[Federal Register Volume 63, Number 158 (Monday, August 17, 1998)]
[Notices]
[Pages 44102-44111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22029]
[[Page 44101]]
_______________________________________________________________________
Part IV
Department of Housing and Urban Development
_______________________________________________________________________
Fiscal Year 1999 Multifamily Housing Mortgage and Housing Assistance
Restructuring Program Request for Qualifications; Notice
Federal Register / Vol. 63, No. 158 / Monday, August 17, 1998 /
Notices
[[Page 44102]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4370-N-01]
Fiscal Year 1999 Multifamily Housing Mortgage and Housing
Assistance Restructuring Program Request for Qualifications
AGENCY: Office of Secretary, HUD.
ACTION: Notice of request for qualifications.
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SUMMARY: The Department is implementing the Mark-to-Market Program
authorized by the Multifamily Assisted Housing Reform Act (MAHRA). The
program is intended primarily to: (1) preserve low-income rental
housing affordability and availability while reducing the long-term
costs of project-based assistance; (2) reform the design and operation
of Federal rental housing assistance programs administered by the
Secretary, to promote greater multifamily housing project operating and
cost efficiencies; (3) encourage owners of eligible multifamily housing
projects to restructure their FHA-insured mortgages and project-based
assistance contracts in a manner that is consistent with the statute.
The statute directs the Secretary to enter into ``portfolio
restructuring agreements'' with ``participating administrative
entities'' (PAEs) for the implementation of mortgage restructuring and
rental assistance sufficiency plans to restructure multifamily housing
mortgages insured or held by the Secretary under the National Housing
Act.
A PAE is a public agency, a nonprofit organization, or any other
entity (including a law firm or an accounting firm), that meets the
requirements of MAHRA. For purposes of this RFQ, a public agency means
a State, county, municipality or other governmental or public body (or
agency or instrumentality thereof) authorized to engage in or assist in
the development or operation of low-income housing; namely, a public
agency is either a State housing finance agency or a local housing
agency. The Department is publishing this Notice as a formal Request
for Qualifications (RFQ) from entities that seek to become PAEs.
The statute establishes a priority and directs the Secretary to
provide a reasonable period during which the Secretary will consider
proposals only from State housing finance agencies (HFAs) and local
housing agencies. It further directs the Secretary to select such an
agency without considering other applicants if the Secretary determines
the agency is qualified. By the end of the period the Secretary shall
notify the State HFA or local housing agency regarding the status of
the proposal. If the proposal is rejected, the Secretary will provide
reasons for the rejection and the public agency will have an
opportunity to respond. To comply with these provisions of the statute,
the selection of qualified PAEs under this RFQ will be completed in two
phases.
DATES: See Supplementary Information for dates concerning pre-
submission conference, proposal deadlines, and selection schedule.
FOR FURTHER INFORMATION CONTACT: George C. Dipman or William S.
Richbourg, Program Coordinators, Office of Multifamily Housing,
Department of Housing and Urban Development, 451 Seventh Street, SW,
Washington, DC 20410-4000; Room 6272; Telephone (202) 708-2495 Fax
(202) 708-5494. (This is not a toll-free number.) Hearing or speech-
impaired individuals may call 1-800-877-8399 (Federal Information Relay
Service TTY). Internet address: George__C.__Dipman@hud.gov or
William__S.__Richbourg@hud.gov.
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act Statement
The information collection requirements contained in this Request
for Qualifications (RFQ) have been submitted to the Office of
Management and Budget (OMB) for emergency review and approval in
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3520). In accordance with the Paperwork Reduction Act, HUD may not
conduct or sponsor and a person is not required to respond to, a
collection of information unless the collection displays a valid
control number. The OMB control number, when assigned, will be
published in the Federal Register, together with any changes in the
information collection requirements that may result from the approval
process.
Participating Administrative Entities--Request for Qualifications
I. Background: Multifamily Housing Mortgage and Housing Assistance
Restructuring Program
The Multifamily Assisted Housing Reform and Affordability Act of
1997 (MAHRA) was enacted in title V of the Departments of Veterans
Affairs and Housing and Urban Development, and Independent Agencies
Appropriations Act, 1998 (FY 1998 Appropriations Act) (Pub. L. No. 105-
65; 111 Stat. 1344, 1384; approved October 27, 1997). Subtitle A of
MAHRA contains the FHA-Insured Multifamily Housing Mortgage and Housing
Assistance Restructuring Program. That program provides authority to
deal with Section 8 contract expirations occurring in FY 1999 and
later. In accordance with section 522(a) of MAHRA, the new program will
be initially implemented by an interim rule to be followed by a final
rule.
