The Department seriously considered using only

Notices of Intent to Sell as the criteria for a State breakdown of

funding. The Department cannot use binding commitments as an indicator,

because it will not have these in advance of the State-by-State

allocation. However, experience from the September 3, 1992, NOFA shows

that an owner's Initial Notice of Intent is only a partial indication

of what an owner will actually do. Therefore, the Department will not

change its method for allocation by State. The Department has also

decided not to maintain a holdback, but will reallocate funds between

intermediaries if levels of grant activity justify a reallocation.

One commenter requested HUD to allocate unused funds from the 1992

NOFA using the 90/10 formula in the statute, rather than giving all

unused funds to technical assistance grants. The Department has decided

to allocate unused funds using the 90/10 formula. Another commenter

sought clarification of the exact amount of funds available from 1992

NOFA and how these funds will be divided. Because the 1992 NOFA is

active, and will be for several months, the Department cannot know

exactly how much will be available once the 1992 NOFA is terminated.

6. Applicant Selection

Several commenters felt that the application review should include

review of the financial viability of the property and an analysis of

the development team, rather than a simple review of the applicant

itself. One commenter was concerned that resident support would

override strong underwriting criteria. The Department has chosen not to

amend this selection criteria, but will also instruct intermediaries

reviewing Predevelopment grant applications to conduct a review on the

feasibility of the purchase, including a review of the development

team.

One commenter requested that if any award is made by an

intermediary or HUD, the procurement requirements of OMB Circular A-110

should be deemed to have been met. This would permit continuity of

service for consultants who were identified by grantees prior to the

availability of Federal funds. The Department finds it unnecessary to

address this in the NOFA. However, if the organization is currently

meeting the OMB requirements, the Department anticipates that the

organization will continue to do so under another grant.

A commenter pointed out that the NOFA says grants are awarded

within 30 days, and that this should be specified as 30 calendar days.

Another commenter requested that the NOFA specify the appeals process

to HUD. The Department has adopted both of these suggestions in this

NOFA.

Several commenters recommended requiring intermediaries to explain

why an application was not funded or why items within an application

were not funded. The Department has adopted this recommendation.

One commenter suggested that applicant resident groups should be

able to request the intermediary to provide expertise and assistance in

grant activities. Because the Department does not wish to have

intermediaries performing activities inconsistently across the country,

it has not made this a requirement of intermediaries.

Eleven comments were received regarding the NOFA's guidance on

competing applications. One area of concern was the time by which

another application could be received. Several commenters suggested

allowing an applicant 30 days to gain support, others suggested 20

days, another 14 days. Several commenters also suggested giving the

intermediary additional review time should two applications be

received. Several commenters felt the intermediary should attempt to

resolve the situation or require that competing applicants meet and

attempt to come to a resolution. Three commenters suggested that in the

case of dual applicants, a clear priority should be for resident groups

and resident councils over Community-Based Nonprofit Housing

Developers.

The Department has decided if a second application is received

within 30 days of receipt of the first application, the intermediary

will have an additional 20 days to complete the review of both. If the

applications are for a Resident Capacity grant, the intermediary will

give funding preference to a resident group or a Resident Council over

another applicant. If there are competing Predevelopment grant

applicants and both are otherwise acceptable, the intermediary will

send back the applications and give applicants an opportunity to meet,

explain differences to tenants, and come to a resolution/compromise. If

no compromise is reached the intermediary would fund the applicant that

it found most capable of performing grant and nonprofit sponsor

activities. The fact that a nonprofit developer is receiving a

Predevelopment grant would not preclude a separate resident group from

getting a Resident Capacity grant.

B. Selection of Intermediaries

1. Fee Structure

Twelve commenters were concerned that the proposed fee structure

for intermediaries would not yield sufficient funds to cover the scope

of services listed in the NOFA. The proposed NOFA contemplated a $5,000

start-up fee, plus 2 percent of the grant awards for the State or

States in which the intermediary administered grants. Suggestions

ranged from 4 to 5 percent of the grant awards. One commenter suggested

that the minimum start-up fee should be $15,000 so smaller States will

participate. Several others suggested that the fee should vary

according to the level of activities that the intermediary is

performing.

The Department considered seriously the appropriateness of the fee

and awarding a different level of funding to intermediaries performing

a higher level of activities. The Department has chosen a processing

fee structure through which each intermediary will receive a $15,000

start-up fee and five percent of each technical assistance grant it

administers, which will be allocated as the grants are disbursed. Each

intermediary will also receive a flat fee of $500 for each grant

application rejected. If a selected intermediary receives no grant

applications, it will receive only the start-up fee.

2. Intermediary Selection

At least one commenter felt that the Department should give

preference to local intermediaries, then State and regional

intermediaries, over national intermediaries. The Department has

decided to allow sub-State intermediaries in areas where there appears

to be enough preservation activity to justify a sub-State intermediary.

However, any sub-State intermediary must apply to administer grants in

a geographic area covering at least one HUD area office. In most

States, any economies of scale would be lost if there was more than one

intermediary. In its review of intermediaries the Department will

review and rate all local intermediaries before reviewing State and

regional intermediaries. However, the Department will consider the

capacity, experience, and point scores of all local, State and regional

intermediaries before making final intermediary selection. National

intermediaries will be chosen for those areas for which no other

acceptable intermediary has applied.

Concern from eleven commenters lead to suggestions that outside

parties, particularly resident groups, should be able to comment on the

applications and selections of intermediaries. Because the selection of

intermediary grantees is competitive, the disclosure of grant

applications would be in violation of section 12 of the Department of

Housing and Urban Development Act (42 U.S.C. 3537a), and, therefore,

the Department cannot implement this suggestion.

One commenter suggested that intermediaries be required to state in

their proposals how they will deal with the problem of monitoring

unincorporated entities to ensure that they act with proper fiscal

standards. The same commenter agreed with the Department's preference

for an intermediary handling both Resident Capacity and Predevelopment

grants. As part of its overall evaluation of each intermediary's

application, the Department will evaluate proposals to deal with the

problem of monitoring fiscal standards.

