! U ?28.1 /SX\ U54?2 United States Department of Housing and Urban Development I: 1978 L NEIGHBORHOOD STRATEGY AREAS

A GUIDEBOOK % FOR LOCAL GOVERNMENT

smiUbi m jp

■ United States Department of Housing and Urban Development

U.S. Conference of Mayors dill National Community Development Association NEIGHBORHOOD STRATEGY AREAS INTRODUCTION & ACKNOWLEDGEMENTS I The Neighborhood Area Strategy (NSA) program is a demonstration effort by HUD to provide local governments with a special set-aside of Section 8 Substantial Rehabilita­ tion funds for use in designated neighborhood areas. It represents the first real attempt by HUD to give local governments control over the distribution of federal housing subsidies, A GUIDEBOOK FOR LOCAL GOVERNMENT in accordance with approved, locally conceived development strategies. The purpose of this Guidebook is to give local officials assistance in understanding the program's goals, ■ requirements, and constraints, and to help them prepare applications for participation in the program. The Guidebook was prepared by the Housing Action Council of White Plains, NY, with John R. Nolon, Michael M. Ehrmann, and Stephen Grathwohl the ! contributing authors. The cover illustration is by Bissell and Wells, Architects, through Prepared for the courtesy of the City of Hoboken Community Development Administration. The Office of Policy Development and Research project could not have been completed without the strong support of HUD Deputy U.S. Department of Housing and Urban Development Assistant Secretary for Assisted Housing Nancy S. Chisholm and her Special Assistant, ! Jack P. Kerry, funding from the HUD policy development and research program, of Assistant Secretary Donna E. Shalala, and the invaluable administrative assistance of Cynthia R. Woodruff, USCM Housing Assistance Staff. Overall editorial responsibility for the Guidebook rests with Barry Zigas, Director of the Housing Assistance Staff. by John J. Gunther Executive Director USCM NCDA U.S. Conference of Mayors

John A. Sasso Executive Secretary National Community Development Association

HUD Contract H2422

S

!

; TABLE OF CONTENTS

PART I—THE NEIGHBORHOOD STRATEGY AREA PROGRAM

Page I. Introduction 1

II. How the Program Works...... 3 A. Who can Apply for NS A Designation?...... 3 B. When Does a Community Apply for Funds Under NSA? 3 C. What is Required in the Application? ...... 4 i D. Special Concerns for Local Government...... 6 1. Administration...... 7 ; 2. Housing Program Coordination...... 7 i 3. Financing...... 7 4. Relocation ...... 8 5. Displacement ...... 8 6. Multiple Applications...... 9 ; E. HUD Review of NSA Applications...... 9 F. Additional Selection Criteria...... 10

III. Carrying Out the NSA Strategy...... 11 A. The Housing Assistance Application Process ...... 11 1. Technical Assistance to Owners and Developers...... 11 2. Understanding the Section 8 Leased Housing Program ... 11 3. Soliciting Proposals...... 12 4. Processing Applications for Section 8 Assistance...... 13 a. Applicants not seeking HUD-FFiA mortgage insurance 13 b. Proposals seeking HUD-FHA mortgage insurance...... 13 5. Community Review of Housing Proposals...... 14 6. Submitting the Proposals to HUD...... 14 7. HUD Area Office Review of Section 8 Proposals ...... 15

IV. Procedure for Other Types of Housing Assistance...... 15 A. Subsequent Year Allocations and Reallocations of NSA Set Aside Funds 15

PART II—NEIGHBORHOOD STRATEGY PLANNING ; AND IMPLEMENTATION

17 This report was prepared under a contract with the U.S. Department of Housing and Urban Develop­ I. Introduction ment (HUD), Offices of Housing, Community Planning and Development, and Policy Development ! and Research. The statements and conclusions in this report are those of the authors and do not i II. Selecting NSA Neighborhoods...... 20 20 necessarily reflect the views of the U.S. Government in general or HUD in particular Neither the 1 A. Threshold Requirements...... United States nor HUD makes any warranty, expressed or implied, nor assumes responsibility for this B. Housing and Ownership Patterns 21 report's accuracy or completeness. ** 7 IV Small properties...... 21 2. Small multifamily buildings .. 22 3. Large multifamily structures . 23 4. Property owners...... 23 ;

I ; ! 24 C. Neighborhood Categories ...... b. Title II Major home improvement loan insurance— 24 Section 203(k) and 220(h) ...... 41 1. Small property areas...... 24 2. Mixed property areas...... c. Single family mortgage insurance programs ...... 42 25 3. Multifamily areas...... d. Multifamily insurance programs ...... 42 D. Evaluating Neighborhood Interest 25 H. Additional Federal Assistance ...... 44 E. Strategic Concerns ...... 26 I. The Private Financial Sector...... 44 J. Additional Incentives...... 45 III. The Neighborhood Inventory: Information Resources 26 VI. Carrying Out the NS A Program .. 45 A. Introduction ...... 26 A. Identifying the Properties 45 B. Properties...... 26 B. Starting the Process...... 46 C. Owners...... 27 C. Carrying Out the Rehab Work 47 D. Financial Institutions...... 27 D. Continuing Responsibilities .. 48 E. Construction and Rehabilitation Resources...... 27 F. Tenants...... 27 VII. Conclusion 48 G. General Demographics...... 28 :

H. Commercial Development ...... 28 ■ . Appendix I: Definitions of Levels of Rehabilitation Work 49 I. Public Resources ...... 28 J. Citizen Involvement...... 28 Appendix II: Section 8 Regulations...... 51 K. Data Services ...... 28 1. Census information...... ' 29 2. R.L. Polk Profiles of Change...... 31 L. Other Information Resources...... 32 1. Area property owners ...... 32 2. Area property managers...... 33 3. Area tenants ...... 33 4. Local builders ...... 33 5. Area lenders...... 33 6. Area commercial interests...... 33 7. Working in familiar areas ...... 33

IV. Assessing the Need for Financing in Your NSA .., 34 A. Relationship to the Neighborhood Inventory 34 B. Working with the Inventory...... 34

V. Finding Financial Resources...... 36 A. Introduction...... 36 i B. Section 8 Substantial Rehabilitation, Existing Housing, and New Construction Housing Payments...... 36 j C. State Housing Agency Financing...... 36 D. Public Housing Authorities ...... 37 E. Municipal Financing...... 38 F. Local Resources—Community Development Block Grant Funds 39 G. Federal Resources ...... 40 1. Direct Loans ...... 40 a. The Section 312 rehabilitation loan program ... 40 b. The Section 202 Program for senior citizens and i handicapped housing...... 40 2. Federal Insurance Programs...... 40 a. Title I property improvement loans...... 41 1

; j ! V

L I

PART I—THE NEIGHBORHOOD

STRATEGY AREA PROGRAM

I. INTRODUCTION to stimulate construction and rehabilita­ tion of subsidized housing. To accomplish Since the passage of the Housing and this, they designed programs which dealt Community Development Act of 1974, directly with financial institutions and de­ local governments have been faced with velopers. This reflected the thinking at the a new responsibility. Through the time, which stressed the need to stimulate mechanism of the Housing Assistance construction of new housing at lower than Plan, communities have been required to normal costs. It was assumed that the hous­ undertake comprehensive reviews of the ing, once built, would be maintained and housing needs of lower income persons, and that the lower income families living there to draft action plans to meet those needs would be "happy ever after." with federal and local resources. In requir­ After years of only marginal success at ing the Housing Assistance Plans, Congress this effort, this thinking has gone out of ! clearly intended that local governments vogue. There is a much more sophisticated take a much more visible and leading role in understanding now of the complex forces providing housing assistance to their lower which govern investment in and mainte­ income residents. nance of housing. And part of this under­ However, as the Community Develop­ standing has sprung from the realization ment Block Grant program matured, it be­ that in giving local governments the re­ came increasingly clear that many com­ sponsibility to plan for meeting the housing munities were failing to live up to this new assistance needs of poor people, the 1974 responsibility. To be sure, Housing Assist­ Act had offered only half a loaf. Without ance Plans were being written, and HUD any tools with which to accomplish the was accepting them. But communities goals laid out, local governments were around the country found that they were often left with little to show for all the stymied in their attempts to make the planning efforts. HAPs actually "happen." There were many With the inauguration of the Neighbor­ reasons for this failure, including a lack of hood Strategies Area (NSA) program, HUD local capacity to deal with the complex is offering local governments the other half process of housing development. But of the loaf. For the first time, the federal another, major obstacle was structural. It government is in effect saying to com­ had to do with the way the federal govern­ munities, "once you plan for the use of ment had traditionally dispensed housing housing assistance in a particular area, and aid. commit your own resources to the revi­ Over the years, the federal government talization of that area, we will commit to | and Congress had developed a series of you the federal housing resources you need complex incentives to stimulate private in­ to complete the job. You will make sure vestment in lower income housing. The that they are used to accomplish your loc­ trend over the years, however, was away ally set goals. You will be our program - 1 from the locally controlled efforts begun manager for those subsidy programs." with the low rent public housing program The NSA program is a demonstration ef­ begun in 1937. Particularly after 1968, fort using a special set aside of Section 8 Congress and successive administrations Substantial Rehabilitation contract author­ relied on mortgage subsidies and insurance ity to provide local governments with a di- I 1 variety of programs to effectively manage fiscal year 1978 are general Section 8 funds; rect control over housing resources. The set and your staff in this process. It is divided and direct the natural dynamic changes of a that is, they can be used by any sponsor who asides will be awarded on the basis of a into two main parts. The first provides a is otherwise eligible under the Section 8 national competition,- in fiscal year 1978, a neighborhood area. . . comprehensive summary of what the pro­ The value of an NSA designation for a program regulations. The remaining 10,000 total of 20,000 units of contract authority gram requires, both in the application stage community cannot be underestimated. For will be available. In order to qualify for the and the program stage. It is heavily refer­ units are available only for projects which the first time, HUD is offering local gov­ funds, communities must prepare a de­ enced to the program regulations, and a full are financed by State Housing Finance ernments control over housing subsidies in tailed plan for dealing with a specific copy of the regulations, as published in the Agencies (HFAs). (This is partly the result neighborhood area. The local government a particular area. Your local government Federal Register, is included as Appendix II of Congressional appropriations actions must assess the need for rehabilitation in will be able to negotiate directly with the for easy reference. The second part of the which limit HUD's flexibility in allocat­

the area, assess the prospects for ac­ private sector, You will be able to analyze guidebook takes you behind the regulations ing Section 8 assistance.) complishing the rehabilitation, determine proposals and determine whether they fit in and explores how a community should pre­ the need for other housing resources and with what you are trying to do in the pare for applying for NSA designation, and A. Who Can Apply for plan for their provision, and develop its own neighborhood area. If they are not, you will how it can use its existing resources and NSA Designation? have a direct say in changing the applica­ talents for providing the program with its plan for revitalizing the neighborhood with Any unit of general local government tion or turning it down—this will not be a I greatest chance for success. The Guidebook community development and other re­ which is participating as an entitlement re­ review and comment procedure, but a full was written by practitioners who have sources over a five year period. cipient in the Community Development scale administrative opportunity. In a very worked in the field with rehabilitation and For those communities which are chosen Block Grant program may apply for NSA major way, your local government will be community development programs for to participate in the program, award of NSA designation. This includes both formula able to guide the course of development many years. It is meant to help you use your designation will mean that the local gov­ entitlement and hold harmless participants through control of the subsidies in a special resources to their fullest as you embark on ernment will be given a set aside of Section with populations of at least 25,000. (24 CFR neighborhood area. the NSA application process. 8 substantial rehabilitation funds. It will be 881.301(b)) Communities which receive As great as the advantages are, there are responsible for soliciting proposals from community development funds through owners and developers; evaluating the pro­ also major new responsibilities which must II. HOW THE PROGRAM another unit of government, such as an posals and providing assistance to those po­ be fulfilled by NSA applicants and partici­ WORKS urban county, may also have an NSA lo­ tential applicants who need it; and select­ pants. You must engage in a full scale plan­ cated in their boundaries, if the prime ing those applicants whose proposals are ning process for the neighborhood area; de­ The Neighborhood Strategy Area pro­ CDBG recipient is the official NSA appli­ most feasible and in line with the commu­ velop staff capacity to evaluate assistance gram is designed to provide local govern­ cant. nity's overall development strategy in the applications; deal with financing packages ments with special procedures for securing Communities participating in the block area. FlUD's review of the assistance appli­ on behalf of interested owners and devel- and processing proposals for Section 8 Sub­ grant program as discretionary grantees are cations from individual owners and devel­ opers; and coordinate the delivery of a wide stantial Rehabilitation assistance submit­ not eligible for the NSA program. This is opers will be limited in most cases to a variety of other assistance funds, such as ted by units of general local government because the NSA program presupposes an technical evaluation, to see that the appli­ CDBG and other local activities. where it is expected that concentrated assured source of community development cations contain all of the necessary infor­ In considering whether to apply for de­ community development activities will re­ funds over at least a five year period, to mation, and meet the federal criteria for signation under the NSA program, and in vitalize the target area within five years. (24 ensure that the other physical development participation. evaluating possible participating neighbor­ CFR 881.301) * needs of the area v/ill be met satisfactorily. Although the only additional assistance hoods within your community, you should The basic application and program proc­ provided under the NSA program is Section keep in mind that areas in which you are ess is simple. Communities will be given 8 Substantial Rehabilitation subsidy funds, already conducting community develop- 90 days to submit applications for the pro­ B. When Does a Community Apply the program encompasses much more than ment rehabilitation programs will be prime gram after notification of fund availability for Funds Under NSA? that. Participating communities will be re- candidates for NSA treatment. While there is published in the Federal Register. The Applications for NSA designation must quired to devote considerable CDBG and may be some attraction in starting out program will use federal subsidy funds be submitted to HUD no later than 90 days other local resources to their neighborhood "fresh" in a brand new area, the corn- which have been specially set aside for this after the community is notified through the efforts, and the attraction of private finan- plexities of the NSA application process, purpose; NSA applicants will not be com­ Federal Register that funds are available in cial investment in the community will be a the short time permitted for filing peting with the general Section 8 allocation the current fiscal year. key element in the NSA strategy. New con- applications—90 days—and the com- process in filing their applications. One half of the units set aside for the program in struction may be necessary in some target prehensive nature of the program required C. What is Required in the neighborhoods, and the Section 8 Existing for designation all argue for adoption of Application? (24 CFR 881.303) Housing Program will also be an important the program in areas with on-going devel- * Unless otherwise noted, all citations are to the NSA tool. NSA, in other words, is a comprehen- opment efforts. & 6 program regulations published in the Federal Regis­ Because the NSA program involves a sive program which requires that you use a This guidebook is intended to help you ter. close coordination of housing and commu-

2 3

j 2 A description of the NSA's demo- and Development Agency, or a Pub­ nity development resources, communities temptation to enter a brand new area graphic and physical characteristics, lic Housing Agency, the request are encouraged by HUD to closely coordi­ ' under NSA and start out fresh, there and an assessment of the extent to are considerable advantages to examin­ shall include a letter from the ap­ nate the development of an NSA applica­ which the area currently meets HUD's tion with the development of Community ing those parts of your community propriate agency stating that the site, neighborhood, and environmental where CD rehab activities are already agency agrees to cooperate with you Development Block Grant and Housing As­ standards. The description must in­ underway. It will simplify coordina­ in providing financing for projects sistance Plan documents. Applications for clude an evaluation of the feasibility of tion with the CDBG application proc­ in the NS A, and will submit appli­ NSA designation and a CDBG may be sub­ rehabilitation, given the condition of mitted concurrently, if the community's ess, and alleviate the reprogramming cations and Proposals to HUD in ac­ the buildings, and the willingness and block grant planning cycle permits. HUD is problems which might otherwise arise. cordance with your local housing financial capabilities of the property encouraging local governments to exercise 4. A housing revitalization program revitalization program. Once again, owners to participate in the program. this option where possible. In addition, which must include the following in­ this part of the NSA application In assessing this willingness, do not ig- other requests for development aid, such as formation: must be closely coordinated with the experience gained from ongo- the Urban Development Action Grant Pro­ nore a) all of the existing housing units in the development of your Housing gram, and the Department of Commerce's ing rehabilitation programs financed the proposed neighborhood strategy Assistance Plan. The number of Local Public Works Grant Program, should by CDBG or other sources. A success­ area must be separated into one of units of assisted housing which you I also be integrated with the NSA application ful and well-used program of this type three categories: those requiring re­ request in the NSA application process if possible. If appropriate activities indicates a general willingness on the hab, those needing no rehab, and should not exceed the need figure necessary for the area's revitalization are part of property owners to participate those which must be demolished. In you submitted in your HAP, unless not contained in your CDBG application, in a comprehensive rehabilitation pro­ addition, any new units which are you are prepared to revise your HAP the NSA application cannot be approved by gram, and this kind of activity should needed must also be included in this and explain to HUD why your needs HUD. be one of the factors you look for in inventory. figure must increase. In most com- If your CDBG plan is already filed before choosing your target neighborhood. In addition to the rehabilitation »munities, of course, this will not be the notification of fund availability for NSA 3. An outline of a specific plan that de­ needs, you may also find that there a great problem—most HAPs show is published, you may amend your block scribes how site and neighborhood de­ are vacant lots in the neighborhood a far greater need than current fed­ grant application to provide the necessary ficiencies will be remedied. This in- which are suitable for housing de­ eral resources could ever begin to program assistance. However, you must eludes a description of all housing and velopment. You may consider in-fill alleviate completely. In any case, also comply with all relevant CDBG re­ CD activities to be undertaken, includ­ new construction for this land. your request for housing assistance quirements regarding such amendments ing their estimated cost and source of Also, there may be properties which in the NSA must be consistent with before the NSA application can be accepted. funding, and a proposed schedule for are not in need of renovation, but your approved HAP, or with an The information which is required in an their completion. This is the part of the which might be suitable for partici­ amendment to that HAP. You must NSA request can be separated into three application in which the community pation in the Section 8 Existing keep in mind that the two docu­ basic categories: an outline of existing con­ must describe what it intends to do to Housing Program. The target ments—HAP and NSA applica­ ditions in the target neighborhood; a de­ revitalize the area using community neighborhood may contain conven­ tion—are closely linked parts of a scription of the neighborhood and housing development resources. It is distinct tional low-rent public housing. single strategy, and that you must revitalization work which will be under­ and separate from the housing revi­ Does this housing need to be mod­ be planning with this in mind. taken,- and a detailed description— talization plan described below. ernized, is it well managed? 5. An outline of how residents and prop­ including proposed schedules—of when, Communities should pay careful at­ b) For each dwelling unit type which erty owners in the NSA have been and how, and in what sequence you will ad­ tention to the development of the requires attention, an estimate of will continue to be involved in the de­ minister the program to ensure that the neighborhood revitalization plan, for a the amount and expected source of velopment and implementation of the proposed activities actually take place. number of reasons. One is that your financing, rental assistance or NSA neighborhood and housing revi­ Specifically, the NSA request must in­ community development block grant mortgage insurance which will be talization programs. Communities clude the following items: program must provide for the activities needed. This is where you must must be able to show that they have at 1. A detailed description of the location of pioposed in this plan. Another is that i state how many units of Section 8 least met the requirements for citizen the proposed NSA, including a discus­ the community must be fully prepared Substantial Rehabilitation units participation in the block grant pro­

sion of the existing land uses and major to carry out the activities described you wish to have set aside for you in gram. If the area chosen for NSA treat­ traffic routes both within the area and the event you are designated as an ment is currently one in which you are in this plan. For these reasons, com­ ! for an area at least one block deep sur­ NSA participant. undertaking CD activities, this should munities considering the NSA pro­ rounding the NSA; and the location of gram should look carefully at neigh- If you propose to use financing for be a matter of simple certification. If shopping, public transportation stops, orhoods in which they are already housing assistance which is pro­ you are entering a new area, you will and available services. vided by a State Housing Finance have to make sure that you comply active. While there may be a great i 4 5 i

: program, as a means of providing relo­ cation payments. Because of these re­ 1. Administration blend different programs to maximize quirements, you will have to submit a Because it involves a considerable their effectiveness will be a very valu­ plan which discusses the expected re­ degree of local planning and coordina­ able asset in the NSA program. When with the full citizen participation location workload, identifies the fi­ tion, the NSA program means that par­ approaching the NSA program, com­ process. In addition, HUD expects that nancial and housing resources which ticipating local governments will have munities should keep in mind prior ex­ communities participating in the NSA can be applied to the relocation prob­ to devote a considerable amount of perience with locally funded rehab program will work very closely with lem and the staff capacity needed to staff time to the program's planning. In programs, as well as such efforts as the

residents and property owners in de­ insure that the relocation activity is the action phase, ^this responsibility Section 312 rehabilitation loan pro­ veloping and carrying out the NSA gram. carefully managed. will shift, but not diminish. Program strategy. This will become particularly A proposed schedule for the solicita­ staff will be responsible for such tasks 3. Financing acute for local governments when is­ 8. Similarly, participating com­ tion, packaging, and submission of as neighborhood development plan- sues like relocation are brought for­ munities will find themselves called Section 8 Substantial Rehabilitation mng; the solicitation of owners and ward as rehabilitation of individual upon to provide a considerable amount proposals must be prepared by local developers for participation in the pro­

buildings progresses. government and submitted for approv- 1 gram; and rendering technical assis­ of help to prospective owners and de­ 6. A description of the administrative tance to them when necessary in the velopers in the securing of financing al to the HUD area office. structure and staff which will be re­ course of application development. packages for housing rehab. Conven­ 9. A statement that the locality submit­ sponsible for implementing the NSA Staff will have to assist in negotiations tional lenders are not all familiar with ted its NS A request to the relevant Cir- j program. This must include a proposed for property acquisition, and be able to housing rehabilitation, and are fre­ cular A-95 clearinghouse, and that the schedule for completion of the analyze real estate "deals" objectively quently reluctant to lend money to

neighborhood revitalization tasks, as clearinghouse was invited to submit and professionally. owners and developers for this purpose. well as the administration of the hous­ comments to HUD. If an NS A applica­ This means that you will have to ob­ In addition, the areas in which you will ing revitalization work. This includes tion is submitted in conjunction with a jectively assess your current staff and be working will probably have experi­ conclusion of financing agreements, community development block grant their capabilities. Can they negotiate a enced some degree of "disinvestment" where they are necessary, completion application—a practice which HUD is housing "deal" with private devel­ by local lenders. This may range from of public agency actions necessary to encouraging where possible—one A-95 opers? Have they managed compli­ hesitation to lend because of legitimate prepare the way for housing rehab or review for both the documents will suf­ cated, multifaceted development fears about the neighborhood's stabil­ other work, and so on. HUD does not fice. strategies before? The NSA program is ity and long-range profitability to expect you to list the staff who will be 10. A statement that the NSA is eligible to not for every community, and some irrational—and illegal—withholding operating your program by name, but it receive all CDBG funds and that con­ should avoid the hassles of applying if of credit strictly on the basis of geo­ will want to see how many persons will centrated housing and block grant they can't honestly say that their staff graphic location. In either case, the be working on the program, and what physical development activities and is able to handle the load. On the other local government will be responsible mix of talent you have put together to public service activities are being, or hand, you should view the NSA as an for breaking up this logjam. Without work on the NSA program. are to be, carried out in a coordinated opportunity to build staff capacity in financing, the NSA program—or any 7. Although the Uniform Relocation As­ manner. (See 24 CFR 881.301(c).) these crucial areas. The staff which can other rehab program—is dead in the sistance and Real Property Acquisition 11. A plan for monitoring and evaluation deal directly with housing developers water. This means that you will have Policies Act of 1970 [Uniform Act] of the NSA program by the local gov­ on the intricacies of a housing assis­ to deal with local lenders. Participating does not apply to displacement that re­ ernment. tance application will also be able to governments may have to use some of sults from rehabilitation of privately- 12. A statement that the request is consis­ apply these skills to other development their own money to subsidize private owned projects or from rehabilitation tent with the Local Housing Assist­ ventures in your community. investments in the NSA or to guaran­ by PHAs where no acquisition takes ance Plan (HAP). 2. Housing program coordination tee private loans. This is a task which place, HUD has determined that the Since the diversity of housing types will take enormous amounts of time, i local government should be responsi­ D. Special Concerns for and ownership patterns in an NSA may and must be considered before an ap­ ble for providing relocation payments Local Governments mean that one type of assistance, such plication is developed. and services to tenants displaced under Obviously, the NSA application process as Section 8 Substantial Rehabilita­ You will also have to familiarize the NSA Program at a level substan- requires a lot from local government. In tion, will not suffice to encourage the yourself with two other sources of daily comparable to the requirements addition to the opportunity being offered, volume of housing rehabilitation re­ financing which will be crucial to NSA of the Uniform Act. These payments HUD is requiring quite a few new responsi- | quired to solve the problems of housing program success. The first of these is and services may be paid for with bilities. These can be expensive and time deterioration in an NSA, participating financing which is insured by HUD- CDBG funds when they are eligible as consuming. Hours of planning and prepara- local governments must be acquainted FHA. There are a wide variety of insur- public services under the CDBG Pro- tion are required to meet the application with other resources. The ability to ance programs, designed to fit nearly gram. The option also exists under cer- requirements. The requirements for appli- tain circumstances to assist affected cation outlined above require some special 7 persons under the Section 8 Existing attention to certain key areas: 6 every kind of financing situation. The the Uniform Act and the regulations those who have lived in the neighbor­ neighborhood as an NS A. Each appli­ value of this mortgage insurance is that issued pursuant to it (24 CFR 42). You hood longer, and may have lower in­ cation must be separate, however. it will often permit lenders to finance should also plan to undertake a thor­ comes, to remain there and enjoy the Because of the heavy planning and ad­ construction or purchase of housing in ough analysis of the local housing newly revitalized area. A common ministrative burdens placed on local areas where the risk would be judged market to identify potential relocation problem in areas undergoing rehabili­ governments by the program, however, too great without it. But HUD-FHA resources. A very valuable resource in tation by private interests is the gap it is not recommended that any but the processing is a difficult procedure. this endeavor will be your local Public between escalating rent and property most prepared communities attempt Many lenders are wary of the insurance Housing Authority (PHA). These agen­ values and the incomes of those resi­ this. programs, and many owners will not cies, through experience with the con­ dents who have lived in the neighbor­

get involved with insured loans be­ ventional low-rent public housing pro­ hood during its less attractive periods. E. HUD Review of NSA cause of the paperwork requirements. gram, and their administration of the As this gap widens, older residents are Applications (24 CFR 881.304) This is why you must be prepared to Section 8 Existing Housing Program, often forced out of the area. Through assist in the development of HUD- are familiar with local housing re­ NS A, you can combine Section 8 re­ All requests for NSA designation will be FHA financing -packages by working sources. The PHA can also work with habilitation with the other tools you submitted to the local Area Office, where with owners, developers, and lenders. the local government to target Section will be assembling to help alleviate they will be reviewed and forwarded, with Over 60 percent of all Section 8 Sub­ 8 Existing Program funds for displaced I this problem. An obvious advantage of any comments, to HUD's Washington of­ stantial Rehabilitation projects fi­ persons in the NSAs, because HUD this approach is that you will be fice. The Area Office will review the re­ nanced to date have used HUD-FHA will consider participation in the Sec­ "hitching your wagon" to a process of quest in order to determine that: mortgage insurance, so it's a very major tion 8 Existing Program an acceptable private reinvestment which is already 1. it is consistent with the community's form of assistance for eligible families underway. This makes the entire proc­ source of financing for your NSA pro­ Housing Assistance Plan; in lieu of relocation payments. ess of marshalling private investment a gram. 2. there are a sufficient number of units 5. Displacement lot easier. A possible disadvantage of The other financing source is the suitable for rehabilitation that are lo­ An issue which is related to reloca­ using NS A in this context, however, is State Housing Finance and Develop­ cated on sites which either meet the tion is displacement. It will arise in a that the designation of the area for ment Agency (HFDA) programs. Since site and neighborhood standards (as number of contexts, and your NSA NS A purposes may dampen the pri­ 10,000 of the units available under modified for the NSA program) or program must be sensitive to it. The vate reinvestment drive because of the NSA this fiscal year are earmarked for where proposed activities will remedy most obvious displacement question unfavorable connotations which your these agencies, you must begin to work any existing deficiencies; actions may include. This is a political with them now to develop financing which you will face involves people 3. the area contains no major environ­ who may be forced out of current hous­ problem which you must take into packages and cooperative processing mental problems; consideration. arrangements. Not every state has an ing or the neighborhood altogether. 4. the proposed relocation plan is accept­ 1 Generally, this approach to NSA active HFDA, or one which has full You must provide relocation benefits able highlights an important point: the pro­ ; financing powers. You should check on to these people, and your program 5. the proposed NSA activities can be ex­ gram is not limited to areas which your own state's situation and act ac­ planning should include some esti­ pected to result in a neighborhood with have declined or are deteriorating. cordingly. If you plan to use state mate of the magnitude of your prob­ a suitable living environment; Neighborhoods are always undergoing financing, you must secure certain lem. 6. local program administration is ade­ Although your most common prob­ change, and the point of the NSA proc­ agreements from the agency be­ ; quate; ess is to enable you to better manage forehand, as explained in the preceding lem may be the one you create yourself, 7. the housing revitalization program, the this change and reap the greatest bene­ section. some communities will find that they : plan to correct site and neighborhood fits possible from it. This, in turn, is an 4. Relocation are already facing a displacement prob­ deficiencies, and the schedule for sub­ important reason to pay close attention As noted earlier, HUD has deter­ lem because of a central city neighbor­ mission of Section 8 proposals are all J to analyzing the neighborhoods you are mined that tenants displaced as a result hood's natural process of rejuvenation. - feasible and can be completed as considering and making certain that of Section 8 Substantial Rehabilitation This phenomenon is occurring in a ; scheduled; f you understand their dynamics before in Neighborhood Strategy Areas will number of cities, and the NSA program : 8. the citizen participation plan is ade­ : you make a final decision. An under­ receive relocation payments and ser­ should not be discounted as a possible I quate; and ' standing of the nature and direction of vices equal to those required under the tool to use in taking advantage of this 9. the NSA is eligible to receive all CD Uniform Act. All communities in­ trend. Where you have a neighborhood the neighborhood's change is vital to a } Block Grant funds. terested in participating in the NSA which is beginning to turn around, ' comprehensive NSA program. In addition, the Area Office will also take program should closely examine 24 with a new influx of middle or upper 6. Multiple Applications i into consideration any comments received CFR 881.309 of the NSA program regu­ income families, the NSA program can !■: Communities may submit requests for designation for more than one through A-95 review, and, when necessary, lations. Your attorneys should review be helpful in making it possible for :

8 ] 9

> may require that additional information be posed private commitment, such as low anxious to approve applications from which you will be confronted is providing supplied by the local government. cost financing, reduced wage rates for re­ ; communities which will be able to show technical assistance to owners and prospec­ When the review is complete, all NSA habilitation work, or mortgage loan pools 1 results under the NSA program within a 1 tive developers who may wish to partici­ requests will be forwarded to HUD's Wash­ to ensure adequate amounts of financing for year after program award. pate in the program. You must be prepared ington office, where final selection of the * the proposed rehabilitation work. HUD : 7. Progress in Equal Opportunity and to provide this assistance,- the NSA regula­ applications will take place. After the selec­ will also give priority to those applications : Fair Housing: Priority will be given to ap­ tions require that it be available (24 CFR tions are made, HUD will notify the local which include evidence of specific pro­ i plications from communities which can 881.305(c)). This technical assistance may government whether its request has been posals by qualified rehabilitation devel­ demonstrate progress in fostering and include assisting in the preparation of Sec­ approved or rejected. If rejected, HUD will opers in undertaking the projected work, or ; achieving equal opportunity and fair hous­ tion 8 applications; identifying and negoti­ explain the reason(s) why. If approved, evidence of interest on the part of present ing goals. ating with financing sources; negotiating HUD's notification will identify the ap­ owners to participate in the program. If you : rent levels with owners and developers; and proved NSA; give the amount of Section 8 make a point of involving lenders, builders, III. CARRYING OUT THE assisting in the negotiations for property discretionary contract authority which will developers, and present owners in your NSA STRATEGY acquisition. You will also be confronted be set aside for the area; state that, for the community in the planning of your NSA with citizens who are faced with displace­ purposes of making underwriting determi­ • application, your chances of securing these Once a community has been awarded ment, and you should have a mechanism in nations under the National Housing Act vital assurances will be enhanced. NSA designation, it must begin the action place for dealing with their relocation HUD-FHA insurance programs, the im­ One indication of such private commit­ phase of the program. Obviously, this needs. Once again, communities which provements pledged in the request shall be ment would be prior experience by your means that the community development will succeed in the NSA effort are those considered as though they were now com­ community in the NSA area through expenditures which were planned for in the which either already have or are able to plete and that HUD-FHA mortgage insur­ CDBG or other rehabilitation and devel­ application must begin to be arranged, and obtain the professional capability to review ance will be generally available in the NSA, opment programs. This is another good rea­ public commitments made good on. This each proposal thoroughly and competently, subject to individual review of each appli­ son to focus on areas with on-going pro­ section of the Guidebook will focus on the and to render the necessary assistance to cation for mortgage insurance; and give the grams when selecting your target housing part of your action plan. prospective program participants. You will approved schedule for submission of Sec­ neighborhood. If you have successfully be the direct link between your NSA and tion 8 proposals. worked with owners and developers in the A. The Housing Assistance HUD funds—you must be able to broker past through your own programs, you will Application Process them quickly and efficiently. F. Additional Selection have clear evidence of private sector inter­ 2. Understanding the Section 8 Leased Criteria (24 CFR 881.304(e)) est in your redevelopment plans. The central feature of the NSA program is Housing Program: Another primary pre­ 3. Guaranteed Supportive Services: the control which your local government requisite to making your NSA program With only 20,000 units available in fiscal Priority will be given to applications which will have over the administration of the work will be a thorough understanding of year 1978, HUD assumes that there will be can show the greatest current extent of Section 8 Substantial Rehabilitation funds how the Section 8 program works. more demand for the units than it can supportive services in the neighborhood; which are set aside for you upon NSA de­ First, the Section 8 program does not pro­ satisfy. In the likely event that applications services included in an approved or signation. In many cases, the local govern­ vide mortgage financing—although it may are received for more units than can be pro­ amended CDBG application; or im­ ment will not be able to solicit proposals facilitate the acquisition of such fi­ vided, HUD will use an additional set of provements and activities to be financed until a significant amount of groundwork nancing—or mortgage insurance. It does selection criteria to choose NSA recipients from other, assured funding sources. has been laid. If your application was well not pay for acquisition or rehabilitation of from among those otherwise eligible. Prior­ 4. Overall Quality: Priority will be given prepared, however, many of the processes housing. The funds which are needed to ity will be given to applicants meeting the to applications showing the highest overall necessary to start the rehab development complete a rehabilitation or to acquire the following selection criteria: quality and feasibility. should already have been started in motion. property in the first place must come from I 1. Degree of Local Public Commitment: 5. Displacement: Priority will be given This includes preliminary discussions with another source. It is your community's job Priority will be given to applications show­ to those applications which anticipate the i private lenders, owners and residents in the in the NSA program to help arrange that ing the greatest amount of CDBG and other least amount of permanent displacement of ! neighborhood, and prospective rehabilita­ source of financing if necessary. federal, state, and local funds and programs area residents. : tion developers. When your community The Section 8 program also is not a designated for use in the NSA. The more 6. Demonstrated Local Capacity: Prior­ has reached the stage where it is ready to source of funds during the rehabilitation concentrated funding your application ity will be given to those applications from commence actual rehabilitation work, you phase of a project. The developer or owner shows, the better your chances for designa­ communities which have demonstrated will have to be ready to start acting as of the property must be sufficiently well- tion. the ability to complete assisted housing HUD's program manager for the rehabilita­ capitalized to complete the project once be­ 2. Degree of Private Commitment: projects of similar magnitude within a rea­ gun. Section 8 funds become available only I tion funds. Priority will be given to applications show­ sonable amount of time following designa­ 1. Technical Assistance to Owners and after the owner has tenants living in the ing the greatest amount of existing or pro- tion of an NSA. Generally, HUD will be : Developers: One of the first tasks with building. : 10 11

5 I i ' The Section 8 program, as presently covers the rent increase. The private owner j and should be relied upon heavily in plan- volved in the project and their previ­ structured, does not provide assistance for retains all of the responsibility for manag- j ning y0Ur NSA strategy. homeowners. It is not a program for provid­ ous participation, if any, in HUD ing the property, selecting tenants, and There are a number of methods for so- projects,- ing assistance to lower income persons who functioning as the owner of the building. j liciting proposals from developers and hi. an "as is" description of the property; own a home and need assistance in re­ The owner may contract with someone else owners. One is to follow HUD's example iv. a complete description of the habilitating it. Section 8 funds may be used to complete these tasks, but the final re- and publish a Notice of Fund Availability pro- posed rehabilitation; by a person who owns an apartment build­ sponsibility is his or hers. If HUD finds that (NOFA), informing the general public that v. the proposed number of units by size ing and lives in one of the units, but only to the owner is not fulfilling this responsibili- there are assistance funds available and re- (the number of bedrooms) and type subsidize the rents of his or her tenants. ty, or that the units are not decent, safe, and questing proposals. Another would be to

Section 8 is a rental assistance program (family, large family, elderly); sanitary, it may cancel its contract to pro- enter into direct negotiations with owners vi. a description of the existing and pro­ for lower income persons living in privately vide rental assistance payments. The owner and developers. Other methods may be al- posed utility combination; owned dwellings. In gross form, the pro­ must then find other tenants who are not lowed if pre-approved by HUD. Again, your vii. whether the services of a registered gram operates this way: HUD solicits pro­ being assisted, or repair the building to own local experience in other rehab loan architect will be required; posals from interested owners and devel­ meet HUD s standards, or try to sell it. programs may be the best guide on how to viii. the proposed contract rent for each opers in a market area by announcing that a When normal vacancies occur, HUD will proceed in your community, unit; certain amount of assistance is available. pay the full approved rent for 60 days; for Certain information and materials must ix. the equipment, utilities, and services These proposals are evaluated and ranked another year thereafter it will pay enough to be available to interested owners and de­ to be included in the rent and those in a competition, and a preliminary com­ cover the debt service attributable to a va- velopers once you begin the solicitation not included, with an estimate of mitment is made to as many developers or cant unit if the owner can prove it is making process (24 CFR 881.305(b)). This informa- their cost; owners as there is money available to assist a good faith effort to fill the unit with an tion is similar to that provided in the De- x. the proposed term of the Housing As­ on the basis of their proposals7 relative eligible tenant. velopers' Packet used by HUD. It includes: sistance Payments Contract between merits. This commitment is redeemable In return for its subsidy, HUD requires • a copy of the Section 8 Substantial Re- the Owner and HUD upon completion of the project. Once the ; that tenants be afforded certain rights in habilitation program regulations; xi. identification of the current tenants developer or owner has completed the proj­ their leases, and certain conditions are pro- • the necessary Section 8 application who must be relocated; if any; ect, be it new construction or rehabilita­ hibited in the leases. forms,- xii. evidence of management capacity tion, he or she returns to HUD for a final All communities which are applying for • a notation of where the HUD Minimum and a management plan; commitment of subsidy funds. At this NSA designation should know the Section Property Standards (MPS) can be found; xiii. certification of compliance with point, HUD inspects the property, and then 8 program thoroughly. Program regulations • information about local zoning codes; applicable non-discrimination, equal agrees to provide to the owner a rental sub­ can be found in the Code of Federal Regula- • information about potential financing opportunity, fair housing and equal sidy on behalf of lower income persons liv­ tions under 24 CFR 881. This thumbnail sources, mortgage insurance, and other employment requirements;

ing in the property. (Eligible tenants, in summary is only that—you must know the housing assistance; xiv. an affirmative fair housing marketing most cases, may not earn more than 80 per­ program well to administer it. • a description of the NSA neighborhood plan;

cent of the median income for the area.) and housing revitalization plans. xv. sample of the proposed lease; HUD will provide, for a period not to exceed 3. Soliciting Proposals: In developing xvi. time required to complete the re­ 4. Processing Applications for Section 8 30 years, a subsidy which equals the dif­ your application for NSA designation, you habilitation; and had to provide a proposed schedule for so- Assistance: there are two principal cate- ference between a federally approved "fair xvii. the proposed method of financing, liciting proposals for Section 8 assistance i 8ories of assistance which will be sought market rent" for the unit, and between 15 evidence of interest by lenders, and from private owners and developers. After under the NSA program. One is for projects percent and 25 percent of the tenant's in­ whether the Housing Assistance NSA designation, you must start the proc- j which will be needing HUD-FHA mortgage come. (The exact amount varies depending Payments Contract will be pledged as on family circumstances.) The owner of the ess of solicitation in motion. Although few insurance, and the other is for those which security for the mortgage loan, property thus receives two payments every communities have ever done this before, not- b. Proposals Seeking HUD-FHA Mort­ month: one from the tenant, and another most communities have had extensive ex- q a. Applicants not seeking HUD-FHA gage Insurance (24 CFR 881.307) from HUD. The latter is an amount equal to perience through other programs with the mortgage insurance (24 CFR 881.305(g)) When an owner or developer indicates a the difference between the approved rent nuts and bolts of seeking proposals. If you For housing assistance applications in an desire to seek HUD-FHA mortgage insur­ and the tenant's payment. The approved have conducted a Section 312 rehabilita­ NSA which do not anticipate using federal ance when making the application for Sec­ rent is subject to increases based on annual tion loan program, or a CDBG funded rehab mortgage insurance, owners and developers tion 8’assistance, the following procedures reviews. If an owner's legitimate costs go loan program, you have probably gone must submit the following information to apply: up, so may the rent. Unless the tenant's through many of the steps already. Don't the local government: • Prefeasibility meeting: before a proposal income also rises, however, its payment overlook this reservoir of knowledge about i. address of the property,- can be submitted to HUD, a prefeasibility remains the same. HUD's subsidy payment the solicitation process—it is very valuable ii. identity of the principal people in- meeting must be held between the owner

