[Federal Register Volume 59, Number 108 (Tuesday, June 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13729]
[[Page Unknown]]
[Federal Register: June 7, 1994]
_______________________________________________________________________
Part III
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Part 291
Single Family Property Disposition; Lease and Sale of HUD-Acquired
Properties; Final Rule
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Assistant Secretary for Housing-Federal Housing
Commissioner
24 CFR Part 291
[Docket No. R-94-1720; FR-3399-F-02]
RIN 2502-AF96
Single Family Property Disposition; Lease and Sale of HUD-
Acquired Single Family Properties for the Homeless
AGENCY: Office of the Assistant Secretary for Housing-Federal Housing
Commissioner, HUD.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends the Department's regulations governing
the Single Family Property Disposition program for the lease and sale
of HUD-acquired properties for the homeless by implementing section
1407 of the Housing and Community Development Act of 1992 (Pub. L. 102-
550, approved October 28, 1992), with regard to notifying eligible
applicants of available properties in their areas.
EFFECTIVE DATE: July 7, 1994.
FOR FURTHER INFORMATION CONTACT: David H. Patton, Acting Director,
Single Family Property Disposition, room 9170, Department of Housing
and Urban Development, 451 Seventh Street SW., Washington, DC 20410;
telephone (202) 708-1832; (TDD number for the hearing- and speech-
impaired (202) 708-4594). (These are not toll-free numbers.)
SUPPLEMENTARY INFORMATION:
I. Background
The Single Family Property Disposition program (24 CFR part 291),
which disposes of one-to-four family properties acquired by HUD or
otherwise held by HUD, includes an initiative by the Department for the
lease and sale of properties to governmental entities, tribes, and
private nonprofit organizations for use by homeless persons (subpart E
of part 291).
Under the current regulations, applicants that have been
preapproved by HUD are notified of the availability of properties for a
10-day consideration and inspection period before the properties are
offered for sale to the general public. (See 24 CFR 291.410(d).)
Properties are leased or sold to applicants on a first come-first
served basis. No more than 10 percent of the total inventory, as of
October 1, may be leased under the program; there is no limitation on
the sale of properties.
Applicants may purchase properties, at a discount, either through a
direct sale or by submitting a competitive bid. Applicants that choose
to lease properties may purchase them at any time during the leasehold.
Leases are for a one-year term, renewable for up to four additional
one-year terms, for $1 a year. Lessees are responsible for all
utilities, taxes, and other costs associated with operating the
property. Under 24 CFR 291.415(d), lessees are required to establish an
escrow account, with HUD as a co-signer, and make monthly deposits to
the account in an amount sufficient to reimburse HUD for any taxes on
the property.
II. Amendments by the Housing and Community Development Act of 1992
Section 1407 of the Housing and Community Development Act of 1992
(Pub. L. 102-550, approved Oct. 28, 1992; hereafter referred to as
``1992 HCD Act'') directs the Secretary to make several amendments to
this discretionary program. Subsection 1407(a) prohibits the Secretary
from making a property available for lease under the homeless
initiative program unless the property has first been listed and made
generally available for sale to the public for at least 30 days.
Subsection 1407(b) of the 1992 HCD Act provides an exception to
subsection 1407(a) with respect to any area in which the Secretary
determines that there will not be a sufficient quantity of decent,
safe, and sanitary affordable housing available for use under the
program if properties located in the area are first made generally
available to the public. In such exception cases, the Secretary will
make available to preapproved applicants up to 10 percent of the total
number of properties in the HUD inventory for the area before offering
those properties to the general public. The Secretary is also directed
to consult with the unit of general local government for the area in
determining which properties should be reserved.
The 1992 HCD Act, in subsection 1407(c), also directs the Secretary
to identify and describe, upon request by an applicant or lessee, any
exemptions or reductions related to the payment of property taxes under
State or local laws that may be applicable to lessees or to the leased
properties. Finally, subsection 1407(c) of the 1992 HCD Act also
provides that the Secretary may not require the lessee to make deposits
for the payment of taxes into an escrow account, where such an
exemption or reduction is provided.
III. Final Rule
On August 11, 1993, the Department published a proposed rule (58 FR
42707) which would implement the changes required by section 1407 of
the 1992 HCD Act, as well as some additional conforming changes. This
final rule implements those proposed changes as described below.