One commenter requested that Community Action Agencies, which have

been the leader in services to the low-income community in all areas

for more than 25 years, be eligible intermediaries. The Department is

adhering to the statutory definition of intermediary, but to the extent

such an agency has the capacity to become an eligible applicant under

the guidelines, a Community Action Agency could apply.

Several commenters suggested that intermediaries receive preference

if they have a structured plan that maximizes resident participation in

administrative policy issues. Another commenter requested that HUD

require intermediaries to work with a tenant-based coalition, and if an

intermediary cannot develop this support, HUD should administer the

grants. The Department will not include this requirement because it

would be too burdensome, particularly for national intermediaries.

However, four commenters suggested giving preference to intermediaries

with demonstrated resident/nonprofit accountability. The Department

will give preference for such a demonstrated track record.

One commenter recommended deleting language that requires

intermediaries to have a record of service in ``multiple communities''

because the language is vague and confusing. The requirement is

statutory and therefore the language remains unchanged. The Department

does not agree that it is confusing. The Department considers ``a

record of service * * * in multiple communities'' to mean the

intermediary has worked with various types of organizations within

varied communities. Preferably these communities would include a cross-

section of the geographic area for which the intermediary is applying

to administer grants. The definition would exclude an intermediary that

has worked solely in one community or neighborhood.

3. Intermediary Tasks

Seven commenters requested more detail in the NOFA of the

Department's expectations to guide intermediaries, particularly in

their monitoring activities, with standards and timeframes. Several

sought clarification of the legal responsibilities of the

intermediaries, others felt intermediary activities should be expanded

and negotiated with HUD to include underwriting, monitoring, servicing,

site visits, and technical assistance provision. One commenter sought

clarification of whether an intermediary will act as a delegated

processor with final grant authority, or whether it will function under

some other model. One commenter disagreed with negotiating the level of

activities, arguing that HUD should require specific tasks of all

intermediaries to get all essential tasks covered. The Department has

seriously considered this issue and has provided a greater level of

detail of its expectations of the intermediaries.

The Department will not allow a variety of participation levels by

intermediaries. However, if an intermediary seeks to perform a higher

level of activities, such as technical assistance, it may apply to

perform these activities under a separate HUD NOFA that will implement

section 254 of LIHPRHA as added by section 312 of the Housing and

Community Development Act of 1992. That NOFA is expected to be

published soon.

One commenter stated that intermediaries, in general, should not

have say over who is selected as a priority purchaser, which

consultants are hired, what are the contract terms, etc. While the

Department's regulations regarding priority purchasers are separate

from this NOFA, the intermediaries will have review authority over

consultants hired and terms of contracts under the technical assistance

grants.

One commenter suggested that some technical assistance grantees may

want closer oversight and assistance, and intermediaries should be

required to provide to those grantees what is agreed upon in the grant.

As discussed above, and in order to provide consistency nationwide, the

grantees cannot request a higher level of service from the

intermediaries.

4. Accountability

Three commenters suggested that resident groups should be able to

formally monitor intermediaries prior to their receipt of further

funding, and to include standards that encourage intermediaries to have

accountability to residents and nonprofits without micromanagement by

the intermediary. One of these commenters suggested that intermediaries

should show evidence of a commitment to tenant organizing; another

suggested a stronger conflict of interest proviso and performance

benchmarks for the intermediary. However, a fourth commenter believed

oversight of intermediaries should not be by tenant groups or other

prospective grantees; rather, HUD should provide this oversight. This

commenter recommended a selection of intermediaries when the track

record indicates absence of abuse. As part of its monitoring of

intermediaries, the Department will accept comments from outside

parties on intermediary performance after intermediary grants are in

place and active. However, the Department does not find it appropriate

to include, nor does it desire to delay intermediary funding by

including, resident groups directly in the monitoring process.

5. Other Comments

One commenter recommended that the benchmarks for Technical

Assistance Grantees be made by the Department, rather than left up to

the intermediary. The statute requires that HUD work with

intermediaries to come up with the performance benchmarks for the

Predevelopment Grant phases. The Department intends these benchmarks to

be consistent across the country.

One commenter requested clarification that intermediaries, at their

own risk, may incur costs from the date they are selected, as opposed

to the date of contract execution. The Department agrees with this

request; however, no actual fees will be paid prior to the date of

contract execution and the intermediary may not begin funding technical

assistance grantees prior to such execution.

II. Purpose and Substantive Description

A. Authority and Background

The funding made available under this NOFA is authorized by section

312 of the Housing and Community Development Act of 1992 (Pub. L. 102-

550, approved October 28, 1992) in order to provide assistance to

resident groups and Community-Based Nonprofit Housing Developers (CBDs)

involved in projects proceeding under the provisions of the Emergency

Low-Income Housing Preservation Act of 1987 (Pub. L.100-242, section

201 of the Housing and Community Development Act of 1987, approved Feb.

5, 1988) (ELIHPA) or the Low Income Housing Preservation and Resident

Homeownership Act of 1990 (Pub. L. 101-625, section 601 of the National

Affordable Housing Act (NAHA), approved November 28, 1990) (LIHPRHA).

The origins of LIHPRHA are in ELIHPA. The purpose of ELIHPA was to

preserve low-income affordability restrictions on certain HUD-insured

or assisted multifamily projects. ELIHPA authorized the use of

incentives to encourage owners to retain low-income affordability

restrictions or to transfer the property to purchasers who would agree

to retain those restrictions. The fundamental principles underlying

ELIHPA were that the low-income housing should be preserved for the

intended beneficiaries and that owners should be guaranteed a fair and

reasonable return on their investments.