? 12 13 i 5 } i I i or developer and HUD Area Office staff. will be able to play under the NSA program. Once this package is submitted to the Area available to NSA communities. Where The objective of this meeting is to ensure Since you hold the housing subsidies which Office, it is equivalent to a Final Proposal other types of federal assistance are antici­ that there are no major obstacles to the are so important to those seeking them, you | under the regular Section 8 processing pated as part of the NSA strategy—such as approval of HUD-FHA mortgage insur­ will have a certain advantage in any negoti­ route. Section 312 rehabilitation loans, Section 8 ance. ating sessions. You should use this advan­ fj 7. HUD Area Office Review of Section 8 new construction, Section 202 housing for • Submission requirements: the initial tage as fully as possible. || Proposals: The Area Office will review the the elderly, etc.—regular processing proce­ submission for these assistance applica­ After the solicitation process, you may applications for Section 8 assistance to en- dures must be followed. tions must include the following infor­ find that certain owners whose properties • sure that: mation: are key in the NSA did not seek to partici­ P all submission requirements have been A. Subsequent Year Allocations i. the owner or developer's application pate in the program. You must be prepared j met; and Reallocations of NSA for a feasibility letter,- to approach these owners and work with • the proposed contract rents are reason- Set Aside Funds ii. a submission identical to that re­ them in completing your housing revi­ j able and, together with utility costs, do quired under Section a (1) (vi), (ix), (x), talization plan. This may require certain not exceed the Fair Market Rents; If all of the available NSA set aside funds (xi), and (xiii) of the preceding sum­ amounts of coercion and negotiation on • the proposed contract term is acceptable; under Section 8 Substantial Rehab have not mary,- .your part, but you must fulfill the goals laid • the sample lease meets HUD's require­ been used by the established deadline dur­

iii. the certifications from the local gov­ out in your NSA application in order to ments; ing the fiscal year, the Area Office will real­ ernment as specified in Section 6 be­ continue receiving the subsidy set asides to • the previous experience of the owner and locate the funds in one of the following low. complete the total project. HUD has pro­ other principals in the development is ways: Each Section 8 proposal which includes a vided NSA designees with a considerable acceptable; 1. authorize the locality to submit other request for simultaneous HUD-FHA mort­ degree of latitude in working with owners • proposed management is acceptable,- proposals for projects within the NSA; gage insurance processing will be evaluated and developers,- you should use this free­ • the Affirmative Fair Housing Marketing 2. if a Notification of Fund Availability by HUD to determine that it is acceptable dom as fully as possible. Plan is acceptable,- (NOFA) for regular Section 8 funds has for the insurance and that it contains all 6. Submitting the Proposals to HUD: • the relocation plan is adequate; and already been published, process pro­ required submissions and certifications. In After the local government has reviewed the rehabilitation design and plan are ac­ posals submitted in response to the addition, the proposed rents and contract the applications and chosen those it wishes ceptable. NOFA for which there were insuffi­ term must be acceptable; previous experi­ to fund, the community must submit the HUD will also do an environmental re­ cient funds to approve; ence of the development team adequate; application for Section 8 assistance to HUD view of the proposal and consider com­ 3. issue a new NOFA for the community the rehabilitation plans satisfactory; and with the following certification enclosed: ments received through the A-95 review in which the NSA is located,- or the relocation plans, if needed, adequate. • the property is located within the NSA and comment procedure. After its review, 4. reallocate the unused contract and Because underwriting of applications for • the proposal is consistent with the local the Area Office will notify the local gov­ budget authority to another allocation HUD-FHA insurance is expected to cause approved HAP and the NSA housing revi­ ernments whether the proposal is approved, area. (24 CFR 881.308] some problems due to the physical condi­ talization strategy,- approved only if certain changes are made From time to time, HUD may make addi­ tion of NSAs, HUD will be using special • the owner has legal control over the prop­ or deficiencies corrected, or that it is not tional Section 8 funds available for existing underwriting procedures. These procedures erty; approved, with reasons for its rejection in­ NSAs or consider the submission of re­ will be somewhat more relaxed than those • the proposal is permissible under local cluded. quests for additional NSAs. If such a deter­ which apply to HUD-FHA's standard pro­ zoning, building, and housing codes; i mination is made, HUD will publish a grams, and should permit wide use of the • if demolition is required, the proposed notice in the Federal Register indicating mortgage insurance in NSA neighborhoods. reuse of the site is consistent with local IV. PROCEDURES FOR the amount of housing assistance funds 5. Community Review of Housing Pro­ zoning and land use codes and will help to ? OTHER TYPES OF available, criteria for selection of additional posals: After you have solicited and re­ revitalize the area; HOUSING ASSISTANCE or supplementary participants, and a sub­ ceived applications for housing assistance • the proposed rents are within the fair i mission deadline. Such requests will be re­ under Section 8 substantial rehabilitation, market rent levels established for the !: The special procedures outlined above viewed and commented on by Area Offices you will have to analyze and rank them in area by HUD. If they are above this level, | apply only to the special set asides of Sec- and forwarded to Washington for final order of funding priority. Some applications a certification from the local government ftion 8 Substantial Rehabilitation funds selection. may be infeasible, or undesirable. You must that it is aware of this and finds the pro­ have the staff capacity to analyze all the posed level reasonable. : applications and make judgments about The local government is also responsible ! their soundness and feasibility. You may - for identifying those properties in the NSA have to negotiate with the assistance appli­ which have historic value, and must assess ; cants. This is an important role which you any proposal's impact on those properties. !

? 14 15

< ' 1 PART II—NEIGHBORHOOD i STRATEGY PLANNING AND IMPLEMENTATION i

I. INTRODUCTION This disinvestment has been practiced by ! many, banks, savings and loan associa­ Neighborhoods do not spring fully tions, homeowners, insurance companies, I formed from the urban fabric; they are con- merchants, and often, the municipality it­ \ stantly in transition, affecting and being af­ self. Except in those cases where outright fected by their communities and their re­ discrimination against residents because of gions. A neighborhood may serve genera­ their race or ethnic origin is the cause, dis­ tions of one ethnic group and then, sud- investment is an undesirable but natural denly, half generations of a succession of phenomenon. It is natural in the sense that ethnic groups. When HUD launches a it is a reaction to the blend of facts and "neighborhood strategy area" program, it myths which attend a neighborhood's catches a thousand eligible neighborhoods changing cycles. No successful NS A in various stages of change. The Federal strategy can be developed without a firm government has immodestly proposed that understanding of the forces which lead to local officials identify areas that can be "re­ this disinvestment, and the interrelation­ vitalized" in five years. Any attempt to re­ ships which have been forged over the years spond seriously to such an invitation re­ between different elements of urban life. quires a thorough understanding of the In developing a workable approach to larger community and a carefully devel­ housing and community development oped revitalization plan which respects the strategies, it is useful to conceive of a com­ I complexity of that particular piece of urban munity as comprised of three basic compo­ I turf. It requires a wedding of planning, pol­ nents: people, housing, and jobs. Of course, icy and programming. there are other fundamental community HUD's interest in the NSA program i elements which cannot be ignored, such as stems from its concern with the quality of land-use policies and priorities, transporta­ i housing in urban neighborhoods, and its de- tion policies, etc. For our purposes, how­ : sire . to promote the development and ever, the first three will suffice. maintenance of a high quality of life in A properly functioning community, ;! those neighborhoods. Housing preservation using this analysis, is one where a balance is a top priority agenda item for the De­ exists between these three components: partment, and the NSA program focuses the number of jobs and the quantity and I heavily on this issue. Historically, housing quality of housing is adequate to serve the l and quality of life in urban neighborhoods needs of the population and to accommo- I has been difficult to maintain because of a date changes in the level or characteristics number of mitigating factors. Perhaps the ! of the population as they occur over time. most devastating of these factors has been Given that housing is but one of three i the consistent trend of disinvestment in components in this model, it is clear why f 1 central city-areas. housing strategies should not be developed ! 17 i I J 1 in isolation from the others. A housing signed to comprehensively tackle these j municipal corporation controls an impres­ i in the NSA program can proceed to select : strategy, when implemented, can substan­ problems, the program will have little i sive amount of public resources that can be neighborhoods, line up contracts, and im­ ; tially influence these complementary ele­ chance of success. * used as seed money or inducements to use plement their programs. ments within the system. Communities which are awarded NSA to leverage the long term investment of the The NSA application requires the collec­ The process of developing a strategy first designation must agree to "manage" the j private sector. Its operating agencies are tion of extensive data regarding the pro­ involves gaining an understanding of the revitalization of the target area to a very j critical to the neighborhood's day-to-day posed target neighborhood. Although these . numerous factors—economic, social, and great extent. With data gathered and j desirability for residents. Its capital budget requirements may, in some cases, force you political—which affect the "use of hous­ analyzed, the task-is understood, goals and ? can begin and help sustain a pattern of long to undertake new surveys or information­ ing" within a community. Secondly, the objectives developed, the cost estimated- j term private reinvestment; it can attract generating exercises, don't forget that your process involves determining what housing To actually carry out the program, how- ; state and federal discretionary dollars for on-going community development plan­ conditions are today and what they are ever, the community must assume a great ) further capital investments, public im­ ning process should be providing a consid­ likely to be tomorrow, both for the com­ share of the responsibility for making all : provements and services. Local govern­ erable amount of this information for you ! munity at large and for the individual the pieces of the strategy happen. This : ment can coordinate the expenditure of so­ on a continuing basis. As mentioned ear- neighborhoods. Finally, the process re­ means that your local government will j cial agency funds on the neighborhood, and, lier, you will save much time and dupli­ quires the selection of goals which translate have to invest a lot of time and energy in j it may, one day, bring a set aside of NSA cated effort if you make a point of coor- knowledge of the operation of the housing managing the development process in your Section 8 housing assistance funds to the dinating your NSA application with your system and housing conditions within the NSA. You will have to manipulate, cajole, >' bargaining table. CDBG program development and applica­ community into effective policies and pro­ or coerce private sector participants who The ebb and flow of neighborhood tion schedule. In many instances, com- grams. are reluctant to get involved in the program. change, as noted, is a complex, and, at munities will find that they have already What this means for NSA applicants is You must assemble a management team times, unruly process. Having conscienti­ completed much of the work required by that you must understand the decision that contains or coordinates with all of the ously gathered and analyzed data, planned a NSA in developing a CDBG program. making chain which leads to widespread relevant decision makers in the process. program and assembled a management Even with this concentrated program de­ financial disinvestment in declining urban This means the lenders, the owners, con- •: team, there remains the task of actually velopment going on, however, each com­ areas. You must develop a working knowl­ tractors, insurance companies, merchants, starting the revitalization process. munity applying for NSA must understand edge of housing management, particularly municipal departments, neighborhood res- Neighborhood decline is itself evidence that the 90-day application period will for smaller multi-family buildings, which idents, and anyone else in your community that existing institutions are not always up place heavy demands on planning staff and are not generally amenable to profes­ who has a role to play in your neighborhood to the task of restoring or maintaining program personnel. You must be prepared sional, contract management arrange­ strategy. This includes current and poten­ urban neighborhoods on their own. The to assign at least one staff person full-time ments. You must fully appreciate the link­ tial investors in the area. local government has several options to ex­ to managing the application process. You age between the social, economic, and • Your local government will assume the plore in its search for alternative or reor­ may also want to consider retaining outside political forces at work in the neighbor­ role of program manager in the NSA for a ganized institutions: assistance to help in developing the appli­ hood, and the individual investment deci­ variety of reasons. It alone has been en­ • It can reorganize an existing public entity cation, but keep in mind that you will have sions of numerous homeowners and prop­ trusted by the people with the police power like a department, renewal agency, or to administer it once NSA designation has erty investors. to regulate private conduct and property ; housing authority and hire competent been made. The more "home grown" your With very few exceptions, communities and to protect the public health, safety, ; staff to undertake this particular project. application, the easier it will be to integrate which apply for NSA designation will have morals and welfare. Its leadership role is • It can contract directly with the private into your on-going programs. to design new data gathering systems to legitimate. The local government has a his­ sector to effect neighborhood revitaliza­ Once a community has received NSA de­ provide answers to the perplexing riddle of tory of dealing with each of the other actors tion through a variety of means, includ­ signation from HUD, the need for extensive disinvestment. You will need statistics through code enforcement, tax assessment j ing lead lenders, a bank consortium, a public agency staff involvement will con­ which can give you an objective under­ and collection, deposit of public monies, j private sector joint venture, and the like. tinue, or even increase. As will be noted I standing of the economic, demographic, rent control or fair housing programs, capi- j • It can establish a not-for-profit revitaliza­ throughout the remainder of this Guide, and physical trends within a target tal project bidding and construction, and ; tion corporation to coordinate private there are a variety of roles which govern­ !! neighborhood. You will also need to de­ the like. If the management calls a meeting, and public activities and investments in ment officials must play if an NSA program the area. Such a corporation could have is to be effectively implemented. Success­ ii velop information about the actors whose wide attendance is likely. Finally, the l continued or anticipated economic pres­ i public, private and neighborhood leaders ful applicants should consider the ap­ ence in the neighborhood is crucial to its on the Corporate Board of Directors to pointment of one or more full-time * For a more complete discussion of comprehensive survival. The information you collect in i insure the proper management of the im­ coordinator-expediters for their NSA effort. housing strategies, see Developing a Local Housing } plementation process. Sufficient time must be reserved in the preparation for NSA development must ad­ Strategy: A Guidebook for Local Governments, pub- j With this in mind, we turn to a detailed schedules of local agency rehabilitation dress all of the interrelated facets of urban lished by the U.S. Conference of Mayors and HUD, [ May, 1977. : discussion of how communities interested specialists. decline, because unless your strategy is de­ i j 18 I 19 !

I In addition to these administrative con­ The first threshold your neighborhood j during the course of the NSA program. To private sector interest in the revitalization !' siderations, NSA communities must also be will have to meet is that it be eligible for a ] do otherwise could result in a failure, program. If you're already making loans and prepared to reserve substantial CDBG and concentrated investment of community I A final threshold requirement to be kept grants to owner-occupants, then you know other funds for use in the NSA areas on such development funds. Other public funds will j in mind involves HUD's requirement that for sure that some people are willing to activities as relocation payments, suppor­ be invested in the area too, but if you cannot |j NSA areas be amenable to substantial revi- work with you on your program. Similarly, tive public improvements and services, and spend CDBG money in the neighborhood, talization within a five-year period. Some if you choose an area where you're already interest subsidies on loans and mortgages your application will be denied. The reason j will point out that this means the hardest working, you can capitalize on the reputa­ for properties to' be rehabilitated through for this threshold is HUD's belief that the hit, most depressed urban neighborhoods tion you've already developed with local both the Section 8 process and local target revitalization of declining neighborhoods will be counted out of the program, and residents. You will have established an on- area rehabilitation activity. requires a sustained, overall redevelopment they will be right. The purpose of the NSA going citizen participation program under Once the commitment has been made, effort. Only CDBG provides this kind of effort is not to concentrate large amounts of CDBG. This can be used for your NSA and HUD designation obtained, and program on-going funding for revitalization work. physical development aid on the most provide a continuing liaison with your CD start-up announced, local agencies will not Your neighborhood must be an eligible area blighted urban areas. Rather, it is meant as a work. be able to cut back or eliminate their plans. for CD expenditures, and you must be able tool to foster neighborhood revitalization No NSA application will be successful if To do so would mean breaking promises to to certify to HUD that the properties within where a concentrated, largely locally fi- you ignore these basic threshold require­ target area property owners, who are being the area are eligible for rehabilitation nanced effort can result in significant ments in the program regulations. You asked to put new funds into their struc- funded by CD under the provisions of the change over a short period of time. This should be able to make an initial cut of your tures; to tenants, who will be substantially Housing and Community Development means that communities will have to make neighborhoods by applying the criteria. The inconvenienced during rehabilitation ac- Act of 1977. tough political choices in screening city following discussion of housing, - owner­ tivity; and financial institutions, which Environmental conditions in the pro- ; neighborhoods for participation in the pro­ ship, and neighborhood settlement patterns will be committing funds based on an over- posed target neighborhood will also have an gram. should help you refine your choices and all plan. HUD regards the entire NSAproc- important bearing on the success of an ap- A convenient, although by no means narrow the field even further. ess as a series of a "quid-pro-quo" relation- plication. Although HUD has not pub- comprehensive, system of neighborhood ships between partners in the revitalization lished any firm standards with regard to evaluation has been developed by the Fed- B. Housing and Ownership Patterns effort. Your community should not initiate environmental problems, it is clear that an eral Home Loan Bank Board's Urban Rein- an NSA effort unless it is willing to accept area which suffers from severe environ- vestment Task Force. It is being used in the All neighborhoods are distinct, with in­ these consequences and to follow through mental problems such as flooding, excess- Neighborhood Housing Services program dividual mixes of housing and ownership on promises made during the planning ive pollution, or a high level of noise will in over 40 cities around the country. If NHS patterns which are peculiar to their loca­ sta£e- require commensurately more investment is operating in your community, you may tion, history of development, and current of public time and money than other, less ■ have an invaluable resource to draw upon in status. As a general matter, however, the II. SELECTING NSA blighted areas. Your community should selecting your NSA neighborhood. If not, types of housing and ownership which are NEIGHBORHOODS keep these factors in mind when screening l\ there may be an NHS program operating likely to be found in NSA neighborhoods various candidates for NSA applications. A nearby, and the staff for that effort should can be broken down into three broad cate­ A. Threshold Requirements neighborhood which will require a substan- be consulted on the criteria used by that gories: tial amount of physical development to al- program in choosing participating neigh- • Small property dwellings, with between Your first job in moving ahead with your leviate environmental hazards places that i borhoods. one and four residential units per struc­ NSA application will be to select the target i As a general rule, HUD officials have of- much greater burden on the community in : ture. neighborhood. All eligible cities will find undertaking the work. In some cases, an ■ fered the following "unofficial" guidance in • Smaller multiple family dwellings, with ;! that they have a multitude of areas which environmental problem such as excessive j characterizing those neighborhoods which between five and 20 residential units per •i could be candidates. Your job will be to noise from a nearby airport will be very 1 will be most suitable for NSA treatment: structure. ii narrow this choice down so that you have difficult to remove. This will further reduce : "not too big, not too bad, and not too many • Larger multifamily buildings, with more the best candidate possible, one in which the area's chances for NSA designation, and i properties." than 20 units. you will be able to complete a program will incidentally make private investment | What all of these threshold requirements within the required time, and where your that much harder to secure. • point to is the fact that communities which 1. Small properties !! investment will have a noticeable and last­ Where your planning process results in ! focus on neighborhoods which have ongo- In some parts of the country, the first ■M ing impact. All neighborhoods considered the choice of a neighborhood which does ; ing CDBG housing and neighborhood revi- category—small property dwellings— for NSA must meet certain basic threshold have environmental problems, be sure that j talization programs will have a jump on dominates central city neighborhoods. Of­ requirements, and these are a good starting the physical development plan which you ; those which don't. This is so for a variety of ten, these properties are occupied by their point for evaluating the candidates you develop will deal with these problems, and j reasons. For one thing, an area with an on- owners, but there is a significant amount of have on hand. ensure that they are substantially corrected j going program provides hard evidence of investor-owned properties of this kind in . ; 20 ■ 21

i

: some of the larger cities. Generally, the nisms which have been used in these build- cant owners. Rehabilitation of these struc- stimulate property rehabilitation, you may smaller property dwellings are also the ings to date will remain applicable, of tures often requires some relocation, have no choice but to work with current older stock in the community. They were course, and Section 312 loans, CDBG loan 3. Large multifamily structures investor owners. Where current owners often built as tenements for immigrants of funds, and other devices can and should be show no interest in the revitalization effort, one period or another, and they have been used in an NSA effort. Finally, most larger cities and some mid­ you may also have to work with investors maintained to widely differing standards in sized communities have a number of larger 2. Small multifamily buildings wishing to purchase the building. and among cities. Over the years, this stock multiple dwellings. In virtually all cases, It is recommended that local officials has been the target of a variety of federal and The second structure type, smaller mul- these are investor owned. Generally, these make current, local investor owners the locally-funded rehabilitation and subsidy tiple dwellings, is found in virtually every larger structures are either recently con- prime focus of their initial NSA rehabilita­ efforts. The Section 312 rehabilitation loan community and, in numbers of units,> is structed and occupied by middle income tion activity. Work with these owners will program was heavily used in this stock, as often the predominant housing type for the tenants, or are old investor-owned prop- afford you a number of benefits. Many of was HUD-FHA mortgage insurance and nation's low and moderate income tenant- erties which are deteriorating, and tenanted these investors own one or a limited locally-funded CDBG rehab loan programs. In fact, over 70 percent of existing rental by low and moderate income residents. The number of structures, usually of the smaller Unless they have been allowed to dete­ housing units in America's central cities latter category of structures frequently re­ h multiple-dwelling type. They have moder­ riorate severely, small properties normally will be found in such buildings. Most quires extensive levels of rehabilitation, ate profit expectations, good actual or po­ require only minimum or moderate levels smaller multiple dwellings are investor- Some core cities have entire areas occupied tential relationships with their tenants, and of rehabilitation.* (Such general rules, of owned. But in some communities, there are by larger multiple dwellings. In most com- they will probably require public agency course, are noted for their exceptions, and 5-12 unit owner occupied structures. The munities a limited number of the larger assistance in planning and undertaking only a thorough inventory of housing con­ investor owners are of various types, in- structures are mixed in with smaller property revitalization strategies. Further­ ditions in your candidate NSA neighbor­ eluding residents of the immediate multi-unit properties, more, many of these individuals have lived hoods will show whether your community neighborhood, owners living in the same Large multiple dwellings may be an ap­ in the community for a long time, and may is the exception or the rule.) municipality where their property is lo­ propriate focus of NSA activity. However, have been involved in various community Up until now, these small properties cated, and "absentee" owners. A majority the level of deterioration frequently found activities. Work with local owners repre­ have not been an appropriate target for the of the owners in this sector are "local", in these types of structures may necessitate sents a logical next step for agencies which Section 8 program. Neither the number of . living in the same target area or community extensive relocation planning and pay- have been working primarily with owner- rental units in each structure nor the level as their properties. ments. If you are interested in assisting this occupants in the past. This approach, if of rehabilitation normally required will at­ Smaller multiple dwellings often require tyPe °f property, you must be prepared to • feasible, will also involve the least amount tract the kind of private investment neces­ moderate or substantial levels of rehabilita- provide the necessary resources. of actual and perceived neighborhood sary to make a Section 8 venture fly. Re­ tion. Most of these structures are now quite change. 4. Property owners member that privately undertaken Section old. As a result of age, limited rents, dif­ Of course, a successful 5 year revitaliza­ 8 rehab is burdened with a considerable ficulties in obtaining new financing, and a Property size categories and ownership tion strategy will also have to include work amount of paperwork and complicated fi­ variety of neighbodhood factors, many of types are closely related. As you evaluate with current absentee owners and new nancial arrangements. Most owner- these structures exhibit advanced dete- your potential NSA neighborhoods, you developer-investors for properties which occupants of small single family or three- rioration. The lack of rehabilitation fund- may find that selection of a particular type are suitable for rehabilitation but owned by flat buildings are not willing or able to ing has been a particularly serious problem. structure for Section 8 assistance will individuals with little interest in revitaliza­ undertake this kind of effort. However, Neither private financial institutions nor involve you with a new type of owner. For tion. In some cases, the absentee investors under the NSA program, local government past HUD-FHA administrations have been example, a great deal of CDBG activity may be large real estate firms with substan­ technical assistance may make Section 8 a aggressive lenders in this area. Also, many around the nation to date has been targeted tial expertise in the field. Joint activity with feasible vehicle for financing the rehabilita­ of the owners of these structures have been on owner occupied structures in the small such companies can add strength to the ef­ tion of such structures. Participation by unwilling or unable to cope with HUD- property sector. This focus has been politi- fort. such owners should not be ruled out. You FHA paperwork requirements. cally popular and has made good sense in Generally, you should be aware that ' M must understand, however, that such own­ Smaller multiple dwellings occupied by communities with limited housing experi- cooperation with all current owners, local ers will require considerably more local in­ low and moderate income tenants deserve cnee. However, most of the properties most or absentee, has one significant advantage vestments of time and energy than those close attention in your NSA planning. The appropriate for Section 8 substantial re- over any efforts to involve new developers. 13 with larger properties and greater financial NSA neighborhood context and the direct habilitation activity are not owner- The process of obtaining properties at resources. involvement of public agency staff in pro- occupied. Indeed, many of these structures realistic prices is often difficult, particu­ All of the traditional subsidy mecha­ cessing housing assistance applications can are controlled by investor-owners who have larly after public announcement of designa­ be immensely helpful in gaining sympa- been regarded with a fair amount of concern tion for a special program, which can in * See Appendix I for a definition of the levels of re­ thetic HUD review of these smaller proj- by public officials. However, if you plan on itself lead to increased prices. You can de­ habilitation work used in this guidebook. ects and in providing assistance to appli- assisting the tenants of these structures and velop strategies designed to counter these

22 23 price jumps, but these efforts may require or levels of deterioration suitable for use of finding private sector financing in the past, substantial time before owners are con­ Section 8 assistance. Local governments are local governments will benefit from an in­ and have been generally unwilling vinced that they will be unable to sell at urged to continue serving these areas with or un- cremental approach in their efforts to revi­ able, due to lack of technical expertise, to higher levels. CDBG or Section 312 rehabilitation funds. talize their neighborhoods. Having begun take advantage of Federal resources. Now At the same time, you should not rule out However, for neighborhoods which have with small property areas, the NSA pro­ NSA offers these owners an opportunity to working with new developers or investors. extensive absentee owned small structures, gram offers public agencies the opportunity get assistance from local officials and to On many occasions, this will be the only occupied by low and moderate income ten­ to move heavily into their mixed property gain HUD's sympathetic processing of their source of interest or adequate financial ants and needing rehab work, the NSA pro­ size areas. Then, as the process of revi­ applications in the context of an overall capacity to complete the job which must be gram offers some potential for activity, pro­ talization gains momentum, and new re- neighborhood plan. done. You must weigh the pros and cons of vided that certain difficulties can be sources become available, the most dif­ Areas with a mix of small properties and each situation carefully. worked out. ficult challenges can be undertaken. multifamily dwellings also generally have a In summary, the presence of a large It may be very difficult to use Section 8 in need for a small property rehabilitation ef­ number of interested local investor-owners these small property areas. If you choose to D. Evaluating Neighborhood Interest fort, and supplemental activities which can should be an important, positive factor in a try this route, you should be aware that the be realistically carried out by local agencies community's evaluation of a particular process will require a considerable amount The neighborhood which you choose during the five year period. Furthermore, neighborhood's appropriateness for the of “hand-holding" by the city with owners must be one in which there is a significant the relocation case loads in such areas usu­ NSA program. and with the HUD Area Office personnel. amount of interest on the part of current ally will be low enough to be successfully This means a consequently greater invest­ citizens and property owners, as well as the supported through local CDBG resources. CL Neighborhood Categories ment of time and energy by your staff. local financial institutions on whcfm you 3. Multifamily areas will be relying for financing of some of your As you examine various neighborhoods 2. Mixed property areas rehab work. This is a key requirement, for if The final category involves neighbor­ for participation in the NSA program, you The second type of neighborhood, with a you designate an area for NSA work, make hoods where multiple dwellings predomi­ the application, and then find out that there will begin to see that the housing owner­ mixture of small properties and multiple nate, and where deterioration is a serious is not sufficient interest in the program to ship types described above occur in all dwellings, is probably the most appropriate problem. Although the Section 8 Substan­ carry it off, you will be facing an unpleasant kinds of mixes. Some neighborhoods will of all for NSA activity. The level of dete­ tial Rehabilitation rental assistance pro­ failure. be dominated by one kind, while others will rioration of these areas generally requires gram is certainly an appropriate resource One way of determining the level of be a potpourri of different types. In narrow,- rehabilitation financing and supportive re­ for the upgrading of individual structures in interest and making sure that it is adequate ing your focus for the NSA program, you sources which are realistic, given the five this type of neighborhood, there are many is to focus your attention on areas in which must begin to make certain decisions re­ year period projected for revitalization. In impediments to focusing an NSA on these you are already undertaking neighborhood garding the type of neighborhood in which many such neighborhoods CDBG funds areas. First, with the level of deterioration and housing revitalization efforts. If you you can work most profitably. will already be committed to small prop­ so advanced, it will be extremely difficult to have been using CDBG money to finance Generally, neighborhoods can be charac­ erty rehabilitation, along with public im­ gain many owners' willingness to invest in rehabilitation, and have an active program terized in the following manner: provements. If not, it would be appropriate their structures. Second, even if the owners in a neighborhood, you can assume that • small property area, with some for a local agency to commit itself to such are willing to proceed, the level of available there is interest on the part of owners to multiple-dwelling properties. an effort as part of its NSA program. In any HUD-FHA assisted units will not be suffi­ participate in a public effort like NSA. • mixed areas, with a relative balance be­ case, the presence of a small property stock cient to upgrade the number of units re­ Similarly, if you have a rehab loan program tween small property and middle-sized and efforts for its revitalization can provide quired for revitalization. Third, the level of which involves local lenders in a particular multiple dwellings and, possibly, a lim­ effective support for the multiple dwelling local public resources available to meet re­ neighborhood, this too shows interest in ited number of larger multi-unit struc­ rehabilitation to be assisted through new location and other improvements, services, the effort. tures. NSA commitments. and facility needs will probably not be ade­ A high level of citizen support, active or These mixed areas involve other consid­ • multiple dwelling areas, with a very lim­ quate to meet the heavy neighborhood re­ potential, is crucial to NSA's eventual suc­ ited number of small properties. erations regarding required NSA pro-; quirements. cess. Unless residents are directly involved Municipalities that have older, larger gramming. The level of rehabilitation is This Guide does not suggest that com­ in planning and carrying out the program, multiple dwellings are likely to find usually particularly appropriate for Section\ munities write off the most heavily dete­ your policy choices are likely to reflect your them concentrated in this type of neigh­ 8 support. Furthermore, many of the prop-] riorated neighborhoods of our urban com­ ideas about the neighborhood, rather than borhood. erties are middle sized and owned by local; munities. If your community finds that the resident's. The resultant disputes which investors. The benefits of. working with; 1. Small property areas resources available now or in the near fu­ will arise as you try to carry out the program these types of owners have already been, ture are sufficient to immediately imple­ will take up more of your time than the The smaller property areas generally do outlined. It's also worth noting that these; ment an NSA plan in such an area, you technical tasks which should be your pri­ not have either the numbers of rental units individuals have had particular difficulties; should go forward. In most cases, however, mary concern. Citizen involvement will

24 25 I I also be an important factor in getting local celerating an unfavorable process, or run- : block, and aggregated according to size D. Financial Institutions owners to participate in the program. • If ning counter to natural trends. NSA will be categories. there is pressure from tenants and a wasted opportunity if it is used in this j # Uses in individual structures, i.e. resi- You should assemble a list of mortgages neighbors to improve properties and up­ fashion. It will be successful only in areas dential, commercial, or mixed, by. block and loans placed in the area by lending in­ grade an area, your job will be easier. where the ingredients for revitalization are j and aggregated, stitutions, and develop a pattern of the pri­ Finally, you must involve the residents in present, if only in a latent way. J • Property conditions, on structure by vate sector financing which has been made buildings which you have slated for reha­ The NSA program is not for everyone. It \ structure as well as aggregated basis. available during the previous decade. Under bilitation or demolition. These people are requires a great deal of local staff time and • Previous new construction and rehabili­ the provisions of the Home Mortgage Dis­ going to bear the brunt of inconvenience planning, and the action phase is a very tation activity. closure Act of 1976, all federally-insured throughout the process, and will stand the intensive program operation. You must ; • Publicly supported housing activity al­ lending institutions—both banks and sav- most to lose unless they are made an inte­ carefully assess your neighborhoods and ready taking place, including the impact ings and loans—must compile this infor­ gral part of your process. Therefore, in the housing stock within them to see if you j of Federal, State or municipal housing mation on a census tract or zip code basis. choosing a neighborhood, you must care­ have areas which would truly benefit from j programs on the target area. Be sure to use this resource in compiling fully and realistically evaluate your ability the NSA program. This step is crucial in the' • Rehabilitation needs to assist in develop­ your neighborhood housing inventory. to work constructively with these residents development of your application, and a| ing a revitalization plan. This will require to gain their confidence and cooperation. realistic appraisal now may save you a lot of evaluating the level of appropriate activ­ E. Construction and grief and disappointment further down the ity for each structure. (See Appendix II for Rehabilitation Resources E. Strategic Concerns road. a description of rehabilitation types.) The hardest part of your application These categories can serve as a guide for Your NSA strategy will be nothing more The preceding conditions should enable process will be making these decisions. the preliminary judgments on each struc­ than a paper document if there is insuffi­ you to narrow down your choices. Once you Once they have been made, you will be able ture. The key objective of this analysis cient rehabilitation and construction con- have reduced the choices as far as you can to move on to the actual application re­ will be to identify the overall number of tracting capacity in your community. You through these objective tests, you should quirements, which the rest of the Guide­ properties which require the moderate or should take the following steps to assess step back and consider the strategic issues book addresses. substantial rehabilitation supported the potential for rehab in the NSA: which will be involved in designating an under the Section 8 Substantial Rehabili­ • Survey firms in your community and area. Earlier, we pointed out that housing tation program. your region with experience in rehabili­ strategies must be part of a larger endeavor, • Assessed values on structures. tation activity, or a track record in con­ III. THE NEIGHBORHOOD and coordinated with a variety of urban • Financial status, i.e. mortgages, liens, struction which is appropriate to NSA policies. In choosing your NSA area, you INVENTORY: etc., of all or a selected group of structures requirements. must think in these terms. What effect, for INFORMATION in area. If a comprehensive survey is im­ • Establish the level of interest and capac­ instance, will the program have on the RESOURCES possible, then the focus should be on ity among these firms and their subcon­ overall trends in the neighborhood? If properties most likely to be serviced by tractors to participate in the NSA effort. people have been moving out of the pro­ A. Introduction Section 8 substantial rehabilitation. This facet of the NSA program can pro­ posed target area, where have they been vide a unique opportunity to foster the de­ moving to? What has forced them to move? Regulations for the NSA require local velopment of minority-owned firms. Al­ Will the NSA actions you are proposing ad­ governments to develop a detailed inven­ C. Owners though many communities have run into dress these problems? Or will they simply tory of proposed target area needs and re­ serious problems with inexperienced or . put a gloss over a process which your pro­ sources. In many cases, communities will The inventory should continue by inves­ under-capitalized firms of this type, the gram won't stop or ameliorate? have to undertake new data collection tigating: NSA program promises a certain level of In asking these questions, you should activities to supplement information • Ownership types in each structure, and locally-controlled resources which could within each size category, i.e., owner oc­ ! come to some conclusions about the currently available. Following is a list of help in developing your local rehab and dynamics of the neighborhoods you are suggested elements in a neighborhood cupied or investor owner. construction industries. looking.at for NSA programs. Too often in • Investor owner locations: are they target r k evaluation. the past, communities have grabbed pro­ area residents, residents of the commu­ F. Tenants it nity, out of town absentee owners. ■j grams because they were there, picked B. Properties neighborhoods for largely political reasons, • Owner incomes, within each type cate­ The following information should be and thrust the programs upon them. Occa­ A neighborhood property inventory gory. gathered about renters: sionally, this worked out, and the program should gather information regarding the: • Racial composition of owners. • The number of tenanted units, per struc­ was a success. Other times, the interven­ • Number of structures, by block. • Ownership transfers over the past ten ture, block-by-block, and on aggregated tion had a counterproductive effect, ac- • Size of structures, i.e. number of units, by years. basis.