HUD seeks to select Participating Administrative Entities with
which it will enter into portfolio restructuring agreements for a term
of one year with optional annual renewals. Compensation is expected to
include a base fee, a performance-based incentive fee and a provision
for reimbursable expenses. Responsibilities will include developing and
implementing mortgage restructuring and rental assistance sufficiency
plans (Restructuring Plan) to restructure multifamily housing mortgages
insured or held by the Secretary under the National Housing Act in
order to:
(a) Reduce the costs of expiring contracts for assistance under
section 8 of the US Housing Act of 1937;
(b) Address financially and physically troubled projects; and
(c) Correct management and ownership deficiencies.
This Request for Qualifications is being issued in order to select
entities that possess sufficient experience, capacity and financial
strength, either on their own or in conjunction with other experienced
entities to become PAEs and to efficiently and effectively execute the
restructuring program.
Attachment A to this RFQ provides a list of insured, subsidized
projects with Section 8 rents greater than 90% of the 1997 Fair Market
Rent. The report shows the number of contracts initially expiring by
year, by State, for a four year period beginning in Fiscal Year 1999.
This list is for illustrative purposes only. It is not a definitive
list of eligible projects. Projects that have already reached their
initial contract expirations and are on one year renewals are not
included. There may also be some projects with formerly insured, HUD
held mortgages that may be eligible. Finally, eligibility will be based
on a comparison with rents for comparable projects in the same market
area.
Selection criteria for PAEs include, among others, experience
working with tenants and tenant organizations, underwriting FHA-insured
and conventional mortgages, and negotiating with mortgagees to
restructure mortgage debt. If an applicant public agency does not
possess this experience in-house it is encouraged to contract for
qualified resources that will enhance its response to the RFQ.
[[Page 44103]]
The selection of PAEs will be conducted in two phases:
Phase I: Public Agency Selection: In Phase I, HUD will consider
only State HFAs and local housing agencies (collectively referred to as
``public agencies'') and will determine which are qualified to be PAEs.
Phase II: Public Agency Appeal and Non-Public Entity Selection:
After HUD has determined which public agencies are qualified in Phase
I, HUD will consider the proposals from nonprofit organizations and for
profit entities (collectively referred to as ``non-public entities'')
and will determine which are qualified to be PAEs. At this time,
appeals from public agencies that were rejected in Phase I will also be
considered. At a later date, these qualified non-public entities will
be provided with specific portfolios of assets and a ``bidding
package'' and will be required to prepare a competitive bid for the
right to restructure the assets in one or more of the portfolios.
II. Purpose and Objectives
The objective of this Request for Qualifications is to select those
PAEs with which the Secretary will enter into portfolio restructuring
agreements (PRAs) to implement Restructuring Plans and carry out the
other purposes of the Mark-to-Market Program.
A portfolio restructuring agreement:
Is an agreement between the Secretary and the PAE that
establishes the obligations and requirements of each party;
Identifies the eligible multifamily housing projects or
groups of projects for which the PAE is responsible for developing and
implementing a HUD-approved Restructuring Plan;
Requires the PAE to review and certify to the accuracy and
completeness of the evaluation of rehabilitation needs;
Identifies the responsibilities of both the PAE and the
Secretary in implementing Restructuring Plans;
Requires each Restructuring Plan to be prepared in
accordance with the requirements of the statute;
Includes other requirements established by the Secretary
including a right of the Secretary to terminate the contract;
Provides for indemnifying the PAE if it is a State HFA or
local housing agency;
Includes compensation for reasonable expenses;
Includes, where appropriate, incentive agreements with the
PAE to reward superior performance in meeting the purposes of MAHRA.
In general, the functions that will be performed by the PAE in
carrying out its responsibilities under the portfolio restructuring
agreement include, but are not limited to, the following:
1. Owner eligibility: Reviewing owner data submitted in connection
with expiring contracts in order to determine eligibility for
restructuring under the Statute.
2. Determining initial restructured rent and operating expense
levels: Based on an analysis of market rent comparables and operating
expenses from an appraisal from data provided by the owner and
servicer, other parties as appropriate, and the PAE's independent due
diligence, the PAE will determine comparable market rents or exception
rents as well as reasonable operating expenses for projects undergoing
a Restructuring Plan.
3. Preservation of affordable housing: Either confirming that the
project meets the criteria for mandatory project-basing or developing,
for qualified projects, a rental assistance assessment plan to
determine whether the renewal of Section 8 assistance should be
project-based or tenant-based, pursuant to guidance provided by HUD.
Meeting with tenants and local community groups to obtain their views
and gain other perspectives that may impact the restructuring process.
4. Rehabilitation needs. Determining the immediate and long term
rehabilitation needs of the project based on a review and certification
of the owner's evaluation of rehabilitation needs and a physical
condition analysis obtained by the PAE, including sizing contributions
to the Reserve for Replacement.
