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Notice

Emergency Capital Repair Grants for Multifamily Housing Projects Designated for Occupancy by the Elderly

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AGENCY:

Office of the Assistant Secretary for Housing-Federal Housing Commissioner, HUD.

ACTION:

Notice.

SUMMARY:

This notice announces the availability of approximately $30 million in grant funds to make emergency capital repairs to eligible multifamily projects owned by private nonprofit entities that are designated for occupancy by elderly tenants. The capital repair needs must relate to items that present an immediate threat to the health, safety, and quality of life of the tenants. The intent of these grants is to provide one-time assistance for emergency items that could not be absorbed within the project's operating budget and other project resources, and where the tenants' continued occupancy in the immediate near future would be jeopardized by a delay in initiating the proposed cure.

The notice provides instructions for owners of multifamily projects to request funding and instructions for the HUD field offices to process requests.

DATES:

HUD will accept applications on a first-come, first-serve basis upon publication of this notice and will award emergency capital repair grants until available amounts are expended. Applicants should submit emergency capital repair applications as soon as they have prepared an application that complies with the procedures and requirements contained in this notice.

ADDRESSES:

Applications must be submitted to the local HUD Field Office for the project covered by the application. Please see Appendix II for a list of the local HUD Field Offices.

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FOR FURTHER INFORMATION CONTACT:

G. DeWayne Kimbrough, Director, Grant and Housing Assistance Field Support Division, Office of Multifamily Housing, Room 6146, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410; telephone (202) 708-3000 (this is not a toll-free number). Persons with hearing or speech impairments may access this number via TTY by calling the toll-free Federal Information Relay Service at (800) 877-8339.

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SUPPLEMENTARY INFORMATION:

I. Background

Section 202b of Title II of the Housing Act of 1959 (12 U.S.C. 1701q-2) was amended to provide grants for “substantial capital repairs to eligible multifamily projects with elderly tenants that are needed to rehabilitate, modernize, or retrofit aging structures, common areas or individual dwelling units.” The Consolidated Appropriations Act, 2005 (Pub. L. 108-447, approved December 8, 2004), provided $25 million ($15 million of which was announced in the FY 2005 Assisted Living Conversion Program's Notice of Funding Availability (NOFA) as being set aside for the Emergency Capital Repair Program). In addition, the Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and Independent Agencies Appropriations Act, 2006 (Pub. L. 109-115, approved November 30, 2005) provides $24.8 million for grants under section 202b of the Housing Act of 1959 (12 U.S.C. 1701q-2) for conversion of eligible projects to assisted living “and for emergency capital repairs as determined by the Secretary” of HUD.

This notice announces the availability of approximately $30 million in funding, including $15 million in FY 2006 appropriation funding and $15 million in carry-over grant funds to make emergency capital repairs to eligible multifamily projects that are owned by private nonprofit entities. The capital repair needs must relate to items that present an immediate threat to the health, safety, and quality of life of the tenants. The intent of these grants is to provide one-time assistance for emergency items that could not be absorbed within the project's operating budget and other project resources, and where the tenants' continued occupancy in the immediate near future would be jeopardized by a delay in initiating the proposed cure.

II. Definition of “Emergency Capital Repairs”

For purposes of this notice, “emergency capital repairs” is defined as repairs at a project to correct a situation that presents an immediate threat to the life, health and safety of project tenants. Assistance is limited to those projects with emergency problems that are of such a magnitude that:

A. The problem poses an immediate threat to the quality of life of the tenants; and

B. The continuation of the existing problem could potentially result in an evacuation of the tenants or long-term tenant displacement unless the repairs are made.