30-day Marketing Period and Exception
In accordance with subsection 1407(a), this final rule amends 24
CFR 291.400(c) to reflect the statutory requirement that HUD make
property available for sale to the general public for at least 30 days
before HUD makes the property available for lease under the program. In
addition, this final rule also requires that the property be vacant,
and not under contract or committed to another program for availability
under the lease program.
This final rule also adds conforming changes to Sec. 291.410(d)
regarding notification to applicants of available properties. After the
public sale period, the HUD Field Office will notify applicants of
eligible properties available in the ZIP Code areas previously
designated by them. Specific properties selected by an applicant will
be held off the market for a 10-day consideration and inspection
period, which will begin to run upon written notification by the
applicant to the Field Office. (The Department encourages applicants to
notify Field Offices by Facsimile (FAX).) Only those properties in
which an applicant has submitted a written expression of interest will
be held off the market. If no further communication from the applicant
is received by the end of the 10-day consideration and inspection
period, the Field Office will resume offering the properties for sale
to the public.
In accordance with section 1407(b) of the 1992 HCD Act, the final
rule provides an exception to the 30-day listing for general sale in
Field Offices having 200, or fewer, total properties in inventory as of
October 1 of each year. HUD has determined that these offices are less
likely to have properties available for applicants after 30 days on the
market. HUD will select these ``exception'' field offices based upon
the number of properties held in inventory as of October 1, of each
year (initially October 1, 1993), the number of properties the
Department anticipates acquiring over the ensuing 12-month period and
the speed with which such properties are selling. In ``exception''
Field Offices, if homeless providers have requested to lease
properties, properties will be offered to them for a 10-day
consideration and inspection period before the properties are listed
for sale to the general public. Field Offices subject to this exception
will notify applicants of properties in designated ZIP Code areas prior
to public listing until such time as 10 percent of their total
inventory, as of October 1, has been leased. The Assistant Secretary
for Housing-Federal Housing Commissioner will supply a list of the
exception Field Offices to the Assistant Secretary for Community
Planning and Development and all field offices on an annual basis.
The final rule also provides that, in those Field Offices subject
to the exception, HUD will consult with units of general local
government to identify areas where there is a need for units for
homeless persons and will make this information available to
applicants. However, local governments will not have veto-power over
where properties used by the homeless are located.
Exception From or Reduction of State and Local Property Taxes
The final rule also amends 24 CFR 291.415(d) to describe HUD's duty
under subsection 1407(c) of the 1992 HCD Act to provide information to
applicants or lessees regarding any exemption from or reduction of
property taxes under State and local laws. Under this final rule, where
State or local law grants such an exemption or reduction, HUD will not
require that the applicant establish an escrow account for that portion
of the payment of property taxes.
While the amendment necessitated by subsection 1407(c) is included
in the final rule, the Department previously determined that this
provision is effective as of October 28, 1992, the date of enactment of
the 1992 HCD Act. HUD Field Offices were instructed to provide this
information upon the request of an applicant or lessee.
Miscellaneous Changes
This final rule also amends part 291 to reflect changes to the
Department's Supportive Housing program. The 1992 HCD Act terminated
the Supportive Housing Demonstration (formerly implemented in 24 CFR
parts 577 and 578), and replaced it with a new Supportive Housing
program. An interim rule for that program was published on March 15,
1993 (58 FR 13870), and is codified at 24 CFR part 583.
Changes to the Proposed Rule
Finally, the Department has made several changes to the proposed
rule in this final rule. Those changes are as follows:
A. This final rule requires that applicants submit a certification
of compliance with fair housing laws, as well as other
nondiscrimination and equal opportunity requirements, as part of the
preapproval process.
B. In Sec. 291.410(d), the references to a 45-day period have been
changed to 30-day period. The 45-day reference was inadvertently put in
the proposed rule, and this change reflects a technical correction.
C. In Sec. 291.410(d), and with regard to re-offering a property to
an applicant, the rule is changed to provide that an unsold property
will be re-offered to an applicant if no offer from the public has been
accepted by HUD, rather than just received by HUD.
D. Section 291.410(d) is further modified to show that written
notification of interest in a particular property by the applicant may
be sent via facsimile, and the Department encourages applicants to use
this method of notification. Signed leases may also be transmitted in
this manner, followed by submission of the original.
E. Section 291.410(e) has been deleted from the final rule. The
Department believes that this provision was redundant since
Sec. 291.110, as published on October 20, 1993, in an interim rule
amending the Single Family Property Disposition program, sets forth the
same notification procedures. In the interest of simplification and
readability, the Department has removed this provision.
