PHA Acquisition of Single Family HUD/VA/RTC Properties

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Public and Indian Housing

24 CFR Part 941

[Docket No. R-94-1711; FR-3591-F-01]

RIN 2577-AB39

PHA Acquisition of Single Family HUD/VA/RTC Properties

AGENCY: Office of the Assistant Secretary for Public and Indian

Housing, HUD.

ACTION: Final rule.

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SUMMARY: This rule revises existing regulations to expedite public

housing agency (PHA) acquisition of single family properties (with or

without rehabilitation) that are secured by an FHA-insured or HUD-held

mortgage or owned by HUD, VA, or RTC by eliminating the requirements

for approval by the Assistant Secretary and allowing Field Offices to

exercise more discretion in determining the nature and scope of

required technical reviews.

EFFECTIVE DATE: May 19, 1994.

FOR FURTHER INFORMATION CONTACT: Janice Rattley, Director, Office of

Construction, Rehabilitation and Maintenance, Office of Public and

Indian Housing, room 4138, 451 Seventh Street SW., Washington, DC

20410, Telephone (202) 708-1800. A telecommunications device for speech

and/or hearing impaired persons (TDD) is available at (202) 708-0850.

(These are not toll-free telephone numbers.)

SUPPLEMENTARY INFORMATION: The current regulation for public housing

development provides, in part, at 24 CFR 941.206(c), that PHA

acquisition of properties (with or without rehabilitation) that are

secured by an FHA-insured or HUD-held mortgage or are owned by HUD may

not be approved, except with the prior written approval of the

Assistant Secretary for Public and Indian Housing. This rule amends

Sec. 941.206(c) by removing the requirement for prior approval by the

Assistant Secretary and by adding properties owned by the Veterans

Administration (VA) or the Resolution Trust Corporation (RTC) as

eligible for acquisition under this section.

This rule also streamlines the procedure for acquiring such

properties by expanding the limited proposal procedure for scattered-

site projects to permit the PHA purchase of HUD/VA/RTC properties, any

combination of such, and/or in combination with the purchase of

eligible properties on the open market. The limited proposal procedure

would be the same for any single family acquisition regardless of its

ownership.

This rule permits Field Offices to exercise more discretion in

determining the nature and scope of required reviews. In order to

enable a Field Office to have the ability to limit its reviews and

expedite processing, the PHA is required to certify, either as part of

its limited proposal or at the time the PHA identifies a property it

wants to acquire and provides the proposed sales contract, that

compliance with all necessary applicable requirements will be met:

e.g.,

(1) Prevailing wages;

(2) Nondiscrimination requirements;

(3) Site and neighborhood standards;

(4) Intergovernmental review;

(5) Accessibility requirements;

(6) Relocation requirements;

(7) Minimum Property Standards (MPS) or Housing Quality Standards

(HQS);

(8) If replacement housing under section 18 is involved, that the

housing to be acquired is consistent with the replacement housing plan

approved by HUD;

(9) Generally, properties constructed prior to 1978 should not be

considered; however, if a proposed property was built prior to 1978,

that lead-based paint testing and the determination of the cost

feasibility of abatement will be done before the transfer of title to

and payment of funds by the PHA or the contract is null and void; and

(10) Any other Federal requirements listed under 24 CFR 941.202

through 941.209. These PHA certifications do not provide a basis for

waiving or dispensing with the applicability of the aforementioned

requirements, environmental assessments and other Federal requirements

listed under 24 CFR 941.202 through 941.209.

Based on the PHA's submission, including the certifications, each

Field Office is allowed to decide, on its own discretion, whether or

not to require the submission, technical review and approval of any

further information. In order to expedite processing, the Field

Office's Housing Specialist will distribute simultaneously to each of

HUD's technical offices (in accordance with the recent reorganization

at the Field Office level) the PHA's submission to determine as soon as

possible if any technical reviews are necessary. The Field Office is

responsible for performing the reviews to assure compliance with

applicable requirements and development within the approved development

cost limits, while at the same time keeping the number of technical

reviews at a minimum. Under this rule, there is a target period of 50

days from the time the PHA indicates it wants to acquire a specific

property and when the Field Office approves or rejects the request;

after approval notification, the PHA has an additional 10 day target

period to close on the property. Properties involving extensive

rehabilitation, lead-based paint testing and abatement, historic

preservation requirements and/or an uncompleted environmental

assessment, may require extension of the target date. The payment of

Single Family Property Disposition (SFPD) customary extension fees is

considered an eligible public housing development expense.