III. Eligibility Requirements

Eligibility for emergency capital repair grants under this notice is restricted to: private nonprofit owners of eligible multifamily-assisted housing developments designated for occupancy by elderly tenants, as specified in sections 683(2)(B), (C), (D), (E), (F), or (G) of the Housing and Community Development Act of 1992 (Pub. L. 102-550, approved October 28, 1992). Those projects, as identified below, must have had final closing on or before January 1, 1999. The eligible projects are:

A. Section 202 direct loan projects with or without Section 8 rental assistance;

B. Section 202 capital advance projects receiving rental assistance under their Project Rental Assistance Contract (PRAC);

C. Section 515 rural housing projects receiving Section 8 rental assistance;

D. Projects subsidized with Section 221(d)(3) below-market interest mortgage;

E. Projects assisted under Section 236 of the National Housing Act; and

F. Other projects receiving Section 8 project-based rental assistance.

To be eligible for an emergency capital repair grant under this notice, a project owner must be in compliance with:

1. Its Loan Agreement, Capital Advance Agreement, Regulatory Agreement Housing Assistance Payment contract, Project Rental Assistance contract, Rent Supplement or Loan Management Set Aside (LMSA) contract, or any other HUD grant or contract document, and

2. All applicants must comply with all applicable fair housing and civil rights requirements in 24 CFR 5.105(a), as applicable.

If you, the applicant:

(a) Have been charged with an ongoing systemic violation of the Fair Housing Act; or

(b) Are a defendant in a Fair Housing Act lawsuit filed by the Department of Justice alleging an ongoing pattern or practice of discrimination; or

(c) Have received a letter of findings identifying ongoing systemic noncompliance under Title VI of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act of 1973, or section 109 of the Housing and Community Development Act of 1974, and the charge, lawsuit, or letter of findings referenced in subparagraph (a), (b), or (c) above has not been resolved to HUD's satisfaction before the application deadline, then you are Start Printed Page 29539ineligible and HUD will not rate and rank your application. HUD will determine if actions to resolve the charge, lawsuit, or letter of finding taken prior to the application deadline are sufficient to resolve the matter.

Examples of actions that would normally be considered sufficient to resolve the matter include, but are not limited to:

(i) A voluntary compliance agreement signed by all parties in response to a letter of finding;

(ii) A HUD-approved conciliation agreement signed by all parties;

(iii) A consent order or consent decree; or

(iv) An issuance of a judicial ruling or a HUD Administrative Law Judge's decision.

IV. Grant Requirements

A. Conditions for Assistance

The following conditions apply to emergency capital grants awarded under this notice:

1. The request for funding must clearly identify the existing emergency and must contain a detailed justification in support of the emergency designation.

2. Funds awarded may be expended only for approved uses.

3. Repairs must be initiated immediately upon receiving the grant award and must be substantially completed within 6 months of the initial start, with final repairs completed no later than 12 months after receipt of funding. Unless there are safety concerns, tenants must be able to remain in their units while the repairs are being made.

4. The project owner must demonstrate that: (i) The project accounts have been maintained in accordance with all HUD requirements; and (ii) there are insufficient funds in the operating budget and other project resources. Owners must use all residual receipts available and all reserve for replacement funds in excess of $1,000 per unit to address the emergency.

5. The project owner's most recent management review rating is “satisfactory” or above.

6. The most recent Real Estate Assessment Center (REAC) physical inspection report for the project must have a score of 60 or above. Developments scoring less than 60 are ineligible.

7. The project is well maintained except for the current emergency capital repair needs.

8. The project does not have a recent history of mortgage defaults.

9. The project owner does not have any material-adverse financial or managerial actions or omissions with regard to any project that is federally assisted or financed with a loan or capital advance from, or mortgage insured by, an agency of the Federal government.

10. Tenants must be notified of the request for the grant and must be informed of the overall plan to complete the capital repairs.

11. The owner's Affirmative Fair Housing Marketing Plan (AFHMP) must meet all applicable HUD requirements. A copy of the approved AFHMP should be attached with the request for funding. If the owner does not have an approved AFHMP, one must be submitted for HUD approval along with the request for funds. A request for funds without either an existing approved AFHMP or a proposed AFHMP will be considered incomplete and will be processed using the procedures set out in Section V B.3 of this notice.

12. The project owner must not have an outstanding Letter of Noncompliance and must not be out of compliance with a voluntary compliance agreement, consent decree, court order, or other Settlement Agreement. If the project owner has an outstanding Letter of Noncompliance or is not in compliance with a voluntary compliance agreement, consent decree, court order, or other Settlement Agreement, the project owner must submit, along with the request for funds, a plan that identifies the compliance problem(s) and the method(s) to be used to correct it (them). A request for funds without a written correction plan under the conditions of this paragraph will be considered incomplete and will be processed using the procedures set out in Section V B.3 of this notice.