5. Underwriting: Determining the Net Operating Income of the
project from estimated revenues based on the restructured rent
determination, and from estimated operating expenses; determining the
size and structure of sustainable new or modified first mortgages based
on these estimates, and the size and conditions of the HUD second
mortgage; ensuring adequate sources of funds are available from project
accounts, the owner's contribution to rehabilitation, the HUD second
mortgage, grants, loans, or capital advances to meet approved uses and
perform an analysis of tax implications for use in analyzing
restructuring options. The analysis of tax implications will not be for
the benefit of the owner or constitute legal advice to the owner. The
owner will be solely responsible for its own analysis of tax
implications.
6. Negotiations: Negotiating with owner to reach agreement on
restructured rental subsidies, restructured debt, and rehabilitation.
7. Loan/funding approval: Obtaining HUD approval of the HUD funding
amount (including the amount of the partial or full payment of claim
and any HUD funding for rehabilitation) and of the HUD held second
mortgage loan. Assist the owner either to obtain approval of the
mortgagee to modify the existing mortgage or to obtain new financing.
8. Closing: Coordinating the time and place of closing, the
drafting, circulation, execution, and recording of documents,
establishment of required escrows, and any transfers of funds.
9. Post-closing document distribution: Ensuring that copies of
properly executed closing documents are circulated to appropriate
parties including HUD field offices and/or HUBs, as well as copies for
the Washington Docket.
10. Facilitating the voluntary sale or transfer of projects:
Facilitate the sale or transfer to a qualified purchaser, either of
properties disqualified from restructuring (before or during the
restructuring) because of the actions of an owner, or at the request of
an owner where the PAE determines that sale or transfer may be the best
means of achieving the purposes of MAHRA.
Servicing second mortgages and rehabilitation escrow accounts:
Servicing is a responsibility that will not be initially covered in the
PRA, as HUD is still considering this matter. This RFQ is not intended
to obtain information to determine an applicant's qualifications to
perform ongoing servicing including administering the Section 8
contracts, monitoring compliance with the terms of the Use Agreements,
servicing rehabilitation escrows, and servicing the second mortgage.
HUD will follow an appropriate public procedure in the future to obtain
necessary information to determine how these responsibilities will be
handled. (Please indicate your interest in performing these services in
Section 2 of Attachment B to this document.)
The following types of entities are invited to apply under this
RFQ: State housing finance agencies, local housing agencies, nonprofit
organizations and for-profit entities including law firms and
accounting firms.
HUD is seeking responses from all entities that are interested and
that are potential candidates under the provisions of the statute.
HUD will not process a response from an entity that (1) has been
charged with a violation of the Fair Housing Act by the Secretary; (2)
is the defendant in a Fair Housing Act lawsuit filed by the Department
of justice; or (3) has
[[Page 44104]]
received a letter of noncompliance findings under title VI of the Civil
Rights Act, section 504 of the Rehabilitation Act, or section 109 of
the Housing and Urban Community Development Act unless the charge,
lawsuit, or letter of findings have been resolved to the satisfaction
of the Secretary.
III. Process for Selecting Qualified PAES
A. Selection Schedule
Subject to publication of the interim rule for effect, HUD intends
to conclude its selection process according to the following schedule:
By September 16, 1998, proposals are due from State HFAs
and local housing agencies and non-public entities. Proposals from the
latter will be held by the Office of General Counsel (OGC) until the
conclusion of Phase I.
Phase I--Public Agency Selection
After reviewing the public agency proposals, the Secretary
shall announce the preliminary selections of the State HFAs and local
housing agencies that are qualified as PAEs with a determination of
both technical qualifications and estimated workload capacity. If a
public agency proposal is rejected at this time, the Secretary shall
provide the reasons and an opportunity for the applicant to respond.
HUD intends to make these announcements on or about October 1, 1998.
Phase II--Public Agency Appeal and Non-Public Entity Selection
After the announcement of preliminary selections of the
State HFAs and local housing agencies is made, proposals from non-
public entities, that meet the requirements of MAHRA shall be released
by OGC for review and evaluation.
Within three weeks after the rejection is sent, a public
agency applicant that was rejected in Phase I and chooses to appeal
must submit its revised application.
On or after October 29, 1998, the Secretary intends to
issue final determinations concerning selection and estimated workload
capacity of State HFAs and local housing agencies as well as all other
entities qualified to be PAEs. HUD intends to allocate assets to a
qualified public agency PAE, up to its numerical capacity, before
allocating assets in the same jurisdiction to a qualified non-public
entity PAE. The Secretary shall also notify all entities that were
rejected and provide the reasons for the rejection. There is no appeal
process for these rejections.
B. Evaluation Procedures
For all applicants HUD will review each application against the
selection criteria in section III.D. of this RFQ. HUD will review each
applicant's qualifications and will assign points for each selection
criterion up to the maximum indicated in section III.D. for the
respective selection criterion. If HUD determines an applicant fails to
meet a selection criterion it will assign zero points for that
criterion which will result in the rejection of the application. HUD
will rank all applicants that have received points on each selection
criterion. Qualified applicants must have at least 70 points. HUD will
select applicants that HUD determines clearly meet each of the five
selection criteria based on the scoring. From the information
submitted, in accordance with selection criterion E, HUD will determine
the number of assets the applicant will be assigned at any given time.