ELIHPA was intended to be a temporary measure that would allow

Congress time to fashion a permanent program for the preservation of

existing low-income housing projects. This permanent program is

LIHPRHA, which replaced ELIHPA except to the extent that section 604 of

NAHA provides a transition option for certain owners. In addition,

section 226 of LIHPRHA establishes the Resident Homeownership Program,

under which tenants may become homeowners of eligible low income

housing. The Department's regulations implementing these statutory

provisions are set out in 24 CFR part 248. (Applicants should note that

part 248, as codified in the April 1, 1993, revision of the Code of

Federal Regulations (CFR) was amended subsequently in a rule published

on July 13, 1993 (57 FR 3384). Most requirements under this NOFA were

imposed by title III of the Housing and Community Development Act of

1992 and are included in the July 13, 1993, amendments to part 248.)

B. Request for Applications

Eligible intermediaries are invited to apply to administer funds

under the provisions of this NOFA (see Section V.A, ``Obtaining

Intermediary Applications'' of this NOFA). The Department will announce

the selected intermediaries and will publish the addresses of the

intermediaries and the date on which applicants may apply to

intermediaries for technical assistance grant funds. Selected

intermediaries will also announce the availability of technical

assistance grant funds as described in Section III of this NOFA.

C. Allocation and Funding

The purpose of this NOFA is to make available $45 million in funds

to and through intermediaries for eligible resident and community

organizations. The dollar amounts will be made available on a State-by-

State basis for two types of grants: Resident Capacity grants and

Predevelopment grants. The description of how funds will initially be

divided by State is listed in Appendix B of this NOFA. The Department

will rate local intermediaries, then State intermediaries, then

regional intermediaries before making selections for each geographic

area. Some States may be subdivided for purposes of the NOFA activities

if there are a sufficient number of eligible low-income housing

projects in the State to justify sub-State intermediaries. Local or

sub-State intermediaries applying to perform grant administration

activities must apply to perform activities covering at least the

jurisdiction of one HUD area office. The Department will generally

favor local or sub-State intermediaries over State intermediaries, and

will favor State intermediaries over regional intermediaries.

However, before making the final intermediary selections, the

Department will assess the overall capacity and experience of

intermediary applicants. If no intermediary applicant applies to

administer grants in a particular State or area, the Department will

select a national intermediary to perform those activities in that

State or area. If no acceptable application is received from a national

intermediary, the Department's field offices will administer the

Resident Capacity and Predevelopment grants for all areas not covered

by local, State, or regional intermediaries.

The Preservation Technical Assistance Grant program that is

currently being administered by the Department, in accordance with a

NOFA published on September 3, 1992, at 57 FR 40570 (as amended at 57

FR 56929 (December 1, 1992) and 58 FR 8766 (February 17, 1993)), will

be terminated at intermediary selection. A portion of the unreserved

funds from that earlier NOFA will be made available under this NOFA

through the intermediaries. Grantees active under the September 3,

1992, NOFA will continue under that grant program unless they apply for

and receive funds under this NOFA.

The two forms of technical assistance grants that will be made

available through intermediaries are Resident Capacity grants and

Predevelopment grants. These are described in Appendix A to this NOFA.

Of the $45 million available from FY 1993 and 1994 appropriations,

$13.5 million is available for Resident Capacity grants and $31.5

million is available for Predevelopment grants. Of any additional funds

made available under this program, 30 percent will be set aside for

Resident Capacity grants and 70 percent for Predevelopment grants. The

dollar amounts available to the individual resident and community

organizations shall be limited to $30,000 for Resident Capacity grants

and $200,000 for Predevelopment grants. The Predevelopment grants will

be funded in at least two phases. The performance benchmarks for these

phases will be negotiated between the Department and selected

intermediaries prior to technical assistance application submission.

III. Intermediaries

A. Eligible Intermediaries

(1) General Definition

An eligible intermediary applicant is a local, State, regional, or

national nonprofit or quasi-public organization or a State or local

housing agency that has as a central purpose of its organization the

preservation of low-income housing and the prevention of displacement

of low- and moderate-income residents. An eligible intermediary must

not receive direct Federal appropriations for operating support. All

intermediaries must have a record of service to low-income individuals

or community-based nonprofit housing developers in multiple

communities, and must meet the standards of fiscal responsibilities

established in OMB Circulars A-110 and A-122 or, if a State or local

agency, 24 CFR 85 and OMB Circular 87. In addition, intermediaries must

have experience with the allocation or administration of grant or loan

funds. (Copies of OMB circulars are available from E.O.P. Publications,

room 2200, New Executive Office Building, Washington, DC 20503,

telephone (202) 395-7332. (This is not a toll-free number.) There is a

limit of two free copies.)

(2) Intermediary Categories

(a) A national nonprofit applicant must also have been in existence

for at least five years and be classified as an exempt organization

under section 501(c)(3) of the Internal Revenue Code of 1986.

(b) A regional, State or local nonprofit applicant must also have

been in existence for at least three years and either be classified as

an exempt organization under section 501(c)(3) of the Internal Revenue

Code of 1986 or be recognized otherwise as a tax-exempt entity.

(c) A State or local agency. This category includes public housing

agencies and State housing finance agencies.

B. Fees

Each selected intermediary will receive processing fees. The fees

will include a start-up fee of $15,000 and an additional fee of five

percent of each technical assistance grant the intermediary

administers, which will be allocated as the grants are disbursed. These

fees are based on the intermediary performing the following activities:

Announcing the availability of grant funds; producing and distributing

application kits; accepting, reviewing and approving and/or rejecting

grant applications; executing grant agreements; disbursing grant funds;

monitoring the grantees' activities under the grant award; monitoring

compliance with the grant agreement through the term of the grant; and

maintaining documentation of grant activities for the Department's

monitoring of the intermediary.

Intermediaries will be legally responsible to the Department for

approving eligible applicants, activities, and budgets, and shall

maintain all correspondence with and documentation regarding the

technical assistance grantees for not less than five years. All

intermediaries will receive the start-up fee when the intermediary

contract is executed. Intermediaries will draw down five percent of

each technical assistance grant award at the time those awards are

disbursed, not to exceed five percent of the total funds available to

the jurisdiction. If an intermediary reviews and rejects a technical

assistance application, it will receive an administrative fee of $500.