B. Funding

The following requirements apply to emergency capital grant amounts awarded under this notice:

1. The maximum amount an individual project owner may apply for is $500,000. (The grant, along with funds from other sources, must remove the emergency condition's.)

2. All grant requests that are submitted by the Hub Directors will be funded based on the date and time of receipt in the Field Offices. See V B. (2) and (3) below.

3. HUD retains the right to adjust the amount of the grant up (to a maximum grant of $500,000) or down, based on review of the reasonableness of the costs for completing the repairs.

4. Davis-Bacon prevailing wage rate requirements do not apply to emergency capital repair grants. Davis-Bacon requirements may apply to emergency repairs if the repairs will also be assisted by another federal program that requires Davis-Bacon wage rates.

C. Eligible Uses of Funds

Grant funds are available only for emergency capital repairs that relate to immediate health/safety needs that impact upon the quality of life of the tenants if the repairs are not made. The project owner must submit a description of the proposed use of the funds and demonstrate how the repairs relate to eliminating the immediate emergency for the tenants. The repair item must have existed prior to submission of the application in order to obtain grant funds. The award is a one-time opportunity for correction of the threat to the tenants. Funds may be used to repair or replace systems including, but not limited to:

1. Existing major building and structural components that are in critical condition; and

2. Repairs or replacements to existing mechanical equipment to the extent that they are necessary for health and safety reasons. The purchase of high efficiency heating and cooling systems (Energy Star) for the approved replacement equipment is encouraged to promote energy conservation.

D. Ineligible Uses of Funds

Emergency capital repair grants may not be used for the following costs:

1. Deferred maintenance items.

2. Lead-based paint abatement.

3. Demolition and reconstruction activities, e.g., conversion of bedroom units.

4. Security systems.

5. Improvements, i.e., installation of sprinkler systems, air conditioning, additional lighting in parking lots, etc.

6. Clearing of mold or mildew unless it is related to a repair of an existing emergency item that poses an immediate threat to the residents.

E. Rental Use Agreement

If there are less than 10 years remaining on the existing mortgage, owners must enter into a Rental Use Agreement (Appendix I of this notice), to extend the remaining affordability of the project for up to 10 years. For example, if the maturity date of the mortgage is 3 years from the execution of the Grant Agreement, the owner must enter into a Rental Use Agreement for 7 years beyond the term of the mortgage. If the maturity date of the mortgage is 15 years, the owner will not need to execute a Rental Use Agreement unless the mortgage is prepaid. All Rental Use Agreements must be recorded. Start Printed Page 29540

V. Request Process

A. Owner Submission Requirements

An emergency categorization is critical to qualifying for participation in this program. Requests for grants must be submitted in accordance with the procedures described below:

1. The request must be made in writing and submitted by the project owner to the local field office. The request must clearly identify the basis for the emergency declaration and how it impacts the health and safety of the tenants, as well as what would happen if the emergency repair were not made immediately. The request also must identify the repairs proposed to correct the emergency for which funding is requested. Requests signed by a consultant or management agent on behalf of the owner are not acceptable.

Note:

Repair items identified on the REAC physical inspection report are not sufficient to be classified as emergency in nature.

2. The repair and/or replacement items are to be written in a manner that specifically describes the scope of work to be performed, provides an estimate of the cost of the work to be performed, and provides an explanation of the basis for the estimate. The estimate provided for the cost of each action item must be reasonable and current (within 6 months of the application submission).

3. The request must demonstrate that the repairs cannot be corrected at a cost that can be absorbed within the operating budget or by use of the reserve for replacement funds in excess of $1,000 per unit and/or residual receipts funds.

4. The request must provide a project plan for substantially completing the repairs within 6 months, but no longer than 12 months from the date of the grant award.

5. The project owner must notify the tenants of the plans to apply for this grant. The request must provide evidence that the tenants were notified and given the opportunity to make comments. Any comments received from the tenants must be submitted to the local HUD field office along with the repair request.

6. The request must provide a description of any unsuccessful attempts the owner has made to acquire funds from other sources, including letters of denial from funding sources, to complete the outstanding emergency capital repairs.