HUD will negotiate and execute Portfolio Restructuring Agreements (PRA)
with only those applicants determined to be qualified.
HUD may select fewer than all non-public entity applicants that
receive the minimum qualifying score. Selection may be based upon the
projected size of the portfolio in States where there is no public
agency PAE.
At a later date, the selected non-public entity applicants will be
provided with specific portfolios of assets and a bidding package and
will be required to prepare a competitive bid for the right to
restructure the assets in one or more portfolios. These portfolios will
include projects that are located in jurisdictions where there are no
qualified public agency PAEs or projects that are not included in a PRA
of any public agency PAE.
HUD will form a limited partnership with each non-public entity
that is a successful bidder.
C. Conflicts of Interest
1. PAE Applicants
All PAE applicants shall identify the procedures they use, or will
use, to identify conflicts of interest.
Definitions. Conflict of interest. A conflict of interest
is a situation in which a PAE or other restricted person has: a
financial interest in a matter relating to the PRA; one or more
personal, business, or financial interests or relationships which would
cause a reasonable person with knowledge of the relevant facts to
question the integrity or impartiality of those who are or will be
acting under the PRA; or is taking an adverse position to HUD or to an
owner whose project is covered by a PRA in a lawsuit, administrative
proceeding or other contested matter.
Control means the power to vote, directly or indirectly, 25 percent
or more of any class of the voting stock of a company; the ability to
direct in any manner the election of a majority of a company (or other
entity's) directors or trustees; or the ability to exercise a
controlling influence over the company or entity's management and
policies. For purposes of this definition, a general partner of a
limited partnership is presumed to be in control of that partnership.
Restricted person means a PAE; any management official of the PAE;
any legal entities that are under the control of the PAE, are in
control of the PAE or are under common control with the PAE; or any
employee, agent or contractor of the PAE, or employee of such agent or
contractor, who will perform or have performed services under a PRA
with HUD.
General prohibitions. The PAE may not permit conflicts of
interest to exist without obtaining a waiver from HUD.
The PAE must establish procedures to identify conflicts of interest
and ensure that conflicts of interest do not arise or continue, subject
to waiver.
HUD will not enter into PRAs with potential PAEs who have conflicts
of interest associated with a particular PRA or identified asset, or
permit PAEs to continue performance under existing PRAs when such PAEs
have conflicts of interest, unless such conflicts have been eliminated
to HUD's satisfaction by the PAE or potential PAE or are waived by HUD.
The PAE has a continuing obligation to take all action necessary to
establish whether it or any other restricted person has a conflict of
interest.
Waivers. HUD will waive conflicts of interest only when,
in light of all relevant circumstances, the interests of HUD in the
PAE's participation outweigh the concern that a reasonable person may
question the integrity of HUD's operations.
Conflicts of interest arising prior to PAE selection.
Request for review of conflicts of interest. A potential PAE may, with
its request to HUD for consideration for selection as a PAE, must
identify existing conflicts of interest and may make a written request
for a determination as to the existence of a conflict of interest, may
request that the conflict of interest, if any, be waived, or may
propose how it could eliminate the conflict.
If, after submitting request but prior to selection, a potential
PAE discovers that it has a conflict, it must notify HUD in writing
within 10 days of submitting the
[[Page 44105]]
request or prior to selection, whichever is earlier. The potential PAE
may, with its notices, request that the conflict be waived or may
propose how it may eliminate the conflict. The potential PAE may also
request a determination as to the existence of the conflict.
Review by HUD. Subject to the restrictions set forth in this
section, HUD in its sole discretion may determine whether a conflict of
interest exists, may waive the conflict of interest, or may approve in
writing a PAE's proposal to eliminate a conflict of interest.
Reconsideration of decisions. Decisions concerning
conflicts of interest may be reconsidered by HUD upon application by
the PAE. Such requests must be in writing and must contain the bases
for the request. HUD may, at its discretion and after determining that
it is in its best interests, stay any corrective or other actions
previously ordered by pending reconsideration of a decision.
PAEs will be subject to such additional conflicts of
interest requirements and requirements concerning standards of conduct
and confidentiality as HUD may prescribe by regulation.
2. Reviewers and Technical Advisors
Consultants or experts assisting HUD in rating and ranking
applicants under this RFQ are subject to 18 U.S.C. 208, the Federal
criminal conflict of interest statute, and to the Standards of Ethical
Conduct for Employees of the Executive Branch regulation published at 5
CFR part 2635. As a result, individuals who have assisted or plan to
assist applicants with preparing applications for this RFQ may not
serve on a selection panel or as a technical advisor to HUD for this
RFQ. All individuals involved in rating and ranking this RFQ, including
experts and consultants, must avoid conflicts of interest or the
appearance of conflicts. If the selection or non-selection of any
applicant under this RFQ affects the individual's financial interests
set forth in 18 U.S.C. 208 or involves any party with whom the
individual has a covered relationship under 5 CFR 2635.502, that
individual must, prior to participating in any matter regarding this
RFQ, disclose this fact to the General Counsel or OGC's Ethics Law
Division.