The rule provides guidance on the factors that a Field Office is to

consider in deciding whether or not to require additional submissions

for review and approval. The Field Office is to take into account the

total development cost of the proposed project, and the management and

development capabilities of the PHA, including the PHA's performance

rating under the Public Housing Management Assessment Program (PHMAP)

at 24 CFR part 901. The Field Office can, at its own discretion, accept

all PHA certifications that required compliances will be met, except

the environmental assessment; by law, only HUD can certify compliance

with 24 CFR part 50. If the Field Office is satisfied with the PHA

submission, including its certifications, additional submissions and

technical reviews will not be necessary.

These changes to HUD's development review process are a part of the

overall effort that the Department is undertaking to promote

decentralization. More authority is entrusted to the Field Offices to

exercise discretion with respect to the activities of PHAs that they

deal with on a close and regular basis. PHAs are themselves empowered

to act without the prior approval of the Assistant Secretary and with

the potential for more informal consultations with the Field Office.

The end result is anticipated to be a more streamlined and efficient

property acquisition process.

This rule further specifies that the limited proposal procedure

under Sec. 941.404(n) for scattered site properties would also be

followed for acquisition of HUD/VA/RTC properties. PHAs may identify

such properties to consider for acquisition as described below in the

succeeding paragraph. Section 941.404(n) is amended to include these

properties within its scope, and to include the list of certifications

discussed above. The unnumbered closing paragraph of Sec. 941.404(n) is

revised to reflect the Department's streamlined review procedures.

Purchase of HUD-Owned Properties

Acquisition by PHAs of HUD's single family acquired properties must

routinely follow the established current procedures used by HUD's

Division of Single Family Property Disposition (SFPD). This includes

the process by which all other nonprofit organizations and government

agencies purchase properties. After a PHA receives notice of property

availability, the PHA has 5 days to indicate interest and then an

additional 15 days to submit a signed sales contract. Upon execution of

the contract by SFPD, the PHA will close the sale within the Field

Office closing timeframe, generally 30-60 days. During this remaining

period, all regulatory and statutory regulations must be met by the PHA

before the transfer of title to and payment of funds by the PHA or the

contract is null and void.

HUD would like to expedite sales to PHAs and encourages PHAs to

contact the Director of Housing Management in the HUD field office

having jurisdiction over the area in which the PHA has authority to

determine the availability of HUD-owned single family properties, and

the status of HUD-held mortgages which may be in the process of being

foreclosed.

Purchase of Properties Owned by the Veteran's Administration (VA)

and the Resolution Trust Corporation (RTC)

Pursuant to a Memorandum of Agreement between the Secretary of

Housing and Urban Development and the Secretary of Veteran Affairs, a

framework will be established for a continuing working relationship

between HUD and VA to coordinate the sale of VA-acquired properties to

PHAs. Upon request, the local VA field office will make available a

list, by computer or otherwise, of single family (one to four units)

properties owned by VA and located within the PHA's jurisdiction. PHAs

will have a right of first option on these properties for a period of

time from the date the list is furnished to the PHA, and the PHA and VA

will follow an agreed upon procedure for the property purchase.

With regard to RTC properties, RTC sells foreclosed single family

properties in conjunction with its responsibilities for resolving

failed financial institutions. Under the RTC's Affordable Housing

Disposition (AHD) Program, public agencies, nonprofit organizations and

low/moderate-income buyers have an exclusive right for a period of time

to purchase lower-priced single family properties that the RTC has

placed on the market. RTC offers these properties at their fair market

value and publicizes the availability of these properties through

various state and local housing agencies and Federal Home Loan Banks,

which serve as property information clearinghouses. PHAs are to contact

the Affordable Housing Disposition Department Head at the local RTC

field offices in order to be placed on the RTC property mailing list.