F. Paragraphs (b) and (c) of Sec. 291.425 have been changed to
indicate that the sales price of any HUD-owned property acquired under
this program will be discounted in an amount determined appropriate by
the Secretary, but not less than 10 percent. This change will make the
rule governing the homeless initiative consistent with an amendment to
Sec. 291.110(a) in the October 20, 1993 interim rule for the Single
Family Property Disposition program.
IV. Discussion of Public Comments From Interim Rule
The Department received 38 public comments in response to the
proposed rule published on August 11, 1993. The following discussion
summarizes the comments and provides HUD's responses to those comments.
Every comment was reviewed and considered, although it may not be
specifically addressed in this preamble.
30-day Public Listing Period: Sec. 291.400(c)(1)
Comment: The Department received twenty-one comments objecting to
the regulatory change which requires that HUD offer properties for sale
to the public for 30 days prior to making them available for leasing to
homeless providers. These commenters were generally concerned that only
the least desirable properties would remain in the inventory after the
30-day public listing period for a variety of reasons: (a) The
increased costs associated with repairing the least desirable
properties; (b) the unsuitability of leasing remainder properties
because of problems with accessibility to supportive services; and (c)
the location of remainder properties often being in crime ridden areas.
HUD's response: Section 1407(a) of the 1992 HCD Act requires that
HUD first offer properties to the general public for at least 30 days
before HUD makes such properties available for leasing to homeless
providers. However, HUD believes that homeless providers will have a
sufficient number of acceptable properties available for their programs
in most housing markets when the 30 day marketing priority takes
effect. This belief is based upon the number of single family
properties currently in the Department's inventory and the number of
new acquisitions projected throughout any given year. In addition, the
Department will administer the exception provision of the law with
attention to valid concerns of the participating homeless providers,
and if in general a sufficient number of acceptable properties are not
available to applicants after the public listing period, the Department
will revisit the exception provision in the future.
Exception to Public Listing Period and Consultation With Units of Local
Government: Sec. 291.400(c)(2)
Comment: Three commenters objected to the 200-unit exception to the
30-day public listing period requirement. One commenter suggested that
exceptions be determined based upon the current level of usage of the
homeless leasing program in an area, and input from each field office
as to where and whether the exception should apply. One commenter
recommended that the exception to the 30-day public listing period
should apply whenever the inventory in a field office is less than 500
units. One commenter recommended that the Community Planning and
Development Division in each field office work with Property
Disposition staff to determine whether the exception to the 30-day
listing period requirement should apply.
HUD's response: The 200 property threshold, which will determine
what field offices must offer their inventory to homeless providers on
a priority basis, is based on HUD's experience administering the
Homeless Initiative Program nationwide. The Department believes this is
a reasonable benchmark which will ensure adequate property availability
for homeless providers; however, if future program experience
demonstrates a need for modification of this criterion to determine
exception areas, the Department will respond appropriately.
Comment: Section 1407(b) of the Housing and Community Development
Act of 1992 requires that HUD consult with units of local government in
determining the area in which properties should be reserved for
disposition under the exception to the 30-day public listing period.
Several commenters recommended that HUD give local governments more
input into the program. Eight commenters objected to HUD's exclusion of
local communities from reviewing and approving of properties for the
homeless on a case-by-case basis. Eight commenters suggested that HUD
require that the program be consistent with the local CHAS.
HUD's response: HUD has no control over which properties enter its
inventory or where they will be located; therefore, there is no
guarantee of property availability in areas designated by the locality
for providing services to the homeless. However, in areas subject to
section 1407(b), HUD will consult with local officials on an annual
basis to determine which neighborhoods are targeted by the locality for
provision of adequate supportive services necessary to conduct homeless
programs. This consultation will be carried out in a manner to minimize
any delay in making HUD owned properties available to homeless
providers. While the language in section 1407(b) of the 1992 HCD Act
provides for consultation on ``which properties should be reserved,''
HUD believes that Congress intended that the Department seek input from
local governments on the specific geographic areas in these communities
where the homeless population could best be served rather than seeking
input on a property-by-property basis. Such a process would be
administratively burdensome for both HUD and the unit of local
government. HUD will make every effort to work with local governments
and applicants; however, the decision on which properties are available
is ultimately determined by the location of properties coming into
inventory.