D. Selection Criteria
In both Phase I and Phase II, all applications will be considered
based on the following selection criteria established under section
513(b) of MAHRA. Please note that the applicant must demonstrate prior
experience and/or a relevant plan that satisfies all five selection
criteria. Failure to satisfy one or more of the selection criteria will
result in the rejection of the application.
1. Selection Criterion A: Demonstrated experience in, and an
adequate plan for, working directly with residents of low-income
housing projects and with tenants and other community-based
organizations. (15 Points)
In rating this criterion HUD will consider demonstrated experience
with residents, tenant organizations, and community-based groups that
have worked with the applicant as well as the plan to work with these
groups in the restructuring process.
2. Selection Criterion B: Demonstrated experience with, and
capacity for successful multifamily restructuring and multifamily
financing (which may include risk-sharing arrangements and
restructuring eligible multifamily housing properties under the fiscal
years 1997 and 1998 Federal Housing Administration multifamily housing
demonstration programs) (25 points).
a. Multifamily Restructurings (15 of the 25 points): HUD will
consider the extent of the applicant's experience within the last five
years in restructuring mortgages secured by multifamily properties.
Restructuring includes loan modifications, workouts, or other forms of
restructuring for both portfolios and single assets. Indicate specific
experience in restructuring affordable multifamily projects involving
Section 8 subsidies and projects with low income housing tax credits or
other affordable housing financing mechanisms. Experience with the
analysis of the tax consequences of restructuring will also be
considered.
b. Multifamily Financing: (10 of the 25 points): HUD will consider
the applicant's demonstrated experience in underwriting multifamily
loans and providing financing for multifamily properties particularly
with regard to affordable multifamily housing utilizing Section 8
subsidies or other public subsidies, including low income housing tax
credits and tax exempt bonds.
3. Selection Criterion C: A history of stable, financially sound,
and responsible administrative performance (which may include the
management of affordable low-income rental housing) (15 points).
HUD will evaluate the administrative and management performance of
the applicants and its partners through the review of its
organizational history, mission, and administrative performance with
specific emphasis on its management of multifamily projects or loans.
4. Selection Criterion D: Demonstrated financial strength in terms
of asset quality, capital adequacy, and liquidity (15 points).
HUD will consider:
Applicant's audited financial statements for most recent two years;
Auditor's key findings;
Applicant's most recent annual report; and
Findings of Bond Rating Agencies.
5. Selection Criterion E: Demonstrated ability and capacity to
carry out the specific transactions and other responsibilities under
subtitle A of the statute in a timely, efficient, and cost effective
manner (30 points).
HUD will review and evaluate applicant and applicant's partners,
subcontractors, and other team members' organization and staffing,
including individual roles and responsibilities, and the experience of
key personnel. The applicant's capacity to manage the anticipated
workload will be determined based on information provided.
HUD will consider applicant's workplan and its administrative and
management systems, policies, and procedures to ensure timely and
effective implementation of the plan.
E. Submission Requirements
Three (3) copies of the response to the Request for Qualifications
should be submitted in the format set out in Attachment B to this RFQ.
F. Questions and Further Information
Respondents' questions to this RFQ must be submitted in writing,
either by fax or e-mail, and received by HUD by August 24, 1998. The
questions will be answered at the pre-submission conference. Questions
should be submitted to George C. Dipman or William S. Richbourg,
Program Coordinators, Office of Multifamily Housing, Department of
Housing and Urban Development, 451 Seventh Street, SW, Washington, DC
20410-4000; Room 6272; Telephone (202) 708-2495 Fax (202) 708-5494.
(This is not a toll-free number.) Hearing or speech-impaired
individuals may call 1-800-877-8399 (Federal Information Relay Service
TTY). Internet address: George__C.__Dipman@hud.gov or
William__S.__Richbourg@hud.gov.
G. Pre-submission Conference
HUD will hold a pre-submission conference in Washington, DC, on or
about September 27, 1998. The precise time and place will be posted on
the FHA/Housing Multifamily Business Homepage at http://www.hud.gov/
fha/mfh/pre/premenu.html. Further
[[Page 44106]]
questions raised as a result of the pre-submission conference should be
submitted either by fax (202) 708-5494 or e-mail to
George__C.__Dipman@hud.gov or William__S.__Richbourg@hud.gov within 24
hours after the pre-submission conference. Within 3 business days after
the pre-submission conference, HUD will post responses to questions
raised at the pre-submission conference on the FHA/Housing Multifamily
Business Homepage at http://www.hud.gov/fha/mfh/pre/premenu.html.