7. The request must provide a description of any previous grants or loans received by the project for repairs during the past 3 years from the effective date of this notice.

B. Field Office Processing

1. The Hub Director/Program Center Director is responsible for ensuring that the requests are promptly and thoroughly reviewed and submitted to HUD Headquarters.

2. Upon receipt of an owner's application, the Field Office will notify Headquarters of the date and time of receipt by facsimile, which should be addressed, “Attention: G. DeWayne Kimbrough, Director, Grant and Housing Assistance Field Support Division.” His facsimile number is (202) 401-9087. Headquarters will acknowledge the date and time of receipt by return facsimile. Also, Headquarters will advise the Field Office that the application will be placed in the Headquarters funding queue as of the date and time of reported receipt and that the Field Office has 15 working days to review and mail the approved application to Headquarters in accordance with the approval process outlined in C. below.

3. Incomplete applications will not be processed and will be returned to the owner. Owners may revise and re-submit an application. However, the resubmitted application will be processed as a new request in the order in which it is received the second time. The Field Office must also notify Headquarters by facsimile of the date an incomplete application is returned to the owner so that the application can be taken out of the Headquarters funding queue.

4. Each field office has the responsibility for conducting a comprehensive review of the project's files, which may include an on-site review if such action is determined to be necessary to resolve concerns raised by the comprehensive review. The review should consist of completion of the questions in Appendix IV of this notice and may include any other concerns the field office may have about the project. The Office of Fair Housing and Equal Opportunity (FHEO) must be involved in determining fair housing and civil rights compliance.

C. Approval Process

1. All approvable requests along with the Recommendations from the Program Centers (Appendix III of this notice) along with narratives describing the emergency capital repairs at the property are to be sent to the Multifamily Hub Director. Hub Directors will review, sign the certification, and mail the approvable request to the Office of Housing Assistance and Grant Administration in Headquarters, Attention: Willie Spearmon, 451 Seventh Street, SW., Washington, DC 20410.

2. When Headquarters receives the request from the Hub Director, the Office of Housing Assistance and Grant Administration will process the request and award the funds, if approved, in accordance with the funding queue established by the date and time of receipt in the Field Office.

Note:

HUD Headquarters reserves the right to deny or reduce any request for funds.

3. Headquarters will notify the Hub Director/Program Center Director by memorandum at the time the assignment of the funds has been approved. The Hub staff will prepare form HUD-718 and send it to the Fort Worth Accounting Center (FWAC) to reserve the funds in the name of the project. After the funds have been reserved, the Field Office can notify the grantee of the award and inform the grantee that execution of the Grant Agreement (Appendix V) and Rental Use Agreement (if appropriate) is necessary to receive the funds.

Catalog of Federal Domestic Assistance (CFDA) Number: 14.315.

VI. Paperwork Reduction Act

The information collection requirements contained in this rule have been submitted to the Office of Management and Budget (OMB) for review under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB control number 2502-0542. This Notice also contains information collection requirements that have not yet received OMB approval. These information collection requirements have been submitted to OMB for review, and approval is pending. HUD will announce the control numbers once OMB approval is received. In accordance with the Paperwork Reduction Act of 1995, an agency 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.

VII. Environmental Review

A Finding of No Significant Impact (FONSI) with respect to the environment has been made for this notice in accordance with HUD regulations at 24 CFR part 50 that implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is available for public inspection between 8 a.m. and 5 p.m. Eastern Time, Monday through Friday, except federal holidays, in the Office of the General Counsel, Regulations Division, Room Start Printed Page 2954110276, Department of Housing and Urban Development, 451 Seventh Street, SW., Washington, DC 20410-0500. Due to security measures at the HUD Headquarters building, please schedule an appointment to review the FONSI by calling the Regulations Division at (202) 708-3055 (this is not a toll-free number).

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Dated: May 16, 2006.

Brian D. Montgomery,

Assistant Secretary for Housing—Federal Housing Commissioner.

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BILLING CODE 4210-67-P

[FR Doc. 06-4745 Filed 5-17-06; 4:35 pm]

BILLING CODE 4210-67-C