26 27 ir» i • Tenant incomes, per structure, so that located within key residential areas. submissions. In addition, the following in­ heating equipment, fuels, air conditioning, water i an estimate of Section 8 eligible residents Failure to develop strategies for revi- j formation resources will yield important and sewage, appliances, gross rent, and ownership can be established. talization of these areas will be a serious material. of second home. Each subject is shown for some or all of the following areas: States (by urban, rural- • The racial mix of tenants, on an aggre­ flaw in the overall rehabilitation 1. Census Information, which is broken nonfarm, and rural-farm residence), SMSA's, ur­ gated basis; strategy.) banized areas, places of 2,500 inhabitants or more, • The amount of rent being paid by resi­ • A preliminary evaluation of future needs, down to the census tract level for all com­ and counties (by rural and rural-farm residence). dents, on an apartment-by-apartment both in types of commercial facilities and munities and census blocks in larger cities. Volume II. basis space required for business expansion. The Census Bureau* has issued the follow­ METROPOLITAN HOUSING I CHARACTERISTICS • The level of tenant organizations in indi­ ing special runs since 1970 which may be particularly useful to local officials devel­ These reports, also designated as Series HC(2), vidual structures, along with an evalua­ I. Public Resources cover most of the 1970 census housing subjects in oping NS A plans: tion of their willingness to work with considerable detail and cross-classification. There This inventory should include: is one report for each SMSA, presenting data for public agencies and owners in the overall Housing Census Reports revitalization strategy,- • A specific inventory of all public im­ the SMSA and its central cities and places of provements, facilities, and services serv­ 50,000 inhabitants or more, as well as a national • If available, the number of residents in Volume I. summary report. the neighborhood and its structures re­ ing the NS A target area. Evaluate the HOUSING CHARACTERISTICS FOR Volume III. ceiving public assistance, and an analysis conditions and status of each of these STATES, CITIES, AND COUNTIES BLOCK STATISTICS This volume consists of 58 "parts"—number 1 for of shelter payment levels. Also, there elements. One report, under the designation Series HC(3), is the United States, numbers 2 through 52 for the 50 ! should be a review of the changes in the • A definition of the neighborhood level of issued for each urbanized area showing data for States and the District of Columbia in alphabeti­ individual blocks on selected housing and popula­ number and percentage of such recipients need for each type of facility, im­ cal order, and numbers 53 through 58 for Puerto tion subjects. The series also includes reports for in and during the past ten years. provements, and service which might be Rico, Guam, Virgin Islands, American Samoa, the communities outside urbanized areas which provided through public and/or voluntary Canal Zone, and Trust Territory of the Pacific have contracted with the Census Bureau to pro­ G. General Demographics agencies. Islands, respectively. Each part, which is a sepa­ vide block statistics from the 1970 census. rate clothbound book, contains two chapters des­ Volume IV. ignated as A and B. Each chapter (for each of the 58 This portion of the inventory should in­ J. Citizen Involvement COMPONENTS OF INVENTORY areas) is issued as an individual paperbound report CHANGE clude: in two series designated as HC(1)-A and B, respec­ This volume will contain data on the disposition • Employment/unemployment levels, and An inventory should be conducted to: tively. of the 1960 inventory and the source of the 1970 ■ Series HC(1)-A. trends in the area. • Develop a list of organizations and agen­ inventory, such as new construction, conversions, GENERAL HOUSING cies which serve, or have relevance to, mergers, demolitions, and other additions and • Population levels and trends for the CHARACTERISTICS neighborhood. The anticipated five and the projected neighborhood. Identify losses. Cross-tabulations of 1970 and 1960 charac­ Statistics on tenure, kitchen facilities, plumbing teristics for units that have not changed and leadership and activities. ten year population growth or decline facilities, number of rooms, persons per room, characteristics of the present and previous resi­ should be projected. • Based on contacts during the planning units in structure, mobile home, telephone, value, dence of recent movers will also be provided. process, evaluate citizen interest in the contract rent, and vacancy status are presented for Statistics will be shown for 15 selected SMSA's some or all of the following areas: States (by urban H. Commercial Development revitalization strategy and the willing­ and for the United States and regions. and rural residence), standard metropolitan statis­ Volume V. ness to participate in a neighborhood or­ tical areas (SMSA's), urbanized areas, places of : ganization^) or committee(s) supportive RESIDENTIAL FINANCE Your analysis of neighborhood commer­ 1,000 inhabitants or more, and counties. This volume will present data regarding the cial development should focus on: of the public effort throughout the five ■ Series HC(1)-B. financing of privately owned nonfarm residential • Inventory of current commercial facili­ year revitalization process. DETAILED HOUSING properties. Statistics will be shown on amount of : CHARACTERISTICS outstanding mortgage debt, manner of acquisition f ties. Statistics are presented on a more detailed basis for • An evaluation of commercial market K. Data Services of property, home-owner expenses, and other the subjects included in the Series HC(1)-A re­ owner, property, and mortgage characteristics for conditions, for the current period, five ports, as well as on such additional subjects as year the United States and regions.

years, and ten years in the future. If the The information required for completion moved into unit, year structure built, basement, Volume VI. commercial sector occupies a significant of an effective NSA application and pro­ ESTIMATES OF "SUBSTANDARD" portion of the area, the community may gram plan is extensive. How can your local *The results of the 1970 Census of Population and HOUSING wish to carry out a detailed market study. agency effectively gather this data and Housing are being issued in the form of printed re­ This volume will present counts of "substandard" housing emits of counties and cities, based on the complete an application in the 90 day ports, microfishe copies of the printed reports, com­ (Note: Many residential target areas will number of units lacking plumbing facilities com­ period being allowed? Hopefully, aspects of puter summary tapes, computer printouts, and mi­ have only a scattering of commercial fa­ crofilm. More detailed information on the reports bined with estimates of units with all plumbing cilities, which can be easily inventoried this information will have already been col­ summarized above can be obtained by writing to the facilities but in "dilapidated" condition. and need not be a prime focus of NSA lected in connection with local preparation Publications Distribution Section, Social and Eco­ Volume VII. planning. However, in other com­ of your yearly Community Development nomic Statistics Administration, Washington, D.C. SUBJECT REPORTS if Each report in this volume will concentrate on a munities, significant business sectors are Block Grant and Housing Assistance Plan. 20233.

29 J 28 :

: ; 4 r: ■ particular subject. Detailed information and all of the following areas: States, counties (by ur­ 1 cross-classifications will generally be provided on ban, rural-nonfarm, and rural-farm residence), Additional Reports Sixth Count—source of the PC(1)-D and HC(2) a national and regional level; in some reports, data SMSA's, urbanized areas, and places of 2,500 in­ reports; contains about 260,000 cells of data ! for States or SMSA's may also be shown. Among habitants or more. Series PHC(E). covering the subjects in these reports and tabu­ ■ Series PC(1)-D. EVALUATION REPORTS lated for States, SMSA's, and large cities. ? the subjects to be covered are housing characteris­ tics by household composition, housing of minor­ DETAILED CHARACTERISTICS This open series will present the results of the The tapes are generally organized on a State basis. ity groups and senior citizens, and households in These reports cover most of the subjects shown in extensive evaluation program conducted as an in­ To use the First Count and Third Count tapes, it is mobile homes. Series PC(1)-C, above, presenting the data in con­ tegral part of the 1970 census program, and relat­ necessary to purchase the appropriate enumera­ siderable detail and cross-classified by age, race, ing to such matters as completeness of enumera- tion district and block maps. and other characteristics. Each subject is shown tion and quality of the data on characteristics. The term “cells" used herein to indicate the scope for some or all of the following areas: States (by Series PHC(R). of subject content of the several counts refers to Population Census Reports urban, rural-nonfarm, and rural-farm residence), PROCEDURAL REPORTS each figure or statistic in the tabulation for a speci­ SMSA's, and large cities. This open series presents information on various fic geographic area. For example, in the Third Volume I. Volume II. administrative and methodological aspects of the Count, there are six cells for a cross-classification CHARACTERISTICS OF THE SUBJECT REPORTS 1970 census, and will include a comprehensive of race by sex: three categories of race (white, POPULATION Each report in this volume, also designated as procedural history of the 1970 census. The first Negro, other race) by two categories of sex (male, This volume will consist of 58 “parts"—number 1 Series PC(2), will concentrate on a particular sub­ report issued focuses on the forms and procedures female). for the United States, numbers 2 through 52 for the ject. Detailed information and cross-relationships used in the data collection phase of the census. In addition to the above-mentioned summary 50 States and the District of Columbia in alphabet­ will generally be provided on a national and re­ tapes, the Census Bureau, makes available for pur­ ical order, and numbers 53 through 58 for Puerto gional level; in some reports, data for States or Computer Summary Tapes chase certain sample tape files containing popula­ Rico, Guam, Virgin Islands, American Samoa, SMSA's will also be shown. Among the charac­ tion and housing characteristics as shown on indi­ Canal Zone, and Trust Territory of the Pacific teristics to be covered are national origin and race, The major portion of the results of the 1970 census vidual census records. These files contain no Islands, respectively. Each part, which will be a fertility, families, marital status, migration, edu­ are produced in a set of six tabulation counts. To names or addresses, and the geographic identifica­ separate clothbound book, will contain four chap­ cation, unemployment, occupation, industry, and help meet the needs of census users, these counts tion is sufficiently broad to protect confidential­ ters designed as A, B, C, and D. Each chapter (for income. are designed to provide data with much greater ity. There are six files, each containing a 1-percent each of the 58 areas) will first be issued as an subject and geographic detail than it is feasible or national sample of persons and housing units. individual paperbound report in four series desig­ desirable to publish in printed reports. The data so Three of the files are drawn from the population tabulated are generally available—subject to sup­ nated as PC(1 )-A, B, C, and D, respectively. The 58 covered by the census 15-percent sample and three Joint Population-Housing Reports pression of certain detail where necessary to pro­ PC(1 )-A reports are specially assembled and issued from the population in the census 5-percent sam­ tect confidentiality—on magnetic computer tape, in a clothbound book, designated as Part A. ple. Each of these three files provides a different printouts, and microfilm, at the cost of preparing ■ Series PC(1)-A. Series PHC(l). type of geographic information. the copy. NUMBERS OF INHABITANTS CENSUS TRACT REPORTS One identifies individual legal SMSA's and, for the First Count—source of the PC(1)-A reports, con­ Final official population counts are presented for This series contains one report for each SMSA, rest of the country, groups of counties; the second tains about 400 cells of data on the subjects States, counties by urban and rural residence, showing data for most of the population and hous­ identifies individual States and, where they are covered in the PC(1)-B and HC(1)-A reports and SMSA's, urbanized areas, county subdivisions, all ing subjects included in the 1970 census. sufficiently large, provides urban-rural and met­ tabulated for each of the approximately 250,000 incorporated places, and unincorporated places of Series PHC{2). ropolitan detail; and the third identifies State enumeration districts in the United States. 1,000 inhabitants or more. GENERAL DEMOGRAPHIC TRENDS FOR groups and size of place, with each individual Second Count—source of the PC(1)-B, HC(1)-A, ■ Series PC(1)-B. METROPOLITAN AREAS, 1960 to 1970 record showing selected characteristics of the per­ and part of the PHC(l) reports; contains about GENERAL POPULATION This series consists of one report for each State and son's neighborhood. 3,500 cells of data covering the subjects in these CHARACTERISTICS the District of Columbia, as well as a national reports and tabulations for the approximately Statistics on age, sex, race, marital status, and summary report, presenting statistics for the State 2. R. L. Polk Profiles of Change informa­ 35.000 tracts and 35,000 county subdivisions in relationship to head of household are presented for and for SMSA's and their central cities and con­ tion, in municipalities where Polk is in­ the United States. * States, counties by urban and rural residence, stituent counties. Comparative 1960 and 1970 Third Count—source of the HC(3) reports; con­ volved. This service, based upon annual SMSA's, urbanized areas, county subdivisions, data are shown on population counts by age and tains about 250 cells of data on the subjects samples conducted locally, provides local and places of 1,000 inhabitants or more. race and on such housing subjects as tenure, covered in the PC( 1 )-B and HC( 1)-A reports and policy and program planners with the abil­ ■ Series PC(1)-C. plumbing facilities, value, and contract rent. tabulated for approximately 1,500,000 blocks in GENERAL SOCIAL AND Series PHC(3). ity to determine neighborhood condition the United States. ECONOMIC CHARACTERISTICS EMPLOYMENT PROFILES OF SELECTED and direction using current data. Fourth Count—source of the PC(1)-C, HC(1)-B, Statistics are presented on nativity and parentage, LOW-INCOME AREAS Of particular importance to the selection : and part of the PHC( 1) reports,- contains about State or country of birth, Spanish origin, mother This series consists of 76 reports, each presenting 13.000 cells of data covering the subjects in and monitoring of Neighborhood Strategy tongue, residence 5 years ago, year moved into statistics on the social and economic characteris­ these reports and tabulated for the approxi­ Areas is the Profiles Neighborhood Situa­ present house, school enrollment (public or pri­ tics of the residents of a particular low-income mately 35,000 tracts and 35,000 county subdivi­ tion Rating methodology. This procedure vate) years of school completed, vocational train­ area. The data relate to low-income neighbor­ I hoods in 51 cities and seven rural poverty areas. sions in the United States; also contains about allows the user to quickly and accurately ing, number of children ever bom, family compo­ 30.000 cells of data for each county. sition, disability, veteran status, employment Each report provides statistics on employment analyze and rank the current condition of Fifth Count—contains approximately 800 cells of status, place of work, means of transportation to and unemployment, education, vocational train­ I every tract. In addition, the procedure iden­ ing, availability for work, job history, and income, population and housing data for 5-digit ZIP code work, occupation group, industry group, class of areas in SMSA's and 3-digit ZIP code areas out­ tifies the degree of positive and negative worker, and income (by type) in 1969 of families as well as on value or rent and number of rooms in change occurring in each tract. What re­ the housing unit. side SMSA's,- the ZIP code data are available ■■ and individuals. Each subject is shown for some or only on tape. sults is a dual-ranking, juxtaposing current

■ 30 31 ;

: ■ ] i I condition and degree of positive or negative • Information on tenant incomes and rent ing in your program. Do they understand change for every tract in the city. levels from local public housing failure to communicate with tenants about au- ; the program's goals, and the manner in While this methodology is most easily thorities and/or coordinators of the Sec­ the program, it will be very hard to over- which you plan to execute it? Have they and productively used by cities subscribing tion 8 existing program, HUD, or the come. Early contact with affected tenants sufficient resources to undertake rehab by to the Profiles Of Change service, it can also in the area is crucial. owners of existing subsidized housing themselves, or will they need help from i be used by non-subscriber cities utilizing 4. Local Builders: a vital business group projects in the target area or nearby. you? If they need help, do they understand available, local data resources. Copies of • Chamber of Commerce Surveys of busi­ you should contact early in the planning i the subsidy and assistance programs which the methodology;entitled T.E.A.M. (Tech­ ness enterprises. process is the builders. This group will be are open to them? You must make contacts niques for Evaluating and Monitoring— able to give you information about local • U.S. Department of Labor—Bureau of with both the owners living in the target : Neighborhood Situation Ratings), are rehabilitation capacity. It knows the stock Labor Statistics information on employ­ available without charge from: area and those absentee owners living in your community and may be able to help ment. Department of Commerce infor­ elsewhere. R. L. Polk & Co. mation on business formations and clos­ develop data about the rehab needs in your 2. Area Property Managers: for buildings Urban Statistical Division ings and general economic conditions. target neighborhood. Once you enter the which are absentee owned and are operated action phase of your NSA you will need to Suite 508 • School enrollment records, including t by some other individual, or for those 1620 Eye Street, NW projected levels of target area school reg­ have this group's cooperation in order to get which are investor-owned and managed by the rehab work done. Washington, D.C. 20006 istration during the five year revitaliza­ professionals, you should make sure you 3. Other Data Services: tion period. 5. Area Lenders: although you can get discuss the program with the managers. certain information about lending patterns • Local planning department records, in­ • Where available, additional surveys and They will have a fair notion of the rehab in your community through the disclosure cluding any data compiled as part of a 701 reports on housing, economic conditions, needs of their own building, and once again, provisions of the Home Mortgage Dis­ ! project. employment, and population prepared by their cooperation could be crucial to your closure Act of 1976, you should make an • Local buildings department records, in­ local and state agencies.

cluding both violations and permits for effort's success. Of course, these individu­ effort to meet with your area lenders while als will not in all cases be cooperative. They planning the NSA effort. In addition to the new construction and rehabilitation. L. Other Information Resources may be representing owners who don't Local officials should review information data they can provide on lending patterns, want to invest in the properties, or be wary their cooperation will be vital for financing for the previous five year period, to de­ In addition to the statistical data which of public intervention in their business. large parts of your NSA strategy. velop patterns of improvements or de­ the resources mentioned above will pro- Nevertheless, you should at least contact 6. Area Commercial Interests: although cline in specific properties. vide, you must actively engage the citizens them to find out. If they are recalcitrant, the NSA is primarily a housing and com­ • If available, local or county Social Ser­ living and investing in the USA in the other strategies for coercing them into the vices agency files, indicating the number munity development program, the success planning process. For one thing, the NSA program may be necessary. of your effort may depend heavily on the of recipients in each structure as well as program regulations require that there be 3. Area Tenants: an especially sticky as­ vitality of neighborhood commercial en­ shelter allowances paid, where specific substantive citizen participation in the pect of your NSA program will involve ten­ terprises located in the target area. Experi­ rental amounts are broken out. Again, it program. But apart from the requirement, ants in buildings which are going to be ence has shown that neighborhoods need would be valuable to review this infor­ you must involve local people because rehabbed. In some cases, the only incon­ these small-scale commercial enterprises. mation for the previous five year period without their support and cooperation, the venience which will result from the reha­ When a community has been deteriorating to establish patterns. program will not get off the ground. bilitation will be a temporary move. In over the years, they are usually in a very • Local tax assessor records, providing im­ 1. Area Property Owners: the NSA pro­ others, tenants may be displaced. This can weakened position. Lenders have probably portant information regarding owner- gram regulations require that you inven­ occur if fewer units are left in the rehabili­ not been extending credit at favorable rates, ship, property values, and recent changes tory the entire neighborhood housing stock tated building than were there to start with, and retail trade is probably down. You will in value and reasons for the modification. in the target area to determine which units a not uncommon event, or you may be faced need different program tools to work with • County or local property registration rec­ need to be rehabilitated, which are sound, with totally private rehab which displaces this group than are available under NSA, ords, indicating current owners, and reg­ and which should be demolished. Some of current tenants because subsequent rent but if you contact the retailers early and

istration of mortgages and other liens. this information will be obtainable from levels are too high. In all of these cases, you keep them fully involved in the process,

• Data on target area investments by local permit data, and windshield surveys. But in must fulfill your obligations to these ten­ they should see the value in reinvesting in lenders over a period of time. This infor­ order to determine both the extent of rehab ants under the Uniform Relocation Assis­ their own business.

mation is available from all federally in­ necessary, and the extent of rehab which tance Act. If tenants being affected by your 7. Working in Familiar Areas: if the area sured lenders under the provisions of the will be possible, you will have to contact program do not fully understand what their you choose for your NSA is one in which Home Mortgage Disclosure Act of 1976. the property owners directly. Before you rights are before construction begins, you you have been working over time with a • Where relevant, rent registration data embark on advanced planning under NSA, may find yourself facing considerable oppo­ comprehensive housing and community maintained by local rent regulation au­ you should assure yourself that there is sition to the program. If this kind of opposi­ development program, many of these issues \ thorities. interest among these owners in participat- tion develops out of ignorance, or your of citizen and interest group involvement

32 ; 33 : ! 1 } A will have been resolved already. This is a neighborhood is. Your survey should have good reason to look at areas with ongoing shown which houses needed very extensive less of the resources available to you. So the cannot reasonably be assured before you programs when choosing your NS A. It will work, and which houses needed only super­ next step is to figure out what your goal is, start the effort, you should seriously con- reduce the amount of community educa­ ficial, cosmetic changes to bring them up to and this will be a function of the urgency of sider changing the goals, changing the tion necessary to win sufficient support for the established local standards. But this need, the amount of money which is realis­ standards, or reassessing the costs. If you your project. It will give you a firm base of survey has provided you only with the raw tically available for the work, and the don't know you're going to be able to raise experience from which to work. information about the current state of the j amount of staff time you can devote to the the capital, you run the risk of not reaching housing stock. In order to accurately gauge I project. your goals. your financing needs, you will have to ; Another important factor will be the Another concern which you must ad­ IV. Assessing the Need for make a series of further decisions. First, you I amount of work which realistically can be dress at this point is whether the owners handled by the private sector builders and Financing in Your NSA will have to set aside the units requiring whose properties you wish to treat during rehabilitation and establish the standard to contractors in your community. You the program will be able to afford financing : A. Relationship to the which you intend to renovate them. Will should involve them closely in this process the kinds of repairs you have proposed. 1 to gain a good estimate of the amount of Also, although you may find that the capi­ Neighborhood Inventory you be expecting all units to meet the local : building code? Is there a residency code : work which it will be possible to complete tal you need is available as a total target One of the primary tasks facing an NSA which is different? Does your community within a given period of time. sum, it may not be feasible on a unit-by­

applicant is the neighborhood inventory. or your state have a rehabilitation code? i Your analysis might look like this: unit basis. For instance, there may not be The previous sections have provided a Keep in mind that when you are using Sec­ enough interest on the part of private lend­ ■ OBJECTIVES guide to information resources you can use tion 8 or any other HUD-FHA program, you ers to finance 60 loans in the neighbor­ Type Standard Number hood of $5,000 apiece for the homeowners. to complete this inventory. When you are will have to bring the units at least up to : 1. Owner occupied

done with it, you should have a very com­ HUD's Minimum Design Standards for Re­ ! 2. Rental units, occupied City code 180 Unless you have the resources to cover this plete notion of the condition of the housing habilitation for Residential Properties 3. Vacant units + HUD and plan accordingly, you may have to re­ stock in your target area. The next step you (HUD Handbook 4940.4). f vise your estimates to reflect the financing The number used here is arbitrary, for must complete is determining how much A convenient way to show the decisions situation more realistically. illustration only. You obviously will have money it will take to complete the neces­ which must be made would be the follow­ Once you have established how much it's to pick your own. sary repairs and rehabilitation to carry out ing: going to cost you to run your program, you Your next step is estimating the cost of the NSA program's goal of substantial revi­ naturally will have to decide where the completing the tasks you have laid out for talization for the area within five years. NEED GOAL OBJECTIVE money's going to come from. This step will your NSA program. This will be an esti­ Determining the amount of financing 4,000 units Conserve hous­ Rehabilitate to have important consequences for your needing rehab ing stock city codes, except mate only, and you should avoid trying to CDBG application, insofar as CD funds will necessary to complete the task is a vital for Section 8, which develop precise costs at this point. Experi­ I step, because without a firm understanding is to HUD be earmarked for some of the work. standards. ence in the CDBG program can be a good of the costs before you start the program, NUMBER COST SOURCES guide to rehab costs, as can the Section 312 you may find yourself "in over your head" 180 $1,680,000 1. CDBG $500,000 program. These will give a rough "ballpark" before you're done. It is also a requirement You may further subdivide your objective 2. Sec. 312 $200,000 figure for you to work with. If you are an­ 3. State HFA $600,000 of the NSA application, so it must be done. to show how many units are for owner- ticipating other kinds of rehab with which 4. Private $400,000 The following methodology is a sugges­ occupants, or for rental units currently oc­ you have had experience, you should apply $1,700,000 tion only. It was developed by Jack P. Kerry cupied and in need of rehab, and for vacant your actual cost figures to your goals for a for the City of Louisville, KY, and is mod­ units. In this hypothetical example, there is cost estimate. eled after the strategic concerns outlined Once you have set the standard to which more anticipated financing than is needed. earlier. Your community may find another you want to rehabilitate the housing stock, You may find that it is necessary to secure Type Standard Number Cost agreements for a higher figure in order to path more successful; if so, you should fol­ you must decide how many you can re­ Rehab for owner low it. This summary will show you what habilitate within a given period of time. occupants City Code 60 X $ 5,000-$300,000 ensure that the work will be finished. If Rehab of rental City Code some of the essential elements of a finance There are certain natural constraints on costs outstrip your estimates, you don't units—occupied and MPS 60 X $ 8,000-$480,000 want to be caught short. inventory should include, however. this number, the most important of which Rehab of vacant Identifying sources is not the same thing . will be your staff capacity to process and units MPS 60 X $15,000-$900,000 <-if. B. Working with the Inventory oversee the rehabilitation. Ideally, of TOTAL 180 $1,680,000 as getting commitments for them. This is course, you would complete all 4,000 units the reason that you should organize this The total of $1.68 million is very impor­ Once you have completed the neighbor­ shown in the breakdown above. But realis­ process early in your application phase so

hood housing inventory, you will know tically, with limited staff, you may only be tant. It represents the minimum amount of that you can begin canvassing anticipated

what the total need for rehabilitation in the able to complete a fraction of that, regard- capital you will need to complete your pro­ sources and gamering whatever commit­ jected NSA rehabilitation program. If it ments you can.

34 35

: The final step in this process is to estab­ local agencies must begin to explore a key tively limited number of units results in a projects ought to contain fewer than 50 lish a series of "strategy packages." These issue: the availability of financing re­ very tight financial situation. The reduced units. In most cases, they prefer projects short outlines will show exactly what pro­ ! sources which are suitable for potential monthly payments made possible as a re­ with over 100 units. The underwriters ar­ : grams you plan to undertake, what goals target area needs. This section of the Guide sult of lower rates and longer terms may ■! gue, with some justification, that bond they will be designed to reach, which objec­ summarizes major financing tools relevant mean the difference between a workable purchasers—the ultimate investors in the tives that achievement will fulfill, its cost, to NSA area rehabilitation. Local officials and impossible rehabilitation project. rehab venture—will not buy obligations and the person(s) responsible for carrying it should review this summary presentation The state agency connection is very im­ backed only by the limited revenues of out. This will be your master plan for NSA and, having identified the most appropriate portant in the NSA program, because smaller buildings. In addition, the paper­ completion, and the component parts are financing elements, begin to meet with rel­ 10,000 of the Section 8 substantial rehabili­ work involved in processing a bond issue is all necessary steps in developing your ap­ evant institutions to determine how avail­ tation units available for the fiscal year the same whether 50 or 500 units are in­ plication. able the desired resources are. 1978 special set asides are available only if volved, thus making the cost relatively ex­ financed by state housing finance and de­ Objective Program cessive for smaller projects. Rehabilitate 180 1. Rehabilitation of owner- B. Section 8—Substantial Rehabilita­ velopment agencies. This means that at Although HUD will be working with units up to the occupied units in selected tion, Existing Housing, and New least one-half of all units available must be state agencies to overcome some of these standard of the areas. Construction Housing Payments financed through this route, and that means obstacles, local governments will also have city housing code 2. Public improvements in the that a considerable amount of negotiating to undertake long and hard negotiations same selected areas. The Section 8 program was briefly de­ will have to take place between local gov­ with the state agencies in order to gain their scribed in Part I of the Guide. It is appropri­ ernments and the state agences. If your confidence and cooperation. You may find 3. Employment and training state has not got a housing finance agency, program. ate here to repeat a critical point made in that state agency financing is only available the earlier discussion. Section 8 is not a then this option is not open to you. If you for the larger projects in your area, or only 4. Section 8 existing financing mechanism. Rather, HUD pay­ are in a state with an active agency which for certain types of projects. Whatever the rehabilitation ments or rental assistance on individual has been invloved in the Section 8 program, case may be, you must contact the agency Strategy Packages units help provide a property income then you should contact your agency at early on, because your NSA application Package A------stream which supports debt service, taxes once and begin negotiating your program must include assurances from the state Description (1) Impact (2) Cost (3) Responsible Party (4) options with it. Program 1------and insurance, operating costs, and owners' agency that it will work with you in the Program 2------rates of returns. Thus, HUD's commitment A major obstacle to participation by state area and devote its resources according to Program 3------of Section 8 is only one step in the process of agencies in the NSA program will be the your plan if you contemplate using any of Program 4------putting a financing package together for in­ lack of experience among most state agen­ the 10,000 state agency units. \\ Totals------— dividual structures. cies with rehabilitation financing. With (1) Description. Identify the purpose or end product of the some notable exceptions, the state agencies D. Public Housing Authorities program. C. State Housing Agency Financing have shied away from rehab, except for (2) Impact. What number of people or units will be affected. single family, owner occupied houses. An invaluable resource in the NSA proc­ The total for all programs should be the same as the There are a number of reasons for this reluc­ ess will be your local Public Housing Au­ objective, in this case, 180 units. There are now more than 30 state hous­ tance. For one thing, the rehabilitation (3) Cost. Should include the best estimate of all costs— ing financing agencies throughout the na­ thority (PHA). These agencies are usually capital and operating. tion. Each of these institutions has the process remains difficult to accurately cost set up under state enabling legislation, and (4) Responsible Party. Identify who is responsible for fund­ power to issue bonds covering the cost of out. Often, a contractor will not know the every state in the Union has such legisla­ ing the program and who will actually carry out the constructing or rehabilitating residential complete extent of the repair work neces­ tion on the books. PHAs were originally set program. properties. This financing is generally se­ sary until after the walls have been knocked up to finance and construct conventional I For each objective, it will be necessary to develop the same cured by the revenue of the property and down and the work begun. This represents low-rent public housing under the U.S. type of information: may also be insured through HUD-FHA or a an additional risk to the lender, who may be Housing Act of 1937. Over the years, how­ —What typs of rehab are proposed? asked to "up the ante" in the middle of a ever, they have taken on other tasks, in­ —How will it be paid for? private insurance firm. These bonds are tax —Who will do it? exempt, with an effective interest rate as project in order to ensure its completion. cluding the Section 23 leased housing pro­ —How many of each type will be done in the first year? low as 7 percent, substantially below pri­ Another problem faced by state agencies gram and its successor, the Section 8 Exist­ vate sector insured or uninsured charges. in the rehab area is the position of bond ing Housing program. Furthermore, repayment terms on state underwriters. Since state agencies cannot PHAs can be valuable to NSA com­

V. Finding Financial Resources financing are generally for 30-40 years, ex­ borrow funds without the assistance and munities for a number of reasons. For one, ceeding private repayment periods by a approval of these professionals, their coop­ Congress has set aside for them a large A. Introduction wide margin. These two benefits could be eration is vital. However, underwriters amount of Section 8 contract authority in Once the neighborhood inventory is particularly helpful in the financing of generally feel that no bond-financed new the fiscal year 1978 appropriation. This completed, or while it is being conducted, smaller multiple dwellings, where the rela- construction 'or substantial rehabilitation means that a certain amount of the total

36 37

l I F. Local Resources— Section 8 contract authority total must be ing and other lower income housing in your appropriate financing uses of CDBG Community Development provided for projects which will be owned community, the PHA has established a monies in conjunction with an NSA effort. Block Grant Funds by PHAs. Thus, some part of your NSA track record in management. If it is a good In order to gain HUD approval of an NSA Section 8 needs, beyond rehabilitation, may one—and not every PHA has been success- application, communities must obtain pri­ be met by using your community's part of ful in this area—you may be able to tap it to Edition t0 their use for payment of vate sector commitments to the revitali­ this set aside. facilitate your own NSA plans. Housing administrative and relocation costs, and zation effort. However, local officials PHAs also have the primary responsi­ management will be a particularly thorny various kinds of facilities, services, and im- should recognize that private sector inter­ bility for administering the Section 8 Exist­ problem in the smaller projects you under- provements in NSA target areas, CDBG est rates are too high to allow financial ing Housing program. As mentioned ear­ take in an NSA, and the PHA experience in monies m^ be an appropriate direct financ­ feasibility on many smaller multiple dwell­ es area should not be overlooked. ln§ resource for housing rehabilitation, or lier, Section 8 Existing Housing funds can ing structures. Using various financing If your community does not have a PHA, t0 provide insurance for private sector in- formulas, local governments may use be used in a coordinated relocation strategy you still may establish one in a number of vestment. During the past three years, local CDBG monies to reduce interest rates to an in your NSA, and they may prove a valuable ways. Your state has enabling legislation agencies throughout the country have been acceptable cost. In Hoboken and other tool generally in your target area. These which would permit the organization of a CE®G funds for dlrec‘ rehabilitation cities, the communities' participating ab­ funds are particularly useful for assisting sentee investor owners have received effec­ people living in standard housing, but who traditional PHA. Another route would be to loaf md &fts' mterest subsidies on lend- establish the PHA as part of your local gov- « loans and mortgages, premium reduc- tive 6% interest rate loans. Based on a are paying more then 25 percent of their emment. HUD has recognized this for tlon P^ents on private sector loans, and $150,000 rehabilitation cost and a required income for rent. some time, and the Housing and Commu- msurance ™ bank mortgages^ Although 4-5% interest reduction on private financ­ Yet another resource provided by PHAs is ing, the local agency may have to expend their ability to finance the construction of nity Development Act of 1974 also recog- $40,000-$50,000 of its CDBG monies in a lower income housing projects, particularly nized PHAs which are instrumentalities or . , , .. T ,. , local governments. Check with your Area onfe clt/' »oboken' ,N'b' GDBG flnanced similar program. This is a considerable Section 8 projects. Under the conventional Office for details on PHA establishment. subsidies and guarantees sum, but a good use of funds if the result is public housing program, local PFLAs issued . . . .. have been used in con unction with multi- to produce 15-25 good quality housing units tax-exempt bonds which were guaranteed PHAs should provide an important source lg dwdb rehabilitation projects with a in the community. of financing management expertise, and £ost of * $70 00a and amortized by the federal government.. Before committing CDBG funds sub­ Section 8 subsidies for your NSA effort. CDBG monies may have several financ- These bonds sold at interest rates substan­ sidizing private financing, you should care­ tially below the market, and were easy to Keep in mind, however, that if you plan to ing roles in NSA rehabilitation. Local agen- fully explore the other financial resources sell to investors because of the federal sup­ use any PHA Section 8 un s in t e , cieS/ partjcuiariy tbose with ongoing re- enumerated in this section. First, you port. These bonds are still ocassionally is­ you must submit evidence of PHA support volving loan programs in the property sec. should attempt to negotiate with private sued to finance the construction, rehabili­ and cooperation as part of your application may wish tQ provide direct loanS/ 100o/o lenders to gain commitments without in­ tation, or acquisition of public housing. for NSA designation. This means that you publicly financed, to owners of smaller surance. Secondly, HUD-FHA is commit­ Under a new section of the 1937 Act, how­ should contact your PHA as early as possi- multiple dwellings. However, this ap- ted to making Federal mortgage insurance ever, PHAs may now issue tax exempt ble in the NSA planning phase. proach will tie up significant amounts of resources support the NSA effort effec­ bonds for the financing of Section 8 proj­ CDBG funds in individual properties, in- tively. As part of HUD's commitment to ects. Section 11 (b) of the Act provides that _ . volve a substantial amount of local admin- the program, the regulations include PHAs may issue these obligations for the E. Municipal Financing istrative paperwork, and in many ways du­ liberalized appraisal standards and acceler­ acquisition, rehabilitation, or construction plicate the Federal Section 312 loan re- ated FHA processing procedures. Neverthe­ of Section 8 projects owned either by itself Most local governments have some au- SOurce discussed below. Although process- less, local agencies may wish to include a or by private entities. (Where a private, thority to issue bonds for a variety of pur-* ing time for the local effort may be some. contingency plan for the use of CDBG funds profit-motivated entity is the owner of the poses, and housing construction or re- what shorter than for the Federal program, for insurance if it is found that some struc­ PHA-financed housing, the amount of the habilitation may be one of them. Now t at steps are now being taken to reduce paper- tures are better serviced in this manner, or mortgage on the property may not exceed the municipal financing crisis of the last work for the 312 program. Furthermore, it if any processing delays in the FHA system 90 percent of the FiUD-approved develop­ few years has quieted down, and com- difficult to imagine that local agencies threaten to discourage individual appli­ ment cost.) HUD has issued regulations munities are being accepted once again by financially or politically could justify cants. Local officials may be able to get f governing the use of this financing investors in the bond market, you niaY financing more than a very limited number lenders to accept 10-50% coverage on indi­ * H mechanism (24 CFR 811), and any commu­ want to consider this alternative for financ- Q£ the $ 100,000-plus rehabilitation projects vidual mortgages for this back-up system. It ! nity considering the NSA program should ing some of your housing work in the NSA. which will probably constitute a significant should be noted that with Federal insurance become familiar with them. Keep in mind, however, that this route can pan of the NSA effort programs offering 90-100% coverage, the A final resource offered by PHAs is their become very expensive in terms of admin- Interest reduction subsidies and, possi- private institution will generally opt for the management experience over the years. istration, and it will make your local gov- mortgage insurance funds are the most FHA route, all else being equal. Through the management of public hous- ernment liable for the debts incurred. 39 38

i fr­

G. Federal Resources: ing, as well as a set-aside of Section 8 hous­ Agency was established in 1934. The insur­ iending amount limits will not allow ex­ ing assistance to subsidize on going opera­ ance programs, particularly in the multi­ tensive use of the Title I program in con­