H. Proposal Deadline
The required copies of the response to the Request For
Qualifications must be delivered on or before 5:15 P.M. EDT on
September 16, 1998.
I. Submission Addresses
Proposals must be submitted to the appropriate address as follows:
State HFAs and Local Housing Agencies: M2M Program-Public Agencies,
Office of the Deputy Assistant Secretary for Multifamily Housing,
George Dipman, HFA Coordinator, Room 6272, Department of Housing and
Urban Development, 451 Seventh Street, SW, Washington, DC 20410
Non-Public Entities: Office of the General Counsel, John J. Daly,
Associate General Counsel for Insured Housing, Attn: M2M Program--Non-
Public Entities, Room 9226, Department of Housing and Urban
Development, 451 Seventh Street, SW, Washington, DC 20410.
IV. Response Contents
The response should address each of the items described in the
template provided in Attachment B to this RFQ and should follow
precisely the format of the template.
Dated: August 11, 1998.
Andrew Cuomo,
Secretary.
BILLING CODE 4210-32-P
[[Page 44107]]
[GRAPHIC] [TIFF OMITTED] TN17AU98.041
BILLING CODE 4210-32-C
[[Page 44108]]
ATTACHMENT B.--FISCAL YEAR 1999 MULTIFAMILY HOUSING MORTGAGE AND
HOUSING ASSISTANCE RESTRUCTURING PROGRAM REQUEST FOR
QUALIFICATIONS--RESPONSE FORMAT
Section 1, Selection Criteria Information
Selection Criterion A: TENANT AND COMMUNITY GROUPS (15 points)
Selection Criterion B1: MULTIFAMILY RESTRUCTURING, COMPREHENSIVE
EXPERIENCE (25 points criteria B1-B5)
Selection Criterion B2: MULTIFAMILY RESTRUCTURING, PROJECT-SPECIFIC
EXPERIENCE
Selection Criterion B3: MULTIFAMILY FINANCING
Selection Criterion B4: MULTIFAMILY FINANCING, PROJECT-SPECIFIC
EXPERIENCE
Selection Criterion B5: MULTIFAMILY RENT & EXPENSE ANALYSIS
Selection Criterion C: HISTORY OF ADMINISTRATIVE PERFORMANCE (15
points)
Selection Criterion D: FINANCIAL STRENGTH (15 points)
Selection Criterion E: DEMONSTRATED CAPACITY TO CARRY OUT TRANSACTIONS
AND ORGANIZATION STRUCTURE & RESPONSIBILITIES (30 points)
Section 2, Additional Response Information
Selection Criterion A: TENANT AND COMMUNITY GROUPS: Provide a summary
of your experience working with residents of low-income housing
projects and the tenant groups and other resident-based organizations.
Identify the concerns and the actions taken regarding the tenant
issues.
------------------------------------------------------------------------
PAE Experience (Note the
tenant issue(s) and how
Criteria resolved. Provide dates,
duration, and current
status.)
------------------------------------------------------------------------
Experience working directly with
individual residents of low-income
housing projects.
------------------------------------------------------------------------
Experience working with tenant
organizations and other community-based
organizations.
------------------------------------------------------------------------
Describe how you plan to work with
tenants, tenant organizations and
communities in the restructuring process.
------------------------------------------------------------------------
Selection Criterion B, Part 1: MULTIFAMILY RESTRUCTURING: Demonstrated
experience with, and capacity for successful multifamily restructuring
which may include loan workouts, loan modifications and bond
refundings. You may also include risk-sharing arrangements and
restructuring of eligible multifamily housing properties under years
1997 and 1998 FHA multifamily housing demonstration programs. HUD will
consider the applicant's experience within the last five (5) years for
restructuring mortgages secured by multifamily assets. In particular,
specific experience in affordable multifamily restructuring including
projects involving FHA insured mortgages and Section 8 subsidies.
Restructuring explanation should include determining the eligibility of
a mortgage requiring loan modifications, workouts or other forms of
debt and/or subsidy restructuring for multifamily assets.
----------------------------------------------------------------------------------------------------------------
Criteria PAE Teaming partner Total
----------------------------------------------------------------------------------------------------------------
Multifamily Debt
Restructurings in last 5
years:
Total number of units
Total number of projects
Total dollar amount
----------------------------------------------------------------------------------------------------------------
Multifamily Subsidy (for
example, Section 8)
Restructurings in last 5
years:
Total number of units
Total number of projects
Total dollar amount
----------------------------------------------------------------------------------------------------------------
Defaulted Loans Foreclosed:
Total number of units
Total number of projects
Total dollar amount
----------------------------------------------------------------------------------------------------------------
Bond Refundings:
Total number of units
Total number of projects
Total dollar amount
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Selection Criterion B, Part 2: MULTIFAMILY RESTRUCTURING: Provide
information for at least 5 projects that have been restructured by the
PAE or teaming partner in the last 5 years. Please note the request to
identify key personnel who did the restructuring; the firm if different
than the PAE and the time required to complete the restructuring.