Notification by ZIP Codes: Sec. 291.410
Comment: Several commenters objected to the exclusive use of ZIP
codes in Sec. 291.410 for identifying areas of interest by homeless
providers for leasing properties, and notifying the providers of
available properties since many communities share the same ZIP codes,
but not the same housing patterns.
HUD's response: Property listings must be based upon some generally
recognized geographic designation that is part of HUD's existing data
base. The Department currently tracks its property acquisitions by ZIP
code. Moreover, the Department is not aware of a better method for
tracking and identifying properties. Finally, the Department has not
experienced any difficulties using this approach in the past, nor has
it had any complaints regarding this method from program participants.
Fair Housing Requirements
Comment: Several commenters objected to the absence of fair housing
requirements in the rule. These commenters recommended that HUD require
that the homeless providers submit a fair housing action plan and an
affirmative marketing plan. One commenter suggested that the Department
require that homeless providers submit a certification of compliance
with fair housing laws.
HUD's response: Since the Department cannot control which
properties or what geographic areas are represented in its inventory, a
requirement that participating agencies submit a fair housing action
plan and an affirmative marketing plan is not appropriate. However, the
Department requires that all of its programs be administered in a non-
discriminatory manner, and Sec. 291.435 expressly makes applicants
subject to the Fair Housing Act, as well as other nondiscrimination and
equal opportunity requirements. The Department agrees that applicants
should submit a certification of compliance with applicable fair
housing laws. Accordingly, this final rule amends Sec. 291.410(c) to
require that applicants submit a certification of compliance with fair
housing laws, as well as other nondiscrimination and equal opportunity
requirements, as part of the preapproval process.
Miscellaneous Comments
Comment: Several commenters recommended that HUD change the rule to
require that HUD notify local municipalities of all property
disposition properties.
HUD's response: On request, HUD does notify local officials of all
properties which become available for purchase within their
jurisdiction.
Comment: Several commenters suggested that HUD give local
municipalities an opportunity to purchase homes on a more competitive
basis. A few commenters recommended that HUD offer substantial
discounts for bulk purchases.
HUD's response: The Department believes that the current pricing
structure is appropriate. HUD offers to public agencies and nonprofits
wishing to purchase a HUD-owned property the following discounts: a 10
percent discount off the list price on single purchases, a 15 percent
discount off the list price on the purchase of five or more properties,
and a 30 percent discount off the list price for properties located in
certain designated ``revitalization areas.''
Comment: Several commenters suggested that HUD change the leasing
program to place a greater emphasis on supportive services, and require
that providers set up a reserve account for participants to assist the
participants in moving toward independence.
HUD's response: The Department agrees that it is important to place
a greater emphasis on the availability of appropriate supportive
services in order to maximize the long term benefits of the Homeless
Initiative program; however, requiring that homeless providers
establish reserve accounts to help move tenants towards independence
seems overly burdensome to homeless providers participating in the
program at this time.
Comment: Section 291.400(f) currently provides that, to the extent
practical and possible, HUD will avoid excessive concentration in a
single neighborhood of properties leased or sold under this program.
Although the Department did not propose to change this provision in the
proposed rule, a number of commenters recommended that the Department
define ``excessive concentration'' in the final rule.
HUD's response: The Department previously addressed this issue in
the final rule published September 16, 1991, where we stated that ``HUD
believes that the need to avoid excessive concentration in a single
neighborhood is important to the goal of integrating former homeless
persons into the community. However, rigid standards * * * would be
counterproductive, and do not recognize the diversity of communities
and needs. The need for flexibility outweighs the need to establish
strict standards to ease delivery of supportive services.'' Based upon
past experience in this program, the Department continues to believe
that a rigid definition would be counterproductive. Accordingly, the
rule is unchanged on this issue. However, if in the future, this proves
to be a problem, the Department will revisit the issue at that time.
Comment: One commenter objected to the single family property
disposition homeless initiative program in general, arguing that it is
incompatible with local municipal housing patterns, and that leasing PD
properties to homeless providers causes declining property values.
HUD's response: There is no evidence that leasing PD properties to
homeless providers has caused values to decline. However, in most
housing markets, HUD properties will now be offered first to the
general public before being made available for lease to homeless
providers. This should enhance homeownership opportunities, as well as
provide greater stability in residential neighborhoods.