If an intermediary receives no technical assistance grant applications,

it will receive only its start-up fee. On occasion, the Department will

review grant activity to determine if reallocation of funds between

geographic regions is necessary.

C. Eligible Tasks

Intermediaries may apply for one or both parts of the intermediary

tasks described in this NOFA. The two distinct tasks are:

Administering Resident Capacity grants; and

Administering predevelopment grants. Through its

application, an intermediary must describe the specific jurisdiction in

which it proposes to perform such tasks.

There will be no duplication of geographic coverage for any

administrative task. In States where there is sufficient preservation

activity to justify sub-State intermediaries, State or regional

intermediaries may apply to perform activities in areas that include

the jurisdiction of one or more HUD field offices. In no case will a

field office jurisdiction be subdivided for purposes of intermediary

selection for grant administration. To assure maximum geographic

coverage by intermediaries, HUD may negotiate geographic coverage with

intermediaries as part of intermediary selection.

Specific tasks for all intermediaries will include the following:

Advertising fund availability for the jurisdiction

overseen.

Producing and distributing grant application kits. (A

sample kit will be provided by the Department.)

Accepting grant applications.

Reviewing and approving or rejecting grant applications.

Executing grant agreements. (A draft grant agreement will

be provided by the Department.)

Vouchering for funds through the Department.

Disbursing grant funds.

Monitoring activities under the grant, including

compliance under the grant agreement, throughout the term of the grant.

Reporting to the Department at least quarterly on the

status of applications, grant awards, grantee activities, and funds

expended.

Maintaining grant documentation for HUD monitoring and

audits.

D. Ineligible Intermediary Activities

Intermediaries may not receive payment, directly or indirectly,

from the proceeds of grants they have approved. In addition,

intermediaries may not provide other services to grant recipients with

respect to the specific properties for which the grant has been

awarded.

E. Selection Criteria

1. Threshold

Intermediaries must meet minimum criteria described in Section

III.A, ``Eligible Intermediaries,'' of this NOFA. If in its review the

Department determines that the applicant does not meet the threshold

criteria, the application will be rejected. If the application does

meet the threshold criteria, then the Department will select

intermediaries through a rating and ranking competition described in

Section III.E(2) of this NOFA.

2. Preferences and Factors for Award

The intermediary applications will be rated and ranked on a point

system, with the maximum point score of 100. The Department will first

rate and rank any local or sub-State intermediary applications, then

all State intermediary applications, and then regional applications. In

general, the Department will give preference to local intermediaries,

as discussed in Section II.C, ``Allocation and Funding'', of this NOFA;

however, capacity, experience, and overall points for these

intermediaries will be considered before selection. The Department may

establish a threshold score on capacity and experience that local

applicants must meet in order to qualify for funding.

After selecting local, State, and regional intermediaries, the

Department will rate and rank all national intermediary applications to

select an intermediary in States or regions for which no other eligible

intermediary, acceptable to the Secretary, has submitted a proposal to

participate. If no such national intermediary applies to perform NOFA

activities, the Department, through its field offices, will administer

technical assistance grant funds for all areas without an acceptable

intermediary. The Department will consider joint venture applications

as long as one eligible intermediary is identified in the application

as the primary applicant. The rating points will be allocated based on

the categories below:

(a) Preservation Experience. (30 points) The Secretary shall give

rating points to applications from eligible intermediaries based on

expertise or experience with ELIHPA and LIHPRHA. Maximum points will be

given to applicants with significant demonstrated expertise or

experience with ELIHPA or LIHPRHA.

(b) Range of Activities. (10 points) These points will be given to

organizations applying to administer both the Resident Capacity grants

and the Predevelopment grants, rather than applying to administer just

one of those grant programs.

(c) Direct Experience. (30 points) Rating points will be given to

intermediaries based on their direct experience in performing the tasks

for which they have applied. This would include administration of

grants to resident organizations, administration of grants to nonprofit

organizations and State or local agencies, and monitoring of nonprofit

grantees. The Department will not assign preference to intermediaries

with experience in administering Federal grants, but may exclude

applicants that have failed to perform under prior contracts of a

similar nature.

(d) Organizational Capacity. (30 points) Each applicant will be

rated on its organizational capacity to implement its plan to

administer grants. Each applicant should submit evidence that its

organization can implement the proposed activities in an efficient

manner, based on demonstrated organizational capacity and staff

expertise.

IV. Responsibilities of Intermediaries

A. General

Intermediaries will be responsible for performing the tasks listed

in Section III.C, ``Eligible Tasks,'' of this NOFA. The technical

assistance grant program that the intermediaries will be administering

is described in detail in Appendix A to this NOFA.

B. Timeframes

Once funding availability is advertised by the intermediary for its

jurisdiction, technical assistance applications will be submitted to

the intermediaries on an ongoing basis. If the applications are

acceptable, grants must be awarded no later than 30 calendar days after

a complete application is received by the intermediary. If the

application is found to be substantially complete (i.e., there are no

missing exhibits), but technically deficient (i.e., an exhibit does not

adequately meet the application requirements), the intermediary shall

send the applicant a deficiency letter and allow 14 days for

resubmission of deficient exhibits. The intermediary will have an

additional 30 days to review and approve an application, following

receipt of application revisions. If the application is not

substantially complete, it will be rejected.

C. Technical Assistance Grant Selection Criteria

1. Resident Capacity Grants

All Resident Capacity applicants will receive an application kit,

which will be produced and distributed by the intermediary. A sample

application kit will be provided to the intermediaries from the

Department. Applications will be accepted on an ongoing basis, and all

acceptable applications will be approved unless there are no funds

available for Resident Capacity grants. Intermediaries must review and

approve or reject applications for Resident Capacity grants based on

the following threshold criteria:

(a) The applicant meets the eligible applicant criteria listed in

paragraph A of Appendix A to this NOFA.

(b) The applicant is applying for funds for eligible activities

listed in paragraph D(1) of Appendix A to this NOFA.