1). Direct Loans tions. Only private non-profit corporations family mortgage area, are expected to play a junction with multiple dwelling rehabilita­ and cooperatives may be sponsors. Newly significant part in any NSA program. tion under the NSA program. However, a. The Section 312 Loan Program constructed or substantially rehabilitated HUD-FHA will consider all neighborhood Title I may be adequate for moderate re­ single-family homes, multifamily struc­ improvements planned for the NSA as habilitation activity in 2-6 unit structures. 3 For many years the Federal Section 312 loan program was the primary public re­ tures, and congregate housing are all eligi­ though they were now complete for under­ writing purposes. However, all individual source for rehabilitation activity. Financed ble. Tenants may be individuals who are at b. Title II—Major Home insurance applications will be reviewed on through United'States Treasury notes, 312 least 62 years of age or who are handi­ Improvement Loan Insurance an individual basis to determine eligibility. loans provide direct, 20 year, 3% federal capped, or may be households of two or Section 203(k) and 220(h) Following is a brief description of the financing to property owners interested in more persons the head of which or spouse is These larger scale property improvement upgrading their structures. Under this pro­ either 62 years old or handicapped. Eligible major HUD-FHA insurance programs which may be helpful in carrying out an programs may be useful for financing of re­ gram, costs of $27,000 per unit are allowed. tenants must also meet Section 8 income NSA effort. More detailed information is habilitation in some of the smaller multiple Significantly, up to 80% of each loan may limits. available from your Area Office. Use of each dwellings in an NSA target area. Following be used for refinancing of existing indebt­ Financing is provided at an interest rate of these insurance categories requires local is a brief summary of their key provisions: edness. Before the advent of Community approximately equal to the current United officials to seek out lending institutions Development Block Grants, 312 loans were States Treasury borrowing rate. Each HUD • Eligible properties: Section 203(k) loans which have been approved for insurance used primarly in conjunction with 1-4 unit Area Office will receive a special pool of can be used for improvements to prop­ participation. HUD can provide CDBG dwellings. Now, as CDBG programs prove Section 8 funds to be used only with the 202 erties of up to four dwelling units, with­ agencies with lists of such lenders in their an appropriate vehicle for the upgrading of program. In response to a periodic adver­ out restriction on the location of the these structures, public officials and HUD tisement published in the Federal Register, areas. property. Section 220(h) loans can be used are turning to the 312 program for financing non-profit sponsors apply directly to HUD for improvements to properties of up to of rehabilitation in smaller and middle- in Washington, D.C., or to Area Offices, a. Title I Property Improvement 11 dwelling units but may only be used in range multiple dwellings. This new em­ depending on HUD's changing policy, for a Loans an FHA-approved urban renewal, rede­ phasis will be facilitated as HUD takes reservation of Section 202 loan authority. If velopment, or concentrated code en­ This is the basic insured property im­ steps to reduce the processing requirements this application is approved, sponsors must forcement area. In general, the property provement loan program of HUD-FHA. The heretofore associated with 312 loans. then meet the regular two-stage Section 8 must be at least 10 years old. Newer Title I Program was the first of all Federal The 312 loan program represents one of processing requirements at the HUD Area properties can be improved with an in­ insurance efforts. Title I loans provide up to the primary financing sources to be used in Office. Upon receipt of Section 8 approval, sured loan only if in need of major struc­ 90% insurance to participating lenders. conjunction with an NSA effort. Many loan funds are then disbursed and construc­ tural improvements, damaged by fire, Borrowers may obtain loans of up to municipalities already have personnel with tion is started. flood, or other casualty, or defective in a $15,000 on 1-3 unit structures or up to NSA designation will not eliminate the way not known at the time of comple­ experience in processing these loans. Fair need for developers to go through normal $25,000 for multiple dwellings, with a limit tion. share communities will be receiving alloca­ of $5,000 per apartment. Title I lending is 202 processing procedures, but support by • Eligible borrowers: Any owner or leasee tions of 312 monies in early 1978 and will limited to rehabilitation costs only; these the local government could prove a big help under a lease for a term at least 10 years be free to reserve all or part of these monies loans can be the second obligation placed in securing Section 202 awards. Section longer than the loan term is eligible, to use in NSA areas. Other municipalities on a property. The maximum interest rate 202 may provide a very valuable housing whether an occupant of the property or with NSA designation will be able to draw resource for old or handicapped residents : is 12%, and repayment must be in 15 years down on Area Office 312 loans funds on a or less. On obligations below $15,000, indi­ not. for NSA, and permit you to better utilize case by case basis. vidual lenders make credit determinations • Eligible improvements: Loans under housing now occupied by these groups. both programs are to be used for im­ b. The Section 202 Program an applications. As a result, approvals are ; provements to the real estate to make the For Senior Citizens 2. Federal Insurance Programs often forthcoming in a week or less. On property more livable and adequate. That and Handicapped Housing The major role of HUD-FHA in housing loans of $15,000-$25,000, HUD Area Office j review is required, and processing may take includes new work, structural alterations Although the Section 202 loan program is financing over the past decade has been in j up to a month. and reconstruction, planning and a specialized funding resource limited to the insuring of private sector loans and changes for improved functions and mortgages. These programs have included Title I has frequently been used in con­ senior citizens and handicapped housing, it junction with local CDBG small property modernization, and changes for aesthetic insurance of property improvement loans, may be useful for rehabilitation of one or rehabilitation efforts. Insofar as small prop­ appeal and elimination of obsolescene. home mortgages, and mortgages on multi­ more structures in an NSA target area. erty efforts take place in an NSA area, use of There are certain restrictions on nones­ family rental properties with a total value Eligible sponsors under Section 202 re­ this program should be explored. The low sential or luxury work items. Properties ceive construction and permanent financ- of $200 billion since the Federal Housing 41 40 1 ’ 1 improved under 220(h) must be brought loans to finance rehabilitation, construc­ i NSA neighborhoods. Following are the and operating subsidies to nonprofit or into conformance with property stand­ tion, or purchase of low-cost 1-4 family major multi-family insurance programs limited profit sponsors for long term (40 ards adopted for the project area. housing. Maximum insurable loan I with a summary of their provisions: years) low interest rate (as low as 1%) • Maximum loan amounts: Generally, amounts are the same as for Section 235. mortgages for rehabilitating multi­ $12,000 per family unit, or up to $17,400 Mortgagors must have adjusted incomes • Section 207 Multifamily Rental Housing family housing for lower-income per unit in high cost areas. Under 220(h), which are no higher than 95% of the area Mortgage Insurance—provides insurance S families. Tenants contribute no more the total amount is limited to $40,000. median income. for loans to public or private developers than 25% of adjusted income to rent. i • Section 203(b)—insurance for one to four to construct or rehabilitate multifamily These ceilings are also subject to limits Since 1974, HUD has paid additional ! on maximum property debt, including family dwellings homeownership. This rental housing. Projects must contain at subsidies to cover the difference between is HUD-FHA's “flagship77 single family least eight rental units, and be located in old and new obligations, according to the tenant's contribution and the actual * insurance program. Mortgages can be areas where market conditions indicate a formulas established under the program. cost of operating the project. No new made for up to 97 percent of the first need for such housing. Investors, build­ • Repayment Term: 20 years or three- commitments are being made by HUD quarters of remaining economic life, $25,000 of the appraised value of the ers, or developers seeking such insurance should first consult their local FHA in­ under this program, however. whichever is less. property, and for 95 percent of any excess These Title II insurance programs have up to the loan limits. Current loan limits suring office. • Section 223(f) Mortgage Refinancing for interest rates currently set at or below FHA are $60,000 for single family residences, • Section 221(d) (3) and (4) Mortgage In- Existing Multi-family Rental Housing mortgage rates. At the present time these $65,000 for two and three family homes, . surance for Multi-family Rental Housing —can be used to refinance existing ; loans are not in particularly active use. and $75,000 for four family residences. for Low- and Moderate Income indebtedness in projects undergoing All mortgagors must “establish that his Families—provide insurance to finance moderate renovation. Major rehabilita­ income is and will be adequate to meet tion would not be eligible. The property c. Single Family Mortgage the construction or rehabilitation or the periodic payments required in the rental (5 or more units) or cooperative owner, through refinancing, can extend Insurance Programs mortgages.77 Eligible units include new, housing for low- and moderate-income or the terms of the mortgage and increase . HUD-FHA's single family mortgage in­ existing, or rehabilitated properties in displaced families. Detached, semi-de­ the principal amount without increasing ! ' surance programs will have limited rele­ any part of the country which meet the tached, row, walk-up, and elevator struc­ the debt service, thereby providing a vance to Section 8 rehabilitation properties. HUD-FHA Minimum Property Stand­ tures are eligible. Both programs have margin of capital for renovation. ' ■ However, local governments may find ards. mortgage limits set by statute and use the • Section 223(e) Miscellaneous Housing that several of these insurance resources The Section 203(b) program can be use­ FHA ceiling interest rate. Projects using Insurance—despite HUD's intention to i may be useful in efforts to support small ful for owners who have no special either of these programs may qualify for relax its normal FHA underwriting property homeownership and rehabilita­ characteristics which would necessitate Section 8 leased housing assistance. standards in NSA areas to allow for the tion in the target area. Following is a brief using one of the special purpose mortgage The Section 221(d) (3) program insures concentrated CD-related investments description of the key programs: insurance programs. The program histor­ mortgages up to 100% of the project which will be taking place as part of your • Section 235 Mortgage Insurance and As­ ically has been most closely connected value for cooperative nonprofit organiza­ strategy, there may still be situations sistance Payments for Home Ownership with suburban development, but there is tions, and up to 90% for limited-dividend where the Area Office will not approve and Project Rehabilitation—insures no programmatic reason it can't be used groups. insurance applications under the stand­ mortgages and provides payments to lend­ in NSAs. The Section 221(d) (4) program insures ard Title II procedures. In this case, the ers to reduce the interest rate to as low mortgages up to 90% of the project value Area Office may waive the provisions

as 5%. Homeowners must contribute d. Multi-family Insurance for profit motivated sponsors. which are causing trouble and grant the The 221(d) (4) multi-family insurance 20% of their adjusted income to monthly Programs insurance application “pursuant to Sec­ mortgage payments and make a 6% program has provided the bulk of the tion 223(e).77 This provision can be downpayment on the cost of the home. The HUD-FHA multi-family insurance financing assistance for Section 8 brought into play if the Area Office de­ Dollar limits on loans and sales prices are programs are expected to play a key role in projects—both newly constructed and cides that the property is in a location i included in HUD's regulation 24 CFR financing of NSA rehabilitation projects. substantially rehabilitated—over the last which is reasonably viable, is needed for 235.25. The family income limit for ini­ The availability of insurance may be criti­ several years. It is an extremely popular low- and moderate-income housing, and tial occupancy is 95% of the area median cally important to municipal efforts to gain program, and one with which developers is insured with the objective of upgrading income. (There is only a limited amount private sector mortgage investments in the and HUD Area Office staff are equally a neighborhood. Mortgagees may not re­ of funding available for this subsidy pro­ target areas. As noted above, HUD-FHA has familiar. quest this special processing; it is granted gram.) included special provisions in the NSA pro­ • Section 236 Mortgage Insurance for at the discretion of the Area Office. I • Section 221(d) (2) Homeownership for gram regulations to increase the applicabil­ Rental and Cooperative Housing for Under NSA, however, you should make a ; Low- and Moderate-Income Families— ity of the insuring resources to Section 8 Lower-Income Families—provides point of discussing this program with insures lenders against loss on mortgage substantial rehabilitation projects from the mortgage insurance, interest reductions, your local HUD-FHA representatives.

42 43

■ -1

H. Additional Federal Assistance only limited relevance to Section 8 re­ J. Additional Incentives habilitation. But bank commitments in their continued interest in their properties this area can be extremely helpful to other, once the tax benefits expire. \ The foregoing are the major financing There are many other financial incen­ supportive CDBG funded small property i sources for housing rehabilitation. Other tives which may also be relevant to local improvement efforts. For larger structures, potential public resources relevant to an NSA efforts. One is local property tax construction financing should not be dif­ NSA effort in many cases are the Section abatement, which can be granted according i ficult to obtain,- note that there is room for VI. CARRYING OUT THE 810 Urban Homesteading Program by to a variety of formulas. Section 8 payments creative negotiation here regarding terms. NSA PROGRAM i which FIUD may transfer federally-owned have been calculated at 100% taxation The most significant area for private sector properties to a local government at nominal levels, so that property tax relief does not Once NSA designation has been awarded, l involvement is permanent mortgage cost; the Economic Development Adminis­ have to be the core element of an NSA ef­ financing. Key issues to be resolved regard­ participating communities will be ready to tration's Small Business Administration, fort. This is fortunate, since officials in move forward with their plan. As part of ing this funding source are: availability of for commercial properties in NSA areas; many municipalities are unwilling or polit­ your application, you prepared a schedule i •. funds, the need for FHA insurance, and ; and the Neighborhood Housing Services ically unable to start abatement systems. for HUD's approval, and you will have to be lending terms. Note that many NSA areas program run by the Urban Re-Investment However, some communities may wish to ready to move quickly to carry it out suffering disinvestment have had limited once Task Force of the Home Loan Bank Board. offer some tax abatement benefits, both as a you have won your designation. The fol­ private sector investment in the recent symbol of municipal commitment to the lowing discussion will focus on key steps past, so that lenders7 general willingness to NSA effort and to increase the margin of which must be taken to carry out your pro­ become involved in these areas is not a financial feasibility for individual projects. gram effectively. HUD officials will be foregone conclusion. I. The Private Financial Sector working closely with the participating If local officials believe that current or You should seek involvement of all the future developer-investors should play a communities to assist in overcoming the

As noted above, PIUD's NSA regulations private sector financial institutions serving significant role in the NSA effort, then sev­ program problems which inevitably will arise. place a great deal of importance on munici­ your community in the NSA effort. The eral other tax incentive opportunities will pal efforts to obtain private sector com­ more lenders who participate, the more be important in gaining their involvement. mitments. There are also a number of sub­ chance to negotiate desirable interest rates First, if there are historic properties in the stantial reasons for local agencies to in­ and repayment periods. As indicated ear­ proposed NSA area, Section 2124 of the Tax A. Identifying the Properties volve local private sector lenders in their lier, these terms can be a significant factor Reform Act of 1976 allows redevelopers of NSA efforts. First, direct governmental in the feasibility of specific rehabilitation such projects a 60 month amortization of You should have begun the process of ■ ! lending sources will rarely, if ever, be suffi­ projects, even when Section 8 housing capital expenditures and other favorable identifying prospective properties for NSA cient to meet the revitalization needs of a payments are available. Furthermore, the depreciation. More generally relevant, Sec­ treatment during your application process. ; ! ' joint participation of a number of lenders in Hopefully, you opened discussions with . particular neighborhood. Second, as noted, tion 167(k) of the Internal Revenue Code private sector financial institutions must placing individual mortgages on Section 8 offers owner-developers a tax advantage by current owners about the program and their be tied into an NSA effort even if HUD- rehabilitation properties may eliminate the allowing them to depreciate on a straight- role in it. Immediately after NSA designa­ tion, you should contact all owners of prop­ FHA insurance is involved in every case. need for back-up insurance. With a guaran­ line basis over a period of five years any I Third, and most significantly, involvement teed income stream from the Section 8 expenditures incurred to rehabilitate low- erties with a rehab potential in the target i of lenders in the overall re-investment ef­ payments and participation by a number of income rental housing, if the taxpayer neighborhood. This can be done through fort will not only increase the resources financial institutions, you may be able to spent at least $3,000 in improvements over mailings, general meetings with interested available for rehabilitation, but also help convince individual lenders that their risks a two year period. The maximum expendi­ parties, specific interviews, or a combina­ stimulate additional private sector invest­ are minimal and do not require mortgage tures that can be amortized are $20,000 per tion of these approaches. Owners should be given detailed information about your : ments for single and multiple family pur­ insurance coverage. Substantial processing unit. Low-income housing is defined as that chases, and for the refinancing of existing delays for FHA insurance, or the commit­ rented to Section 8 eligible tenants, gener­ complete program at this time. It will be debts. Finally, the involvement of lending ment of CDBG monies for local insurance, ally 80% of area median income. additionally helpful if you can provide de­ officials in the planning and action phases can be avoided if this agreement is success­ tails about the Section 8 program and other f of an NSA program will bring valuable pri­ fully made. Local officials working with developers subsidy approaches you are applying in the vate sector technical skills to this effort. motivated in part by these tax incentives NSA. These meetings can also include local To summarize, private sector investors are urged to negotiate investor commit­ lenders whose participation you will be ex­ Private lenders can provide property im­ should be heavily involved in the NSA ef­ ments in two key areas. First, it is impor­ pecting in the area. It would certainly be provement loans, permanent mortgages, forts. The extent of private sector commit­ tant that these developer-investors plan appropriate to discuss with owners the var­ and construction financing. Property im­ ments will be used as one of the key ele­ and implement an effective management ied financing resources you have inven­ provement loans, insured under the Title I ments in HUD7s ranking of applications for plan for their structures. Secondly, the toried through the application process at or Title II program, or unsecured, will have NSA designation. owners should assure public officials of this point.

44 45 During your inventory of properties for discount this problem. If potential not have worked with HUD-FHA mort- with the owners in helping obtain local i NSA, you almost certainly identified a developer-investors cannot reach workable gage insurance programs before. You craftsmen and minority-owned businesses larger number of buildings than you could agreements with current owners because of should be prepared to assist in preparing to carry out some or all of the work. realistically treat in one program year. this price inflation, the local public agen­ for negotiations in the pre-feasibility 2. Develop a management plan. Man­ There will be a temptation to restrict your cies involved in your program may have to meetings, and afterwards. agement difficulties have been a critical selection of properties to a number which step in as a party without direct financial • development of cost estimates. Particu­ problem in many low and moderate income larly if you have been running CD rehab can be easily accommodated with the re­ interest. One possible strategy for you here multi-family projects throughout the coun- sources available. However, you should would be to make a well-publicized an­ programs in the past, the availability of try, particularly where a small number of make a point of selecting a group of units nouncement that no property transfer to be trained rehab work estimators will be of units has precluded the use of professional, large enough to provide a guaranteed re­ financed through Section 8 will take place great help to many owners. You can pro­ contract management. The area-wide scope serve of potential rehabilitation sites dur­ above a certain ceiling limit per unit on vide the technical expertise to make rea­ of the NSA program and the extensive in­ ing the program. The reason for this is sim­ acquisition cost. HUD limits can be used as sonable judgments about the amount of volvement of your local government in the ple. During your program year, some own­ the basis for such a move. It may also be work necessary, whether for a Section 8 process affords a number of opportunities in ers will decide, for any number of reasons, necessary to let the market "settle down." job or some other kind of rehab work. this area. You should meet with the tenants to back out of their commitments, or not to Rehabilitation activity in these properties 2. Identify financing sources and assis­ and the owners, either separately, together, enter into them in the first place. Some may can take place during later cycles of Section tance you are prepared to offer. Potential or both, and discuss the management op-' wish to defer participation until a later date. 8 reservations for the five year plans, after owners should be given a clear understand­ tions which are available. Among some in­ There is little that you can do about this current owners have time to realize that ing of what their options in this area are, teresting options to consider are: natural fall-out, but you can plan and be their initial price expectations were un- and you should present a clear summary of • self management with tenant involve­ l prepared for it. Be sure you have sufficient realistic. your plans to provide such incentives and ment. There have been some notable staff set aside to work closely with the subsidies as land write-downs for any new successes with tenant-run housing man­ construction that's required, interest rate { owners. Make sure that your reserve units B. Starting the Process agement, but you should be aware that are ready to be brought "on line" quickly if subsidies, necessary public improvements, there have also been some notable fail­ second mortgages, and the like. ! they're needed. Remember that the worst Once a group of interested owners or po­ ures, too. thing that can happen with a reserve group tential owners has been identified, local of­ 3. Detail relocation requirements and • joint negotiation by a group of owners benefits to owners and residents. This step with a management firm to provide ser- f of units is that you will be so successful that ficials and the developers will have to work you will have to seek additional funding to closely together on the steps leading to is crucial, and should take place im­ vices for a group of buildings. Your CD complete them. If you are "plagued" with HUD approval of specific applications for mediately after program award. Meet with agency could be the catalyst or organizer this problem, your program will have been a Section 8 assistance and the carrying out of both parties and explain the mechanics of of this kind of effort. ! great success. On the other hand, if you rehab projects. Section 8. Residents should be offered the • establishment of a community-based

have scheduled a certain amount of work 1. Define and advertise city services: one opportunity to make their own suggestions management concern financed in part about necessary rehab work. If relocation for your program, and find that the natural of the key elements of the NSA program is with CD or other local funds. will be necessary either during or after the loss of interested participants leaves you the heavy involvement by your local agen­ • Contracting with the local Public Hous­ f rehab work, HUD-mandated procedures for short, you will have fallen behind in your cies in the development of housing pro­ ing Authority. notification of affected individuals should program schedule, and you'll have to deal posals for assistance. The program regula­ 3. Complete the application forms for begin at this point. with disappointed area residents and a tions require you to provide technical as­ Section 8 or other assisted rehabilitation i series of questions about capability from sistance to owners and developers who re­ work and send them on to HUD. This is the C. Carrying out the rehab work HUD. quest it, so you must be prepared for this point at which you will have to step back If new investor owners are going to be step. The services which you might be pre­ and review the proposals for completeness 1. Obtain estimates for the proposed re­ involved in the first cycle of your program, a pared to provide in your role as manager of and accuracy. Keep in mind that these pro­ habilitation work. This can be done by pri­ number of special tasks will have to be un­ the NSA program can include: posals will be considered final proposals by vate contractors, or the city can provide ■ dertaken. The task of identifying appropri­ • preparation of HUD applications. Re­ HUD, unless they involve HUD-FHA proc­ s staff to undertake this preliminary step. essing. Your judgments must be profes­ ate owners and sites, begun during the ap­ member that many of the owners you r Remember that good estimates are crucial sional and defensible, or your program will ' plication- process, will have to be com­ will want to involve in the program will : to a successful rehab effort. Glossing over be set back. pleted. Then, option agreements and even­ have never worked with a HUD program major problems, or underestimating the 4. Monitor construction work, in the tual sales prices compatible with Section 8 before. The paperwork requirements can amount of work necessary are common NSA. After the papers have been filed and financing will have to be negotiated. The be very intimidating, and you should be plagues in the rehab business, and they lead approval granted, you should continue to possibility of sharp jumps in property costs prepared to help filling these out. to serious complications. work with the owners, developers, and res­ due to the announcement of NSA designa­ • HUD-FHA mortgage insurance negoti­ This can be a good point at which to work idents to make sure that the work proceeds tion has been mentioned before. Do not ations. Similarly many of the owners will

47 46 as planned, and with as few complications ings to discuss the program and get sug­ borhoods, whether they are designated for and painting of deteriorating walls and ceil­ as possible. gestions from area citizens on specific pro­ special treatment on a concentrated basis, ings. Minimum rehabilitation activity usu­ ? 5. While construction is taking place, grams and policies. You should also seri­ or they are the sites for selected assistance. ally does not cost more than $1,000 per you will have to be overseeing the prepara­ ously consider designating an existing rep­ Unless the stratgies and techniques devel­ dwelling. Minimum rehabilitation is in­ ! tion of Section 8 documents for tenants, resentative group or establishing a new oped through the NSA program—which is corporated in the "maintenance and opera­ and helping establish procedures for pay­ group to act as an advisory organization to as comprehensive an effort as HUD is ever tion" component of property budgets. With likely to fund—are transferred to these ments to owners. the NSA program staff. the possible exception of low-income 6. Continued monitoring of completed other areas, and incorporated into the owner occupants, property owners nor­ projects should be part of your operating everyday functioning of your community mally do not require governmental assis­ plan. The NSA effort will not be completely VII. CONCLUSION development program, the value of NSA tance to finance these repairs. successful if it doesn't presage a new will have been lessened. When property owners are committed to cooperative arrangement between area The first round of Section 8 processing by the operation of their structures, minimum owners, tenants, businesses, lenders, and an NSA community will be extremely sig­ rehabilitation activities are carried out local government. You can assist in making nificant to its eventual success under the without pressures from tenants or gov­ APPENDIX I: DEFINING sure that the Section 8 payments are made program. You should approach the first year ernmental agencies. This is particularly on time; that management plans are being very seriously. In an enterprise as compli­ REHABILITATION true in owner occupied buildings. Owners !: fulfilled and properties maintained; that cated as NSA, unanticipated problems are generally realize that the cost of completing The term "rehabilitation" has been used Section 8 tenants are afforded all their bound to arise. The first application round minor repairs will be less than future to define numerous types of activity, all rights under the law and regulations; and should flush some of these out in such key charges for major problems which result , relating to the upgrading of property. This that your ancillary efforts in the neighbor­ areas as ownership motivation, citizen and from neglect. However, in neighborhoods includes correction of code violations, re­ which are beginning to deteriorate, owners hood are having the desired effect. tenant participation, commitment of an­ i ticipated resources, and paperwork process­ moval of decay, and elimination of struc­ may begin to lose confidence in the area's tural deficiencies. It can include "freshen­ D. Continuing Responsibilities ing by HUD-FHA. Dealing with the quirks future and stop making such repairs. r ing up" of a building's facade, or the com­ ' and obstacles which arise in the first year . plete, historically accurate restoration of an The direct work with property owners will take a creative and flexible staff effort. exterior and interior. On the other hand, it 2. Moderate Rehabilitation :i and residents is only one facet of the NSA One way to minimize the potential for : can involve the gutting of a historical struc­ : program. You also have your own commu­ unpleasant surprises in the first year is to Moderate rehabilitation includes such ■ ture and the replacement of old architec­ nity development effort to think about, and devote a lot of time to the initial application major repairs as the replacement of building tural features with very modern interiors. coordinating the delivery of this assistance requirements in the program. Once you subsystems, extensive carpentry, plaster­ For purposes of clarifying the discussion in will be a major, time-consuming interest have completed the first cycle, spend some ing or painting work, and replacement of this guidebook, the following definitions of i l during, before and after the actual rehabili­ special time on evaluating the experience windows, doors, and roofs. Minimum re­ •- rehabilitation will be used. They are taken ! tation of houses. Your general responsibili­ and spotlighting problems areas. Analyze habilitation activities also may be incorpo­ from a publication entitled "The Westches­ rated in moderate rehabilitation, since i ties under NSA will include: why they were problems, what the elements ter County Experience: A Report for Local f 1. Finalizing a first stage plan for physi­ which led to blockages were. Use this in­ owners often choose to take care of all prob­ Officials" produced by the Housing Action lems as part of a property improvement ! cal improvements in the target area, par­ formation to modify subsequent program Council of White Plains, N.Y., under con­ program. Generally, moderate rehabilita­ ticularly under the CDBG program. years. tract to HUD. (This book, publication tion activity does not exceed $10,000 for a 2. Development and maintenance of a Despite its challenge, and considerable • 4 number HUD-PDR-194-1(2), December, one-to-two unit structure or $4,000 per target area code enforcement program. If at claims upon a community's time and re­ ; 1976, is available from HUD's Office of dwelling unit in larger properties. ; i all possible, the initial property inspections sources, the NSA program offers you an ex­ : Policy Development and Research.) Moderate rehabilitation may be the re­ should be undertaken before designation or cellent opportunity to gain supplemental sult of an owner's interest or of governmen­ while your staff members are discussing po­ resources for a comprehensive neighbor­ tal pressures. The cost of such activity cre­ tential participation with owners. The use hood and housing revitalization strategy. / 1. Minimum Rehabilitation ates financial problems for low- and of code enforcement in an NSA area to spur This guidebook has been prepared to en­ 1 Minimum rehabilitation includes minor moderate-income homeowners and their participation in the program should not be courage local officials to go forward with repairs or replacement of accessories, tenants, particularly if the owner must bor­ ! underestimated. the NSA program, despite its considerable small-scale structural improvements, row funds at market rates. Generally, expe­ : 3. Involvement of local residents in the demands, and to make local governments cleaning, patching, and painting. Among rience has shown that incentives are neces­ citizen participation process. This should aware of the many tasks which will have to the activities in this category are replace­ sary to induce owners in these income include, at the very least, distribution of be undertaken to succeed in the NSA pro­ ment of individual plumbing fixtures, re­ groups to carry out moderate rehabilitation written materials about your program, and, gram. The lessons you learn in carrying out pair of electrical outlets, patch replastering, activity. as it moves along, its progress,* public meet- NSA will be applicable in your other neigh- 49 48

I 3. Gut Rehabilitation money or to borrow from the private mar­ ket to rehabilitate the structure. Strong Gut rehabilitation includes the stripping code enforcement pressures are usually not down of buildings to their joists and head­ sufficient to get them to make major im­ ers, the replacement of building subsys­ provements. •: tems, rearrangement of apartment layouts,

the total replacement of accessories, car- Many local governments, of course, pro­

pentry, and the addition of new amenities. vide assistance of one kind or another to APPENDIX II It requires large expenditures, with a min- those undertaking both minimum rehabili­ f imum of $20,000 for smaller structures, and tation and moderate rehab. The Section 8

at least $10,000 per dwelling unit in large Substantial Rehabilitation Program re­ quires more than routine or minor repairs. SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM buildings. REGULATIONS Public financing with reduced interest Substantial Rehabilitation under the Sec­

r rates or an equivalent benefit is a necessary tion 8 Program may vary in degree from gutting and extensive reconstruction to element in any gut rehabilitation project - Subpart C: Neighborhood Strategy Areas cosmetic improvements coupled with the designed to serve low- and moderate-in- Special Procedures / come renters. The owners of many severely cure of substantial accumulation of de- Cosmetic im- deteriorated buildings have allowed their ferred maintenance, - Subparts A, B, D, and Latest Increases in properties to decline because they are un­ provements alone do not qualify as Sub­ Maximum Allowable Rents willing or unable to commit personal stantial Rehabilitation.

■ :■ t

f

| } i

:■ i i I f

1 .!

’ i : i i ? •• ] « : I

‘ ; i I l ; ‘:i M I l i

51 50

k- "W ; I I TUESDAY, JANUARY 31, 1978 ■ RULES AND REGULATIONS i PART III [4210-01] certain certifications concerning those proposals. special procedures to only one NSA in i TW* 24—Homing and.Urban Development The contract and budget authority a locality was unduly restrictive. This available for use under these special may be true in certain cases. Accord­ ! CHAPTER VIII—LOW INCOME HOUSING, DE­ ingly, section 881.303(a) has been PARTMENT OF HOUSING AND URBAN DE­ procedures In this fiscal year will come re- VELOPMENT from authority retained by the Secre­ vised to provide that a local govem- ;i tary pursuant to § 891.403(b). Propos­ ment may request, and HUD may ap­ [Docket No. R 77-387] als or applications for other assisted prove, more than one NSA within the ■ PART 881 SECTION 8 Housiwft Programs will be handled jurisdiction of the local government. PAYMENTS^r^^ sumt^?, .? Under r?gular Procedures except that maIh iTATrSiniROGRAM“SUBSTANT ^ RE' aPProPriate waivers may be granted to Length of Time Allowed for HABITATION support the NSA program pending the Submission of Proposals Special Procedure! for Neighborhood Strategy modification of the regulations and is­ suances applicable to the other pro­ Two comments expressed concern Areas grams. that the requirement that "all Propos­ AGENCY: Department of Housing The diversity of housing types and als submitted under these special pro­ } i and Urban Development. ownership patterns in a proposed NSA cedures be submitted to HUD within •; may mean that one type of assistance six months after approval of the ACTION: Final rule. such as assistance provided under this (NSA) request” allowed Insufficient : SUMMARY: This rule sets forth poll- Subpart will not suffice to encourage time for Proposals to be developed. It ' cies and procedures under which Sec- v0*111116 housing rehabilitation was suggested that the contract and tion 8 Substantial Rehabilitation required to solve the problems of budget authority to be used under . i under this subpart may be used in a deterioration in a neighbor- these procedures .be available for the i identified Neighborhood Strategy «>?°di^A“°,rding^* local governments life of the local government’s program, Areas (NSAs) where it is expected that rphnimtS™ 6 ri«f 0f ^ Pos®lble with Proposals submitted according to DEPARTMENT OF concentrated community development whpn mechailjfms a local schedule. ! : •i SL°ththe“^"a Seemed !arly’ When “SpEorpuS In response to these comments, sec- tion 881.304(f) is revised to allow sub­ : i period of time. SgSSfS ^r^eT^S mission of proposals based upon a HOUSING schedule mutually agreed upon by DATES: Effective date: January 31, governments should consider a variety HUD and the local government. If it i 1978. Comment date: Additional com- °* resources such as the Community appears that the local government will ments on this Final Rule should be Development Block Grants (block i AND URBAN filed -with the Rules Docket Clerk by Brant), including Urban Development not be able to meet the schedule, it June 1, 1978. Action Grants (UDAG), and local may be renegotiated. However, the funds. In this regard, section provisions of section 881.308 allow the Docket Clerk, 881.301(c), which defines an eligible Field Office to use the contract and DEVELOPMENT Office of the General Counsel, Room NSA area, Is designed in part to ensure budget authority set aside under this 5218, Department of Housing and that assistance under this Subpart Is Subpart for other proposals under this i Urban Development, 451 Seventh targeted to areas in which all eligible Subpart or for other purposes if the Street SW., Washington, D.C. 20410, block grant physical development ac- original schedule is not met. 202-755-7603. tivities and public services may be car­ : ried out. Applicability of Uniform Relocation FOR FURTHER INFORMATION Assistance and Real Property Ac­ { On January 31, 1977, the Depart­ CONTACT: ■ ment published in the Federal Regis- quisition Policies Act of 1970 ! i Richard L. Schmitz, Acting Director, ter (42 FR 5918) a proposed rule to Two comments noted that, in the Section 8 and Leased Housing Divi- revise 24 CFR, Part 881 of the Section case of a privately owned section 8 slon, Office of Assisted Housing De- 8 Housing Assistance Payments Pro- substantial rehabilitation project, the velopment, Office of Assisted Hous- gram—Substantial Rehabilitation Reg- Uniform Relocation Assistance and ing, U.S. Department of Housing and Nations by adding a new Subpart C to i Urban Development, Room 6254, create special procedures for Neigh- Real Property Acquisition Policies Act 202-755-5380. borhood Renewal Strategy Areas. In­ of 1970 (Uniform 'Act) was inapplica­ ble. It was suggested that the Uniform terested persons had until March 2, SECTION 8. HOUSING SUPPLEMENTARY INFORMATION: 1977, to submit written comments. Act should apply to all proposals ap­ Units of general local government eli­ By the end of the comment period, proved under these special procedures. ■■ gible to utilize these special proce- 18 written comments had been re- The Uniform Act does not apply to re­ ' V ASSISTANCE dures are those local governments ceived. All of these comments, as well habilitation of privately owned pro­ which are applying for or are receiving as several received after the comment jects or to rehabilitation by PHAs assistance under 24 CFR, 570.102 or period, were carefully considered. where no acquisition takes place. How­ PAYMENTS PROGRAM 570.103. Approval of a request from a Changes have been made to the Regu- ever, this final rule provides that the unit of local government to use the lations as published for comment. A local government shall be responsible special procedures (1) assures the gen- discussion of the major changes and of for relocation payments and services, SUBSTANTIAL eral availability of HUD mortgage in- the more recurrent and significant af a level equivalent to the require­ surance in the NSA, and (2) sets aside comments follows: ments of the Unform Act, to all ten­ a specific amount of Section 8 Sub­ ants displaced by rehabilitation under­ REHABILITATION Neighborhood Strategy Areas stantial Rehabilitation contract au­ taken under this subpart. These pay­ thority for use in the NSA, and (3) au- The name of the areas eligible for ments and services may be paid for thorizes the local government to solic- consideration under- these procedures with block grant funds. Also added is a It Section 8 Substantial Rehabilitation has been changed from Neighborhood provision which gives the option in Special Procedures for Proposals for up to the amount of con- Renewal Strategy Areas to Neighbor- certain cases to assist affected persons tract authority. set aside. The local hood Strategy Areas (NSAs). who would be eligible under the sec­ government will then review and tion 8 existing housing program Neighborhood Strategy submit to HUD, which has final ap­ More Than One NSA May Be through the issuance by the Public Permitted proval authority, Section 8 Substantial Housing Agency (PHA) of a Certifi­ Rehabilitation Proposals that it be- Several comments expressed concern cate of Family Participation in lieu of Areas lieves are approvable together with that the limitation on the use of these rental assistance payments.

FEDERAL REGISTER, VOL 43, NO. 21—TUESDAY, JANUARY 31, 1978 52 53 7 {

RULES AND REGULATIONS i: RULES AND REGULATIONS I ; Environmental Clearance Require­ are limited to areas that receive con­ for approval of an NSA and to assist (2) A table of contents for Subpart C ments—Relationship With Block centrated physical redevelopment ac­ owners in the preparation of specific is added as follows: Rfti ^*dihereln-Sectlori redevelopment, public improvements f tivities while some areas suitable for proposals. Field Office staff will be ,wl}Ich contaIns preferences and services) assisted by the local gov- ■ Grant Program section 8 substantial rehabilitation available to provide assistance to local Subpart C—Special Procedural for Nelghberhaatf innivrt' t}?eS 01 PI? oSS8’ 8JlaU not ernment’8 block grant program pursu- Comments were received which ad­ may not need such activities. This governments who undertake NSAs, Strategy Areal fifiufnfl “ -302, mSS'XS ant 10 24 CFR Part 570. The local gov- dressed the environmental assessment limitation is intentional. These proce­ and, when possible, HUD will offer Sec. 881.306 shall apply in lieu of §§ 881.202 emment may request and HUD may requirement for each section 8 propos­ dures are specifically designed for training to local governments which 881.301 Applicability and scope. through 881.210 of Subpart B for pro- approve more than one NSA within al submitted for an approved NSA. It areas where concentrated revitaliza­ are selected for participation. 881.302 Contract and Budget Authority posals not indicating HUD mortgage the jurisdiction of the local govem- was suggested that the process be sim­ tion is planned. Other substantial re­ Comments were received which available for use under this subpart. insurance under these special proce- ment. plified by changing this Subpart to asked for a definition of the term 881.303 Request by local government for dures. For proposals which indicate (b) Coordination with the Communi- habilitation needs should be identified approval of NSAs. permit the environmental clearance in local housing assistance plans and "Owner” and also asked if the term 88V30?- tv Development Planning Process. E1I- done under the block grant regula­ covered nonprofit sponsors and devel­ 881.304 HUD review of requests for NSA(s) 881.305 and §881.307 shall apply in gible applicants are encouraged to tions to suffice for each subsequent addressed through the regular proce­ approval. lieu of §§ 881.202 though 881.208. dures in Subpart B, or through other opers. The term "Owner” as defined in 881.305 Submission of proposals for pro­ .. . Tr ... . - submit requests for approval of an section 8 proposal. Because the re­ §881.102 covers any entity which has (e) Use of other housing assistance NSA simultaneously with their appli- quirements of the National Environ­ assisted or unassisted housing pro­ jects within NSAs. grams. the legal right to lease or sublease 881.306 HUD evaluation and approval of programs. Other housing assistance cations for the block grant program, mental Policy Act of 1969 do not units. This includes nonprofit spon­ proposals not indicating HUD mortgage programs such as the public housing However, requests may be submitted permit the suggested change to be Areas Receiving Block Grant Funds sors. insurance. program, the section 8 existing hous- at any other time if a block grant ap­ made with respect to environmental From Another Unit of Government One comment suggested that guid­ 881.307 Section 8 substantial rehabilitation ing program, and the section 235 pro- plication or amendment which sup- ; review, this requirement has not been ance was needed concerning when the proposals indicating HUD mortgage , in­ gram, for which contract authority is ports the activities in Section revised. NSAs may be located in communities services of an architect would be advis­ surance processing. not included in this set aside may be 881.303(d) has been approved or is In the Interest of coordinated plan­ which receive block grant funds from able or required. Because of the 881.308 Use of contract authority not re­ necessary in order to accomplish the • under review by HUD. In either case. ning by a locality, language was in­ another unit of general local govern­ nature of rehabilitation, the determi­ served. cluded in § 881.303(b) to encourage ap­ ment such as an urban county. Howev­ 881.309 Relocation for section 8 substantial In such 03563 the request, while it will reflect part of nation of the need for an architect rehabilitation under subpart C. the Field Office shall consider the ap- the local government’s community de- plicants to submit requests for NSA. er, both the request for approval of must be made on an individual basis. proval of projects pursuant to other velopment planning, shall not be con- approvals simultaneously with their the NSA and any proposals must be (3) Subpart C is added as follows: programs Lf contract authority is avail- sidered part of the block grant appll- block grant applications. Moreover, in certain cases either HUD submitted by the block grant program mortgage insurance or local ordin­ able. Appropriate waivers of the regu- cation. [ recipient which is an eligible applicant Subpart C—Special Procedures for Conformity With Site and ances may specify when an architect’s lations governing such other assisted (c) A-95 Procedures. Any request as defined in § 881.301. Neighborhood Strategy Areas Neighborhood Standards services are required. housing programs wiil be considered to under paragraph (a) of this Section Because of the importance of this facilitate their use in, or in support of, shall be submitted by the local govem- A number of comments expressed a Other Significant Revisions and § 881.301 Applicability and scope. 1 Clarifications regulation in making assistance avail­ the NSA, ment to the appropriate A-95 i concern that the neighborhoods which able to areas which will qualify as (a) General This Subpart sets forth: Clearinghouse for review and com­ I would be most appropriate as NSAs do In response to a comment that addi­ neighborhood strategy areas, it has (1) The policies and procedures for re­ § 881.302 Contract and budget authority ment prior to or simultaneously with ’ not at present comply with the site tional public services need not always been determined that it is in the quests made by units of general local available for use under this subpart. the submission of the request to HUD, { and neighborhood standards for the be part of NSAs, § 881.303(a) has been public interest to make these regula­ government for approval by HUD of (a) Authority available from initial unless the request was submitted with section 8 substantial rehabilitation changed to make it clear that physical tions effective on publication. Howev­ neighborhood strategy areas (NSAs) allocation. [Reserved] the block grant application and has program as prescribed in §881.112. (see paragraphs (b) and (c) of this sec­ ■ redevelopment, public improvements, er, because of the many changes that (b) Authority made available by Sec- therefore complied with the require- i While the Department is considering a were made as a result of considering tion), and (2) the special procedures to retary. HUD will publish a notice in ments under 24 CFR Part 570. revision of these regulations which and public services are examples of ac­ be used by local governments and ■ may have the effect of permitting ceptable types of concentrated neigh­ comments previously received, HUD the Federal Register indicating: (d) Contents. A local government re- borhood development activities. invites further comments on this final HUD for securing and processing sec­ (1) The amount of contract author- quest for approval shall include: ; i more neighborhoods to qualify as tion 8 substantial rehabilitation pro­ ; : NSAs, the standards of §881.112 shall Several comments addressed the rule. Comments received, along with ity to be made available under this (1)A map or maps of the applicant's ! 1 posals under this Subpart. t continue to be applicable to all section Issue of how special procedures would experience in implementing the pro­ Subpart and the approximate number Jurisdiction which clearly identify: work in NSAs where one to four unit gram, will be considered to determine (b) Eligible applicants. Units of gen­ of units this authority is expected to (i) Location of the proposed NSA; 8 substantial rehabilitation proposals. eral local government eligible to par­ Where the local government pro­ properties predominated. Properties of any needed amendments to these reg­ assist; (ID Existing land uses and major i poses to use other assisted housing this type may be difficult to process ulations. ticipate are those which are applying (2) The criteria, including but not traffic routes in the proposed NSA . ' programs, such as section 8 new con­ under normal section 8 substantial re­ A finding of inapplicability respect­ for or are receiving assistance under limited to the criteria in § 881.304(e), and an area at least one block deep struction '‘or public housing, the site habilitation procedures. It Is recog­ ing the National Environmental Policy the community development block which will be used in selecting NSAs outside the perimeter of the NSA : Act of 1969 has been made in accor­ grant (block grant) program pursuant i and neighborhood standards which nized that it may be difficult for to receive the authority being made (ill) Location of shopping, public ■ apply to those programs also remain owners of such properties to comply dance with HUD procedures. A copy of to 24 CFR 570.102 and 570.103. available; and transportation stops, personal services, ! applicable. with the processing and documenta­ this finding of Inapplicability will be (c) Eligible areas. To be approvable, (3) The date by which requests for social services, and community services tion requirements of the section 8 pro­ available for public inspection during a proposed NSA must be a residential approval of NSAs pursuant to either inside or outside the NSA which ; Allocation of New Construction gram. However, it is anticipated that regular business hours in the Office of area where concentrated housing and § 881.303 must be submitted to the ap- would serve the NSA \ Units the assistance provided by the local the Rules Docket Clerk, Office of the block grant assisted physical develop­ propriate Field Office in order to be (2) A description of the proposed government, coupled with the less General Counsel, Room 5218, Depart­ ment and public service activities are considered for assistance. NSA’s demographic and physical char- It was suggested that HUD consider ment of Housing and Urban Develop­ being, or are to be, carried out in a co­ allocating new construction units competitive nature of these special (c) Contract and budget authority acteristics; an assessment of the i . where needed in NSAs. In cases where procedures, will help to resolve this ment, 451 Seventh Street SW., Wash­ ordinated manner to serve a common not reserved. Contract and budget au- extent to which the area currently section 8 new construction is needed as problem. ington, D.C. 20410. objective or purpose pursuant to a lo­ thority set aside by HUD for local gov- meets site and neighborhood stan- . part of the overall strategy for the Comments expressed concern for the It is hereby certified that the eco­ cally developed plan or strategy for ernments under these special proce- dards contained in §881.112 and the ’ area, the local government may re­ rights of tenants occupying units in nomic and inflationary impacts of this neighborhood improvement, conserva­ dures not obligated during a fiscal environmental standards contained in quest preapproval of a site or sites structures to be rehabilitated under regulation have been carefully evalu­ tion or preservation. The area shall be year will be set aside in the subsequent § 881.114; and an evaluation of the fea- within the NSA pursuant to the sec­ this Subpart. One comment proposed ated in accordance with Executive of manageable size and condition, so fiscal year if: sibility of rehabilitation given the con- tion 8 new construction regulations that previous tenants be given the Order 11821. that block grant and other resources (1) Contract and budget authority dition of the buildings in the proposed (see § 880.203(e)). However no more choice of remaining in their units, or, Accordingly, 24 CFR, Chapter VIII, to be committed to the area can rea­ are available for this purpose; and NSA and the general willingness and than 20 percent of the authority to be if eligible, receive first priority for sec­ Part 881 is revised as follows: sonably be expected to meet the iden­ (2) HUD determines that the local financial capability of the property made available by the Secretary for tion 8 housing assistance. We have de­ tified physical development and hous­ government is making satisfactory owners to participate in revitalization set asides under these special proce­ termined that the new requirements § 881.102 [Amended]. ing needs within a 5-year period. The progress in meeting the schedule de­ efforts. dures may be used for section 8 new in §881.309 providing relocation pay­ (1) In Subpart A, § 881.102. local plan (see §881.303) shall provide scribed in § 881.304(f)(4). (3) A specific plan which identifies construction. In addition, other hous­ ments and services give adequate pro­ (a) A definition for neighborhood for a coordinated program of develop­ how deficiencies in the neighborhood ing programs such as public housing tection to tenants occupying units to strategy area (NSA) is inserted be­ ment activities, such as necessary § 881.303 Request by local government for are to be remedied. This shall include or the setion 235 program may be uti­ be rehabilitated under these special tween the definitions for “Lower- public Improvements facilities and ser­ approval of NSAs. (i) a description of all activities to be lized in the NSA. procedures. Income Family” and "New Communi­ vices, private investments, citizen self- (a) Request for Approval of One or undertaken including any activities Several comments were received con­ ties” as follows: Neighborhood Strate­ help activities and coordination of the More NSAs. A local government may necessary to correct deficiencies under Applicability to Areas Without the cerning the need for HUD to provide gy Area (NSA). An area approved by efforts of public and private agencies submit to HUD a request for approval § 881.112, such as public improvements Need for Concentrated Development HUD where assistance under Subpart technical training and assistance if in­ and neighborhood organizations. of an area as an NSA which is expect- and services and new public and pri­ i Comments were received which sug­ experienced local governments are ex­ C of this Part will be provided. See (d) Applicability of subparts A and ed to receive concentrated community vate construction; (ii) the cost and gested that these special procedures pected to be able to submit requests § 881.301(c). B. Provisions of Subpart A are applica- development activities (e.g., physical source of funding of public activities • 1