Comment: Three commenters supported the proposal that HUD limit the
number of properties held off market for any applicant at any one time
based upon the applicant's financial capacity and past performance.
HUD's response: HUD believes that the number of properties held off
the market for an applicant should relate to that applicant's prior
housing experience and demonstrated capacity to administer the program.
Field offices currently have the discretion to determine the
appropriate number of properties for any applicant.
Comment: Two commenters recommended that HUD grant the field
offices more discretion in the program's administration.
HUD's response: On November 2, 1993 (58 FR 58560), the FHA
Commissioner redelegated to field offices the authority to waive
handbooks, notices, directives and other issuances for Housing programs
unless a regulatory or statutory provision is involved. As a result of
this redelegation of authority, field offices now have more flexibility
in program administration of the single family property disposition
homeless initiative program.
Comment: Two commenters recommended that HUD change the way it
administers the ten percent cap on leasing property to homeless
providers. These commenters believe that leased properties are counted
toward the annual ten percent cap each time their annual lease is
renewed.
HUD's response: Properties leased to homeless providers are counted
only once against the ten percent of annual inventory cap. Renewal of a
lease does not mean that an individual property is counted twice in one
year towards the limitation on the number of properties which may be
leased for this purpose. Moreover, in the past, the Department as a
whole has never leased ten percent of the nationwide inventory to
homeless providers, so that individual field offices exceeding their
own ten percent threshold may request reallocation of authority to
lease from other areas.
V. Other Matters
A. Executive Order 12866
This rule was reviewed by the Office of Management and Budget (OMB)
under Executive Order 12866 on Regulatory Planning and Review. Any
changes made in this rule as a result of that review are clearly
identified in the docket file, which is available for public inspection
in the Office of the Rules Docket Clerk, room 10276, 451 Seventh Street
SW., Washington, DC.
B. Environmental Impact
A Finding of No Significant Impact with respect to the environment
was made in accordance with HUD regulations at 24 CFR part 50, which
implement section 102(2)(C) of the National Environmental Policy Act of
1969 for the proposed rule published on August 11, 1993. The Department
has determined that the Finding is not affected by the changes in this
final rule. The Finding is available for public inspection between 7:30
a.m. and 5:30 p.m. weekdays in the Office of the Rules Docket Clerk,
room 10276, 451 Seventh Street SW., Washington, DC.
C. Executive Order 12612, Federalism
The General Counsel has also determined, as the Designated Official
for HUD under section 6(a) of Executive Order 12612, Federalism, that
the policies contained in this rule do not have federalism implications
and, thus, are not subject to review under that Order.
D. Executive Order 12606, the Family
The General Counsel, as the designated official under Executive
Order 12606, The Family, has determined that the Single Family Property
Disposition Homeless Initiative, generally, has a positive and
beneficial impact on the formation, maintenance, and general well-being
of homeless families, and the amendments made by this rule will not
significantly change the overall impact of the rule on families.
Therefore, the rule is not subject to review under that Order.
E. Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this rule before publication and by
approving it certifies that this rule will not have a significant
economic impact on a substantial number of small entities.
Specifically, the rule modifies the procedures under which HUD makes
properties available for lease to governmental entities and private
nonprofit organizations for use by homeless persons.
F. Paperwork
The amendments made to 24 CFR part 291 by this final rule will not
add any additional information collection burden to that already
approved by the Office of Management and Burden under the Paperwork
Reduction Act and assigned OMB approval numbers 2502-0412 and 2502-
0306.
G. Regulatory Agenda
This rule was listed as Sequence No. 1606 in the Department's
Semiannual Agenda of Regulations published at 59 FR 20424, 20452 on
April 25, 1994, under Executive Order 12866 and the Regulatory
Flexibility Act.
List of Subjects in 24 CFR Part 291
Community facilities, Conflict of interests, Homeless, Lead
poisoning, Low and moderate income housing, Mortgages, Reporting and
recordkeeping requirements, Surplus government property.
Accordingly, for the reasons stated in the preamble, part 291,
subpart E, of title 24 of the Code of Federal Regulations is amended as
follows:
PART 291--DISPOSITION OF HUD-ACQUIRED SINGLE FAMILY PROPERTY
1. The authority citation for 24 CFR part 291 is revised to read as
follows:
Authority: 12 U.S.C. 1709 and 1715b; 42 U.S.C. 1441, 1441a, and
3535(d).