(c) The applicant has notified the residents of its application in

accordance with paragraph B of Appendix A to this NOFA.

(d) The plan for promoting the ability of residents to participate

meaningfully in the preservation process is reasonable and feasible.

(e) The budget submitted with the application reflects reasonable

costs directly associated with the grant activities.

(f) The estimate of time necessary to achieve completion of

activities and delivery of products is reasonable and realistic and

within the time frames set forth in the applicable program regulation.

2. Predevelopment Grants

All Predevelopment grant applicants will receive an application kit

that will have been produced and distributed by the intermediary. A

sample application kit will be provided to the intermediaries from the

Department. Applications will be accepted on an ongoing basis, and all

acceptable applications will be approved unless there are no funds

available for Predevelopment grants. Intermediaries must review and

approve or reject applications for Predevelopment grants based on the

following threshold criteria:

(a) The applicant meets the eligible applicant criteria listed in

paragraph A of Appendix A to this NOFA;

(b) The applicant is applying for eligible activities listed in

paragraph D(2) of Appendix A to this NOFA;

(c) The applicant has notified the residents of its application in

accordance with paragraph B of Appendix A to this NOFA;

(d) The plan for promoting and achieving a resident supported

purchase of the property must be reasonable and feasible and in

conformance with the appropriate program regulations and guidelines.

This will include an evaluation of the experience and capacity of the

applicant's development team;

(e) The budget submitted with the application reflects reasonable

costs directly associated with the grant activities that would result

in the development of a feasible purchase; and

(f) The estimate of time necessary to achieve completion of

activities and delivery of products is reasonable and realistic and

within the time frames set forth in the applicable program regulation.

3. Competing Grant Applications

If a second technical assistance application is received within 30

days of receipt of the first application for any property, and if that

application is for the same grant category, the intermediary shall have

an additional 20 days to review both applications. The total review

time for any grant cannot exceed 50 days. If the competing applications

are for Resident Capacity grants, resident groups and Resident Councils

shall have priority over other applicants. If the competing

applications are for Predevelopment grants, and both are found

technically acceptable, the Intermediary will return the applications

with instructions that the applicants meet together and with the

residents to reach a resolution for a final application. If no

compromise is reached, the intermediary will approve the applicant that

the intermediary finds most capable of performing grant and nonprofit

sponsor activities. In addition, in the case of any application, if

there is an indication that a majority of the residents oppose the

applicant's selection, that application shall be denied.

4. Decision Not To Fund

In any denial of award letter, the intermediary shall be required

to explain the reasons for its determination. In addition, if the

intermediary makes a determination that results in a reduction of

proposed grant funds, that determination shall also be explained in

writing.

5. Appeals

If an application for either a Resident Capacity grant or a

Predevelopment grant is denied, the applicant will have the right to

appeal that denial to the Department. The appeal must be made within 45

days of application rejection to: Multifamily Preservation Division,

Department of Housing and Urban Development, 451 7th Street, NW., room

6284, Washington DC, 20410. The Department will make a binding

determination within 45 days of the appeal.

6. Award Notification

If an applicant is awarded and accepts a Resident Capacity or

Predevelopment grant, the applicant must inform the residents of the

property about the award, by posting a notice or through a resident

meeting or both, within three weeks of the applicant's acceptance of

the award.

V. Intermediary Application Process

A. Obtaining Intermediary Applications

Intermediary application kits are available from the Multifamily

Preservation Division, Department of Housing and Urban Development,

room 6284, 451 7th Street, SW., Washington, DC 20410; telephone (202)

708-2300; and the Multifamily Housing Clearinghouse, P.O. Box 6424,

Rockville, MD 20850, telephone 1-800-955-2232.

B. Submitting Applications

Applications will be submitted to the Multifamily Preservation

Division Department of Housing and Urban Development, 451 7th Street,

SW., room 6284, Washington, DC 20410. Applications must be received no

later than June 6, 1994. No facsimiled (FAXed) applications will be

accepted. Any application received after 5:00 p.m., E.D.T., on the due

date will not be accepted for processing and will be returned to the

applicant. Any corrections to deficient applications made in accordance

with Section V.E of this NOFA may be transmitted by facsimile; however,

the original subsequently must be submitted by mail.

C. Submission Requirements

An intermediary must provide the following:

(1) A completed application, including the following, as

applicable:

(a) OMB Standard Form 424;

(b) Identification of proposed geographic area in which it will

perform intermediary activities;

(c) Information about how the applicant meets the Factors for Award

listed in Section III.E(2) of this NOFA;

(d) Information about the applicant, including its history, its

staff and their qualifications, and its experience;

(e) Summary of plan to advertise grant availability, distribute

applications, review applications, disburse funds, and monitor

activities under the grant;

(f) Evidence of tax exempt status, if applicable;

(g) Certification that the intermediary will not receive payment,

directly or indirectly, from the proceeds of the grants it has

approved;

(h) Certification that assistance provided under this NOFA will not

be used to supplant or duplicate other resources for the proposed

activities. For purposes of this paragraph, ``other resources'' means

resources provided from any source other than under this NOFA;

(i) Other disclosures, certifications, and assurances (including

Drug-Free Workplace and Anti-Lobbying certifications), as required

under the law and this NOFA; and

(j) Other information and materials as may be described in the

application kit.

D. Intermediary Selection Process

The selection process for intermediaries consists of a threshold

screening to determine whether the application meets the technical

requirements for application submission contained in this NOFA and the

application kit. If the application meets the technical requirements,

it will be reviewed and ranked by the Preservation Division in HUD

Headquarters according to the selection criteria in Section III.E of

this NOFA. Within 60 days from the application deadline, the

Preservation Division will notify an intermediary of its selection or

rejection. Selected intermediaries will be required to sign a grant

agreement. If no intermediary is selected for a particular State, the

HUD field offices will administer the grants directly.