[[Page 44109]]
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Description and
nature of
restructuring (e.g.,
workout, loan
Project name modifications, Status of Restructuring Key Personnel Time to complete Date completed
foreclosure, ongoing (complete, ongoing, etc.) (months)
litigation, and
associated tax
analysis)
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1.
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2.
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3.
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4.
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5.
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Selection Criterion B, Part 3: MULTIFAMILY FINANCING: Demonstrated
experience with financing multifamily properties to include
underwriting multifamily loans, providing financing for affordable
multifamily housing utilizing Section 8 subsidies or other public
subsidies, including low income tax credits and tax exempt bonds (may
include risk sharing).
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Criteria for multifamily
financing PAE Teaming partner Total
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Total Number of multifamily
loans financed 1992-1998:
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Total Dollar Amount
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Total Number of Units
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Total Number of
Affordable Housing Units
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Percentage (%) of Loans
Defaulted
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Selection Criterion B, Part 4: MULTIFAMILY FINANCING: Provide
information for at least 5 projects that have been financed by the PAE
or teaming partner. Please identify key personnel, their firm if
different than the PAE, and the time required to complete the
financing.
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Financing type; project
description; and role of Time required to
Project name PAE or teaming partner in Key personnel complete (months)
the financing
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1.
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2.
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3.
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4.
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5.
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Selection Criterion B, Part 5: MULTIFAMILY RENT AND EXPENSE ANALYSIS:
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-------------------------------------------------------------------------
(a) In determining Market rents and expenses, an owner might not agree
with your position based on the appraisal, market study and your
inspection. Provide an example of how you would determine and support
your rents and expenses in resolving rent and expense disputes with the
owner.
(b) Explain what database or other resources you have in completing a
rent and expense comparability analysis.
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Selection Criterion C (Part 1): HISTORY OF ADMINISTRATIVE PERFORMANCE:
A history of stable, financially sound, and responsible administrative
performance (which may include the management of low-income rental
housing).
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Criteria PAE Teaming partner
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General History and Mission
of Applicant
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Property Acquisition and
Operations (include
description of current
operations)
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Management of Multifamily
Portfolios (include
description of current
portfolio)
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[[Page 44110]]
Selection Criterion C (Part 2): List at least 5 properties that have
been acquired, developed or managed or loans that have been originated
or serviced by the proposed PAE and/or Teaming Partner. Please
illustrate how you have effectively administered or managed these
assets. Note if the properties are for low-income, elderly, or
handicapped.
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Description (noting if properties are for
Property low-income or handicapped)
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1.
------------------------------------------------------------------------
2.
------------------------------------------------------------------------
3.
------------------------------------------------------------------------
4.
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5.
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Selection Criterion D: FINANCIAL STRENGTH: Demonstrate financial
strength in terms of asset quality, capital adequacy & liquidity.
The following is a checklist of items to be provided by the PAE and
Teaming Partner, if applicable.
________1. Applicant's Audited Financial Statements for last two
(2) years
________2. Annual Report
________3. Most recent credit rating report published in either
Moody's Weekly Credit Perspective or Week in Review; and/or Standard
and Poor's Credit Perspective or Week in Review; and/or Standard and
Poor's Credit Week or other comparable rating agency report.
Selection Criterion E: DEMONSTRATED CAPACITY TO CARRY OUT TRANSACTIONS
AND ORGANIZATION STRUCTURE & RESPONSIBILITIES: Provide information to
demonstrate that the PAE and Teaming Partner will carry out the
specific transactions and other responsibilities under this subtitle in
a timely, efficient, and cost-effective manner. Provide information
regarding the organization including staff responsibilities and the
following:
The following is a checklist of items to be provided by the PAE and
Teaming Partner:
________1. Provide organization and staffing chart for proposed PAE
and other team members
________2. Provide resumes for each team member
________3. Describe method by which organization will provide
project management and oversight
________4. Provide matrix of relevant experience of key personnel
in the following format:
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Knowledge of
alternative
financing Multifamily
Community Data Deal Loan review Closing and Knowledge of Source (FNMA, construction
involvement collection and negotiations and approval post-closing HUD programs FHLMC, tax and
underwriting credits, tax rehabilitation
exempt bonds, expertise
etc.
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Individual 1
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Individual 2
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Individual 3
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Note: Check appropriate boxes to indicate relevant experience of each of the key personnel listed.
5. Restructuring Capacity: Based on a projected timeline of 180
days to complete the restructuring process, from assignment of the
asset to closing, indicate in the following table your quarterly
capacity to accept projects and the estimated number of restructurings
you can complete annually.