2. In Sec. 291.400, paragraph (b) is amended by removing the word
``Demonstration''; and paragraphs (c), (d), and (e) are revised to read
as follows:
Sec. 291.400 Purpose and scope.
* * * * *
(c) Property available for lease with option to purchase. (1) HUD
will make available up to 10 percent of its total inventory of
properties as of October 1, 1993. Thereafter, on October 1 of each
year, the 10 percent figure will be adjusted upward or downward to
reflect increases or decreases in the total inventory. Property will be
available for lease under the terms and conditions described in
Sec. 291.415, in accordance with the following criteria:
(i) The property has been listed for sale for at least 30 days,
except as provided in paragraph (c)(2) of this section;
(ii) The property is vacant; and
(iii) A sales contract has not been accepted for the property, or
the property has not been committed to another program.
(2) Where a Field Office has 200, or fewer, total properties in
inventory on October 1 of each year, and where applicants have
requested to lease properties in certain designated areas, such
properties will be offered first to applicants for lease before being
listed for sale to the general public until 10 percent of the total
inventory of the Field Office has been leased. HUD will also take into
consideration the number of properties that the Department anticipates
acquiring over the next 12-month period and the speed with which
acquired properties are selling in the area. HUD will consult, on an
annual basis, with units of general local government in the area on
parts of the area where there is a need for housing for homeless
persons.
(d) Property available under a McKinney Act Supportive Housing
program lease-option agreement. Eligible properties will be available
under a lease-option to purchase agreement, under the terms and
conditions described in Sec. 291.420, to Supportive Housing program
applicants for acquisition grants under 24 CFR part 583.
(e) Properties available for sale. Eligible properties will be
available for competitive sale or direct sale for fair market value,
less a discount determined appropriate by the Secretary but not less
than 10 percent, under the terms and conditions described in
Sec. 291.425.
* * * * *
Sec. 291.405 [Amended]
3. In Sec. 291.405, the definition of ``Applicant'' is amended by
removing the word ``Demonstration'', and by removing the words ``24 CFR
577.5 or 578.5'' and replacing them with ``24 CFR part 583'' in the
last sentence; the definition of ``Eligible properties'' is amended by
adding the word ``vacant'' before ``single family properties''; and the
definition of ``Supportive Housing Demonstration'' is removed.
4. Section 291.410 is amended by revising paragraph (c)
introductory text, adding paragraph (c)(6), and revising paragraph (d),
to read as follows:
Sec. 291.410 Applicant preapproval; notification of eligible
properties.
* * * * *
(c) Applicant data and certification. To obtain preapproval,
applicants must provide the appropriate HUD Field Office with the
following data and certification:
(1) * * *
(2) * * *
(3) * * *
(4) * * *
(5) * * *
(6) A certification of the applicant's intent to comply with the
requirements of the nondiscrimination and equal opportunity
requirements set forth in Sec. 291.435.
(d) Notification of eligible properties available for lease. (1)
Applicants, preapproved by HUD as described in paragraph (a) of this
section, must designate geographic areas of interest by ZIP Code to the
appropriate HUD Field Office(s), and must indicate their intention to
lease properties in those areas.
(2)(i) Upon request, and after properties have been listed for sale
to the general public for at least 30 days, except as provided in
paragraph (d)(2)(ii) of this section, Field Offices will notify
applicants, in writing, of available eligible properties in the ZIP
Code areas previously designated by the applicant. Specific properties
selected by the applicant will be held off the market for a 10-day
consideration and inspection period beginning to run upon notification
by the applicant to the Field Office. (Where notification is by mail,
the 10-day period will begin to run five days after mailing.) Only
those properties in which the applicant has expressed an interest will
be held off the market. If a signed lease is not received from the
applicant by the end of the 10-day consideration and inspection period,
the Field Office will resume offering the properties for sale.
(Facsimile (FAX) transmissions are acceptable.)
(ii) Where properties are made available to applicants before being
listed for sale to the public, as described in Sec. 291.400(c)(2), upon
request, Field Offices will notify applicants, in writing, when
eligible properties become available in the ZIP Code areas previously
designated by the applicant. Those properties will remain available for
a 10-day consideration and inspection period before being listed for
sale to the public. The 10-day period will begin to run upon
notification of the applicant by the Field Office. (Where notification
is by mail, the consideration period will begin to run five days after
mailing.) Applicants must submit a signed lease to the Field Office by
the end of the 10-day period. (Facsimile (FAX) transmissions are
acceptable.) If a signed lease is not received by the end of the 10-day
period, the Field Office will offer the properties for sale to the
general public. After the initial 10-day consideration and inspection
period, a property will not be available to applicants for lease again
until it has been offered to the public for 30 days. If an applicant
expresses an interest in leasing a property during or after the 30-day
public sale period, the Field Office will offer the property to the
applicant for 10 days after the public sale period, provided the
property is unsold, no offer from the public has been accepted, and the
property is not in a public bid-offering period or committed to another
purpose or program.