The Department has determined that the changes made by this rule

should be adopted without the delay occasioned by requiring prior

notice and comment. These changes primarily constitute a change in the

Department's own review procedures and the elimination of a requirement

to obtain prior approval of the Assistant Secretary before a PHA may

acquire certain properties. As such, prior notice and comment are

unnecessary, and the rule is exempt under 24 CFR part 10 from notice

and comment requirements.

Findings and Certifications

A. Environmental Impact

A Finding of No Significant Impact with respect to the environment

has been made in accordance with HUD regulations at 24 CFR part 50,

which implement section 102(2)(C) of the National Environmental Policy

Act of 1969. The Finding of No Significant Impact is available for

public inspection between 7:30 a.m. and 5:30 p.m. weekdays in the

Office of the Rules Docket Clerk at the above address.

B. Federalism

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

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

contained in this rule do not have federalism implications and, thus,

are not subject to review under the Order. This rule removes a layer of

prior HUD review and approval and allows Field Offices to exercise more

discretion at multiple processing stages for the acquisition of certain

properties. It will not have substantial, direct effects on States, on

their political subdivisions, or on their relationships with the

Federal government, or on the distribution of power and

responsibilities between them and other levels of government.

C. Family Impact

The General Counsel, as the Designated Official under Executive

Order 12606, the Family, has determined that this rule will have only

an indirect, though beneficial, impact on family formation,

maintenance, and general well-being, since it should simplify the

development of housing by PHAs, and thus, is not subject to review

under the Order.

This rule was not listed in the Department's Semiannual Agenda of

Regulations published on October 25, 1993 (58 FR 56402) under Executive

Order 12291 and the Regulatory Flexibility Act.

List of Subjects in 24 CFR Part 941

Grant programs--housing and community development, Loan programs--

housing and community development, Public housing.

Accordingly, the Department amends 24 CFR part 941 as set forth

below:

PART 941--PUBLIC HOUSING DEVELOPMENT

1. The authority citation for 24 CFR part 941 continues to read as

follows:

Authority: 42 U.S.C. 1437b, 1437c, 1437g, and 3535(d).

2. In Sec. 941.206, paragraph (c) is revised to read as follows:

Sec. 941.206 Eligible properties.

* * * * *

(c) Single family properties secured by an FHA-insured or HUD-held

mortgage, or owned by HUD, the Veterans Administration (VA), or the

Resolution Trust Corporation (RTC). (1) Proposals for the acquisition

of single family properties (with or without rehabilitation) that are

secured by an FHA-insured or HUD-held mortgage or are owned by HUD, the

Veterans Administration (VA), or the Resolution Trust Corporation

(RTC), must be submitted to the Field Office for approval. The limited

proposal procedure for scattered-site projects, as set forth at 24 CFR

941.404(n), may be followed to facilitate the PHA purchase for

scattered-site projects of HUD/VA/RTC properties, any combination of

such, and/or in combination with the purchase of eligible properties on

the open market.

(2) After approval of the limited proposal and execution of the

ACC, Field Offices will determine the nature and scope of required

technical reviews, taking into consideration the PHA submission

identifying a property it wants to acquire that includes the proposed

sales contract and PHA certifications that compliance with all

necessary requirements will be met. If the PHA has provided the

certifications as part of its limited proposal, the Field Office can,

at its own discretion, accept all PHA certifications that required

compliances will be met except the environmental assessment; by law,

only HUD can certify compliance with 24 CFR part 50. The PHA

certifications do not waive or dispense with the applicability of other

Federal requirements pursuant to 24 CFR 941.202 through 941.209, but

only serve to facilitate the approval process. These certifications

shall address, but are not limited to:

(i) Prevailing wages;

(ii) Nondiscrimination requirements;

(iii) Site and neighborhood standards;

(iv) Intergovernmental review;

(v) Accessibility requirements;

(vi) Relocation requirements;

(vii) Minimum Property Standards (MPS) or Housing Quality Standards

(HQS);

(viii) If replacement housing under section 18 is involved, that

the housing to be acquired is consistent with the Replacement Housing

Plan approved by HUD;

(ix) Generally, properties constructed prior to 1978 should not be

considered; however, if a proposed property was built prior to 1978,

that lead-based paint testing and the determination of the cost

feasibility of abatement will be done before the transfer to and

payment of funds by the PHA or the contract is null and void; and

(x) Any other Federal requirements listed under 24 CFR 941.202

through 941.209.