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Criteria 1st quarter FY 99 2nd quarter FY 99 3rd quarter FY 99 4th quarter FY 99 Total
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(a) Multifamily Restructuring
Capacity: Based upon the proposed
team, indicate the number of
properties you can accept during
the next twelve (12) months, by
quarter, for restructuring before
you have reached your multifamily
restructuring capacity
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(b) Closing Capacity: Based on the
projected 180 day timeline, the
proposed staffing capacity as
presented, estimate the number of
multifamily restructurings you
can close in the first twelve
(12) months, by quarter
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(c) Increasing Capacity: What is
your plan for increasing
capacity, beyond the proposed
team, if there is an increase in
the volume of assets eligible for
assignment?
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6. Preliminary Determination of Cost-Effectiveness: To both comply
with Section 513(b)(1)(e) of MAHRA, and to help in establishing
appropriate PAE compensation, HUD is requesting an estimate of your fee
to perform the restructuring
[[Page 44111]]
of properties. This will include only your fee to perform the
restructuring and should not include reimbursables. The request is for
information purposes only and does not bind the respondent or HUD to
any commitment with respect to the fee estimates provided. This
information will be confidential.
The steps involved in the restructure process for which you are
asked to estimate your costs, are summarized as follows:
Owner Eligibility, Determining Rent Levels:
perform due diligence and collect financial information
for each property including: market rents, appraisal, operating
expenses;
Preservation of Affordable Housing:
meet with the tenants and local community groups to gain
perspectives that may impact the restructuring process;
Rehabilitation Needs:
obtain a Physical Condition Analysis (PCA) report
(reimbursable);
Underwriting:
obtain an environmental review (to be provided by HUD)
perform analysis of potential restructuring options;
perform analysis of tax implications for use in developing
restructuring options;
perform financial modeling to underwrite the property at
market rents; while ensuring that any current and long term repairs,
replacement, maintenance, and rehabilitation are provided for in the
restructuring;
Negotiations with Owner:
conduct negotiations with the owner;
reach agreement on restructured rental subsidy,
restructured debt, and rehabilitation;
Loan/Funding Approval:
coordinate final deal terms and closing documentation with
HUD and obtain HUD's final approval;
Closing
coordinate closing and distribution of closing documents.
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Estimated restructuring fees
--------------------------------------------------------
Number of loans Unpaid principal
balance In basis points In dollars
------------------------------------------------------------------------------------**--------------------------
1...................................................... $1,600,000 ................. .................
5...................................................... $8,000,000 ................. .................
25..................................................... $40,000,000 ................. .................
50..................................................... $80,000,000 ................. .................
75..................................................... $120,000,000 ................. .................
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** Stated as a percentage of the Unpaid Principal Balance.
In completing these costs estimates, please use the following
assumptions:
1. Negotiations could result in several different restructuring
scenarios. Sample scenarios include: (a) projects which are viable once
restructured and result in partial payment of claim on the mortgage
insurance, (b) projects with negative NOI after marking the rents to
market levels--where tax implications for the ownership entity will be
a driving factor in negotiations, and (c) projects with negative NOI
after marking the rents to market levels--where project costs and other
factors (such as rehabilitation needs) will require rent levels which
are above market levels.
2. The majority of the loans are currently performing and thus this
process would not involve taking control of the property, hiring
property managers, or initiating and managing a foreclosure process.
3. Certain asset related subcontractor costs including the cost of
the appraisal and the PCA are reimbursable costs by HUD.
4. Responsibilities for this phase will end after closing documents
have been distributed.
5. Projects are distributed around the country, except for Public
Agency assets that will be restricted geographically.
6. Loans can vary in size from $200,000 to over $10,000,000 and
average approximately $1,600,000.
7. Once an asset is assigned to a PAE, it must go through the
restructuring process through closing.
8. Information that will be provided by HUD will include: the asset
management file, project file, loan documentation, payment history, and
project financial statements.
9. Level of reporting requirements to HUD will be moderate. HUD
will be providing reporting systems and financial models for the use of
the PAEs.
10. [The HFA participants in the fiscal years 1997 and 1998
demonstration programs received a minimum base fee of $25,000 for each
mortgage restructured.]
Section 2 Additional Response Information: Please provide the
following information.
The following is a checklist of items to be provided by the PAE and
Teaming Partner, if applicable.
________1. PAE conflicts of interest: Disclose any conflict of
interest as defined in Section C.(1) of this RFQ.
________2. Describe the geographic area in which you will assume
the restructuring responsibility.
________3. If you are a State Housing Finance Agency and plan to
work with local housing agencies, please indicate the name of the local
agency and how you would work with them if they are selected as a
qualified PAE.
________4. Provide evidence of your ability (either with your
existing organization or through team partner) to evaluate the tax
implications of the restructuring.
________5. Indicate if you would like to be considered for future
solicitations to provide the following services:
________(a) Servicing of second mortgages.
________(b) Servicing of Rehabilitation Escrow Accounts.
________(c) Monitoring Use Agreement.
[FR Doc. 98-22029 Filed 8-14-98; 8:45 am]
BILLING CODE 4210-32-P