E. Corrections to Deficient Applications

If an application submitted by an intermediary is found to be

deficient in a nonsubstantive manner, the Department will inform the

applicant of such deficiency within 15 days after the application

deadline and the applicant will have seven days to submit revisions to

its application. Nonsubstantive deficiencies are those that are not

integral to the application's review, such as a certification. If an

application is substantively deficient at the time of application

deadline, the application will be rejected.

F. Application Selection Timeframe

The Department will complete its review and selection process

within 60 days of the deadline date for intermediaries. Once

intermediaries are selected and agreements are executed, intermediaries

will have 30 days to make grant funds available to eligible technical

assistance applicants. Grants from technical assistance applicants will

be accepted on a rolling basis by the intermediaries administering such

grants.

G. Intermediary Information

The Department will publish in the Federal Register the list of

selected Intermediaries within 30 days of the date that the

Department's intermediary selection process is completed. That

publication will include information for potential technical assistance

applicants on how to obtain application kits and will list contact

names at the Intermediary organizations selected to administer the

grants.

VI. Other Matters

Environmental Impact

In accordance with 40 CFR 1508.4 of the regulations of the Council

on Environmental Quality and 24 CFR 50.20(b) of the HUD regulations,

the policies and procedures contained in this notice relate only to

technical assistance and, therefore, are categorically excluded from

the requirements of the National Environmental Policy Act.

Federalism Impact

The General Counsel, as the Designated Official under section 6(a)

of Executive Order 12612, Federalism, has determined that the policies

contained in this notice will not have substantial direct effects on

States or their political subdivisions, or the relationship between the

federal government and the States, or on the distribution of power and

responsibilities among the various levels of government. As a result,

the notice is not subject to review under the Order. Specifically, the

funds available under this NOFA will be used to select intermediaries

that will administer technical assistance grants to eligible

recipients. The grants to eligible recipients will be for technical

assistance activities related to the preservation of low-income

housing.

Family Executive Order

The General Counsel, as the Designated Official under Executive

order 12606, The Family, has determined that this notice 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 notice, as those policies and programs

relate to family concerns.

Section 102 of the HUD Reform Act: Documentation and Public Access

Requirements; Applicant/Recipient Disclosures

Documentation and Public Access Requirements

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) for

further information on these documentation and public access

requirements.)

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 generally

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 part 12, subpart C, for further information on

these disclosure requirements.)

Section 103 HUD Reform Act

HUD's regulation (24 CFR part 4) implementing section 103 of the

Department of Housing and Urban Development Reform Act of 1989 (42

U.S.C. 3537a) (Reform Act) applies to the funding competition announced

today. The requirements of the rule continue to apply until the

announcement of selection of successful applicants.

Both HUD and intermediary employees involved in the review of

applications and in the making of funding decisions are limited by 24

CFR 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 (voice/TDD). (This is not a toll-free number.)

The Office of Ethics can provide information of a general nature, 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.

Section 112 of the Reform Act

Section 112 of the HUD Reform Act added a new section 13 to the

Department of Housing and Urban Development Act (42 U.S.C. 3537b).

Section 13 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 regulations codified in part 86. If

readers are involved in any efforts to influence the Department in

these ways, they are urged to read the regulations, particularly the

examples contained in Appendix A of part 86.

Any questions about the rule should be directed to the Office of

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

Seventh Street, SW., Washington, DC 20410-3000. Telephone: (202) 708-

3815 (voice/TDD). (This is not a toll-free number.) Forms necessary for

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

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.

Authority: 42 U.S.C. 4101 et seq.; 42 U.S.C. 3535(d).

Dated: March 29, 1994.

Jeanne K. Engel,

General Deputy Assistant Secretary for Housing--Federal Housing

Commissioner.

Appendix A: Technical Assistance Applications

A. Eligible Applicants

(1) General Definition. An eligible applicant must notify

residents of all occupied units that it is applying for a grant.

That notification shall meet the specifications of paragraph B

below. An eligible applicant is one of the entities described in the

following paragraphs (a) through (c) that complies with the

applicable criteria:

(a) Resident Group. Resident Groups are eligible for Resident

Capacity grants only. For an applicant to be considered a resident

group, the following must be submitted:

(i) Evidence that the greater of 5% of the occupied units or 10

units of the subject property have heads of households that are

members;

(ii) A copy of a notice announcing an organizational meeting to

discuss resident participation in decisions affecting the project;

(iii) A copy of the agenda of the organizational meeting

referred to in item (ii) of this paragraph; and

(iv) A list of attendees of the organizational meeting referred

to in item (ii) of this paragraph.

(b) Resident Council. (RC) For an applicant to be considered an

RC, it must meet the definition of ``resident council'' as set out

in Sec. 248.101. Specifically, an RC is any incorporated nonprofit

organization or association in which membership is available to all

the tenants, and only the tenants, of a particular project and:

(i) Is representative of the residents of the project;

(ii) Adopts written procedures providing for the election of

officers on a regular basis; and

(iii) Has a democratically elected governing board, elected by

the residents of the project.

(c) Community-Based Nonprofit Housing Developer. (CBD) For an

applicant to be considered a CBD it must submit evidence that it:

(i) Is classified as tax exempt under section 501(c)(3) of the

Internal Revenue Code of 1986;

(ii) Has been in existence for at least two years, and has at

least two years of housing and community development experience,

prior to the date of grant application;

(iii) Has a record of service to low- and moderate-income people

in the community in which the project is located;

(iv) Is organized at the neighborhood, city, county or a multi-

county level;

(v) In the case of an organization seeking to acquire eligible

housing under LIHPRHA, agrees to form a purchasing entity that

conforms to the definition of a community-based nonprofit

organization (CBO) in Sec. 248.101;

(vi) Agrees to use its best efforts to secure majority tenant

consent to the acquisition of the project for which grant assistance

is requested. Evidence of ``best efforts'' shall include a plan in

the application which details method for securing such support. In

addition, continued evidence of ``best efforts,'' such as additional

resident meetings and notices, is required as a grantee moves

towards a purchase.