(3) After receiving a PHA's submission in accordance with paragraph

(c) (2) of this section, each Field Office will decide whether or not

to require the review and approval of any further information, based on

its consideration of the PHA's submission, the acquisition cost of the

property, and the management and development capabilities of the PHA,

including the PHA's performance rating, under the Public Housing

Management Assessment Program (PHMAP) at 24 CFR part 901.

(4) The Field Office will perform all necessary reviews to assure

all compliance requirements are met.

(5) Under this section, there is a target period of 50 days from

the time the PHA indicates it wants to acquire a specific property and

when the Field Office approves or rejects the request; after approval

notification, the PHA has an additional 10 day target period in which

to close on the property. Properties involving additional requirements,

such as acquisition with extensive rehabilitation, lead-based paint

testing and abatement, historic preservation requirements and/or an

uncompleted environmental assessment, may require extension of the

target date.

3. In Sec. 941.404, paragraph (n) is amended by designating the

introductory text as paragraph (n)(1); by revising the section heading

and the newly designated paragraph (n)(1); by redesignating existing

paragraphs (n)(1) through (n)(9) as paragraphs (n)(1)(i) through

(n)(1)(ix), respectively; by adding a new paragraph (n)(1)(x); by

designating the undesignated paragraph as paragraph (n)(2); and by

revising the newly designated paragraph (n)(2), to read as follows:

Sec. 941.404 Proposal content.

* * * * *

(n) Special procedures for HUD/VA/RTC properties and scattered site

projects. (1) PHAs may, in lieu of submission of the complete proposal

described in this section, submit a limited proposal if: the proposal

is for the acquisition of properties secured by an FHA-insured or HUD-

held mortgage, or owned by HUD, the Veterans Administration (VA), or

the Resolution Trust Corporation (RTC); or the proposal is for a

project involving scattered-site acquisition or a scattered-site

conventional new construction or rehabilitation development, and the

proposal has been determined to be eligible for front-end funding

pursuant to Sec. 941.402(c) or Sec. 941.403(c), and the diversity of

ownership of the properties is expected to make site control difficult.

* * * * *

(x) Certification that the PHA will comply with the following HUD

requirements:

(A) Prevailing wages;

(B) Nondiscrimination requirements;

(C) Site and neighborhood standards;

(D) Intergovernmental review;

(E) Accessibility requirements;

(F) Relocation requirements;

(G) Minimum Property Standards (MPS) or Housing Quality Standards

(HQS);

(H) If replacement housing under section 18 is involved, that the

housing to be acquired is consistent with the Replacement Housing Plan

approved by HUD;

(I) Generally, properties constructed prior to 1978 should not be

considered; however, if a proposed property was built prior to 1978,

that lead-based paint testing and the determination of the cost

feasibility of abatement will be done before the transfer to and

payment of funds by the PHA or the contract is null and void; and

(J) Any other Federal requirements listed under 24 CFR 941.202

through 941.209.

(2) HUD will review the limited proposal, in accordance with

Sec. 941.405, and upon approval of the proposal, HUD will execute the

ACC and permit advances for the purposes and amounts described in

Sec. 941.406(b)(3). The PHA will select individual properties in

accordance with its approved limited proposal, but will not acquire a

property or make a commitment to acquire without specific HUD site

approval, and a determination that the property, including the

resulting total development cost, is consistent with the approved

limited proposal.

Dated: April 11, 1994.

Joseph Shuldiner,

Assistant, Secretary for Public and Indian Housing.

[FR Doc. 94-9392 Filed 4-18-94; 8:45 am]

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