FEDERAL REGISTER, VOL 43, NO. 21—TUESDAY, JANUARY 31, 1978 FEDERAL REGISTER, VOL 43, NO. 21—TUESDAY, JANUARY 31, 1978

54 55

i■; : RULES AND REGULATIONS RULES AND REGULATIONS vate financing in the area, local agree­ In the NSA (I.e., the concentrated be provided in ft^rdanee with the re- (5) The present condition of the applications and proposals; however, ule provided for in § 881.304(f)(4). If neighborhood is such that' a suitable ments for special wage rates for reha­ the concurrence of the local govem- approvable Proposals sufficient to use living environment is expected to bilitation or other support activities; ment must be obtained on every appli- the contract and budget authority set Result after implementation of the (3) The overall quality and feasibil­ cation or proposal submitted to HUD aside for use in NSA(s) have not been proposed activities outlined ' in ity of the program described in the re­ pursuant to the set-aside. submitted by the established deadline, that are not detailed In the block ose when the local government § 881.303(d)(3) and the provision of quest for approval of an NSA; including any extensions approved by grant application); and (1U) a schedule eg ^ use the section 8 existing housing assistance described in (4) The extent to which rehabilita- §881,305 Submission of proposals for pro- the field office, HUD shall follow the for completing the activities. If the program as part of its reloca- § 881.303(d)(4). tion is expected to be completed with­ jecta within NSAs. procedures of §881.308 concerning the (6) The administrative structure pro­ out causing permanent displacement; (a) Request for Proposals. After the use of residual contract authority. posed by the local govemqient appears (5) The demonstrated capacity of notification by HUD of the availability (f) Submission and Review. Submis- Mg&i ssasss sarMff k the local government to manage hous­ proved^heTule^HUD may withdraw SSSLwS- The^atS to be appropriate. of contract and budget authority pur- sion and review requirements for sec- (7) The activities proposed to correct ing and community development pro­ suant to § 881.304(f) has been received tion 8 Substantial Rehabilitation Pro- the unreserved portion of the set-aside shaU Indicate that all services described indeficiencies grams; by the local government, the local gov- posals requesting simultaneous pro- and proceed in accordance with wiU be provlded which are necessary § 881.303(d)(3), the proposed housing (6) The demonstrated capacity of emment shall invite (through negotia- cessing for HUD mortgage insurance §881.309. to provide minorities, female heads of revitalization program described in .the local. government. , to promote. fair tion, advertisement, or other means), are found in §881.307. Proposals not <4) A proposed housing revitalization household, and other low-income fam- § 881.303(d)(4), and the schedule set housing and equal opportunity for the preparation and submission of requesting simultaneous HUD mort- program which includes the following: the opportunity to take ad- forth in § 881.303(d)(9) appear feasible members of minority groups and Proposals for projects within the des- gage insurance processing shall in- (i) The total number of units in the vantage of housing choices outside the and can reasonably be expected to be ^eJSfi2i?ea<4 ^°useh°I(J> ignated NSA. The local government elude the following: NSA broken dowp by the number of minority concentration and completed in the specified time. If the (7) The potential of achieving, in the shall publish a notice in a newspaper (1) The address(es) of the which require no rehabilitation, the i0W_inCOme areas containing an undue proposed activities require an amend­ speediest manner possible, the reserva­ of general local circulation which sets property(ies) proposed to be rehabili- number to be demolished, the number concentration of persons receiving ment to the current approved block tions of housing units under this Sub­ forth the number of units by house- tated. to be rehabilitated by tenure type housing assistance. grant application or to the block grant part. hold type available and the boundaries (2) The identity of the Owner(s), (owner occupied or rental), and the (g) ^ description of the administra- application under HUD review, the (f) Notification of Local Govern­ of the NSA. This notice shall also de- rehabilitator(s) (if known), and number of new units to be con- struct- j.jve structure which the local govem- NSA request shall not be approved ments. The. Assistant Secretary shall scribe how the local government (and archltect(s) (if applicable and identity ed. ment proposes to use to implement until the amendment or the applica­ notify each Field Office as to which if applicable, the HFDA and/or PHA) is known); the officials, principal mem­ . (ii) the number of -units by size these special procedures. tion is approved. NSAs in its jurisdiction have been ap- will solicit and process Proposals, bers, shareholders, investors, and (number of bedrooms), and structure (g) a proposed schedule for submis­ (8) The local government’s citizen proved or disapproved. The Field (b) Basic Information. The local other parties having substantial inter- type (e.g., detached, walkup, elevator) sion of Proposals. participation program has involved Office shall notify the local govern­ government shall provide basic infor- est, and the prior participation of each for which contract authority under (jo) A statement that indicates that the residents and property owners of ment of this determination. If the re­ mation to interested Owners and de- in HUD programs on the prescribed these special procedures is requested, the proposed NSA is eligible pursuant the NSA in the development of the quest is not approved, the notification velopers concerning the special proce- forms; and a disclosure by each party and the estimated amount and expect- to § 881.301(c). strategy and Is designed to facilitate shall indicate the reasons. If the re- dures of this Subpart including: (1)A of any possible conflict of interest ed source of permanent financing for (H) A statement that the request is their continuing participation in the quest is approved, the notification copy of these regulations; (2) where which would be in violation of the both assisted and nonassisted units to consistent with the Local Housmg As­ implementation, monitoring, evalua­ shall include: Minimum Design Standards for Reha- ACC, Agreement, or Contract. he rehabilitated. Examples of sources slstance Plan that has been approved tion and adjustment of the strategy. (1) An identification of the approved bilitation for Residential Properties or (3) A description of the property(ies) of financing or rental subsidy which by HUD or submitted to HUD for ap- (9) The proposed NSA(s) is an eligi­ NSAs and a statement that Section 8 HUD Minimum Property Standards as is, including number and type of the local government should consider proval by the local government. ble area pursuant to Section Substantial Rehabilitation Proposals and other applicable regulations, stan- structures, number of stories, structur- 881.301(c). may be processed pursuant to these dards, and forms, may be obtained; (3) al system, number of units by size special procedures. requirements and information neces- (number of bedrooms), living area and i“““ «"»S" ' — (b) A-95 Comment. HUD shall review I funds, the 312 loan program, State NSA(s) approval, and consider any comments received (2) The amount of contract and sary to enable the interested parties to composition of each size of unit, spe- and local financing programs, private (a) Field Office Review. The Field from the A-95 Clearinghouse. budget authority which has been set submit a Proposal; and (4) the assis- cial amenities or features, if any; and | i financing, and all of HUD’s assisted office shall review each request to de- (c) Additional Information and aside for use in the NSA and the ap- tance the local government will pro- sketches for the interior, showing di- and mortgage insurance programs, termine whether It meets the follow- Modifications. If, during review of the proximate number of units by house- vide to Owners. The local government mensions. If appropriate, typicals may When the local government proposes ing requirements: . . ... request. HUD finds that additional in­ hold type this authority is expected to shall also provide information to inter- be provided. to use financing provided by a State (1) The request Is consistent with formation is necessary, or that modifi­ support, and a statement of the condi- ested parties about how to obtain fi- (4) A description of the proposed re- i i Housing Finance and Development the Local Housmg Assistance Plan cations are necessary, it may request tions set forth in § 881.302(c). nanclng, other rental assistance, or habilitation covering each basic ele- Agency (HFDA) or by a Public Hous- that has been approved or submitted (3) A statement that, for purposes of mortgage insurance which the local ment (e.g., roof, exterior walls, porch­ ! ing Agency (PHA), either Section 8 or for approval by the local government, such additional information or modifi­ cations and/or meet with representa­ making underwriting determinations government has determined will be es and steps; interior walls, ceilings public housing assistance, the request (2) A sufficient number of unite suit- under the National Housing Act, the necessary to achieve the revitalization and floors; kitchen and bathroom fa- *hall include a letter from the appro- able for rehabilitation under this Sub tives of the local government to re­ solve outstanding questions concern­ improvements pledged in the request of the NSA. cilities and equipment; plumbing, priate HFDA or PHA stating that the Part areonnvStlfthe^site^d shall be considered as though they (c) Assistance in Development and heating and electrical equipment; agency agrees to cooperate with the sit^ which conioimvdth the site and ing the request. were now complete and that HUD Review of Proposals by Local Govern- landscaping; etc.) indicating the (d) Field Office Determination. The mortgage insurance will be generally ment The local government shall, to nature of the work to be done on each local government^ in Providimg finane- ne g^ or^ wm conform whep Field Office shall submit those re­ ing for projects in the NSA and will ., _ activities described in quests it determines acceptable to the available in the NSA; provided howev- the extent necessary to assure ade- element. If alteration, renovation, or ; \- submit applications 8 881.303(d)(3) are completed. Howev- er that each site or property will be re- quate Owner interest and viable Pro- remodeling is indicated a description Assistant Secretary for Housing for viewed individually for underwriting posals, assist Owners in the prepara- of such work and sketches showing HUD in accordance with the local go\t When the request for approval of approval. If the Field Office deter­ r emment’s housing revitalization pro: ^ nsa Indicates the intention to use mines that a local government’s re­ purposes to determine its eligibility tion of Proposals. The local govern- the layout after completion of reha- for insurance. ment shall review comprehensively all bilitation shall be submitted. If appro- 8xam- . . . , . __... „ _ programs other than Section 8 Sub- quest is not acceptable, it shall notify (4) A schedule, mutually agreed Proposals to make the certifications priate, typicals may be provided, (5) A statement describing the stantlai Rehabilitation, such as Sec- the local government of the reasons. means by which residents and proper- tion g New construction or Public upon by the Field Office and local gov- required by § 881.305(g). The local gov- (5) The number of units by unit size (e) Review by HUD. When limited ernment, for submission of Proposals. ernment shall transmit to HUD for (numer of bedrooms) and type of occu- ' ty owners of the proposed NSA are Housing, the site and neighborhood availability of contract and budget au- and will continue to be involved in the standards of those programs shall be (g) Notification of Other Agencies. If review section 8 Substantial Rehabili- pancy (elderly or handicapped or . r thority requires the Assistant Secre­ the set aside includes contract author- tation Proposals it believes are approv- family) proposed for the property development and execution of the applicable, tary for Housing to select among local neighborhood strategy. (This state- area contains no major ob- ity for projects to be financed by an able. after the completion of rehabilitation. governments responding to the Notice, HFDA or owned by a PHA, the notifl- (d) Local Assurances. The local gov- (6) A description of the existing util­ ment shall not substitute for the Citi- stacles to meeting the environmental priority shall be given based on the - zen Participation Certification re- standards of § 881.114 or any other ap- cation shall Indicate the amount of ernment shall assure that the Propos- ity combination, whether a change to quired by the.block grant program.) plicable environmental standards following; such contract authority. Additionally, als processed under these special pro- a different combination is proposed, * (1) The degree of local public com­ the Field Office shall notify the ap­ cedures will not collectively require and, if so, a description of the new (6) A statement that the NSA re- which cannot be remedied by the ac­ mitment to the program as evidenced quest was submitted to the A-95 tivities proposed for the area. This propriate HFDA or PHA of the set- contract and budget authority in utility combination, ! by Community Development Block aside and indicate that the authority excess of the amount set aside in the (7) A statement as to whether the Clearinghouse prior to or simulta- review shall not substitute for the en- Grant and other Federal, state, or neously with the submission of the re- vlronmental review required by is only available for use in the NSA in notification pursuant to § 881.304(f). services of a registered architect will local programs and funds that have (e) Timely Submissions. The local be utilized for preparation of final quest to HUD and that the Clearing- 8 881.306(b) for each Proposal subse- been designated for supporting activi- accordance with the local govern­ house has been requested to send any quently submitted. ment’s housing revitalization plan. government shall assure that Propos­ working drawings and specifications. comments it has to HUD. (4) The relocation payments and ser- tics* The HFDA or PHA shall then follow als are prepared and submitted in ac- (8) The proposed Contract Rent for (") A statement outlining the reloca- vices proposed by the local govern- (2) The extent of existing or pro­ the regular procedures in obtaining cordance with the agreed upon sched- each unit, by size and structure type. ttr payments and services which will ment are acceptable. posed private commitment such as p \ FEDERAL REGISTER, VOL 43, NO. 21—TUESDAY, JANUARY 31, 1973 fEDCRAL REGISTER, VOL 43, NO. 21—TUESDAY, JANUARY 31, 1973 56 57 I ■ n ii

■ , RULES AND REGULATIONS RULES AND REGULATIONS n (17) The proposed method (e.g., con- other than Section 8 Substantial. . Re-. any local government certification re- derwrltlng determinations for all HUD Proposals submitted In response there­ (9) The equipment, utilities and ser­ ventional mortgage, Farmers Home, habilitation under this subpart which quired by this Part, HUD shall accept mortgage Insurance programs, the lm- to, but not selected, Including those to vices to be included in the proposed the certification as correct. However, provements pledged In the request which the deadline described In Sec­ Contract Rent and those utilities and If HUD has substantial reason to ques- shall be considered as though they tion 881.203(c) (4) and (5) or does not services not so included. For each util­ tlon the correctness of any certifies- were now complete, apply; or ity and service not Included In the pro­ tion, HUD shall promptly bring the (11) The acceptability of the Proposal (d) Reallocate the unused contract posed Contract Rent, an estimate of Isiss gssis matter to the attention of the local for Section 8 assistance In accordance and budget authority to another allo­ the average monthly cost to occupants review and interest by a lender, bond suances. cation area or to another local govern­ underwriter or counsel, or similar evi­ government and ask the local govern- with 5 881.306(a) (1), (2), (4), (5), (8), for the first year of occupancy by size § 881.306 HUD evaluation and approval of ment review its findings. After such (9), (10), (11), and (14). ment for use in an NSA. and structure type. dence that financing would likely be proposals not indicating HUD mort­ available should the Proposal be se­ review HUD will act in accordance (111) The reasonableness of the pro- (10) The proposed term of each Con­ gage insurance. with the judgment or evaluation of posed Contract Rents pursuant to §881.309 Relocation for Section 8 sub­ tract (including renewals), and justifi­ lected. Such evidence of financing is stantial rehabilitation urider subpart C. not required if the Owner proposes to (a) Evaluation of, proposals.. .. UT7T> Each, the local government unless HUD de- 5881.108(b). cation for such term in accordance utilize HUD mortgage insurance (see Proposal shall be evaluated by HUD to termines that the certification Is not (4) HUD determination. HUD shall (a) Applicability of uniform act with §881.109. supported by available evidence. notify the local government and the Title II of the Uniform Relocation As- (11) Whether the proposed rehabili­ §881 307) or the FmHA Section 515 determine whether: Rural Rental Housing Program. In (1) The Proposal and the certifica- (f) HUD determination. HUD shall Owner that the submission is: sistance and Real Property Acquisition tation will displace site occupants. If notify the local government and the (1) Approved. A notification * of Pro- policies Act of 1970 (Uniform Act) ap- so, the Proposal shall state the such cases, either the prescribed HUD tions submitted by the local govem- form or evidence that a preapplication ment contain all the elements required Owner that the Proposal is: posal approval for Section 8 assistance plies to certain displacements occur- I number of families, individuals, and (1) Approved. This notification shall in accordance with 5 881.208(h) shall ring as a result of a PHA’s acquisition business concerns to be displaced has been submitted to the FmHA shall by § 881.305 (f) and (g). be submitted with the Proposal. A (2) The proposed Contract Rents Include the statements required by be transmitted simultaneously with or order to vacate real property, issued (identified by race or minority group tatement shall be included In all Pro- plus any Allowances for Utilities and §881.208(h)(l) (1), (li), (Hi), (iv), (v), the feasibility letter. in connection with acquisition, for a status and whether they are owners or s and (vi). 881.208(h) (2) and (3) shall (ii) Approvable toith modifications, project. HUD regulations governing renters). See §881.309 for relocation posals as to whether the Owner in- Other Services do not exceed the Fair ! tends to pledge or offer the Agree- Market Rent limitations pursuant to apply. Following approval the Propos- HUD may issue a Letter which condi- displacements under the Uniform Act requirements. ment and/or Contract as security for § 881.108(a). al shall be deemed to be a Final Pro- tions approval of the Proposal, for are set forth at 24 CFR Part 42. Any (12) Submission of evidence of man­ (See (3) The proposed Contract Rents are posal within the meaning of § 881.211, mortgage insurance and/or Section 8 family, individual, business, farm or agement capability and a proposed any loan or obligation et seq All further actions with regard assistance, on correction of specified nonprofit organization occupying a management plan and a certification §881.115(b)). ___ . reasonable pursuant to § 881.108(b). (4) The proposed term of the Con- to Proposals approved pursuant to this deficiencies including the substitution property to be rehabilitated pursuant £genthif angina Smiat^ceptabl^to poSl not requestingstaaultaneous pro- tract (including renewals) is accept- section shall be in accordance with of alternative property(ies). to this Subpart and who meets the HTO if propo™ pS Sfor cLing for HUD mortgage insurance able in accordance with § 881.109 Subpart B of these regulations start- (iii) Not approved. If the Proposal is definition of a "displaced person," as ing with § 881 211. not approved, a Letter shall be sent in- defined in 24 CFR 42.20(d), shall be than 15 i^iu evidence of capa- shall be accompanied by the following (5) The form of lease meets the re- (2) Not approved. The notification dtcating the reasons for such disap- provided relocation payments and as- bility of provid^gnece^axy manage^ information from the local govern- <**^*£W£ experience of the shall indicate the reasons for disap- proval. ( sistance in accordance with 24 CFR ment and maintenance servic^. (1)'A certiflcatIon by the chief ex- Owner and other key participants in proval and where appropriate, that (b) Delayed mortgage insurance pro- part 42, as modified by paragraphs (c) the local government may submit sub- cessing. If an Owner does not indicate through (g) for residential tenants of other^entity for management and/or ecutlve officer of the local government development and management is ac- stitute Proposals to use remaining con- in the Proposal an intent to utilize this section including the obligation oTth^pro^fd rontractSSkS stoU^Rehabmtatio^te’^ithin the “<7? The management capability of tract and budget authority. HUD mortgage insurance and applies placed on the local government. l (g) Clearinghouse notification. In all for HUD mortgage insurance after ap- (b) Tenants displaced by private- he InHuded «>ntrac designated NSA; and HI) the Proposal the Owner and/or his managing agent cases, the appropriate A-95 Clearing- proval by HUD of the Proposal for owner or byPH A ^bthtahon unth- I! rSiA turned certification that the is consistent with the requirements the proposed management plan, and house shall be notified by HUD of its Section 8 assistance, he risks (1) out acquisition. Although the Uni­ Owner intends to comply with Title VT and restrictions of the approved Local the proposed management agreement/ final action. having the Proposal rejected for HUD form Act does not apply to the dis­ of the Civil Rights Act of 1964, Title Housing Assistance Plan and the ap- contracts) Housing mortgage insurance, and (2) having placement of tenants as a result of ac- i § 881.307 Section 8 substantial rehabilita- lower rents approved under the mortr quisition by a private developer oras a VHI of the CJvU1 ^f^o^Executfve ***(2* A certification that the Owner Marketing Plan is acceptable. tion proposals indicating HUD mort- gage insurance program than the result of rehabilitation by a PHA witn- i! gage insurance processing. rents set forth in the Proposal ap- -out acquisition for a Section 8 project, ' mnrurrent vrocessino Where an proved under this Subpart. HUD has determined that any family, SSS" (a) Concurrent processing, wnere an ^ subsequent processing. Following individual, business, farm, or nonpofit ; Owner indicates that he intends to uti­ approval of a proposal involving HUD organization that is a tenant (not an lize HUD mortgage insurance, the fol­ mortgage insurance, subsequent pro- owner-occupant) occupying a property lowing shall apply: (1) Preapplication meetings. Propos- cessing shall be in accordance with to be rehabilitated pursuant to this Subpart B of these regulations start- Subpart on the date the Proposal Is 1P1H sss £ HqUDSrrtgamgUelt^u^cPer°“t in* with Section 881.209. submitted to HUD (see 5§ 881.305 and 881.307) and who is thereafter re­ be accepted from the local government §881.308 Use of Contract Authority Not quired to move, shall be eligible for re­ *04) proposed project consists (4) A certification that the proposed of financing are ^ptabie (see also unless a preapplication meeting has Reserved. location payments and assistance to be been held in the Field Office. The of five or more units, submission of an rehabilitation is pennissible under ap- §8(81831)- The proposed utility combina- local government will be advised of If Proposals containing a sufficient determined on the same basis as pro­ Affirmative Fair Housing Marketing plicable zoning, building, housing and (13) The p P any major obstacles to approval of number of units to utilize the contract vided by 24 CFR Part 42, as modified Plan together with a statement of the other local codes, ordinances, or regu- Monteapparent conflicts by paragraphs (c) through (h) of this HUD mortgage insurance which are and budget authority set aside for use section, as if the tenant were a "dis­ toSeat“v?d“ o“uXCS 'IS“identification of properties in- of interest which would be in violation discovered by the Field Office as a in an NSA under this Subpart are not placed person” within the meaning of result of the meeting. submitted ^ accordance with the the Uniform Act. For purposes of the (2) Initial submission requirements: schedule provided in § 881.304(f)(4) or regulations at 24 CFR Part 42, the srsss2 re 0£^rrerea? (i) The Owner’s application for a any approved[extensions; thereto or H local government’s transmittal of the Feasibility Letter on the prescribed an approved Propos^fails to result to Proposal to HUD shall be deemed to form with appropriate exhibits. an Agreement, the Field Office shall be the "initiation of negotiations.” (il) Documentation required from either: . (c) Preliminary notice to each resi­ the Owner by § 881.305(f) (2), (6). (9), (a) Authorize the local government dential tenant No later than 30 days no) nn (13) (15) and (16) to submit other Proposals for projects a* the date thereof; : ed dates for commencement and com- (h) Other housing programs. Propos- (e) HUD review of local government insurance. For purposes of making un- llshed for that allocation area, process ' pletion of each stage shall be provided, als for housing assistance programs certifications. Generally, in reviewing FEDERAL REGISTER, VOL 43, NO. 21—TUESDAY, JANUARY 31, 1973 FEDERAL REGISTER, VOL 43, NO. 21—TUESDAY, JANUARY 31, 1978 59 58 V \

right to continue In occupancy within (2) Insofar as possbile, informs the essary to permit rehabilitation or de­ 60 days after the date of the HUD no­ PART 881—SECTION 8 HOUSING ASSIST­ tenant whether permanent relocation molition. If a move is required: ANCE PAYMENTS PROGRAM—SUB­ mill be required If the Proposal is ap­ (i) Not more than one temporary re­ tification of the approval of the Pro­ STANTIAL REHABILITATION location by the tenant shall be re­ posal, the tenant shall be deemed to proved; Subpart A—Applicability, Scope and Basic (3) States that if the tenant moves quired; have been issued a notice of displace­ Policies after the date the Proposal was sub­ (li) The temporary relocation, if any, ment effective on the date of the HUD 881.101 Applicability and scope. mitted to HUD for any reason, except shall not exceed twelve months in du- notification of the approval of the 881.217 Execution of housing assistance ratlon; 881.102 Definitions. ■ after being issued a notice of displace­ Proposal. .881.103 Demonstration of need for sub­ payments contract. ment as described In paragraph (e) of (ill) A decent, safe, and sanitary (g) Tenants Continuing in Occupan­ stantial rehabilitation projects; 881.218 Marketing. this section, the tenant will not be en­ dwelling shall be available to the cy. The local government shall take Compliance with Section 213 of 881.219 Lease requirements. titled to relocation payments or other tenant for the period of any tempo­ such steps as may be necessary to HCD Act. 881.220 Termination of tenancy. rary relocation; and 881.104 Preference for certain types of proj­ 881.221 Maintenance, operation and Inspec­ assistance provided under/or deter­ insure that no tenants who continue tions. mined in accordance with 24 CFR Part (iv) The local government shall pay in occupancy under the provisions of ects. actual reasonable out-of-pocket ex­ • 881.105 Maximum total annual contract 881.222 Reexamination of family Income, 42, as modified by this section; this section are subjected to an unrea­ commitment and project account composition and extent of ex­ (4) Indicates that as soon as practi­ penses, including any moving costs or increase in monthly housing costs, in­ sonable change in the character of (private-owner or PHA-owner ceptional medical or other un­ cal. but not later than 60 days after curred by the tenant in connection their immediate environment without projects). usual expenses. the HUD notification of the approval being given the opportunity to move 881.106 Maximum total ACC commitment 881.223 Overcrowded and underoccupied with the move, any temporary reloca­ and project account (prlvate- units. of the Proposal, the tenant will receive and qualify for relocation assistance as an appropriate notice as specified tion, or both. owner/PHA projects). 881.224 Adjustment of allowance for utili­ a displaced person. For example, an el­ 881.107 Housing assistance payments to under paragraph (d) or (e) of this sec­ (4) If the tenant is required to ties and other services. vacate the dwelling during the four- derly tenant shall not be subjected owners. 881.225 Continued family participation. i tion. The provisions of the notices year period for any reason other than without alternatives to a sharp in­ 881.108 Initial contract rents. 881.226 Inapplicability of low-rent public that are referred to shall be generally r for cause, or if any of the commit­ crease in the number of children occu­ 881.109 Term of housing assistance pay­ housing model lease and grievance described; ments to the tenant under this notice ments contract. procedures. I (6) Generally describes the reloca­ pying nearby units. 881.110 Rent adjustments. 881.227 Reduction of number of contract are not met, the tenant shall auto­ (h) Section 8 Assistance to Tenants units for failure to lease to eligi­ tion payments and other assistance for matically be deemed to have been which the tenant would be eligible, if Displaced by Private-Owner. If a resi­ 881.111 Types of housing and property ble families. issued a notice of displacement as de­ dential tenant who has been displaced standards. 881.228 HUD review of contract compliance. required to relocate; and scribed in paragraph (e) of this section 881.112 Site and neighborhood standards. 881.229 FHA reporting requirements. [Re­ 1 (6) Informs the tenant of the appli­ and to be entitled to relocation pay­ by an Owner pusuant to paragraph (b) 881.113 Relocation. served]. cable policies contained in paragraph of this section has voluntarily selected 881.114 Other Federal requirements. ments and other relocation assistance Subpart C—[Reserved] 0X1) and (f)(2) of this section. available to displaced persons provided a replacement rental dwelling unit, 881.115 Financing. 1 (d) Notice of Right to Continue in the local government shall provide a 881.116 Security and utility deposits. Subpart D—Demonstration Rehabilitation ’ under in 4 CFR Part 42, as modified Program Occupancy. No later than 60 days rental assistance payment as described 881.117 Establishment of Income limit , by this section. schedules; 30 percent occupancy 881.401 Applicability and scope. after the HUD notification of the ap­ (e) Notice of Displacement Not later in 24 CFR Part 42, unless a PHA pro­ by very low-income families. 881.402 Criteria for eligibility and prefer­ proval of the Proposal the local gov­ than 60 days after the HUD notifica­ vides a Certificate of Family Participa­ 881.118 Establishment of amount of hous­ ences for selection. ernment shall furnish each residential tion of the approval of the Proposal, tion under the Section 8 Housing As­ ing assistance payments. 881.403 Contents and submission of appli­ tenant who will not be displaced, a the local government shall issue a sistance Payments Program Existing 881.119 Responsibilities of the owner. cations. written notice of the tenant’s right to written notice of displacement to each Housing 24 CFR Part 882. The latter 881.120 Responsibility for contract admin­ 881.404 HUD review and selection of ap­ continue in occupancy. The notice istration, and defaults (private- plications. residential tenant to be displaced. The can only occur when the displaced owner and PHA-owner projects). 881.405 Prequallflcatlon of developers. ahall contain the following conditions: notice shall state that if the tenant famiy or individual is eligible to par­ 881.121 Responsibility for contract admin­ 881.406 Review and approval of requests for (1) The tenant shall have the right moves or moves personal property ticipate in that program, the replace­ istration, and defaults (prlvate- prequallflcatlon. to lease and occupy a decent, safe, and from the property on or after the date ment rental dwelling unit meets the owner/PHA projects). 881.407 Other provisions of Part 881. i sanitary dwelling which is either the 881.122 Rights of owner If PHA defaults of HUD notification of approval of the requirements of that program, and the Note.—It Is hereby certified that the eco­ under agreement (private-owner/ current dwelling or a comparable Proposal, the tenant will be entitled to landlord of the replacement rental nomic and Inflationary impacts of this reg­ dwelling located within the same certain relocation payments and other PHA projects). ulation have been carefully evaluated In ac­ ; I building or nearby building located on dwelling unit is willing to participate 881.123 Separate project requirement. cordance with OMB Circular A-107. ! assistance which shall be described, in­ 881.124 Conversions. the same site, for a continuous period cluding the maximum allowable dollar in that program. (i) Nonresidential tenants. The 881.125 Projects financed with proceeds from Authority: Sec. 7(d), Department of of at least four years. The four-year amount or range of each payment for Housing and Urban Development Act (42 modifications in paragraphs (c) sale of bonds or notes. period shall begin on the date of HUD which the tenant will apparently be 881.126 Applicability of this part to Invita­ U.S.C. 3535(d)); sec. 5(b), U.S. Housing Act notification of the approval of the eligible, the conditions of eligibility, through (h) of this section do not tions for proposals outstanding of 1937 (42 U.S.C. 1437c(b)); sec. 8. U.S. Proposal, or the date the dwelling is and the procedures for obtaining the apply to the displacement of any busi­ on April 26, 1976. Housing Act of 1937 (42 U.S.C. 1437(f)). placed in decent, safe, and sanitary payment(s). ness, farm, or nonprofit organization Subpart B—Project Development and Operation Source; 41 FR 17488, Apr. 22, 1976, unless condition, or the termination date of (f) Automatic Notice of Displace­ who has been displaced as a result of 881.201 Allocations of contract authority otherwise noted. an action described in paragraph (a) of any required temporary relocation, ment (1) If a tenant is not issued a to field offices. Subpart A—Applicability, Scope and Basic whichever is later, preliminary notice as described in this section. Such businesses, farms, or 881.202 Determination of number and types Policies (2) If the tenant is an “eligible" paragraph (c) of this section within 30 nonprofit organizations shall be pro­ of units to be assisted; substantial family as defined in Section 881.102 days after the transmittal of the Pro­ vided relocation payments and other rehabilitation program. § 881.101 Applicability and scope. assistance in accordance with the reg­ 881.203 Notifications of fund availability. and 24 CFR Part 812, the amount of posal to HUD, the tenant shall be 881.204 Obtaining program information. (a) The policies and procedures con­ rent payable by the tenant shall be de­ deemed to have been issued a notice of ulations of 24 CFR Part 42 and the 881.205 Contents of preliminary proposals. tained herein are applicable to the mak­ termined in accordance with 24 CFR displacement effective 31 days after policies and procedures contained iri 881.206 Submission of preliminary pro­ ing of Housing Assistance Payments on Part 889 and any necessary subsidy the transmittal of the Proposal to HUD Handbook 1371.1 REV, Reloca­ posals. Behalf of Eligible Families leasing Sub­ shall be provided pursuant to Section HUD. if such Proposal is later ap­ tion Policies and Procedures. 881.207 Preliminary proposals Indicating stantially Rehabilitated housing pur­ 881. If the tenant does not qualify as proved by HUD. However, if the local (j) Manner of Notices. Any notice re­ HUD-FHA mortgage insurance. suant to the provisions of section 8 of the government later issues a preliminary 881.208 Preliminary evaluation, technical U.S. Housing Act of 1937 ("Act”). an eligible family as defined in Section quired under this section shall be per­ processing and selection of pre­ 881.102 and 24 CFR Part 812, the notice to a tenant who has not yet sonally served, receipt documented, or liminary proposals. (b) For the purpose of this part, “Sub­ amount payable by the tenant for rent moved and agrees to reimburse the sent by certified or registered first- 881.209 Final proposals. stantially Rehabilitated’’ housing shall and utilities and other services shall tenant for any expenses incurred to class mail, return receipt requested. 881.210 Evaluation of final proposals. mean housing requiring Substantial Re­ not exceed 25 percent of monthly satisfy any binding contractual reloca­ (k) Responsibility for relocation pay­ 881.211 Owner’s acceptance of notification habilitation for which, prior to the start income, which income shall be calcu­ tion obligations entered into during ments and assistance. The local gov­ and submission of architect’s cer­ of rehabilitation, an Agreement to En­ lated in accordance with 24 CFR Part the period in which the notice of dis­ tification. ter into Housing Assistance Payments ernment is responsible for providing 881.212 . Annual contributions contract and 889 and any necessary subsidy shall be placement was in effect, such auto­ Contract is executed between the Owner matic notice of displacement is can­ the relocation payments and assis­ 1 agreement (prlvate-owner/PHA provided by the local government. projects). and the Department of Housing and Ur­ celled. tance described in this section from (3) The tenant shall not be required funds other than those provided under 881.213 Submission of estimates of required ban Development (“HUD”) or the Public to move from the dwelling units other (2) If a tenant is not issued a written annual contributions (prlvate- than for cause unless the move is nec- notice of displacement or a notice of these special procedures. owner/PHA projects). 881.214 Preparation and execution of agree­ Issued at Washington, D.C., January ment (private-owner and PHA- owner projects). 25, 1978. 881.215 Rehabilitation period. Lawrence B. Simons, 881.218 Project completion. Assistant Secretary for Hous­ ing-Federal Housing Commis­ 61 sioner. 60 [FR Doc. 78-2630 Filed 1-30-78; 8:45 ami

J § 881.102 Ch. VIII—Low Income Housing, Dept, of Housing & Urban Dev. § 881.102 Title 24—Housing and Urban Development Housing Agency. However, housing al­ vide annual contributions to the PHA Fair Market Rent, (a) The rent which vate-Owner Project or a PHA-Owner ready undergoing rehabilitation may be with respect to the project. (See Appen­ is determined by HUD as the Fair Market Project, a written contract between the eligible for participation if all subse­ dix III.) Rent for New Construction projects un­ Owner and HUD for the purpose of pro­ quent actions are in compliance with Contract. See definition of Housing der section 8. This Fair Market Rent is viding ‘housing assistance payments to this part and if the Owner certifies and Assistance Payments Contract. the rent, including utilities (except tele­ the Owner on behalf of Eligible Families. demonstrates to the satisfaction of HUD Contract Rent. The rent payable to phone), ranges and refrigerators, park­ (See Appendix n.) that: the Owner under his Contract including ing, and all maintenance, management (b) In the case of a Private-Owner/ (1) At the date of application to HUD, the portion of the rent payable by the and other services, which, as determined PHA Project, a written contract between a substantial amount of rehabilitation Family. In the case of a cooperative, the at least annually by HUD, would be re­ the private Owner and the PHA, ap­ (generally at least 25 percent) remains term “Contract Rent” means charges un­ quired to be paid in order to obtain pri­ proved by HUD, for the purpose of pro­ to be completed; and der the occupancy agreements between vately developed and owned, newly con­ viding housing assistance payments to (2) At the date of application to HUD, the members and the cooperative. structed rental housing of modest (non­ the Owner on behalf of Eligible Families. the project cannot be completed with­ Decent, Safe, and Sanitary. Housing is luxury) nature with suitable amenities (See Appendix V.) out a commitment for assistance under Decent, Safe, and Sanitary at completion and sound architectural design meeting Housing Assistance Payment on Be­ this part; and ■of rehabilitation if the dwelling units the objectives of the HUD Minimum half of Eligible Family. The amount of (3) At the time rehabilitation was ini­ and related facilities are accepted by Property Standards. housing assistance payment on behalf tiated, all of the parties reasonably ex­ HUD as meeting the requirements of the (b) Separate Fair Market Rents will be of an Eligible Family determined in ac­ pected that the project would be com­ Agreement. (See § 881.216.) Housing established for dwelling units by various cordance with schedules and criteria es­ pleted without assistance under this part. continues to be Decent, Safe, and Sani­ sizes (number of bedrooms) and types tablished by HUD. (See § 881.118.) I V (c) Conversions of section 23 projects tary if it is being maintained in a con­

:■. sistance Payments Contract (.“Agree­ and for storage of utensils and dishes; such future period, an appropriate re- an Owner and an Eligible Family. _ for.. the ment”). (a) In the case of a Private- (d) Operating condition of heating, duction will be made in determining the leasing of a Decent, Safe, and Sanitary Owner Project or a PHA-Owner Project, lighting and ventilating equipment and/ approvable Contract Rent. dwelling unit in accordance with the ap­ a written agreement between the Owner or other facilities; and ed) The Fair Market Rent, minus the plicable Contract, which agreement is in and HUD that, upon satisfactory comple­ (e) Size, number of rooms, and fur- amount of any applicable Allowance for compliance with the provisions of this tion of the rehabilitation in accordance nishability in relation to the size and Utilities and Other Services payable di- part. ! 1 with the HUD-approved Final Proposal, type of Family in occupancy in accord- rectly by the Family, shall be the maxi- Local Housing Assistance Plan. A nous- HUD will enter into a Housing Assist­ ance with any applicable State or local mum amount that can be approved as ing assistance plan submitted by a unit ance Payments Contract with the Owner. codes. the Contract Rent, except that the maxi- of general local government and ap- (See Appendix I.) Eligible Family (.“Family”). A Family mum approvable amount may be lower proved by HUD under section 104 of the (b) In the case of a Private-Owner/ which qualifies as a Lower-Income Fam­ as stated in paragraph (c) of this defi- HCD Act or, in the case of a unit of gen- PHA Project, a written agreement be­ ily and which meets the other require­ nition and may be higher or lower as eral local government not participating tween the private Owner and the PHA, ments of the Act and this part. The term provided in § 881.108. under Title I of the HCD Act, a housing approved by HUD, that upon satisfactory Family includes an elderly, mentally or Final Proposal. A proposal to provide plan which contains the elements set completion of the rehabilitation in ac­ physically handicapped, disabled, or dis­ Substantially Rehabilitated housing sub- forth in section 104(a)(4) of the HCD cordance with the HUD-approved Final placed person and the remaining mem­ mitted in response to a HUD notification Act and which is approved by the Secre- Proposal, the PHA will enter into a ber of a tenant family as defined in sec­ of selection of Preliminary Proposal. tary as meeting the requirements of sec- Housing Assistance Payments Contract i tion 3 (2) of the Act. A Family’s eligibility Gross Family Contribution. The por- tion 2i3 of that Act. C with the private Owner. (See Appendix for housing assistance payments con­ tion of the Gross Rent payable by an Lower-Income Family. A family whose IV.) Eligible Family, i.e., the difference be- inCome does not exceed 80 percent of the Allowance for Utilities and Other Serv­ tinues until its Gross Family Contribu­ tion equals the Gross Rent for the dwell­ tween the amount of the housing assist- median income for the area as deter- ices (“Allowance”). An amount deter­ ance payment payable on behalf of the mined by HUD with adjustments, for mined or approved by HUD as an al­ ing unit it occupies, but the termination Family and the Gross Rent. of eligibility at such point shall not affect smaller or larger families, except that lowance for the cost of utilities (except Gross Rent. The Contract Rent plus HUD may establish Income limits higher telephone) and charges for other serv­ the family’s other rights under its Lease any Allowance for Utilities and Other nor shall such termination preclude re­ or lower than 80 percent on the basis of ices payable directly by the Family. Services. its findings that such variations are nec- Annual Contributions Contract sumption of payments as a result of sub­ HCD Act. The Housing and Commu- sequent changes in Income or other essary because of the prevailing levels (“ACC”). In the case of a Private- mHousi7i9°AsSstance Payments Contract of construction costs unusually high or Owner/PHA Project, a written agree­ relevant circumstances during the term ment betwen HUD and the PHA to pro- of the Contract. (“Contract”). (a) In the case of a Pri- low incomes, or other factors.

r

i I 62 63 ! - \ |

: i Jk !