(2) Resident Capacity Grant Applicants. Applicants for Resident

Capacity grants must meet the eligibility criteria listed in

paragraph A of this Appendix. In addition, these grants may be made

only with respect to eligible low-income housing, as defined in

Sec. 248.101, for which the owner has filed a Notice of Intent under

ELIHPA, an Initial Notice of Intent under LIHPRHA, or a Notice of

Election to Proceed under section 604 of NAHA and is proceeding

under the LIHPRHA appraisal process.

(3) Predevelopment Grant Applicants. Predevelopment grant

applicants must be RCs or CBDs meeting the criteria listed in

paragraph A of this Appendix. These grants may be made only to

organizations seeking to purchase the property with a majority of

resident support for the purchase. These grants may be made only

with respect to eligible low-income housing projects for which: (i)

the owner has filed an initial or second Notice of Intent to

transfer the housing to a qualified purchaser under LIHPRHA, or has

filed any Notice of Intent under LIHPRHA or ELIHPA and the owner has

entered into a binding agreement to sell the housing to the

applicant organization, or (ii) the owner has filed a Notice of

Election to Proceed under section 604 of NAHA and is proceeding

under the LIHPRHA appraisal process and has entered into a binding

agreement to sell the housing to the applicant organization. This

binding agreement shall not necessarily be a formal sales contract;

rather, it may state that the owner will neither work with nor

accept a purchase offer from any other entity during the term of the

grant, as long as the grantee is progressing towards a purchase

offer, plan of action or resident homeownership plan, and

acquisition in a reasonable period of time.

(4) Conflict of Interest. Each applicant must certify that its

organization is not a ``Related Party'', as set forth in 24 CFR

248.101, and that no individual that has, or has had within the last

five years, a personal or professional relationship with the owner

entity will receive financial benefit from the grant funds. This

certification shall prohibit using mutual consultants, attorneys,

etc. It shall not explicitly prohibit using architects or engineers

that have worked with the owner or in the property in the past, as

long as there is no ongoing professional relationship with the owner

that could be perceived as a conflict of interest. A nonprofit

general partner of an eligible property that is attempting to buy

out its limited distribution partners is exempt from this part of

the conflict of interest requirement. A certification shall also

require disclosure, to the intermediary and the tenants of any

relationship with ownership, management, or any other parties to a

sale, and will state that the applicant will not seek any financial

benefit from project ownership or operations other than those

disclosed.

B. Resident Notification

Each applicant will be required to notify residents of the

property of its application prior to submitting the application

package to the intermediary. That notification shall be in writing,

be distributed to each resident of the property, and include a

summary of the applicant's plan for the property. The notification

shall also include a statement that residents can themselves become

eligible applicants under the Preservation Technical Assistance

grant program. In addition, the applicant must meet with the

residents of the property at least two weeks prior to application

submission, and give the residents at least two weeks notification

of such meeting. In the meeting the applicant must provide the

following information to the residents:

A summary of the grant proposal;

A list of members of the board of directors, if known;

A list of the proposed development team and management

company, if known;

A list of all proposed consultants and attorneys;

Disclosure of any relationship with ownership,

management, or any other parties related to the owner or, if

applicable, related to the sale; and

Information on how the residents may comment to the

intermediary on the applicant's proposal and that residents shall

have 14 days to submit comments to the applicant and to the

intermediary on the proposal. This information shall include a name

and contact number for the intermediary and a name and phone number

for a contact person in the applicant organization.

If the applicant is unable to make this notification due to lack

of access to the property or lack of resident addresses, the

applicant may contact the intermediary for assistance. The

intermediary may contact the owner to request access or resident

addresses for the applicant. If the owner is uncooperative, the

intermediary may contact the HUD field office for assistance. If

residents make substantive comments to the intermediary, the

applicant will be required to address these comments prior to any

grant award from the intermediary.

C. Ineligible Technical Assistance Applicants

(1) Entities that have applications pending for funds under the

HOPE 2 program are not eligible to apply for funding under this NOFA

(because the owner would have already elected to proceed under the

distinct requirements applicable to HOPE 2 grants and is precluded

from concurrently filing the prerequisite Notice of Intent under

LIHPRHA or ELIHPA). An entity that is receiving HOPE 2 funding for

preservation-eligible property is ineligible to apply under this

NOFA for a grant for that property until the HOPE 2 grant has been

terminated due to HUD's acceptance of the owner's filing of a Notice

of Intent under ELIHPA or LIHPRHA.

(2) Entities that have been awarded grants under the

Preservation NOFA (entitled ``Technical Assistance Planning Grants

for Resident Groups, Community Groups, and Community-Based Nonprofit

Organizations and Resident Councils'') issued September 3, 1992 (57

FR 40570), may not receive funds under this NOFA for any properties

for which those grants were funded either until all funds awarded to

the grantee under the 1992 NOFA have been expended, or until the

grant under the September 3, 1992, NOFA has been terminated as a

result of a new grant approval under this NOFA. The total funds

received from the September 3, 1992, NOFA plus the total grant award

for this NOFA may not exceed the funding limits of this NOFA. A

grantee under the September 3, 1992, NOFA is eligible for funds

under this NOFA only if it also meets the eligibility criteria of

this NOFA and meets the notification requirements of Paragraph B

above.

D. Eligible Technical Assistance Grant Activities

(1) Resident Capacity Grants. Resident Capacity grants may be

used to cover expenses for the following activities:

Resident outreach and coordination;

Legal services to incorporate the resident organization

or RC, establish a board of directors, write by-laws, or establish

nonprofit status;

Accounting services for budgeting, planning, and

creation of accounting systems that are in compliance with OMB

Circular A-110 or A-122;

Conducting resident meetings and democratic elections;

Training residents and developing resident leadership;

and

Hiring an architect or engineer to advise the residents

during the Preservation Capital Needs Assessment and or the

appraisal stage of the Preservation process.

Other technical assistance related to developing the

capacity of the residents of the organization to meaningfully

participate in decisions related to the project.