(iii) In notifying applicants of available properties, Field
Offices will coordinate the dissemination of the information to ensure
that where more than one applicant designates a specific area, those
applicants receive the list of properties at the same time, based on
intervals agreed upon between HUD and the applicants. Properties will
be leased or sold to applicants on a first come-first served basis.
(iv) HUD may limit the number of properties held off the market for
an applicant at any one time, based upon the applicant's financial
capacity and past performance as determined by HUD from information
provided in the preapproval process and observations made during
monitoring of a program in progress.
5. Section 291.415 is amended by redesignating paragraph (d)(1) as
paragraph (d)(1)(i), by adding paragraph (d)(1)(ii), and by revising
the first sentence of paragraph (f)(1), to read as follows:
Sec. 291.415 Lease with option to purchase properties for use by the
homeless.
* * * * *
(d) Property operating costs and insurance.
(1)(i) * * *
(ii) Upon request by an applicant or lessee, HUD will identify and
describe any exemptions or reductions relating to payment of property
taxes under State or local laws, for the jurisdiction requested by the
applicant or lessee, that may be applicable to lessees or to properties
leased under this subpart. If a lessee of a property under this subpart
is provided an exemption from any requirement to pay State or local
property taxes, or a reduction in the amount of any such taxes, the
lessee will be required to establish an escrow account to cover only
the amount of taxes owed.
* * * * *
(f) Purchase of leased properties. (1) Lessees that desire to
purchase leased properties during the lease term will be offered the
properties at the lower of the fair market value established at the
time of the initiation of the lease or at the time of the sale, less a
discount determined appropriate by the Secretary but not less than 10
percent, provided lessees agree to use the properties either to house
low-income tenants for a period of not less than 10 years or to resell
the properties to low-income buyers. * * *
* * * * *
6. Section 291.420 is amended by revising the section heading and
paragraphs (a) (1) and (3), and by removing the word ``Demonstration''
from the first sentence of paragraph (b), to read as follows:
Sec. 291.420 Supportive Housing program lease-option to purchase
properties.
(a) Lease-option for Supportive Housing program applicants. (1)
Eligible properties will be available under a lease-option agreement to
applicants for acquisition grants under the Supportive Housing program,
as described in 24 CFR part 583. An applicant may enter into a lease-
option agreement with HUD for up to six months while its application
for Supportive Housing assistance is being reviewed by HUD.
* * * * *
(3) The applicant may purchase the property for fair market value,
less a discount determined appropriate by the Secretary but not less
than 10 percent, at any time during the lease period in accordance with
the terms of Sec. 291.415(f).
* * * * *
7. Section 291.425 is amended by revising paragraphs (b) and (c) to
read as follows:
Sec. 291.425 Sale of properties for use by the homeless.
* * * * *
(b) Direct sales. In accordance with Sec. 291.110(a), the purchase
price for the property will be at the fair market value established for
the property in the approved disposition program, less a discount
determined appropriate by the Secretary but not less than 10 percent.
(c) Competitive sales. As an alternative to direct sales, an
applicant, whether or not preapproved, may submit a competitive bid on
any property listed for sale to the general public, as described in
Sec. 291.105. If the HUD Field Office accepts the bid, the net amount
due HUD will be reduced by a discount determined appropriate by the
Secretary but not less than 10 percent.
* * * * *
8. Section 291.435(a)(1) is amended by replacing the period at the
end of the paragraph with a semi-colon, and by adding the following
language after the final semi-colon:
Sec. 291.435 Applicability of other Federal requirements.
* * * * *
(a) Nondiscrimination and equal opportunity. * * * and, where
applicable, the Americans with Disabilities Act (42 U.S.C. 12131) and
implementing regulations at 28 CFR parts 35 and 36.
* * * * *
Dated: April 5, 1994.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 94-13729 Filed 6-6-94; 8:45 am]
BILLING CODE 4210-27-P