§ 881.105 Title 2A—Housing and Urban Development Ch. VIII—Low Income Housing, Dept, of Housing & Urban Dev. § 881.104 which require or encourage development to 40 percent of such maximum annual New Communities. New community de­ dition requiring more than routine or of- projects which contain a specified Contract commitment, HUD shall, velopments approved under Title IV of minor repairs or improvements of such proportion of assisted units, not to ex­ within a reasonable period of time, take the Housing and Urban Development Act extent as to necessitate execution of an ceed 20 percent, and (2) Proposals of such additional steps authorized by sec­ of 1968 and Title VII of the Housing and Agreement prior to the performance of more than 50 units of housing for other tion 8(c) (6) of the Act as may be neces­ the work. Substantial Rehabilitation may : Urban Development Act of 1970. than the elderly and/or handicapped sary to carry out this assurance, includ­ : Notification of Fund Availability vary in degree from gutting and exten­ which indicate that assistance will be ing (as provided in that section of the sive reconstruction to cosmetic improve­ Act) “the reservation of annual contri­ ’ (“NOFA”). A notice published by HUD limited to 20 percent or less of the units inviting the submission of Proposals in ments coupled with cure of substantial to be rehabilitated. (See Sec. 881.208 butions authority for the purpose of accordance with Sec. 881.203. accumulation of deferred maintenance. (g)(1)>. amending housing assistance contracts Owner. Any private person or entity Cosmetic improvements alone do not (b) Three or More Bedroom Projects. or the allocation of a portion of new au­ including a cooperative, or a PHA, hav­ qualify as Substantial Rehabilitation Where the need for dwelling units of thorizations for the purpose of amend- ing the legal right to lease or sublease under this definition. three or more bedroom size (“large dwell- ing housing assistance contracts.” Substantially Rehabilitated dwelling (b) Substantial Rehabilitation also in­ ing units”) is shown, each HUD field of­ cludes renovation, alteration or remodel­ § 881.106 Maximum total ACC commit­ units. fice shall be responsible, to the extent ment and project account (private- PHA-Owner Proposal and PHA-Owner ing for the conversion or adaptation of feasible, for inviting and selecting pro­ structurally sound property to the design owner/PHA projects). i Project. A proposal for a project under posals which in the aggregate will (a) Maximum Total ACC Commit­ this part (and the resulting project) to and condition required for use under this achieve the goal of providing a number part (e.g., conversion of a hotel to hous­ ment. The maximum total annual con­ be owned by a PHA throughout the term of large dwelling units equal to at least tribution that may be contracted for in . I of the Agreement and Contract where ing for the elderly). 20 percent of all the assisted units ap­ Substantially Rehabilitated. See the ACC for a project shall be the total such Agreement and Contract are to be proved under the Section 8 Housing As­ of the Gross Rents for all the Contract entered into between the PHA and HUD. § 881.101(b). sistance Payments Program, without un­ Very Low-Income Family. A family units in the project, plus a fee for the ; Preliminary Proposal. A proposal to due concentration of such large dwelling regular costs of PHA administration, i provide Substantially Rehabilitated whose Income does not exceed 50 percent units in any one location. of the median Income for the area, as de­ HUD-approved preliminary costs for ad­ : housing submitted in response to a HUD ministration (including administrative Invitation for Preliminary Proposals or a terminated by HUD, with adjustments § 881.105 Maximum total annual con­ i I for smaller or larger families. tract commitment and project ac­ costs in connection with PHA activities Notification of Fund Availability. count (private-owner or PHA-owner Private-Owner/PHA Proposal and Pri­ [41 FR 17488, Apr. 26, 1976, as amended at related to relocation of occupants) shall 41 FR 45121, Oct. 14, 19761 projects). be payable out of this total. vate-Owner/ PHA Project. A proposal for (b) Project Account. In order to assure a project under this Part (and the re­ § 881.103 Demonstration of need for (a) Maximum Total Annual Contract Commitment. The maximum total an­ that housing assistance payments will be sulting project) to be owned by a private substantial rehabilitation projects; increased on a timely basis to cover in- Owner throughout the term of the Agree­ compliance with section 213 of HCD nual housing assistance payments that ment and Contract where such Agree­ act. may be committed under the Contract creases in Contract Rents or decreases in shall be the total of the Gross Rents for Family Incomes: ment and Contract are to be entered into (a) Substantial Rehabilitation projects between the private Owner and the PHA all the Contract units in the project. (1) A Project Account shall be estab- shall be permitted only where: (1) HUD (b) Project Account. In order to as- lished and maintained, in an amount as pursuant to an ACC between the PHA determines that there is not and there is and HUD. The term also covers the situa­ sure that housing assistance payments determined by the Secretary consistent not likely soon to be an adequate supply will be increased on a timely basis to with his responsibilities under section 8 i tion where the ACC is with one PHA and of existing housing which, with the aid of the Owner is another PHA. cover increases in Contract Rents or de- (c) (6) of the Act, out of amounts by Private-Owner Proposal and Private- housing assistance payments provided creases in Family Incomes: which the maximum ACC commitment Owner Project. A proposal for a project under the Section 8 Housing Assistance (1) A Project Account shall be estab- per year exceeds amounts paid under the under this part (and the resulting proj­ Payments Program—Existing Housing, lished and maintained, in an amount as ACC for any year. This account shall be ect) to be owned by a private Owner can meet the needs of Eligible Families,! determined by the Secretary consistent established and maintained by HUD as throughout the term of the Agreement or (2) the proposed project is specifi­ with his responsibilities under section 8 a specifically identified and segregated and Contract where such Agreement and cally approved by HUD in accordance (c)(6) of the Act, out of amounts by account, and payment shall be made Contract are to be entered into between with priorities established from time to which the maximum annual Contract therefrom only for the purposes of (i) the private Owner and HUD. time by the Secretary including priori­ commitment per year exceeds amounts housing assistance payments and (ii) Project Account. The account estab­ ties for New Communities which involve paid under the Contract for any year. other costs specifically authorized or ap- lished and maintained in accordance Substantial Rehabilitation. This account shall be established and proved by the Secretary with §§ 881.105 or 881.106. (b) No proposal for section 8 housing maintained by HUD as a specifically (2) Whenever a HUD-approved esti- Public Housing Agency (“PHA”). Any may be approved unless HUD require­ identified and segregated account, and mate of required Annual Contribution State, county, municipality, or other gov­ ments implementing sections 213 (a), payment shall be made therefrom only exceeds the maximum ACC commitment ernmental entity or public body (or agen­ (b), and (c) of the HCD Act have been for the purposes of (i) housing assistance then in effect, and would cause the cy or instrumentality thereof) which is satisfied. payments, and (ii) other costs specifi- amount in the Project Account to be less authorized to engage in or assist in the § 881.104 Preference for certain types cally authorized or approved by the than an amount equal to 40 percent of development or operation of housing for of projects. Secretary. such maximum ACC commitment, HUD low-income Families. (2) Whenever a HUD-approved esti- shall, within a reasonable period of time, Secretary. The Secretary of Housing (a) 20 Percent Projects. Assistance mate of required housing assistance pay- take such additional steps authorized by and Urban Development. payments may be made with respect to ments for a fiscal year exceeds the maxi- section 8(c)(6) of the Act as may be Substantial Rehabilitation, (a) The up to 100 percent of the dwelling units in mum annual Contract commitment, and necessary to carry out this assurance, in- t improvement of a property to Decent, any structure or project. However, a would cause the amount in the Project eluding (as provided in that section of 1 Safe, and Sanitary condition and in ac­ preference will be provided for (1) Pro­ Account to be less than an amount equal the Act) “the reservation of annual con- ! cord with HUD requirements from a con- posals responding to local ordinances

i w ! 1 64 65 : i % ; r i, i

Ch. VII!—Low Income Housing, Dept, of Housing & Urban Dev. § 881.107 § 881.108 Title 24—Housing and Urban Development

tributions authority for the purpose of Owner shall not be entitled to any pay­ that the amount of the payments re- thereof where the estimated cost of the amending housing assistance contracts ment under this paragraph (c) (1) un­ quested is not in excess of that portion rehabilitation is less than 25 percent of or the allocation of a portion of new au­ less he: (i) Immediately upon learning of the deficiency which is attributable the estimated value of the property after thorizations for the purpose of amending of the vacancy, has notified HUD or the to the vacant units for the period of the rehabilitation), except that this limit housing assistance contracts.” PH A, as the case may be, of the vacancy vacancies. may be exceeded or prospective vacancy and the reasons (v) The Owner has submitted, in con­ (1) By up to 10 percent if the field § 881.107 Housing assistance payments for the vacancy, and (ii) has taken and nection with the semiannual claim, a office director determines that special to owners. continues to take the actions specified in statement with relevant supporting evi- circumstances warrant such higher rent (a) General. Housing assistance pay­ paragraphs (b) (2) and (3) of this sec­ dence that there is a reasonable prospect and the higher rent meets the test of ments shall be paid to Owners for units tion. that the project can achieve financial reasonableness in paragraph (b) of this under lease by Eligible Families, in ac­ (2) If the Owner evicts an Eligible soundness within a reasonable time. The section, or cordance with the Contract and as pro­ Family, he shall not be entitled to any ' statement shall indicate the causes of (2) By up to 20 percent, where the vided in this section. These housing as­ payment under paragraph (c) (1) of this the deficiency; the corrective steps that Regional Administrator determines that sistance payments will cover the differ­ section unless the request for such pay­ have been and will be taken; and the special circumstances warrant such ence between the Contract Rent and the ment is supported by a certification that time by which it is expected that the higher rent or determines that such : portion of said rent payable by the (i) he gave such Family a written notice project revenues will at least equal proj­ higher rent is necessary to the imple­ Family as determined in accordance with of the proposed eviction, stating the ect costs without the additional pay­ mentation of f* Local Housing Assist­ the HUD-established schedules and cri­ grounds and advising the Family that it ments provided under this paragraph. ance Plan, ant that such higher rent : V teria. No section 8 assistance may be pro­ had 10 days within which to present its (3) HUD may deny any claim for meets the test of reasonableness in para­ vided for any unit occupied by an Owner; objections to the Owner in writing or in additional payments or suspend or term­ graph (b) of this section. however, cooperatives are considered person and (ii) the proposed eviction was inate payments if it determines that (b) Reasonableness of Rents. In any rental housing rather than owner-oc­ not in violation of the Lease or the Con­ based on the Owner’s statement and case, the Contract Rent as proposed must cupied housing for this purpose. other evidence, there is not a reasonable be determined by HUD to be reasonable tract or any applicable law. prospect that the project can achieve in relation to the quality, location, amen- (b) Vacancies During Rent-up. If a (d) Debt service payments. (1) If a ities, and management and maintenance unit continues to be vacant after the financial soundness within a reasonable i I Contract unit is not leased as of the time. services of the project, and any proposed effective date of the Contract, the Owner 60-day period specified in paragraph (4) This paragraph (d) shall be ap- rent shall be subject to reduction, if it is shall be entitled to housing assistance (b) or (c) of this section, the Owner plicable to any project eligible for pay- found to be higher than such reasonable payments in the amount of 80 percent of may submit a claim and receive addi­ ments under this paragraph for which rent. Appropriate reductions to reflect the Contract Rent for the unit for a tional housing assistance payments on a conditional or unconditional com­ any savings where tax-exempt financing vacancy period not exceeding 60 days a semiannual basis with respect to such is involved may be made. i from the effective date of the Contract, a vacant unit in an amount equal to the mitment for permanent financing was principal and interest payments re­ not secured by the Owner from a lender [41 FR 17488. Apr. 26, 1976, as amended at ! in accordance with the procedure set or underwriter prior to December 15, 41 FR 46121, Oct. 14, 1976] forth in § 881.217(b), provided that the quired to amortize the portion of the 1976. An Owner of a project for which § 881.109. Term of housing assistance ; Owner (1) commenced marketing and debt attributable to that unit for the a commitment for permanent financing otherwise complied with § 881.215(f), (2) period of the vacancy, whether such payments contract. vacancy commenced during rent-up or was secured prior to December 15, 1976, has taken and continues to take all feasi­ may request HUD to agree to make this (a) Where’ the estimated cost of the ; ble actions to fill the vacancy, including, after rent-up. paragraph applicable, on a showing that rehabilitation is less than 25 percent of ■ but not limited to, contacting applicants (2) Additional payments under this the estimated value of the project after I the financing terms have been renegoti­ on his waiting list, if any, requesting the paragraph (d) for any unit shall not be completion of the rehabilitation, the ■ for more than 12 months for any va­ ated to result in a lower cost of financing PHA and other appropriate sources to and lower contract rents. Contract may be for an initial term of : refer eligible applicants, and advertising cancy period, and shall be made only if: not more than five years of any dwelling '• (i) The unit is not in a project in­ (e) Prohibition of Double Compensa­ unit, with provision for automatic re­ the availability of the unit, and (3) has tion for Vacancies. The Owner shall not not rejected any eligible applicant, ex­ sured under the National Housing Act newal (unless agreed otherwise) for one except pursuant to section 244 of that be entitled to housing assistance pay­ or more additional terms of not more cept for good cause acceptable to HUD ments with respect to vacant units under ! or the PHA, as the case may be. Act. than five years each; provided, how­ : (c) Vacancies After Rent-up. (1) If an (ii) The unit was in decent, safe, and this section to the extent he is entitled ever, that the total Contract term, in­ Eligible Family vacates its unit (other sanitary condition during the vacancy to payments from other sources (for ex­ cluding all renewals, shall not exceed 10 I period for which payments are claimed. ample, payments for losses of rental in­ ! than as a result of action by the Owner years for any dwelling unit. which is in violation of the Lease or the^ (iii) The owner has taken and is con- come incurred for holding units vacant (b) Where the estimated cost of the i Contract or any applicable law), the* tinuing to take the actions specified in for relocatees pursuant to Title I of the rehabilitation is 25 percent or more, the Owner shall receive housing assistance paragraphs (b)(1), (2) and (3) or para­ HCD Act or payments under § 81.116): Contract may be for an initial term of payments in the amount of 80 percent graphs (c)(1) (i) and (ii) and (c)(2) [41 FR 17488, Apr. 22, 1976, as amended at not more than five years for any dwell­ of the Contract Rent for a vacancy of this section, as appropriate. 42 FR 12982, Mar. 7,1977] ing unit, with provision for automatic period not exceeding 60 days; Provided, (iv) The Owner has demonstrated in § 881.108 Initial contract rents. renewal (unless agreed otherwise) for however, That if the Owner collects any connection with the semiannual claim, additional terms of not more than five on a form and in accordance with the (a) Fair Market Rent Limitation. The of the Family’s share of the rent for this sum of the initial Contract Rent and years each, for a total Contract term period in an amount which, when added standards prescribed by HUD with re­ which will cover the financing of the spect to the period of the vacancy, that any Allowance for Utilities and Other : to the 80 percent payments, results in Services for any unit shall not exceed cost of rehabilitation, or the remaining : more than the Contract Rent, such ex­ the project is not providing the Owner term of the existing indebtedness, if with revenues at least equal to the proj­ the Fair Market Rent for newly con­ • j cess shall be payable to HUD or as HUD structed rental housing (or 75 percent that be longer, or which will cover the may direct. (See also § 881.116.) The ect costs incurred by the Owner, and

:

i 67 i l : 66 i

: 1 j !

Title 24—Housing and Urban Development Ch. VIII—Low Income Housing, Dept, of Housing & Urban Dev. § 881.111 § 881.112 1973, and it meets any relevant HUD Owner clearly demonstrates that such § 881.112 Site and neighborhood stand­ financing of the cost of the rehabilitation ards. standards and local requirements. and of acquisition or refinancing of the general increases have caused increases - existing indebtedness; provided, how­ in the Owner’s operating costs which Proposed sites for Substantial Reha­ § 881.113 Relocation. ever, that the total Contract term, in­ are not adequately compensated for by bilitation projects must be approved by (a) In the evaluation or selection of cluding all renewals, for any dwelling automatic annual adjustments. The HUD as meeting the following stand­ Proposals, consideration shall be given unit shall not exceed 20 years, or 40 Owner shall submit to HUD financial ards: , . ____ to whether there are site occupants who years where the project is owned by, or statements which clearly support the (a) Adequate utilities (water, sewer, would have to be displaced, whether the financed by a loan or loan guarantee incrc&sc* gas and electricity) and streets shall be relocation of site occupants is feasible, from, a State or local agency. (d) Overall Limitation. Notwithstand­ available to service the site. an(i the degree of hardship which dis- (c) If the project is completed in ing any other provisions of this Part, ad­ (b) The site and neighborhood snail piacement might cause. Greater weight stages, the dates for the initial and the justments as provided in this section be suitable from the standpoint of facili- ghaU be given to proposals which do not renewal terms shall be separately related shall not result in material differences tating and furthering full compliance require displacement, or, where dis- to the units in each stage; provided, how­ between the rents charged for assisted with the applicable prov^ions of™1® placement is required which will involve ever that the total Contract term for and comparable unassisted units, as de­ of the Civil Rights Act of 1964, Title vm the least amount of hardship. the units in all the stages, beginning termined by HUD; Provided, however, of the Civil Rights Act of 1968, Execu­ (b) In the case of a PHA-Owner Proj­ with the effective date of the Contract that this limitation shall not be construed tive Order 11063, and HUD regulations ect, no Agreement shall be executed for with respect to the first stage, may not to prohibit differences in rents between issued pursuant thereto. housing which is to be rehabilitated on a exceed the overall maximum term allow­ assisted and comparable unassisted units (c) The site shall promote greater site which has occupants unless the to the extent that such differences may choice of housing opportunities and avoid Agreement provides that, pursuant to the ! j able for any one unit, plus two years. undue concentration of assisted persons i [41 FR 17488, Apr. 26, 1976, as amended at have existed with respect to the initial Uniform Relocation Assistance and Real 41 FR 45121, Oct. 14, 1976] Contract Rents, in areas containing a high proportion of Property Acquisition Policies Act of 1970, 141 FR 17488, Apr. 26, 1976, as amended at low income persons. the PHA undertakes liability for (1) the § 881.110 Rent adjustments. 41 FR 45121, Oct. 14, 19761 (d) The site shall be free from serious, provision of relocation payments and as­ (a) Funding of Adjustments. Housing adverse environmental conditions, or sistance as prescribed in sections 202, § 881.111 Types of housing and prop­ there shall be evidence that any such assistance payments will be made in in­ erty standards. 203, and 204 of the Act; (2) the provision creased amounts commensurate with conditions will be corrected by the time of relocation assistance programs offer­ Contract Rent adjustments under this (a) Existing structures of various the rehabilitation is completed. ing the services described in section 205 paragraph, up to the maximum amount types may be appropriate for this pro­ (e) The site shall comply with any ap­ of the Act; and (3) assuring that within ■ authorized under the Contract. (See gram including apartment hotels, single­ plicable conditions in the Local Housing a reasonable period of time prior to dis­ ! §§ 881.105 and 881.106.) family houses, and multifamily struc­ Assistance Plan, approved by HUD. placement, Decent, Safe, and Sanitary (b) Automatic Annual Adjustments. tures. Hotels or office buildings may be (f) The housing shall be accessible to replacement dwellings will be available (1) Automatic Annual Adjustment Fac­ suitable for conversion under this pro­ social, recreational, educational, com­ to displaced persons. The Agreement tors wall be determined by HUD at least gram to housing designed for elderly or mercial, and health facilities and serv­ shall provide that the PHA will provide annually; interim revisions may be made handicapped Families and individuals, ices. and other municipal facilities and full funding for the required relocation ! as market conditions warrant. Such including congregate housing. Single services that are at least equivalent to payments and assistance unless other room occupant housing planned specif­ those typically found in neighborhoods commitments, satisfactory to HUD, have Factors and the basis for their deter­ ically as a relocation resource for eligi­ ; mination will be published in the Federal consisting largely of unsubsidized, stand­ been made for the funding of such pay­ ble single persons may also be developed. ard housing of similar market rents. ments and assistance. (In the case of a | Register. These published Factors will Except in the case of housing predomi­ (g) Travel time and cost via public be reduced appropriately by HUD where Private-Owner Project or a Private : 5 utilities are paid directly by Families. nantly for the elderly, high-rise elevator transportation or private automobile, Owner/PHA Project, the Uniform Relo­ (2) On each anniversary date of the projects for Families with children may from the neighborhood to places of em­ cation Assistance and Real Property Ac­ 1 Contract, the Contract Rents shall be ad­ not be utilized unless HUD determines ployment providing a range of jobs for quisition Policies Act of 1970 is justed by applying the applicable Auto­ there is no practical alternative. Mobile lower-income workers, shall not be ex­ inapplicable.) homes may not be utilized in this cessive. (While it is important that el­ matic Annual Adjustment Factor most § 881.114 Other Federal requirements. ■ recently published by HUD. Contract program. derly housing not be totally isolated from (b) Participation in this program re­ employment opportunities, this require­ (a) Equal Opportunity Requirements. 1 Rents may be adjusted upward or down­ ment need not be adhered to rigidly for . ward, as may be appropriate; however, quires compliance with (1) HUD Mini­ Participation in this program requires | in no case shall the adjusted rents be mum Design Standards for Rehabilita­ such projects.) compliance with (1) Title VI of the Civil tion for Residential Properties, (2) in the (h) The project may not be on a site Rights Act of 1964, Title VILE of the Civil less than the Contract Rents on the effec­ which has occupants unless the reloca­ Rights Act of 1968, Executive Orders * tive date of the Contract. case of congregate or single room occu­ pant housing, the appropriate HUD tion requirements referred to in § 881.113 11063 and 11246, and section 3 of the (c) Special Additional Adjustments. are met. Housing and Urban Development Act of Special additional adjustments shall be guidelines and standards, (3) HUD re­ (i) The project may not be in an area 1968; and (2) all rules, regulations, and granted, when approved by HUD, to re­ quirements pursuant to section 209 of the that has been identified by HUD as hav­ requirements issued pursuant thereto. flect increases in the actual and neces­ HCD Act for projects for the elderly or (b) National Environmental Policy ■ handicapped, (4) HUD requirements per­ ing special flood hazards and in which t-! sary expenses of owning and maintain­ the sale of flood insurance has been made Act. Participation in this program re­ ing the Contract units which have re­ taining to noise abatement and control, available under the National Flood In- quires compliance with the National En­ (5) HUD regulations issued pursuant to sulted from substantial general increases surance Act of 1968, unless the project vironmental Policy Act and all rules, reg- in real property taxes, utility rates, or the Lead Based Paint Poisoning Preven­ is covered by flood insurance as required ulations, and requirements issued similar costs (i.e., assessments, and tion Act, 42 U.S.C. 4801, and (6) ap­ by the Flood Disaster Protection Act of pursuant thereto. utilities not covered by regulated rates), plicable State and local laws, codes, ! but only if and.to the extent that the ordinances, and regulations.

f T 69 68 I j;

k Ch. VIII—Low Income Housing, Dept, of Housing & Urban Dev. § 881.116 §881.117 Title 2A—Housing and Urban Development ' (c) Clean Air Act and Federal Water profit corporation or the PHA, the proj­ by the Owner in a segregated bank ac­ of the Family or spouse). The term very large Family means a Family which in­ Pollution Control Act. Participation in ect will be considered as a PHA-Owner i count, and the balance of this account, this program requires compliance with Project. •at all times, shall be equal to the total cludes eight or more minors (other than the Clean Air Act and the Federal Water (b) Use of Contract as Security for amount collected from tenants then in the head of the Family or spouse). i | Pollution Control Act and all rules, reg­ Financing. (1) An Owner may pledge, or occupancy, plus any accrued interest. § 881.119 Responsibilities of the Owner. ulations, and requirements issued pur­ offer as security for any loan or obliga­ The Owner shall comply with all State tion, an Agreement or Contract entered and local laws regarding interest pay­ (а) The Owner shall be responsible i suant thereto. (subject to post-review or audit by HUD (d) Davis-Bacon Wage Rates. Not less into pursuant to this part; Provided, ments on security deposits. however, That such security is in connec­ (c) Families shall be expected to ob­ or the PHA, as the case may be) for than the wages prevailing in the locali­ tain the funds to pay security and utility management and maintenance of the ty, as predetermined by the Secretary of tion with a project rehabilitated pursu­ project. These responsibilities shall in­ Labor pursuant to the Davis-Bacon Act ant to this part, and the terms of the deposits, if required, from their own re­ financing or any refinancing have been sources and/or other private or public clude but not be limited to: (49 Stat. 1011) shall be paid to all la­ sources. (1) Payment for utilities and services ! borers and mechanics employed in the approved by HUD. It is the Owner’s re­ (unless paid directly by the Family), ; development of any Substantial Rehabil­ sponsibility to request such approval in § 881.117 Establishment of income limit insurance and taxes; itation project with nine or more as­ sufficient time before he needs the fi­ schedules; 30 percent occupancy by (2) Performance of all ordinary and sisted units. nancing to permit review of the method very low-income families. extraordinary maintenance; | (e) Other Federal Statutes and Regu­ and terms of the financing and the in­ (a) HUD will establish schedules of (3) Performance of all management 1 lations. Participation in this program re­ strument of pledge, offer or other assign­ Income limits for determining whether functions including the taking of ap­ quires compliance with the National His­ ment that HUD is requested to approve V families qualify as Lower-Income Fam­ plications, selection of Families includ­ ! toric Preservation Act (Public Law 89- Where the methods and terms of financ­ ilies and Very Low-Income Families. ing verification of Income and other 665), the Archeological and Historic ing require, the Contract Rents may be (b) In the initial renting of Contract pertinent requirements, and determina­ 1 Preservation Act of 1974 (Public Law 93- reduced in accordance with § 881.108(b). units, the Owner shall lease at least 30 tion of eligibility and amount of Family I 291), and Executive Order 11593 on Pro­ (2) Any pledge of the Agreement, percent to Very Low-Income Families contribution in accordance with HUD- tection and Enhancement of the Cultur­ Contract, or ACC, or payments thereun­ and shall thereafter exercise his best ef­ established schedules and criteria; al Environmental, including the proce­ der, shall be limited to the amounts pay­ forts to maintain at least 30 percent oc­ (4) Collection of Family rents; dures prescribed by the Advisory Council able under the Contract or ACC in ac­ cupancy of Contract units by Very Low- (5) Termination of tenancies, includ­ on Historic Preservation in 36 CFR Part cordance with its terms. Income Families, provided that if this ing evictions; 800. (3) In the event of foreclosure, includ­ requirement with respect to initial rent- (б) Preparation and furnishing of in­ ing foreclosure by HUD, and in the event ■ (41 PR 17488, Apr. 26, 1976, as amended at up cannot be met because of Families al­ formation required under the Contract; 41 FR 45121, Oct. 14, 1976J of assignment or sale agreed to by HUD ready residing in the property to be re­ (7) Reexamination of Family Income, or made to HUD, housing assistance pay­ § 881.115 Financing. habilitated, HUD may adjust the per­ composition, and extent of exceptional ments shall continue in accordance with centage of Very Low-Income Families to medical or other unusual expenses, and (a) Types. Any type of financing may the terms of the Contract. ! the extent that the adjustment is com­ redeterminations, as appropriate, of the ; be utilized, including, but not limited to, § 881.116 Security and utility deposits. pensated for by a higher than 30 percent amount of Family contribution and . the types listed below. requirement with respect to such Fami­ amount of housing assistance payment : ! (1) Conventional loans from commer­ (a) An Owner may require Families to lies in other projects. in accordance with HUD-established cial banks, savings banks, savings and pay a security deposit in an amount equal schedules and criteria; t loan associations, pension funds, insur­ to one month’s Gross Family Contribu­ § 881.118 Establishment of amount of housing assistance payments. (8) Redeterminations of amount of ance companies or other financial insti­ tion. If a Family vacates its unit, the Family contribution and amount of tutions. Owmer, subject to State and local law, The amount of Housing Assistance may utilize the deposit as reimbursement housing assistance payment in accord- 1 (2) Mortgage insurance programs un­ Payment on Behalf of Eligible Family, to ance with HUD-established schedules der the National Housing Act (see § 881.- for any unpaid rent or other amount be determined in accordance with sched­ and criteria as a result of an adjust­ i 207). (With respect to any obligation se­ owed under the Lease. If the Family has ules and criteria established by HUD, ment by the PHA or HUD, as appro­ cured by a mortgage insured under sec­ provided a security deposit, and it is. in­ will equal the difference between (a) no priate, of any applicable Allowance for I tion 221(b) (3) of the National Housing sufficient for such reimbursement, the less than 15 percent nor more than 25 Utilities and Other Services; and Act and issued by a public agency as Owner may claim reimbursement from percent of the Family’s Income and (b) (9) Compliance with equal opportunity mortgagor in connection with the financ­ HUD or the PHA, as appropriate, not to the Gross Rent, taking into considera­ requirements. ing of a project assisted under section 8, exceed an amount equal to the remainder tion the Income of the Family, the num­ (b) Subject to HUD approval, any of one month’s Contract Rent. Any re­ the interest paid on such obligation shall ber of minor children in the household, Owner may contract with any private .< be included in gross income for purposes imbursement under this section shall be and the extent of medical or other un­ or public entity to perform for a fee the of Chapter I of the Internal Revenue applied first toward any unpaid rent. If usual expenses incurred by the Family, services required by paragraph (a) of this Code of 1954.) a Family vacates the unit owing no rent except that, in the case of a large Very section, provided that such contract (3) Home Improvement Loans under or other amount under the Lease or if Low-Income Family or a very large such amount is less than the amount of shall not shift any of the Owner’s re­ Title I of the National Housing Act. Lower-Income Family or a Family with sponsibilities or obligations. However, * (4) Section 202 of the Housing Act of the security deposit, the Owner shall re­ fund the full amount or the unused bal­ exceptional medical or other unusual ex­ no entity which is responsible for ad­ 1959. penses, the amount of the housing as­ ministration of the Contract (for exam­ i . (5) Title V of the Housing Act of 1949. ance, as the case may be, to the Family. ple, a PHA in the case of a Private-Own- (b) In those jurisdictions where inter­ sistance payment shall be the difference (6) Financing by tax-exempt bonds or between 15 percent of the Family’s In­ er/PHA Project) may contract to per­ other obligations. Where the project is est is payable by the Owner on security form management and maintenance of deposits, the refunded amount shall in­ come and the Gross Rent. The term large owned by a non-profit corporation which Family means a Family which includes the project; Provided, however, That this is an agency or instrumentality of a PHA, clude the amount of interest payable. All six or more minors (other than the head prohibition shall not preclude man- i and the financing is provided by the non- security deposit funds shall be deposited

: I 70 . 71 ; !

i ,

Ch. VIII—Low Income Housing, Dept, of Housing & Urban Dev. § 881.123 § 881.124 Title 24—Housing and Urban Development agement by the PHA in the event it takes action, determine that there is a sub­ be assigned a separate project number, tained HUD approval of its financing possession as the result of foreclosure or stantial default and require the PHA to All Substantial Rehabilitation units to be documents proposes substantive changes assignment in lieu of foreclosure. (See, assign to HUD all of the PHA’s rights and placed under a single Contract shall com- in the documents, whether by way of however, § 881.123(b) which permits interests under the Contract. In such prise a separate project. However, the amendment, replacement or supplemen- conversion of a Private-Owner/PHA case, HUD will continue to pay annual field office director may designate as a tation," such’ changes must 1be submitted Project to a Private-Owner Project.) contributions in accordance with the single project the units to be covered by to HUD^ for prior approval, terms of the ACC and the Contract. two or more such Contracts for Substan­ (2) The financing agency shall also § 881.120 Responsibility for contract submit a certification specifying (i) its administration, and defaults (private- (3) The Contract shall contain a pro­ tial Rehabilitation projects where: / A ...... fVl_ owner and PHA-owncr projects). vision to the effect (i) that if the PHA (1) The units are placed under ACC projected rate (net interest costj^oi the determines that the Owner is in default on the same date;date; and borrowing from which funds will be used (a) Contract Administration. HUD is under the Contract, the PHA shall notify (2) Such consolidation is necessary in for financing (interim and permanent) responsible for administration of the the Owner, with a copy to HUD, of the the interest of administrative efficiency, the project, (ii) the projected rate at Contract. HUD may contract with actions required to be taken to cure the which interim financing will be provided another entity for the performance of default and of the remedies to be applied § 881.124 Conversions. to ^ owner for the project, (iii) the I some or all of its Contract administra­ by the PHA including abatement of hous­ (a) Conversion of Private-Owner Prof- projected capital cost of the project and tion functions. ing assistance payments and recovery of ect to PrivateOwner/PHA Project. HUD the projected rate and the term of the (b) Defaults by Owner. The Contract overpayments, where appropriate; and may request the Owner of a Private- permanent financing to be provided to ; shall contain a provision to the effect (1) (ii) that if he fails to cure the default, Owner Project and an appropriate PHA the Owner for the project, (iv) the pro­ that if HUD determines that the Owner the PHA has the right to terminate the to agree, if they are willing, to a con- jected monthly debt service for such per­ i ' is in default under the Contract, HUD Contract or to take other corrective ac­ version of any such project to a Private- manent financing on which Contract shall notify the Owner of the actions tion, in its discretion or as directed by Owner/PHA Project if HUD determines Rents are based, and (v) the spread, if required to be taken to cure the default HUD. If the PHA is the lender, the Con­ that such conversion would promote effi- any, between the projected rate of bor- : and of the remedies to be applied by HUD tract shall also provide that HUD has an cient project administration. rowing and the projected rate of lending ; including abatement of housing assist­ independent right to determine whether (b) Conversion of Private-Owner/PHA to the Owner. The financing agency shall ance payments and recovery of overpay­ the Owner is in default and to take cor­ Project to Private-Owner Project. The also certify (vi) that the spread, if any, ments, where appropriate; and (2) that rective action and apply appropriate private Owner and the PHA, in the case between its actual rate of borrowing and if he fails to cure the default, HUD has remedies, except that HUD shall not of a Private-Owner/PHA Project, may the actual rate of lending to the Owner the right to terminate the Contract or to have the right to terminate the Contract request HUD to agree to a conversion of for the project will not be greater than take other corrective action. without proceeding in accordance with any such project to a Private-Owner the projected spread nor greater than paragraph (b) (2) of this section. or a PHA-Owner Project. HUD shall the spread allowed for the borrowing as § 881.121 Responsibility for contract agree to such conversion if it determines a whole under the Department of Treas- administration, and defaults (private- § 881.122 Rights of owner if PHA de­ it to be in the best interest of the project, ury regulations regardmg arbitrage if owner/PHA projects). faults under agreement (private- the borrowing is subject to those regula­ (a) Contract Administration. The PHA owner/PHA projects). § 881.125 Projects financed with pro­ tions, or the HUD regulations under is primarily responsible for administra­ The ACC and the Agreement shall con­ ceeds from sale of bonds or notes. section 11(b) of the United States Hous- tion of the Contract, subject to review tain a provision to the effect that in the (a) Applicability of this section. The ing Act of 1937 (24 CFR 811.101) if the and audit by HUD. event of failure of the PHA to comply provisions pf this section shall apply borrowing is by a PHA under that §811.- I (b) Defaults by PHA and/or Owner. with the Agreement with the Owner, the where the interim and permanent financ- ioi, and (vii) that the terms of the (1) The ACC and the Contract shall Owner shall have the right, if he is not in ing for a project is to be provided by a financing, the amount of the obligations contain a provision to the effect that in default, to demand that HUD determine, public agency or other entity including issued with respect to the project, and the i the event of failure of the PHA to comply after notice to the PHA giving it a rea­ a PHA (“financing agency”) from the use of the funds raised will be in corn- with the Contract with the Owner, the sonable opportunity to take corrective proceeds of the sale of bonds or notes, pfiance with applicable Department of Owner shall have the right, if he is not in action, whether a substantial default (b) Submission of Financing Docu- Treasury regulations regarding arbitrage default, to demand that HUD determine, exists, and if HUD determines that such ments to HUD. (1) Before HUD may ap- 0r HUD regulations in § 811.101. The after notice to the PHA giving it a rea­ a default exists, that HUD assume the prove a Final Proposal which is to be term “spread” means the difference be- i sonable opportunity to take corrective PHA’s rights and obligations under the financed in a manner subject to this tween the net interest cost on financing i action, whether a substantial default ex­ Agreement, and carry out the obligations section, the financing agency shall sub- agency obligations issued in connection I ists, and if HUD determines that such a of the PHA under the Agreement, includ­ mit to the appropriate HUD field office with a project and the effective rate of default exists, that HUD assure that the ing the obligation to enter into the Con­ or offices copies of the documents relating interest (i.e., including the servicing obligations of the PHA to the Owner are tract. to the method of financing of the project, charge) payable by the Owner k ' carried out. such documents to include the bond res- (3) The financing agency shall retain ] (2) The ACC shall contain a provision § 881.123 Separate project require­ olution or indenture, loan agreement, m its files, and make available for HUD to the effect that if the PHA fails to com­ ment. regulatory agreement, note, and mort- inspection, the documentation relating to ply with any of its obligations (including (a) In the case of a Private-Owner eaee or deed of trust and other related its financing of section 8 projects, mclud- specifically failure to enforce its rights Project or a PHA-Owner Project, each documents, if any, including the “official ing any certifications of compliance with under the Contract, in the event of any Agreement and Contract shall constitute statement” or “prospectus”, if available the applicable Department of Treasury default by the Owner, to achieve com­ a separate project. at that time or as soon as it is available, or HUD regulations. _ pliance to the satisfaction of HUD or to (b) In the case of a Private-Owner/ After prompt review, HUD shall notify (c) Recoupment of Savings in Financ- : toe flnS asmy that the documents ing Cost. Cl) In the event that interim ■ terminate the Contract in whole or in PHA Project, such project may not in­ clude more than one type of section 8 are acceptable or if unacceptebfeshaU taancingis conttau^after toe first y^ part, as directed by HUD), HUD may, 1 ! after notice to the PHA giving it a rea­ assistance, shall be processed with a sep­ event! financingTge°ncy which has ob- service of toe interim financing for any sonable opportunity to take corrective arate ACC List and ACC Part I and shall