(2) Predevelopment Grants. Predevelopment grants may be used to

cover consultant costs, and grantee staff and overhead costs related

to the following activities:

Legal services to organize a purchasing entity;

Accounting services for budgeting, planning, and

creation of accounting systems that are in compliance with OMB

Circular A-110 or A-122;

Preparing bona fide offers including contracts and

other documents to purchase the property;

Training residents, resident council staff and board

members on the Preservation process and in skills related to the

operation and management of the project;

Developing and negotiating management contracts,

related contract monitoring, and management procedures;

Engineering studies, such as site, water, and soil

analysis, mechanical inspections; and estimations of the cost of

rehabilitation and of meeting local building and zoning codes, in

anticipation of purchasing a property, as necessary to supplement

the capital needs assessment developed by HUD (see the Final

Guidelines for Determining Appraisals of Preservation Value Under

LIHPRHA, 57 FR 1970 (May 8, 1992));

Securing financing and preparation of mortgage

documents, transfer documents, and other documentation incident to

closing a purchase offer;

Preparing feasibility analyses, market studies and

management plans;

If applicable, creating a Community-Based Nonprofit

Organization that conforms to the definition of such organization

under 24 CFR Sec. 248.101;

Preparing a Plan of Action, Resident Homeownership

Plan, and related documents, such as a Transfer of Physical Assets

in accordance with 24 CFR Secs. 248.213, 135, and 173; and

Other activities related to promoting the ability of

eligible applicants to acquire, rehabilitate and competently own and

manage eligible housing.

E. Ineligible Grant Activities

Examples of activities that are not eligible to be funded for

technical assistance grantees include:

Earnest money deposits as part of a purchase offer made

under 24 CFR 248.157, 248.161, 248.173, and 248.175;

Purchase of land or buildings or any improvements to

land or buildings;

Activities not directly related to the eligible

activities listed in paragraph D of this Appendix A;

Entertainment, including associated costs such as food

and beverages, except that refreshments served at resident meetings

shall be allowable to the extent they facilitate resident

participation in planning for the grant;

Payments of fees for lobbying services;

Activities funded from other sources;

Activities completed prior to the time an applicant

becomes eligible for a grant; and

Activities performed by the administering intermediary.

Appendix B: Activity Level and State Allocation

The allocation of funds by State will be determined according to

the level of activity in that State as of the closing date for

intermediaries to submit applications to become intermediaries. If

additional grant funds are made available, the State allocations

will be revised according to the activity levels at the time the new

funding is made available. The total funding under this NOFA has

been divided by the number of active Notices of Intent submitted by

owners for properties in the State. Regional and national

intermediaries may utilize funds for their entire geographical areas

on a first come first serve basis, rather than maintaining the State

allocations in funding grants. Sub-State intermediaries will be

considered in the States of California, Texas, and Washington. The

following is a breakdown of dollar amounts by state based on

activity level by State as of November 30, 1993. This will be

updated prior to actual release of funds based on activity levels at

the time of intermediary selection, but provides a good estimate of

expected funds available by State. In addition, the Department will

periodically assess activity levels and, if necessary, reallocate

funds among intermediaries.

Resident Capacity Grants

Alabama: $131,250

Alaska: $37,500

Arizona: $150,000

Arkansas: $150,000

California: $3,693,750

Colorado: $75,000

Connecticut: $187,500

Delaware: $0

District of Columbia: $37,500

Florida: $168,750

Georgia: $93,750

Hawaii: $131,250

Idaho: $243,750

Illinois: $243,750

Indiana: $375,000

Iowa: $243,750

Kansas: $18,750

Kentucky: $112,500

Louisiana: $168,750

Maine: $18,750

Maryland: $281,250

Massachusetts: $750,000

Michigan: $262,500

Minnesota: $375,000

Mississippi: $187,500

Missouri: $168,750

Montana: $93,750

Nebraska: $187,500

Nevada: $0

New Hampshire: $18,750

New Jersey: $225,000

New Mexico: $18,750

New York: $225,000

North Carolina: $150,000

North Dakota: $56,250

Ohio: $131,250

Oklahoma: $0

Oregon: $581,250

Pennsylvania: $262,500

Puerto Rico: $75,000

Rhode Island: $300,000

South Carolina: $93,750

South Dakota: $75,000

Tennessee: $187,500

Texas: $543,750

Utah: $56,250

Vermont: $18,750

Virginia: $206,250

Virgin Islands: $0

Washington: $1,143,750

West Virginia: $0

Wisconsin: $543,750

Wyoming: $0

Predevelopment Grants

Alabama: $306,250

Alaska: $87,500

Arizona: $350,000

Arkansas: $350,000

California: $8,618,750

Colorado: $175,000

Connecticut: $437,500

Delaware: $0

District of Columbia: $87,500

Florida: $393,750

Georgia: $218,750

Hawaii: $306,250

Idaho: $568,750

Illinois: $568,750

Indiana: $875,000

Iowa: $568,750

Kansas: $43,750

Kentucky: $262,500

Louisiana: $363,750

Maine: $43,750

Maryland: $656,250

Massachusetts: $1,750,000

Michigan: $612,500

Minnesota: $875,000

Mississippi: $437,500

Missouri: $393,750

Montana: $218,750

Nebraska: $437,500

Nevada: $0

New Hampshire: $43,750

New Jersey: $525,000

New Mexico: $43,750

New York: $525,000

North Carolina: $350,000

North Dakota: $131,250

Ohio: $306,250

Oklahoma: $0

Oregon: $1,356,250

Pennsylvania: $612,500

Puerto Rico: $175,000

Rhode Island: $700,000

South Carolina: $218,750

South Dakota: $175,000

Tennessee: $437,500

Texas: $1,268,750

Utah: $131,250

Vermont: $43,750

Virginia: $481,250

Virgin Islands: $0

Washington: $2,668,750

West Virginia: $0

Wisconsin: $1,268,750

Wyoming: $0

[FR Doc. 94-8065 Filed 4-5-94; 8:45 am]

BILLING CODE 4210-27-P