90-079—77------30 : :

’

72 73 * § 881.201 Title 24—Housing and Urban Development Ch. VIII—Low Income Housing, Dept, of Housing & Urban Dev. § 881.126 not to exceed 15 calendar days, to fur- ity organizations involved in housing and period of three months after such first or Contract entered into pursuant to this ' nish such documentation. part, and a financing agency may pledge community development, and fair hous­ year, is less than the anticipated debt Subpart B—Project Development and ing groups. In addition, the field office sendee under the permanent financing ACC payments as security for housing assistance payments pursuant to the Operation shall notify the State Director of the on which the Contract Rents were based, Farmers Home Administration, if appli­ an appropriate amount reflecting the Contract; Provided, however, That such § 881.201 Allocations of contract au­ security is in connection with a project thority to field offices. cable, and, to the extent feasible, the savings in financing cost shall be cred­ field ^office may notify appropriate PHAs, ited by HUD to the Project Account pur­ rehabilitated pursuant to this part, the HUD field offices will be allocated con­ terms of the financing or any refinancing the chief executive officer of the appro­ suant to §§ 881.105 or 881.106, as appro­ tract authority for the Section 8 Hous­ priate unit(s) of general local govern­ priate, and withheld from housing assist­ have been approved by HUD in accord­ ing Assistance Payments Program for ment, trade journals, and other non­ ance payments to the Owner. If during ance with this section, and the financing metropolitan areas and for nonmetro­ agency has submitted a certification that minority media. Information copies of the the course of the same year there is any politan areas in conformance with sec- NOFA may also be sent to sponsors of period of three months in which the debt the terms and conditions of the financing tion 213(d) of the HCD Act. for the particular project are consistent FHA projects which are in processing and service is greater than the anticipated § 881.202 Determination of number and could be eligible for Section 8 assistance, debt service under the permanent financ­ with those specified in the documents and to owners who previously submitted which were approved by HUD. Any such types of units to be assisted; substan­ ing, an adjustment shall be made so that tial rehabilitation program schedule. Proposals which had been found approv- only the net amount of savings in debt pledge shall be limited to the amounts able but were not selected due to fund­ service for the year is credited by HUD payable under the Contract or ACC in (a) Number and Types of Units to be ing limitations. to the Project Account and withheld accordance with its terms. Assisted. Each field office shall, after con­ (c) The Notification shall state: from housing assistance payments to the (2) In the event of foreclosure, or as­ sidering the contents of any Local Hous­ (1) The geographic area or areas in Owner as aforesaid (no increased pay­ signment or sale to the financing agency ing Assistance Plans and any other which the housing is to be rehabilitated; ft ments shall be made to the Owner on ac­ in lieu of foreclosure, or in the event of pertinent information which it has or (2) The amount of Section 8 contract count of any net excess for the year of assignment or sale agreed to by the which is brought to its attention in rela­ authority being made available for sub­ actual interim debt service over the an­ financing agency and approved by HUD tion to the factors set forth in section stantial rehabilitation projects designed ticipated debt service under the perma­ (which approval shall not be unreason­ 213(d) of the HCD Act, including any ap­ for the elderly and handicapped and the nent financing). Nothing in this para­ ably delayed or withheld), housing assist­ plicable state or areawide housing alloca­ approximate number of units this graph (c) shall be construed as requir­ ance payments shall continue in accord­ tion plan, determine the number and amount is expected to assist. i ing a reduction in the Contract Rents or ance with the terms of the Contract. types of units to be made available for (3) The amount of Section 8 contract new construction, substantial rehabilita­ precluding adjustments of Contract § 881.126 Applicability of this Part to authority being made available for sub­ Rents in accordance with § 881.110. Invitations for Proposals Outstanding tion, and existing housing in the geo­ stantial rehabilitation projects for other graphic areas established for the purpose (2) The computation and recoupment on April 26, 1976. than the elderly or handicapped, and (i) under this paragraph (c) may be made of allocating funds (herein called “al­ the approximate number of large family (a) If, prior to April 26, 1976, an Invi­ location areas”). units (3 or more bedrooms) and (ii) the on an annual or on a quarterly or other tation for Proposals had been issued and periodic basis, but in any event no later (b) Substantial Rehabilitation Pro­ approximate number of other family than as of the end of each fiscal year; (1) the deadline in said Invitation had gram Schedule. units that this amount is expected to Provided, however, That if recoupment passed and (2) copies of Proposals had With respect to each allocation area assist; is to be made less often than quarterly, been sent to the A-95 Clearinghouse or part thereof, the field office shall pre­ (4) That, up to a specified deadline and the funds shall be deposited in a spe­ and/or unit of general local government pare an appropriate schedule for publish­ date (generally 35 calendar days, begin­ i cial account from which withdrawals for comment, such Proposals shall be ing Notifications of Fund Availability ning with the date of the first publica­ may be made only with the authorization processed and selection shall be made in (NOFA) pursuant to § 881.203 (a) tion), the field office will accept Pre­ of HUD or other entity administering the accordance with this Part prior to said through (c) or inviting Proposals for pre­ liminary Proposals, but that such dead­ Contract. ^ _ . date. approved properties pursuant to §881.- line may be shortened or extended by (d) Adjustment to Reflect Actual Cost (b) If, prior to April 26, 1976, an In­ 203(e). The schedule may be modified HUD with appropriate notification to of Permanent Financing. After the proj­ vitation for Proposals had been issued at such time as circumstances require. those parties who have registered with but any of the conditions specified in the field office so that they may be so ect is permanently financed, the financ­ § 881.203 Notifications of fund avail­ I ing agency shall submit a certification paragraph (a) of this section had not oc­ notified; curred, Proposals shall continue to be re­ ability. i as to the actual financing terms. If the (5) That in the case of Proposals for v ceived in accordance with the Invitation (a) Publication. The field office shall projects to be located in non-metropoli­ actual debt service under the permanent t financing is lower than the anticipated and the field office director shall make a publish Notifications of Fund Availability tan areas and Proposals for projects in debt service on which the Contract Rents determination whether to perform all in accordance with its schedule. Each which the Owner proposes to limit the were based, the initial Contract Rents, or further processing and other activities NOFA shall be published in a news­ number of assisted units to 20 percent of the Contract Rents currently in effect, with respect to said Invitation and re­ paper (s) of general circulation serving the dwelling units in the project, the shall be reduced commensurately, and sulting Proposals (1) in accordance with the area(s) in which the housing is deadline shall not apply; the amount of the savings shall be cred­ this Part prior to said date until the desired at least once a week for two con­ (6) That Proposals may be submitted ited to the Project Account. The maxi­ selection of Proposals has been com­ secutive weeks. by private Owners or PHA-Owners for mum ACC or Contract commitment shall pleted, or (2) in accordance with this (b) Notification to Minority Media and direct contracting with HUD, or by PHAs not be reduced. If the actual debt service Part as amended on said date. Where al­ on behalf of Owners with whom the PHA Others. As promptly as possible, the field proposes to contract pursuant to an An­ is higher, the Contract Rents shall not ternative (2) is utilized, the field office office shall also notify minority media, be increased. shall notify the Owners who have sub­ nual Contributions Contract with HUD; business concerns included in HUD’s (7) That appropriate instructions, (e) Use of Contract as Security for mitted Proposals prior to the deadline registry of Section 3 businesses for the Financing. (1) An Owner or financing forms, and other program information of the additional documentation required applicable political jurisdictions, minor- may be obtained at the field office. agency may pledge, or offer as security and shall allow them a reasonable time, for any loan or obligation, an Agreement [

t ; 75 74 l ! ! ■ I L Ch. VIII—Low Income Housing, Dept, of Housing & Urban Dev. § 881.205 § 881.205 Title 24—Housing and Urban Development

(8) Such other pertinent information § 881.204 Obtaining program informa- (e) The number of units by unit size displaced (identified by race or minority as the field office may specify. tion. (number of bedrooms) and the type of group status, and whether they are own­ (d) Notifications for Special Catego­ (a) Rehabilitation Program Packet. occupancy (elderly or handicapped or ers or renters), and shall demonstrate ries. (1) In the case of projects in new The Rehabilitation Program Packet shall other) proposed for the property after that relocation is feasible; in the case of communities when authorized by the include: _ . . . the completion of rehabilitation. a PHA-Owner Proposal, a statement New Communities Administration, the (1) A copy of the Section 8 Substantial (f) If demolition is proposed for any shall be included as to how necessary re­ field office shall utilize the procedures set Rehabilitation regulations and HUD structure on the site of the property, a location payments will be funded. forth in this Subpart, except that forms required for submission of a Pre­ description of the proposed reuse of the (p) A signed certification of the § 881.203 (a) through (c) shall not be liminary Proposal and the Packet shall land including sketch plans for archi­ Owner’s intention to comply with Title applicable. Other appropriate means of indicate where HUD Minimum Design tectural and landscape treatment. VI of the Civil Rights Act of 1964, Title notification as determined by the field • Standards and other applicable regula­ (g) A description of the existing utility VTH of the Civil Rights Act of 1968, office and the New Communities Ad­ tions, standards, and forms may be ob­ combination, whether or not a change to Executive Order 11063, Executive Order a different combination is proposed, and ministration may be used. tained; and . .. 11246, and Section 3 of the Housing and (2) In the case of PHA-Owner Pro­ (2) Requirements and information if so, a description of the new utility Urban Development Act of 1968. If the posals utilizing any special set-aside es­ to enable interested parties to combination. proposed project is to be located within : necessary (h) A statement as to whether or not tablished for PHA-Owner Projects, the prepare a Preliminary Proposal in ac- the area of a Local Housing Assistance field office shall utilize the procedures set the services of a registered architect will Plan, include certification that the cordance with this Part. be utilized for preparation of final work­ forth in this Subpart, except that (b) Additional Guidance. Any Owner Owner will take affirmative action to \j § 881.203 (a) through (c) shall not be may request a meeting with the field of­ ing drawings and specifications. provide the opportunity to apply for required. Other appropriate means of fice for the purpose of obtaining addi­ (i) The Contract Rent per unit, by size units in the proposed project to persons notification as determined by the field tional guidance and assistance prior to and structure type. expected to reside in the community as : office may be used. submitting a proposal. (j) The equipment to be included in a result of current or planned employ­ (e) Preapproved Properties. (1) Upon the Contract Rent. ment, as indicated in the Local Housing written request from a unit of general § 881.205 Contents of preliminary pro­ (k) The utilities and services to be in­ Assistance Plan. local government that a property or posals. cluded in the Contract Rent and those (q) The identity of the Owner, re- i properties be preapproved for Section 8 Each Preliminary Proposal shall in­ utilities and services not so included. For habilitator (if known), and architect (if i use, the field office may review the site(s) clude or indicate the following: (a) The each utility and service not included in applicable and identity is known); the the Contract Rent, an estimate of the for compliance with the site and neigh­ address (es) of the property proposed to qualifications and experience of each; i borhood and the environmental stand­ be rehabilitated and a map showing the average monthly cost (for the first year and the names of officials and principal of occupancy) to the occupants by unit ards of this Part and, at the discretion of location of the site(s) and the racial members, shareholders and investors, ■: the field office director, may preapprove composition of the neighborhood(s). size and structure type. and other parties having substantial in­ ‘ such property for Section 8 use. Preap­ (b) Documentary evidence that the (l) The proposed term of the Contract terest, and the prior participation of proval shall not be granted unless (i) the Owner has title to the property or a copy (including renewals) and justification each in HUD programs, using the pre­ property will be made available to the of a contract(s) of sale, if any, with for such term in accordance with scribed form. developer selected by HUD in accordance respect to the property or a copy of the § 881.109. (r) Whether the Owner intends to with the procedures under this Subpart, option agreement(s) or other legal com­ (m) A showing that the Proposal provide management services or to con­ i and (ii) the price at which the property mitment for the property (however, only meets any special requirements or re­ tract with a managing agent. In the lat­ ! will be made available to the selected the proposed price is required for a New strictions necessary for compliance with ter case, provide the identity of the man­ developer is reasonable and approved by Communities project). the provisions of the Local Housing As­ aging agent, if known, and the other HUD. In the case of a property that has (c) A description of the property as is, sistance Plan, if any. information as specified in paragraph been so preapproved, HUD shall publish including number and type of structures, (n) Evidence that the proposed re­ (q) of this section. habilitation is permissible under appli­ ! a NOFA requesting Preliminary Pro­ number of stories, structural system, ex­ (s) The proposed method (e.g., con­ .1 posals for that property, except that terior finish, heating-air conditioning cable zoning, building, housing and other ventional mortgage, FHA insured mort­ where the property is in an urban re­ system, number of units by size (number codes, ordinances or regulations, or a gage, bonds) and terms (e.g., interest of bedrooms), living area and composi­ statement of the proposed action to make rates, discounts, amortization period) of newal area, HUD may approve the Pre­ the rehabilitation permissible and the liminary Proposal of a developer who has tion for each size of unit, special ameni­ financing together with evidence of re­ i been or will be selected under the appli­ ties or features, if any, and exterior and basis for belief that such action will be view and interest by a lender or bond cable urban renewal procedures (i.e., interior photos; and sketches of the in­ successfully completed prior to the underwriter or counsel or similar evi­ \ terior showing dimensions. Owner’s acceptance of the HUD Notifi­ dence that financing would likely be with no advertisement pursuant to this cation of Approval of the Final Proposal Subpart). (d) A description of the proposed re­ available should the Proposal be selected. (2) Where an Invitation for Prelim­ habilitation covering each basic element or submission of the architect’s certifica­ (Such evidence of financing is not re­ inary Proposals or a NOFA has been pub­ (e.g., roof, exterior walls, porches and tion pursuant .to § 881.211(b) (e.g., a quired if the Owner proposes to utilize steps; interior walls, ceilings and floors; summary of results of any recent re­ FHA mortgage insurance (see § 881.207) lished prior to the determination to uti­ quests for rezoning on land in similar lize a preapproved property, such Invita­ kitchen and bathroom facilities and or the FmHA Sec. 515 Rural Housing tion or NOFA may not be cancelled or equipment; plumbing, heating and elec­ zoning classifications and the time re­ Program; in such cases, either the pre­ amended in order to use all or part of trical equipment; landscaping; etc.) in­ quired for such rezoning, preliminary scribed FHA form shall be completed and the same allocation for such preapproved dicating the nature of the work to be indications of acceptability from zoning submitted with the Preliminary Proposal, bodies, etc.). property. done on each element. If alteration, re- or evidence that a preapplication has movation or remodeling is indicated, a (o) Whether the proposed project will \ (f) Availability of Notifications. Copies displace site occupants. If so, the Pro­ been submitted to the FmHA shall be I of each NOFA and Rehabilitation Pro- description of such work and sketches submitted with the Preliminary Pro­ showing layout after completion of re­ posal shall state the number of families, gram Packet shall be available in the individuals and business concerns to be posal.) A statement shall be included field office. habilitation.

\ ! : •I

J ;■ 76 \ 77 iH : : : £ I I ; Ch. VIII—Low Income Housing, Dept, of Housing & Urban Dev. § 881.207 § 881.208 Title 24—Housing and Urban Development

in all Proposals as to whether the Owner supporting exhibits and the required fee. analysis to determine the tentative ap- surance program than the rents set forth intends to pledge or offer the Agreement Such an Application shall meet all ap­ provable mortgage amount and maxi­ in the approved Proposal under this Part. and/or Contract as security for any loan plicable mortgage insurance criteria and mum supportable cost based on the field 141 FR 17488, Apr. 26, 1976, as amended at or obligation (see § 881.115(b)). underwriting standards without modifi­ office’s estimate of market rentals, op­ 41 FR 45121, Oct. 14, 1976] cation and without reliance upon hous­ erating expenses and taxes for the pro­ (t) Whether the Owner wishes to des­ § 881.208 Preliminary evaluation, tech­ ignate alternative properties for consid­ ing assistance payments under this Part, posed project. If the field office is unable or, in the alternative, approval for mort­ to approve the mortgage amount request­ nical processing and selection of pre­ eration by HUD, in its discretion, if HUD ed, it shall notify the Owner in accord­ liminary proposals. finds defects or deficiencies with respect gage insurance shall be conditioned upon to the principally designated properties; subsequent approval of a Section 8 Pro­ ance with Sec. 881.208(e) (4) or in the (a) Preliminary Evaluation. In order posal for the same project. If a Feasibil­ notification of selection, in accordance to determine whether a Preliminary Pro­ and, if so, the Owner shall include for with Sec. 881.208(h), of the maximum each such alternate property the infor­ ity Letter, Conditional Commitment, or posal is complete and acceptable for Firm Commitment, whichever is appli­ mortgage amount which is tentatively Technical Processing, the field office may mation required by paragraphs (a), (c), approvable and shall advise the Owner (e), (j), (k), and (o) of this section. cable, is issued, and if prior expiration begin its Preliminary Evaluation imme­ thereof the Owner submits a Prelimi­ to inform the field office within the speci­ diately upon receipt of the Proposal. Such [41 FR 17488, Apr. 26, 1976, as amended at fied time whether he wishes processing 41 FR 45121, Oct. 14, 1976] nary Proposal under this Part which is Preliminary Evaluation shall consist of consistent with the Proposal as approved of the Proposal to proceed based on the a review to ascertain whether it is clear, § 881.206 Submission of preliminary for mortgage insurance, such Proposal revised mortgage amount. even without field investigation, that: proposals. will nevertheless be subject to review and (3) After Selection of a Preliminary (1) The Proposal is lacking any of (a) Submission Requirements. Prelim­ evaluation in accordance with the proce­ Proposal which involves HUD-FHA the required submissions and forms, or inary Proposals shall be submitted to the dures under this Part; however, if the mortgage insurance, the Owner may sub­ any of them are not properly completed; field office in the number of copies and Preliminary Proposal is acceptable in ac­ mit prior to submission of the Pinal Pro­ (2) The physical condition of the in the manner specified in the Rehabili­ cordance with the procedures under this posal (if not previously submitted) an property is not suitable for rehabilita­ tation Program Packet. Submission of Part, further processing will be coordi­ application for Feasibility Letter or Con­ tion or, upon completion of the proposed Preliminary Proposals shall be by hand nated in accordance with paragraph (b) ditional Commitment with the required rehabilitation, the housing would not delivery or certified mail. Any Prelim­ of this section to the extent applicable, fee if he is requesting that the Proposal be meet the requirements and objectives of inary Proposal received by the field office and the rents which may be approved eligible for Government National Mort­ this Part; ! gage Association (GNMA) commitment. (3) The site does not meet standards * ; after the deadline shall not be accepted for such a Preliminary Proposal will not but shall be returned unopened. be less than the previously approved In all cases, an application for HUD- set forth in § 881.112; (b) Confidentiality of Information. All rents which were used in processing the FHA Conditional or Firm Commitment (4) The proposed Gross Rents exceed information in or specifically relating to mortgage insurance application, pro­ with the required fee under the applica­ the applicable Fair Market Rent limita­ any submitted Proposal shall be held vided that they are otherwise approvable ble mortgage insurance program shall be tions (see § 881.108(a)); confidential by HUD, in the same man- in accordance with this Part. submitted by the Owner with the Final (5) The sizes and types of units pro­ ner as bids before award of a contract, (b) Concurrent Processing. (1) The Proposal. Such Final Proposals will not posed are not suitable for the type of i until the latest date established by HUD provisions of this paragraph (b) apply be approved under Section 8 unless they occupancy intended; for the acceptance of Proposals and un­ where the Preliminary Proposal indicates also qualify for issuance of a HUD-FHA (6) The rehabilitator, Owner and/or til after any extensions granted pursuant an intention to finance a project with a Conditional or Firm Commitment under managing agent lack the ability to re­ to Sec. 881.208(b). However, confiden­ HUD-FHA insured mortgage. Such a the applicable mortgage insurance pro­ habilitate the project or to carry out the : : tiality shall not apply after a Proposal Proposal will not be approvable under gram. The HUD notification of approval required management and maintenance ; has been submitted to the unit of gen­ this Part unless it meets the market and of the Final Proposal will be accom­ services; eral local government or A-95 Clearing­ site acceptability criteria of the appli­ panied by a HUD-FHA Conditional or (7) The Proposal fails to comply with house. cable mortgage insurance program. How­ Firm Commitment for HUD-FHA mort­ one or more requirements of the NOFA, gage insurance. The Owner’s acceptance the Rehabilitation Program Packet or § 881.207 Preliminary proposals indi­ ever, the commitment of Section 8 hous­ ing assistance will be taken into account of HUD’s notification of approval of the this Part 881. cating HUD-FHA mortgage insur­ Final Proposal will constitute concurrent (b) Action on Proposals Found to Be ance. when measuring the market absorption component of marketability. The proc­ acceptance of the conditions and terms Deficient. If a Proposal is incomplete or Because of the differences in the defi­ essing of such a Proposal for mortgage of the HUD-FHA Conditional or Firm if a deficiency is found with respect to ! Commitment for mortgage insurance. nition of “substantial rehabilitation”, a insurance will be integrated with the any item set forth in paragraph (a) of ! proposed project which qualifies as a Section 8 review and evaluation process. The Owner will be required to obtain a this section, the Owner shall be advised Substantial Rehabilitation project under Such a Preliminary Proposal will be ap­ Firm Commitment prior to the execution in writing of the deficiencies and (1) that 1 this Part may fail to qualify as a sub­ proved only where HUD has also deter­ of the Agreement. the Proposal is rejected, or (2) if the stantial rehabilitation project under (c) Delayed Mortgage Insurance Proc- field office determines that further con­ ' mined that the Proposal will qualify for essing. Where an Owner does not indi­ FHA mortgage insurance programs. mortgage insurance subject to a satis­ sideration of the Proposal would assist in (a) Advance Mortgage Insurance Proc­ cate in his Preliminary Proposal that meeting the qualitative and quantitative essing. This paragraph (a) applies to factory demonstration by the Owner of he intends to utilize HUD-FHA mortgage objectives of this Part, that amendments Owners who apply for HUD-FHA mort­ his capability to complete the project, insurance and applies for HUD-FHA or modifications to correct the deficien­ gage insurance prior to the submission and subject to subsequent determina­ mortgage insurance after selection by cies will be accepted if they are received of a Preliminary Proposal under this tions of “as is” value, the loan amount HUD of the Preliminary Proposal under on or before a specified date. Such > Part. In such cases, an Owner may apply and credit approval. this Part, he risks (1) having his Prelim­ amendments or modifications may, at for a Feasibility Letter, A Conditional (2) As part of the Technical Proc­ inary Proposal rejected for HUD-FHA HUD’s discretion, include substitution of Commitment or a Firm Commitment for essing (§ 881.208) of Proposals involving mortgage insurance and (2) having lower alternate properties if designated by the mortgage insurance by submitting an HUD mortgage insurance, the field office rents approved under the mortgage in- Owner in the Preliminary Proposal, pro­ Application on the prescribed form with shall make a preliminary debt service l y

* ‘i i 79 78 l; I Ch. VIII—Low Income Housing, Dept, of Housing & Urban Dev. § 881.208 § 881.208 Title 24—Housing and Urban Development

vided that such alternate properties are as that officer may designate) of the of this section. After Technical Process­ proximate the estimated maximum otherwise acceptable to the field office. unit of general local government in ing of the superior Proposal (s) is com­ number of units called for in the NOFA. (c) Eligibility for Technical Process­ which the proposed housing is to be lo­ plete and the Proposal (s) is found ap­ The estimated maximum number of ing. If a Proposal is found acceptable cated. The letter shall invite a response provable, the Owner(s) shall be sent a units in the NOFA may be exceeded if pursuant to paragraph (a) of this section within 30 calendar days from the date notification of selection in accordance the funds indicated in the NOFA are suf­ the Proposal shall be eligible for Tech­ of the notification letter. with paragraph (h) of this section. ficient or if additional funds are made nical Processing. Similarly if amend­ (3) The field office shall evaluate each (f) Selection Where There Is Suffi­ available. ments or modifications were requested Proposal on the basis of all pertinent cient Contract Authority for All Approv­ (3) The field office shall determine pursuant to paragraph (b) of this sec­ factors under this Part 881 including, but able Proposals. If the contract authority whether the combined results of the ten­ tion and were received by the date speci­ not limited to: rents; location (site) of indicated in the NOFA is sufficient for tative selections from both listings would fied and found acceptable, the Proposal the property to be rehabilitated; reha­ all the approvable Preliminary Proposals, exceed the estimated maximum number shall be eligible for Technical Processing. bilitation plan or design; previous experi­ the Owners shall be notified of selection of units called for and the funds indi­ However, if such amendments or modifi­ ence of the Owner and other key partici­ in accord with paragraph (h) of this sec­ cated in the NOFA or would result in an cations are not found acceptable, the pants in development and management; tion; provided, however, that if the field undue concentration of assisted persons terms, conditions, and likelihood of fi­ office determines that selection of such in an area containing a high proportion f Proposal shall be rejected. ! (d) Modification of Deadline. (1) The nancing; overall feasibility; and any Proposals would result in an undue con­ of low income persons. If sufficient funds I field office may determine to shorten the comments received during the response centration of assisted persons in an area are not available, or an undue concen­ periods from the appropriate A-95 Clear­ containing a high proportion of low in­ tration would result, the field office shall i :: deadline if it finds that a sufficient num­ ber of Proposals are eligible for Techni­ inghouse and from the unit of general come persons, the field office shall deter­ make such revisions in the total num­ cal Processing, and at least 10 calendar local government. mine which Proposal (s) will not be ber of units to be approved and/or the days remain until the deadline date (4) If, in its evaluation of all perti­ approved. tentative selections as it may determine specified in the NOFA. In such case, the nent factors, the field office finds defi­ (g) Selection Where Co?ifracf Author­ to be necessary. field office shall notify in writing all those ciencies which, in its judgment, are cor­ ity Is Insufficient for All Approval Pro­ (h) Notification of Selection. (1) With rectable within a reasonable time, in­ respect to those Preliminary Proposals who have registered and not yet sub­ posals. If the contract authority indi­ ; [ mitted Proposals that no Proposals will cluding the substitution of alternate cated in the NOFA is not sufficient for all selected in accordance with this section, be accepted after a specified date (at properties designated by the Owner in the approvable Preliminary Proposals, the field office shall notify the Owners in least five working days after the date the Preliminary Proposal, it may grant the field office shall proceed as follows: writing and request them to submit of the mailing). All such notifications such additional time as it deems appro­ (1) Proposals consisting of projects to within a reasonable time (to be specified shall be mailed on the same date by priate to enable the Owner to correct be developed entirely or predominantly in the notification) a Final Proposal registered mail return receipt requested. such deficiencies. Otherwise the Owner for the elderly and/or handicapped meeting the requirements of § 881.209. I (2) If the field office finds that an shall be sent a notification specifying shall be listed in rank order and a sep­ The notification shall specify or include: insufficient number of proposals eligible the deficiencies and stating that the Pro­ arate rank listing shall be established for (i) The Contract Rents acceptable to posal is rejected. projects to be developed entirely or pre­ HUD; in the case of Proposals requesting for Technical Processing have been re­ : ceived by the deadline, it may extend the (5) Prior to selection, the field office dominantly for other than the elderly FHA mortgage insurance, the rents ap­ ' deadline by publishing a notification to shall complete an environmental review and/or the handicapped. Rank orders proved for purposes of processing the this effect, and by providing such addi­ pursuant to HUD NEPA requirements. shall be based on the field office’s assess­ mortgage insurance application; and if tional notification as it deems appro­ (6) Based on the factors set forth in ment of which Proposals have the best either of these rents is lower than the ; this paragraph (e), the field office shall combination of rents; location (site) of rents proposed by the Owner, the rea­ priate. son (s) for .the reduction; | (e) Technical Processing. When a Pro­ determine for each allocation area or the property to be rehabilitated; rehabil­ part thereof the Preliminary Proposals itation plan or design; previous experi­ (ii) The term of the Contract that will posal is determined eligible pursuant to be acceptable to HUD where it is shorter paragraph (a) or (c) of this section, which, in its judgment, are approvable. ence of the proposed Owner and other Selection of Proposals shall then be made key participants in development and than the term proposed by the Owner, i the field office shall begin Technical and the reason for the shorter term; Processing, but no final selection shall in accordance with paragraph (f) or (g) management; terms, conditions and of this section. likelihood of financing; overall feasibil­ (iii) That the services of a registered t be made until the response periods of (7) Notwithstanding the foregoing ity; and comments, if any received from architect must be utilized where HUD paragraph (e) (1) and (2) of this sec­ has determined that the nature and ex­ tion have ended. Technical Processing provisions of this section, where Prelim­ the appropriate A-95 Clearinghouse and inary Evaluation has been completed for from the unit of general local govern­ tent of the rehabilitation requires the shall consist of the following: all Proposals and, on the basis of this ment; provided, however, that preference utilization of such services; ! (1) For each Preliminary Proposal evaluation and such Technical Process­ shall be granted to: (i) Proposals re­ (iv) In the case of a PHA-owner Pro­ ! which is determined to be subject to A-95 ing as may have taken place, it is clear sponding to local ordinances which re­ posal, the estimate of the amount of re­ clearance, the field office shall send a that one or more Proposals are superior, quire or encourage development or proj­ location payments; copy (if not previously submitted by the the field office director may direct that ects which contain a specified propor­ (v) Any other special conditions or re­ Owner) to the appropriate A-95 Clear­ Technical Processing be completed first tion of assisted units (not to exceed 20 quirements; inghouse for review, inviting a response on such Proposal(s). If the superior Pro­ percent); and (ii) Proposals of more (vi) A date by which the Owner is re­ within 34 calendar days from the date posal (s) would utilize all the contract than 50 units of non-elderly housing quired to return a copy of the notifica­ of the letter of transmittal. authority indicated in the NOFA, Tech­ which indicates that assistance will be tion with either (A) an indication of his (2) For purposes of compliance with nical Processing of the remaining Pro­ limited to 20 percent or less of the units acceptance of the notification including section 213 of the HCD Act, the field posals may be suspended; otherwise, to be constructed. any modifications requested by HUD, or office shall forward (if not previously (B) his request for reconsideration of submitted by the Owner) a notification, such remaining Proposals shall continue (2) With respect to each listing, the field office shall identify for selection the any modifications. ! in the form prescribed by HUD, to the in processing and selection shall be made i in accordance with paragraphs (f) or (g) highest ranking Proposals in descend­ (2) If the notification contains modi­ chief executive officer (or such designee ing order which will most reasonably ap­ fications, and the Owner requests their I; f

?

I ■ h i i i 81 !' . 80

■ ! ii - Ch. VIII—Low Income Housing, Dept, of Housing & Urban Dev. § 881.209 § 881.209 Title 24—Housing and Urban Development

reconsideration, the field office shall and steps; Interior walls, ceilings, and opportunity to apply for units in the pro­ a copy of the appropriate form indicating notify the Owner of the date by which he floors; kitchen and bathroom facilities posed project to persons expected to re- the results of the FmHA review of the is to furnish documentation in support of and equipment; plumbing, heating and • side in the community as a result of cur­ preapplication, shall be submitted with his request for reconsideration. electrical equipment; landscaping; etc.) rent or planned employment, as indicated the Final Proposal. (3) If the Owner does not accept the indicating the nature of the work to be in the Local Housing Assistance Plan, (16) Evidence that the proposed re­ notification by the date specified, or if done on each element and the grade and if any. Examples of such efforts include: habilitation is permissible under the ap­ the Owner requests reconsideration of quality oi the work, materials and equip­ participation in regional or semi-regional plicable zoning, building, housing and modifications and the field office and the ment. If alteration, renovation or re­ application pools; establishment of a other codes, ordinances or regulations; Owner are unable to reach agreement modeling is indicated, preliminary draw­ referral system with PHAs and other or a statement of the proposed action with respect thereto, the field office shall ings and plans and outline specifica­ Section 8 Owners/managers in sur­ to make the rehabilitation permissible notify the Owner that its previous ap­ tions on the prescribed form. rounding jurisdictions; contacts with and the basis for belief that such action proval of his Proposal is rescinded. (3) The number of units by unit size and provision of information about the will be successfully completed prior to (i) Notification of Nonselection. Own-- (number of bedrooms) and the type of ! project to local industries and their em­ the Owner’s acceptance of the HUD No­ ers whose Preliminary Proposals were occupancy (elderly or handicapped or ployees. tification of Approval of Final Proposal placed in Technical Processing but were other) proposed for the property after (10) Submissions as required by HUD or submission of the architect’s certifica­ not selected by the field office shall be the completion of rehabilitation. regulations and other requirements pur­ tion pursuant to Sec. 881.211(b). (4) If demolition is proposed for any suant to section 3 of the Housing and (17) The anticipated time required for sent a letter notifying them of such Urban Development Act of 1968. i determination. structure on'the site of the property, a completion of the project after the description of the proposed reuse of the (11) The proposed term of the Contract Agreement is signed (if the project is to Y (j) Use of Residual Contract Author­ (including all renewals) and justification ity. If at any time after completing se- land including sketch plans for archi­ be completed in stages, identification of tectural and landscape treatment. for such term in accordance with the units comprising each stage and the ! lection of Preliminary Proposals, the con­ § 881.109. tract authority indicated in the NOFA (5) The Contract Rent per unit, by estimated dates for commencement and size and structure type. (12) The identity of the Owner, re- completion of each stage). for an allocation area is not fully com­ habilitator, architect (if applicable) and mitted or if a selected Proposal fails for (6) The equipment to be included in (b) Consistency With Preliminary the Contract Rent. managing agent (if any); the qualifica­ Proposal. The Final Proposal shall be any reason to result in an Agreement, the tions and experience of each; and the field office may: (7) The utilities and services to be in­ consistent with the HUD-approved Pre­ cluded in the Contract Rent and those names of officials and principal members, liminary Proposal. Any material devia­ (1) Give further consideration to Pro­ shareholders and investors, and other posals which were either not found eli­ utilities and services not so included. For tions from the Preliminary Proposal in I each utility and service not so included, parties having substantial interest, and the Final Proposal will cause reconsider­ gible for Technical Processing, or as a the prior participation of each in HUD result of such processing were found not an estimate of the average monthly cost ation by HUD of such Final Proposal and (for the first year of occupancy) to the programs, using the prescribed form. may result in its rejection. However, the : approvable, or were found approvable (13) Submission of evidence of man­ '■ but were not selected as a result of the occupants by unit size and structure type. Owner may request, with the submission (8) In the case of a PHA-Owner Proj­ agement capability and a proposed man­ of his Final Proposal or architect’s cer­ \ ranking, and afford the owners an op­ agement plan and a certification by the portunity to remedy any deficiencies, in­ ect, a statement that the PHA under­ tification or, if such certification is not takes liability for (i) provision of reloca­ Owner and the managing agent, if any, required, with the Owner’s acceptance of cluding substitutions of alternate prop­ in a format acceptable to HUD; or, if the HUD’s Notification of Approval of Final erties designated by the Owner in the tion payments and assistance as Pre- scribed in sections 202, 203, and 204 of proposal is for less than 15 units, evi­ Proposal, an increase in Contract Rents Preliminary proposal; the Uniform Relocation Assistance and dence of capability of providing the re­ over those approved in the Preliminary I (2) Process Proposals not yet consid­ Real Property Acquisition Policies Act of quired management and maintenance Proposal; and HUD, in its discretion, may ered for projects to which the deadline 1970; (ii) provision of relocation assist­ services. If the Owner proposes to con­ approve such an increase of HUD deter­ does not apply (see § 881.203(c) (5)); ance’ programs offering the services de­ tract with another entity, including a mines that (1) (i) the need for increased (3) Publish another NOFA for the al­ scribed in section 205 of said Act (in) PHA, for management and/or mainte­ rents is due to factors beyond the Own­ r location area; or assuring that within a reasonable period nance services for the project, a copy of er’s control which he could not have rea­ (4) Reallocate the unused contract of time prior to displacement, Decent, the proposed contract (s) shall be in­ sonably foreseen or (ii) HUD’s previous authority to another allocation area. Safe, and Sanitary replacement dwellings cluded. findings regarding the reasonableness of [41 FR 17488, Apr. 26, 1976, as amended at will be available to displaced persons; (14) Submission of the form of Lease rents were in error because of increases 41 FR 46121, Oct. 14, 19761 and (iv) full funding of the required re­ the Owner proposes to use, which shall be in rehabilitation costs, real property § 881.209 Final proposals. location payments and assistance unless in accordance with Sec. 881.219. taxes, utility rates or similar costs (e.g., (15) A statement of any changes in the assessments, and utilities not covered by (a) Contents of Final Proposal. Each other commitments, satisfactory to HuiJ, have been made for the funding of such proposed method and terms of financing regulated rates) in excess of those taken Final Proposal shall indicate or include payments and assistance. In the latter and other related information which the into account by HUD in determining the the following: case, the PHA shall specify such other Owner submitted as part of the Prelim­ reasonableness of the Contract Rents (1) A copy of the documentary evi­ commitments. (In the case of a Private- inary Proposal (see § 881.205(s)), or a proposed in the Preliminary Proposal; dence that the Owner has title to the Owner Project or a Private-Owner/PHA statement that there is no change. If the (2) the requested rents are reasonable property or a copy of a contract(s) of Project, the Uniform Relocation Assist­ Owner intends to use FHA mortgage in­ (see § 881.108(b)); (3) (i) there was i sale, if any, with respect to the property, ance and Real Property Acquisition Poli­ surance, an application for a Conditional sufficient contract authority to select all or a copy of the option agreement(s) or cies Act of 1970 is inapplicable.) or Firm Commitment on the prescribed approvable Preliminary Proposals, or (ii) other legal commitment for the property (9) Submission of an Affirmative Fair form shall be completed and submitted it is specifically determined by HUD, (however, only the proposed price is re­ Housing Marketing Plan if the Proposal with the prescribed fee with the Final based upon the record of the ranking of quired for a New Communities project. Proposal unless this was previously done. all the approvable Proposals, that the •• (2) A description of the proposed re­ is for five (5) or more units together with a statement of the affirmative actions If the Owner intends to use the FmHA Preliminary Proposal clearly would have habilitation covering each basic ele­ Sec. 515 Rural Rental Housing Program, been selected even without regard to any ment (e.g., roof, exterior walls, porches the Owner intends to take to provide the

1 l

i 83 82 Ch. VIII—Low Income Housing, Dept, of Housing & Urban Dev. § 881.212 § 881.213 Title 24—Housing and Urban Development and an Agreement), until after the Total Required Annual Contributions for any requested changes in the amount weight being given by reason of its rents; (see § 881.213). and (4) the requested rents do not exceed Owner has submitted to HUD the archi­ of housing assistance payments and the tect’s certification on the prescribed (b) Preparation of Agreement. The fee for administration. the Fair Market Rent limitations in ef­ Agreement shall be prepared by the fect at the time of HUD’s decision on the form. Such certification shall be made by (d) Revisions of Estimates. Any of the the architect responsible for the prep­ HUD field office at the time the ACC is above Estimates may be revised to re­ request for rent increase (see § 881.108 prepared (see § 881.214), and shall con­ (a)). The Owner shall submit documen­ aration of the working drawings and flect changes in circumstances and avail­ specifications. form to the prescribed form shown as able data. tation justifying his request and evidenc­ Appendix IV. The Agreement shall in­ (e) HUD Approval. All Estimates of ing the need for increased rents. (2) The architect’s certification shall state that, to the best of the architect’s clude all required information and re­ Required Annual Contributions and any [41 FR 17488, Apr. 26, 1976, as amended at quired attachments. revisions thereto submitted by the PHA 42 FR 16119, Mar. 24,1977] knowledge, belief, and professional judg­ ment, (i) the working drawings and (c) Execution of ACC and Agreement. shall be subject to HUD approval. After receipt of the PHA-executed ACC, § 881.210 Evaluation of final proposals. specifications are consistent with the ap­ § 881.214 Preparation and execution of (a) Evaluation of Final Proposals by proved Final Proposal (including any accompanied by the Estimates of Re­ agreement (Private-owner and PHA- HUD. Each Final Proposal will be eval­ modifications required by HUD in its quired Annual Contributions, HUD shall owner projects). review of the Final Proposal), and (ii) : review the Estimates and, if approved, uated by HUD to determine that the execute the ACC. HUD shall then trans­ After receipt of a copy of the accepted provisions of this Part have been com­ the proposed rehabilitation in accord­ notification (and, where required, the ance with these plans, and specifications mit a fully executed copy of the ACC to 1 plied with and that such Final Proposal the PHA, together with four copies of architect’s certification, and the work­ is consistent with the Preliminary Pro­ is permissible under the applicable zon­ ing drawings and specifications), the / ing, building, housing, and other codes, the unexecuted Agreement. After exe­ posal. cution of the Agreement by the PHA and HUD field office shall prepare the Agree­ (b) Clarifications or Modifications. ordinances or regulations, as modified ment in the prescribed form shown as by any waivers obtained from the appro­ the Owner, all copies shall be returned HUD may request clarification of indi­ by the PHA to HUD for approval. HUD Appendix I. The Agreement shall include vidual items, additional information, or priate officials. This certification shall all required information and required i also cover compliance with the appro­ shall return three copies to the PHA, modifications of the Final Proposal. retaining one copy for its records. attachments. HUD shall transmit to the (c) HUD Determination. HUD shall priate HUD Minimum Design Standards Owner three copies of the unexecuted for Rehabilitation for Residential Prop­ § 881.213 Submission of estimates of notify the Owner (and the PHA, if ap­ Agreement. After the Owner executes all ; plicable) that the Final Proposal is: erties and other standards, guidelines required annual contributions (Pri- copies of the Agreement, he shall return (1) Approved. and criteria applicable pursuant to vate-owner/PHA projects). them to HUD. HUD shall execute the i (2) Approvable only if specified de­ § 881.111(b). (a) Initial Submission. An allowance Agreement, returning one copy to the . ficiencies are corrected and that HUD (3) One copy of the certified working may be provided for preliminary costs Owner and retaining two copies for its will approve the Final Proposal if it drawings and specifications shall be sub­ incurred by the PHA prior to the begin­ records. receives within a specified time evidence mitted with the architect’s certification i ning of the first fiscal year. When the §881.215 Rehabilitation period. : of such necessary corrections. to HUD; provided, however, that re­ ACC is executed by the PHA, it shall sub­ (3) Not approved. If a Final Proposal ceipt and retention by HUD of these mit an Initial Estimate of Required An­ (a) Timely Performance of Work. t is not approved or if the conditions for working drawings and specifications nual Contributions (Preliminary Costs) After execution of the Agreement, the approval under paragraph (c) (2) of this shall not denote or constitute HUD re­ together with an Estimate of Total Re­ Owner shall promptly proceed with the section are not met, HUD shall so advise view or approval of such drawings or quired Annual Contributions on the pre­ rehabilitation work as provided in the the Owner. specifications. scribed «forms. This submission includes Agreement. In the event the work is not ! (d) Notification. The unit of general (4) If the Owner fails to submit the estimates of costs of administration and so commenced, diligently continued, i local government shall be notified by certification by the date specified in the non-expendable equipment up to the be­ and/or completed, HUD (or the PHA HUD of its final action. notification, HUD shall rescind the noti­ ginning of the first fiscal year. with HUD approval, as appropriate) (e) Use of Residual Contract Au­ fication unless it determines that a rea­ (b) First Fiscal Year Submission. Not shall have the right to rescind the sonable extension of time should be •i thority. See Sec. 881.208(j). earlier than 150 and not later than 90 Agreement, or take other appropriate ■' [41 FR 17488, Apr. 26, 1976, as amended at granted. days prior to the estimated date of the action. 41 FR 45121, Oct. 14, 1976] [41 FR 17488, Apr. 26, 1976, as amended at beginning of the first fiscal year, the (b) Delays. Although extensions of 41 FR 45122, Oct. 14, 1976] time may be granted for the reasons I § 881.211 Owner’s acceptance of notifi­ PHA shall submit an Estimate of Re­ § 881.212 Annual contributions contract quired Annual Contributions (Housing specified in the Agreement, no increases cation and submission of architect’s in Contract Rents may be granted on certification. and agreement (privatc-owner/PHA Assistance and Administration) cover­ projects). ing the estimated amount required for that account. S (a) Owner’s Acceptance. Upon receipt the first fiscal year for housing assist­ (c) Changes. The Owner shall submit by the Owner of the notification of ap­ (a) Preparation of ACC. After receipt ance payments and for the fee for ad­ for HUD approval any changes from the proval of the Final Proposal, the Owner of a copy of the accepted notification ministration together with an Estimate approved Final Proposal which would shall return to HUD a copy indicating (and, where required, the architect’s cer­ of Total Required Annual Contributions. materially reduce or alter his obliga­ his acceptance within the time pre­ tification with the working drawings tions or any changes which would alter and specifications), the HUD field office (c) Subsequent Fiscal Year Submis­ scribed in such notification (copy to the sions. Not earlier than 150 and not later the design or materially reduce the PHA, if applicable). If the Owner does shall prepare the ACC, shown as Ap­ quality or amenities of the project. HUD I pendix IH. The ACC shall be transmitted than 90 days prior to the beginning of not accept the notification by the date each subsequent fiscal year, the PHA may condition its approval of such specified, HUD may rescind the notifica­ to the PHA for execution and returned changes on a reduction of Contract to HUD. This transmittal shall advise shall submit an Estimate of Required tion. Annual Contributions (Housing Assist­ Rents. If such changes are made without (b) Architect’s Certification. (1) If the PHA that it must simultaneously ance and Administration) and an Esti­ prior HUD approval, HUD may deter­ the services of a registered architect are submit for HUD approval its Initial Esti­ mine that Contract Rents shall be re­ 1 mate of Required Annual Contributions mate of Total Required Annual Contri­ to be used, HUD will not enter into an butions, with supporting documentation, duced or that the Owner shall remedy the t Agreement (or, where applicable, an ACC (Preliminary Costs) and an Estimate of i

•j A 84 85

i * L i

Ch. VIII—Low Income Housing, Dept, of Housing & Urban Dev. § 881.216 §881.217 Title 24—Housing and Urban Development

deficiency as a condition for acceptance (1) A certificate of occupancy and or . that such inspection was performed by lowing shall apply: (1) If the only de- other official approvals necessary for him or under his supervision with the fects or deficiencies are punchlist items of the project. Contract Rents may not frequency and thoroughness required by be increased by reason of any changes occupancy. or incomplete items awaiting seasonal or modifications except those required by (2) . A certification by the Owner, the generally accepted standards of pro- opportunity, the project may be accepted changes in local codes or ordinances which will be supported by the Owner’s fessional care and judgment; and that and the Contract executed. If the Owner warranty in the Contract, that: to the best of his knowledge, belief and fails to complete the items within a rea- made subsequent to execution of the professional judgment: sonable time to the satisfaction of HUD Agreement, and then only if HUD ap­ (i) The project has been completed in accordance with the requirements of the (1) The project has been completed in (and the PHA, if applicable), HUD may, proval is obtained prior to incorporation conformance with the certified working of any such changes in the project. Agreement; upon 30 days notice to the Owner (and (ii) The project is in good and ten- drawings and specifications for the proj­ the PHA, if applicable) terminate the (d) Inspection of HUD-FHA Insured ■ ect or approved changes thereto (such Contract and/or exercise its other rights Projects. For projects financed with antable condition; (iii) There are no defects or defi­ changes to be listed); thereunder or, if the Contract is with a HUD-FHA insured mortgages, required ■: (ii) The project is in good and tenant- PHA, cancel its approval of the Contract HUD inspection procedures shall be fol­ ciencies in the project except for ordi­ nary punchlist items, or incomplete work able condition; and require its termination and/or ex­ lowed including compliance with equal (iii) There are no defects or deficien­ ercise its other rights under the Contract opportunity requirements. awaiting seasonal opportunity such as i landscaping and heating system test cies in the project except for ordinary and the ACC. 1 (e) Equal Opportunity Review. Equal punchlist items, or incomplete work (2) If the defects or deficiencies are opportunity review may be conducted (such excepted items to be specified); (iv) The project has been rehabili­ awaiting seasonal opportunity such as other than punchlist items or incomplete with any scheduled HUD inspection or at landscaping and heating system test work awaiting seasonal opportunity, S' other time deemed advisable by tated in accordance v/ith the applicable : any zoning, building, housing and other codes, (such excepted items to be specified); HUD shall determine whether and to HUD. . _ and what extent the defects or deficiencies (f) Commencement of Marketing. The ordinances ■ or regulations, as modified by any waivers obtained from the ap­ (iv) The project has been rehabili- can be corrected, what corrections are Owner shall commence and diligently tated in accordance with applicable zon- essential to permit HUD to accept the continue marketing as soon as possible, propriate officials; ! (v) The project was treated and is in ing, building, housing and other codes, project, whether and to what extent a but in any event no later than 60 days ordinances or regulations, as modified by reduction of Contract Rents will be re­ 1 prior to the estimated completion date. compliance with applicable HUD Lead Based Paint regulations (24 CFR Part any waivers obtained from the appro­ quired as a condition to acceptance of The Owner shall notify HUD (or the PHA priate officials. the project, and the extension of time in the case of a Private-Owner/PHA 35) and that if the property was con­ structed prior to 1950, each Family upon (c) Review and Inspection. (1) Within required for the remaining work to be ■ Project) of the date of commencement ten working days of the receipt of the done. The Owner (and the PHA, if ap­ . of marketing. The Owner shall also com­ occupancy will receive the notice re­ quired by HUD Lead Based Paint regu­ evidence of completion, HUD shall re­ plicable) shall be notified of HUD’s de­ ply with all reporting requirements un- view the evidence of completion for com­ terminations and, if he agrees to com­ der the Affirmative Fair Housing Mar­ lations and procedures regarding the hazards of lead based paint poisoning, pliance with paragraph (b) of this ply with the conditions, an agreement keting Regulations. Not later than 30 section. shall be entered into pursuant to which ! days prior to the estimated completion the symptoms and treatment of lead poisoning and the precautions to be (2) Within the same time period, a the defects or deficiencies will be cor­ date and periodically thereafter, the HUD representative (accompanied by a rected and the project then accepted. If Owner shall notify HUD (or the PHA taken against lead poisoning and that records showing receipt of such notice PHA representative, if applicable) shall the Owner is unwilling to enter into such in the case of a Private-Owner/PHA inspect the project in a manner suf­ agreement or if he fails to perform the I Project) of any units which he antici­ by each tenant will be maintained; (vi) There has been no change in the ficient to enable the inspector to'report agreement, the project shall not be pates will be vacant on the effective date that he has inspected the observable ele­ accepted. of the Contract. At the time the Contract evidence of management capability or in the proposed management program ments and features of the project in ac­ (f) Notification of Nonacceptance. If is executed (see §881.217), the Owner cordance with professional standards of HUD determines that, based on the re­ will be required to submit a list of the (if one was required) specified in his Final Proposal other than changes ap­ care and judgment and that, on the basis view of the evidence of completion and dwelling units leased as of the effective of the inspection, the project has been inspection, the project cannot be ac­ date of the Contract and a list of the proved in writing by HUD in accordance cepted, the Owner shall be promptly no­ with the Agreement; and completed in accordance with the Agree­ units not so leased, if any. The Owner (vii) He has complied with the pro­ ment and that there are no observable tified of this decision and the reasons. will be entitled to housing assistance pay­ visions of the Agreement relating to the conditions inconsistent with the evidence (g) Arbitration. In the event the ments for any unleased units, pursuant to payment of not less than prevailing wage of completion, including the certifica­ Owner disputes HUD determinations, he § 881.107(b), only if he has fully com­ rates and that to the best of his knowl­ tions of the Owner and the design or may submit the controversy to third- * plied with the requirements of that edge and belief there are no claims of inspecting architects. If the inspection party arbitration at his expense, pro­ section and of this paragraph. underpayment in alleged violation of discloses defects or deficiencies, the in­ vided that the arbitration is advisory £ spector shall report these with sufficient only, § 881.216 Project completion. said provisions of the Agreement. In the event there are any such pending claims detail and information for purposes of (h) Completion in Stages. If the proj­ (a) Notification of Completion. The to the knowledge of the Owner, HUD, or paragraphs (e) (1) and (2) of this sec­ ect is to be completed in stages, the pro­ Owner shall notify HUD (with a copy to the PHA (if applicable), the Owner shall tion. cedures of this section shall apply to the PHA in the case of a Private-Owner/ be required to place a sufficient amount (d) Acceptance. If HUD determines each stage. PHA Project) when the work is com­ from the review and inspection that the in escrow, as determined by HUD, to as­ project has been completed in accord­ § 881.217 Execution of housing assist­ pleted and shall submit to HUD the evi­ sure such payments. ance payments contract. dence of completion described in para­ (3) If working drawings and specifica­ ance with the Agreement, the project shall be accepted. (a) Time of Execution. Upon accept­ graph (b) of this section. tions for the work were prepared and ance of the project by the Government (b) Evidence of Completion. Comple­ certified to by a registered architect, a (e) Acceptance Where Defects or De­ certification by the registered architect ficiencies Reported. If the project is not pursuant to § 881.216, the Contract shall tion of the project shall be evidenced by acceptable under paragraph (d), the fol- be executed first by the Owner and then furnishing HUD with all of the following: responsible for inspection of the work

[

.

86 87 *

■ i j § 881.218 §881.219 Title 24—Housing and Urban Development n Ch. VIII—Low Income Housing, Depf. of Housing & Urban Dev.

by HUD, or, in the case of a Private- Owner’s waiting list is such that there PHA determines that the applicant shall c. The Lessor shall not discriminate i would be an unreasonable length of time not be admitted, the PHA shall so notify against the Lessee In the provision of serv- Owner/PHA Project, executed by the Ices, or In any other manner, on the grounds Owner and the PHA and then approved before the applicant could be admitted, the applicant in writing and such notice shall inform the applicant that he has the of race, color, creed, religion, sex, or na- by HUD. the Owner may advise the applicant that tional origin. (b) Unleased Units. At the time of the Owner is not accepting applications right to request a review by HUD of the d. The Lessor shall provide the following execution of the Contract, HUD (or the for that reason. The Owner shall retain PHA’s determination. The procedures of services and maintenance: (Here Insert the PHA, as appropriate) shall examine the copies of all completed applicants to­ this subparagraph do not preclude the complete list as contained In the approved lists of dwelling units leased and not gether with any related correspondence applicant from exercising his other rights Final Proposal.] leased, referred to in § 881.215(f), and for three years. For each Family selected if he believes he is being discriminated Lessor: ______shall determine whether or not the for admission, the Owner shall submit against on the basis of race, color, creed, By: ...... Owner has met his obligations under one copy of the completed and signed ap­ religion, sex, or national origin. The PHA Date: ______plication to the HUD field office (in the shall retain for three years a copy of the Lessee:______that section with respect to any unleased Date: ______units. HUD (or the PHA, as appropriate) case of Private-Owner/PHA Projects, the application, the letter, the applicant’s re­ shall state in writing its determination Owner simultaneously shall send a copy sponse if any, the record of any informal (c) Prohibited Provisions. Lease of the form to the PHA). Housing assist­ hearing, and a statement of final disposi­ clauses which fall within the classifica­ with respect to the unleased units and tion. for which of those units it will make ance payments will not be made on behalf tions listed below shall not be included in housing assistance payments. The Owner of an admitted Family until after this § 881.219 Lease requirements. any Lease. shall indicate in writing his concurrence copy has been received by the HUD field (1) Confession of Judgment. Prior office (or, in the case of Private-Owner/ The Lease shall contain all required with this determination or his disagree­ provisions listed in paragraph (c) of this consent by tenant to any lawsuit the ment, reserving his rights to claim hous­ PHA Projects, until the copy has been section and none of the prohibited landlord may bring against him in con­ ing assistance payments for the unleased received by the PHA with a certification provisions listed in paragraph (c) of this nection with the Lease and to a judg­ units pursuant to the Contract, without by the Owner that he has sent a copy to section and shall otherwise conform to ment in favor of the landlord. prejudice by reason of his signing the HUD). the form of Lease included with the Own­ (2) Distraint for Rent or Other Contract. Copies of all documents • (3) If the Owner determines that the er’s approved Final Proposal. Charges. Authorization to the landlord referred to in this paragraph shall be applicant is eligible on the basis of In­ (a) Term of Lease. The term of the to take property of the tenant and hold furnished to HUD in the case of a come and family composition and is Lease shall be for not less than one year. it as a pledge until the tenant performs { otherwise acceptable but the Owner does any obligation which the landlord has : Private-Owner/PHA Project. The Lease may (or, in the case of a : not have a suitable unit to offer, the Lease for a term of more than one year, determined the tenant has failed to § 881.218 Marketing. Owner shall place such Family on his shall) contain a provision permitting perform. (a) Compliance with Equal Opportu­ waiting list and so advise the Family. termination upon 30 days advance writ­ (3) Exculpatory Clause. Agreement nity Requirements. Marketing of units (4) If the Owner determines that the ten notice by either party. by tenant not to hold the landlord or • ; and selection of Families by the Owner applicant is eligible on the basis of In- (b) Required Provisions. The Lease landlord's agents liable for any acts or shall be in accordance with the Owner’s come and family composition and is between the Owner (Lessor) and the omissions whether intentional or negli­ HUD-approved Affirmative Fair Housing otherwise acceptable and if the Owner Family (Lessee) shall contain the fol­ gent on the part of the landlord or the has a suitable unit, the Owner and the lowing provisions: landlord’s authorized representative or Marketing Plan, if required, and with all Family shall enter into a Lease. Such agents. regulations relating to fair housing ad­ Addendum to Lease Lease shall be on the form of Lease in­ (4) Waiver of Legal Notice by Tenant i vertising including use of the equal op­ The following additional Lease provisions Prior to Actions for Eviction or Money portunity, logotype, statement, and slo­ cluded in the Owner’s approved Final i Proposal and shall otherwise be in con­ are incorporated In full in the Lease between Judgments. Agreement by tenant that i gan in all advertising. Projects shall be formity with the provisions of this Part. ------(Lessor) the landlord may institute suit without managed and operated without regard to (5) Records on applicant families and and______any notice to the tenant that the suit race, color, creed, religion, sex, or (Lessee) for the following dwelling unit: ■ approved Families shall be maintained ------In case has been filed. national origin. , . , . (5) Waiver of Legal Proceedings. Au­ i (b) Eligibility, Selection and Admis­ by the Owner so as to provide HUD with of any conflict between these and any other racial, ethnic and gender data and shall provisions of the Lease, these provisions shall thorization to the landlord to evict the sion of Families. (I) The Owner shall be be retained by the Owner for three years. prevail. tenant or hold or sell the tenant’s pos­ i responsible for determination of eligi­ (6) In the case of a PHA-Owner proj­ a. The total rent shall be $______sessions whenever the landlord deter­ ! bility of applicants, selection of families ect, (i) if the PHA places a Family on its per month. mines that a breach or default has oc- from among those determined to be eli­ b. Of the total rent, $ shall waiting list, it shall notify the Family of curred without notice to the tenant or * gible, and computation of the amount of the approximate date of availability of a be payable by or at the direction of the De­ any determination by a court of the housing assistance payments on behalf partment of Housing and Urban Develop­ rights and liabilities of the parties. of each selected Family, in accordance suitable unit insofar as such date can be ment (“HUD”) as housing assistance pay­ *! reasonably determined, and (ii) if the ments on behalf of the Lessee and $______(6) Waiver of Jury Trial. Authoriza­ with schedules and criteria established PHA determines that an applicant is in­ shall be payable by the Lessee. These tion to the landlord’s lawyer to appear I by HUD; provided that in establishing eligible on the basis of income or family amounts shall be subject to change by rea­ in court for the tenant and to waive the criteria for the selection of applicants, composition, or that the PHA is not se­ son of changes In the Lessee’s family in­ tenant’s right to a trial by jury. no local residency requirements or pri­ lecting the applicant for other reasons, come, family composition, or extent of ex­ (7) Waiver of Right to Appeal Judi­ I ority systems relating to place of resi­ the PHA shall promptly send the appli­ ceptional medical or other unusual expenses cial Error in Legal Proceedings. Au­ dence may be applied to applicants who in accordance with HUD-established sched­ thorization to the landlord’s lawyer to are working in the community. cant a letter notifying him of the deter­ ules and criteria: or by reason of adjust­ mination and the reasons and that the ment by HUD, or the PHA, if appropriate, of waive the tenant’s right to appeal on (2) For every family that applies for the ground of judicial error in any suit applicant has the right within a reason­ any applicable Allowance for Utilities and f admission, the Owner and the applicant able time (specified in the letter) to re­ Other Services. Any such change shall be or the tenant’s right to file a suit in shall complete and sign the form of effective as of the date stated In a notifica­ equity to prevent the execution of a application prescribed by HUD, except quest an informal hearing. If, after con­ ducting such an informal hearing, the ! tion to the Lessee. judgment. { that if there are no vacant units and the : * ! 90-079—77------31 1 1 : ■ 1

88 89 ; : * i £ Titie 24—Housing and Urban Development Ch. VIII__Low Income Housing, Dept, of Housing & Urban Dev. § 881.223 § 881.224 will not be abated, unless the Owner fails rent public housing are applicable only (8) Tenant Chargeable with Costs of (d) Units Not Decent, Safe, and Sani­ tary. If HUD (or the PHA, as appropri­ to offer the Family a suitable unit as to PHA-Owner Projects under the Sec- Legal Actions Regardless of Outcome. ate) notifies the Owner that he has soon as one becomes vacant and ready tion 8 Housing Assistance Payments Agreement by the tenant to pay attor­ failed to maintain a dwelling unit in for occupancy. In the case of an over- Program. ney’s fees or other legal costs whenever Decent, Safe, and Sanitary condition crowded unit, if the Owner does not have § 881>227 Reduction of number of con- the landlord decides to take action and the Owner fails to take corrective any suitable units or if no vacancy of a tract units for failure to lease to eli- against the tenant even though the court action within the time prescribed in the suitable unit occurs within a reasonable gy>ie families, finds in favor of the tenant. (Omission time, HUD (or the PHA) will assist the ...... , time becrinning six of such clause does not mean that the notice, HUD (or the PHA) may exercise t Family in finding a suitable dweUing unit S eSive daU of the any of its rights or remedies under the ! tenant as a party to a lawsuit may not Contract, including abatement of hous­ and require the to such Confcract> ^ Qwner fails for a cun- be obligated to pay attorney’s fees or I ing assistance payments, even if the ! a unit as soon as possible. The Owner tinuous peri0d of six months to have at other costs if he loses the suit.) Family continues to occupy the unit. If, ! may receive housing assistance paymente least 80 percent of the Contract units §881.220 Termination of tenancy. however, the Family wishes to be re­ for the vacated unit if he complies with leased or available for leasing by Eligible The Owner shall be responsible for housed in another dwelling unit with V ( the requirements of § 881.107(c) (1). Families, HUD (or the PHA at the direc- termination of tenancies, including evic­ section 8 assistance and HUD (or the § 881.224 Adjustment of allowance for tion of HUD, as appropriate) may on PHA) does not have other section 8 funds tions. However, conditions for payment : utilities and other services. 30 days notice reduce the number of of housing assistance payments for any for such purposes, HUD (or the PHA) ttttpi rv,»» fVio pui ac tvip mav be Contract units to not less than the mini— V i resulting vacancies shall be as set forth may use the abated housing assistance payments for the purpose of rehousing spection and at such other times as it lewtag ^.^^hf^th^numberZX" £ 10 in § 8.81.107(c) (1). the Family in another dwelling unit. deems appropriate, whether an adjust- next highest § 881.221 Maintenance, operation and Where this is done, the Owner shall be ment is required in the Allowance for or more, rounded to the next highest inspections. notified that he will be entitled to re­ sumption of housing assistance payments ! Utilities and Other Services applicable to nuJ™er. (a) Maintenance and Operation. The the dweUing units in ^e Project^ on ^ Contracfc and of each renewal term, Owner shall maintain and operate the for the vacated dwelling unit if: ! project so as to provide Decent, Safe, and (1) The unit is restored to Decent, grounds of changes in utility rates HUD (or the PHA at the direction of 1 Sanitary housing and he shall provide Safe, and Sanitary condition; other changeof generai ap^b y HUD| as appropriate) may, by notice to all the services, maintenance and utili­ (2) The Family is willing to and does all units in the project. If HUD (or .. . PT. rpdnrp the number of Con— move back to the restored dweUing unit; PHA ) dbete£™es ^ —T tract units’to not less than (1) the num- ties which he agrees to provide under the should be made, HUD (or the PHA) ^ Q{ units under lease or available for Contract, subject to abatement of hous­ and shall prescribe the amount of the adjust- leasing by Eligible Families at that ing assistance payments or other ap­ (3) A deduction is made for the ex- penses incurred by the Family for both ment and direct the Owner to make time 0r (2) the average number of units plicable remedies if he fails to meet these promptly a corresponding adjustment m sq leased or available for leasing obligations. moves. (b) Inspection Prior to Occupancy. the amount of rent to be paid by the duri the last year, whichever is the § 881.222 Reexamination of Family in­ affected Families and the amount greatest number, plus 10 percent of. such Prior to occupancy of any unit by a Fam­ come, composition, and extent of housing assistance payment. number if the number is 10 or more, i ily, the Owner and the Family shall in­ exceptional medical or other unusual spect the unit and both shall certify, on §881.225 Continued family participa- rounded to the next highest number. expenses. tion. (c) HUD will agree to an amendment \ forms prescribed by HUD, that they have Reexamination of Family Income, inspected the unit and have determined composition, and the extent of medical A family m-tcontinuefooccupy its of .the it to be Decent, Safe, and Sanitary in ac­ or other unusual expenses incurred by participation’in the Houstog Assistanpe ttocrtwy “ “ftlis"n tt cordance with the criteria provided m the Family shall be made by the Owner the prescribed forms. Copies of these at least annually (except that such re­ Payments Program except that If the determines that the restoration reports shall be kept on file by the Own­ views may be made at intervals no longer Family (a) wishes to vacate its unit at instifled as a result of changes in de- er for at least three years. than two years in the case of elderly the end of the Lease term (or prior ^^ m the Ught of the Owner’s (c) Periodic Inspections. HUD (or the thereto but m accordance with the pr - o£ compUance with his obligations ; Families), and appropriate redetermina­ i PHA, as appropriate) will inspect or tions shall be made by the Owner of the visions of the Lease), or (b) is required ef the Contract and if annual cause to be inspected each Contract unit amount of the Gross Family Contribu­ to move for reasons other than violation co“tributlons contract authority is !<; and related facilities at least annually tion and the amount of the housing as­ of the Lease on the part of the Family, ilable; and HUD wm take such steps and at such other times (including prior sistance payment, all in accordance with and if the Family wishes to receive the authorized by section 8(c) (6) of the Act - to initial occupancy and rerenting of schedules and criteria established by benefit of housing assistance^ payments may be necessary to carry out this t any unit) as HUD (or the PHA) may fle- HUD. in another approvable unit, the Family assui.ance (see §§ 881.105 and 881.106). termine to be necessary to assure that and under- ■ the Owner is meeting his obligation to § 881.223 Overcrowded .<—— occupied units. nnnronriate so that HUD or the PHA puance. I maintain the units in Decent, Safe, and i Sanitary condition and to provide the If HUD or the PHA, as the case may may be, determines that a Contract unit as­ agreed upon utilities and other services. the Family s request. ensure.rSSSS that the Owner is in full com- HUD (or the PHA) will take into ac­ sisted under this Part is not Decent, Safe, and Sanitary by reason of increase § 881.226 Inapplicability of low-rent phance with the terms and conditions of count complaints, by occupants and any public housing model lease and griev- the contract. Equal Opportunity review other information coming to its atten­ in Family size, or that a Contract unit is larger than appropriate for the size of ance procedures. may be conducted with the scheduled tion in scheduling inspections and shall Model lease and grievance procedures HUD review or at any time deemed ap- notify the Owner and the Family of its the FamUy in occupancy, housing assist- payments with respect to such unit established by HUD for PHA-owned low- propriate by HUD. determination. ance

; ;

90 91 i ! l Title 24—Housing and Urban Development which a commitment for permanent fi- CHAPTEft VIII—LOW-INCOME HOUSING ?™lcinLwas not se°ured before April 30, bTn-STPm°eFNtH0US'NG 1977, which is the date the Supplemental Housing Authorization Act of 1977 be­ [Docket Nos. R-77-380 and R-77-387] or unconditional commitment for ner- came law. The purpose of the amend­ years, subject to renewal for additional AprTso fi1977C?g V* secured before PAANC?°lfv£?MTc8 1°USING ASSIST- ment permitting a 30-year term for con­ terms of not more than five years each, ’ 19except as otherwise nr« ventional financing, is to encourage this as may be mutually agreed upon by the vlded in paragraph (b)(2)(iv) P wnItrCcton13 PROGRAM NEW section; or of this type of financing. Projects for which fl- Owner and HUD or, in the case of a nancing was secured prior to the effec­ Private-Owner/PHA Project, by the Oi) 20 years where the project is not PAANc?17fvS?MTfi8 H0USING ASSIST- tive. date of the Act were able to obtain Sw£fand the PHA with the approval secttorf an/?1"ograph (b) (2) (iv)' of this Stawt.»?AIMENTS PROGRAMtt-SUB- financing without the 30-year term pro­ STANTIAL REHABILITATION of HUD; provided, that the total Con­ section and is financed with the assist- visions, and there is no need to make the tract term for any mobile home shall not £”9® °J a ?a? made by’ or insured, guar- Increase in Maximum Allowable Term for provision applicable to them. exceed 20 years. For the purposes of this FedeTfti °r intended for purchase by, the Certain Contracts A Finding of Inapplicability respect­ paragraph (d), the term “mobile home” other than Pur- AGENCY: ing the National Environmental Policy means the original mobile home and any Housing1Actor " 244 °f the NatI°naI Act of i969 has been made in accordance replacement(s); combined. In the case with HUD procedures. A copy of this ”.an.ypi?>Je‘'f uuder this paragraph (d), and Finding of Inapplicability will be avail­ notwithstanding the maximum total al­ able for public inspection during regular lowable term per unit stated therein, a unZditarrs ACTION: Final rule. business hours at the Office of the Rules sha11 ** determined by nent financing based on a term of more Docket Clerk, Office of the Secretary, HUD where appropriate, taking into ac­ Room 5218, Department of Housing and than 20 but no more than 30 years Act of count the amount of the capital ex­ sxKir'- Urban Development, 451 7th Street, SW,. penditures reasonably required for the was secured on or after April 30, 1977, Washington, D.C. 20410. project, the reasonable period and rate except as provided in paragraph (b) (2) It is hereby certified that the economic r?a .2? * contracts for assistance of amortization for the financing and (ii) or Civ) of this section; or payments under the Section 8 program and inflationary impacts of this regula­ the approved rents to the Owner. (iv) 40 years, where the project is mon^f8 °f ?*ree hundr*d !£ty tion have been carefully evaluated in ac­ (e) if the project is completed in cordance with Executive Order 11821 owned by, or financed by a loan or loan S?e^A. ieptihat such tenn may not stages, the dates for the initial and the guarantee from, a State or local Accordingly, 24 CFR, Parts 880 and renewal terms shall be separately re­ agency. the ?^°^Undred and forty m°nths in 881 are revised as follow/;: (c) If the project is completed in ,case °l a Project financed with lated to the units in each stage- pro­ assistance of a loan made by, or Insured 1. Paragraph (a) of Section 880.109 is vided, however, that the total Contract stages, the dates for the initial and the ^uarmrteed or Intended for prnclSby revised, a new paragraph (b) is added term for the units in all the stages, be­ renewal terms shall be separately related the Federal Government, other than and paragraphs (b), (c), and (d) are ginning with the effective date of the to the units in each stage; provided, redesignated (c), (d), and (e), respec­ Contract with respect to the first stage however, that the total Contract term Hcmsing Act.m 60tion 244 <* the National tively, and are reprinted in their en­ may not exceed the overall maximum tirety as follows: This* amendment increases the maxi­ term allowable for any one unit, plus mum term permitted for Housing Assist­ § 880.109 Term of housing assistance two years. ance Payments Contracts and Annual payments contract. 2.. ,§ 881.109v , (a) and (b) are revised respect to the first stage, may not exceed and (c) is reprinted so as to read in its to°30r;veaJ??, Contracte 20 years (a) The Contract may be for an initial entirety as follows: he overall maximum term allowable for for conventionally, financed term of not more than five years for any one unit, plus two years. amendment did not change any dwelling unit, renewable at the sole § 881.109 Term of Housing Assistance (Sec. 7(d), Department of HDD Act (42 mUlL4J year term avaJIable for option of the Owner, for additional terms Payments Contract. U.S.C. 3636(d)).) owned by- or financed by a loan of not more than five years each, pro­ (a) Where the estimated cost of the agency. gUarantee from- a State or local vided that the total Contract term for rehabilitation is less than 25 percent of Issued at Washington, D.C., August 12, any dwelling unit, including all renew- the estimated value of the project after iy77. c ®*c?on 8 New Construction land. als shaH .not exceed 20 years, where a completion of the rehabilitation, the Lawrence B. Simons, Rpm Rebabfi^tation Program conditional or unconditional commit- Contract may be for an initial term of Assistant Secretary for Housing, *r® bein& amended to re­ ment for permanent financing was se- not more than five years for any dwell­ Federal Housing Commissioner. flect this statutory change. In addition by the °wner Prior to April 30, ing unit, renewable at the sole option of [FR.Doc.77-24172 Filed 8-19-77;8:45 am] S +!!nical changes are being made 1977, or 30 years, where a conditional the Owner, for one or more additional the re&uiations and assure uni- or unconditional commitment for per­ terms of not more than five years each- iomi interpretation between manent financing, based on a term of lations and the the regu- provided, however, that the total Con­ forms contract document more than 20 but no more than 30 years tract term, including all renewals, shall amenrimpnfcthls lubject- Since these was secured on or after April 30, 1977^ not exceed 10 years for any dwelling aSenrfSJfS? based on a statutory except as otherwise provided in this unit. °r are °nIy technlcal dari- section. (b) Where the estimated cost of the on PuMcaS. are be“B ”ade effective (b) Jn the case of a Contract under ! rehabilitation is 25 percent or more of which housing assistance payments are the estimated value of the project after EFFECTIVE DATE: August 22, 1977. made with respect to a project not cov- i completion of the rehabilitation, the ered by paragraph (c) of this section I Contract may be for an initial term of ^^tFURTHER information CON- which is financed with the assistance of not more than five years for any dwell­ a loam made by, or insured, guaranteed ! ing unit, renewable at the sole option of April D. LeClair, Section 8 and Leased or intended for purchase by, the Federal the Owner, for additional terms of not Government, other than pursuant to more than five years each, for a total S™5 ZJMston. Office of Assisted ' Ho£S ^elopment, Department of Section 244. of the National Housing Act Contract* term, including all renewals, Houshig and Urban Development, 451 the total Contract term, including all which: 20410S20l-t75Sr380WaShlngtOn' DC' renewals, shall not exceed 20 years for (1) Will cover the longest term of a any dwelling unit. .►;r single credit instrument covering- (i) (c) In the case of a Contract under The cost of rehabilitation; or ?Sf^M?NTARY rNFORMATION: existing indebtedness; or 2de»it?SarJme°t has given serious con­ which housing assistance payments are ! made with respect to a project owned 'fill "^he c°st of rehabilitation and sideration to the issue of the effective : the refinancing of the existing indebted­ for* 30^ale?entaii2n °f the provisi<>n by, or financed by a loan or loan guar­ ness; or antee from, a State or local agency, the determine r ten^' ^ Department has total Contract term may be equal to the I (iv) The cost of rehabilitation and the *£?'SfiB&Sr —dments ef- term of such financing but may not ex­ acquisition of the property; and for projects for ceed 40 years for any dwelling unit. I „J2) Wfil not exceed, for any dwelling unit, (i) 20 years, where a conditional

92 93

*V.S. GOVERNMENT PRINTING OFFICE 1978 0-260-982/64

I 7^8,1 m hh f? IS'

*• Id

I .. jf )

- —r. 728.1 U5ii72 1978 li United States Confere nee of : Mayors. Neighborhood strategy areas. i i

i

i

; j ■

% 1 1 j

' |V 1 I $ \ r ' Vi ! f - i ! i f

’

■

: .

. ; '! i ».* t ! I

il

(

’

I I I 1

:

5

es '4

V

A- -• II i \ 1

March 1978 - HUD-PDR-291 f H i . i i . • - *