[Federal Register Volume 75, Number 166 (Friday, August 27, 2010)]
[Proposed Rules]
[Pages 52689-52691]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-21322]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Part 401
[Docket No. FR-5304-P-01]
RIN 2502-AI75
Multifamily Housing Reform and Affordability Act: Projects
Eligible for a Restructuring Plan; When Eligibility Is Determined
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Proposed rule.
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SUMMARY: HUD seeks public comment on HUD's determination of the point
in time at which an assisted project covered by the Multifamily and
Assisted Housing Reform and Affordability Act is eligible for
restructuring. Additionally, HUD proposes to amend its regulation,
which provides a cross-reference to the statutory list of the types of
projects that are eligible for mortgage restructuring, to incorporate
that list into the regulation. HUD is initiating this rulemaking in
accordance with a court decision.
DATES: Comments Due Date: October 26, 2010.
ADDRESSES: Interested persons are invited to submit comments regarding
this proposed rule to the Regulations Division, Office of General
Counsel, Department of Housing and Urban Development, 451 7th Street,
SW., Room 10276, Washington, DC 20410-0500. Communications must refer
to the above docket number and title. There are two methods for
submitting public comments. All submissions must refer to the above
docket number and title.
1. Submission of Comments by Mail. Comments may be submitted by
mail to the Regulations Division, Office of General Counsel, Department
of Housing and Urban Development, 451 7th Street, SW., Room 10276,
Washington, DC 20410-0500.
2. Electronic Submission of Comments. Interested persons may submit
comments electronically through the Federal eRulemaking Portal at
http://www.regulations.gov. HUD strongly encourages commenters to
submit comments electronically. Electronic submission of comments
allows the commenter maximum time to prepare and submit a comment,
ensures timely receipt by HUD, and enables HUD to make them immediately
available to the public. Comments submitted electronically through the
http://www.regulations.gov Web site can be viewed by other commenters
and interested members of the public. Commenters should follow the
instructions provided on that site to submit comments electronically.
Note: To receive consideration as public comments, comments must
be submitted through one of the two methods specified above. Again,
all submissions must refer to the docket number and title of the
rule.
No Facsimile Comments. Facsimile (FAX) comments are not acceptable.
Public Inspection of Public Comments. All properly submitted
comments and communications submitted to HUD will be available for
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the
above address. Due to security measures at the HUD Headquarters
building, an advance appointment to review the public comments must be
scheduled by calling the Regulations Division at 202-708-3055 (this is
not a toll-free number). Individuals with speech or hearing impairments
may access this number through TTY by calling the Federal Information
Relay Service, toll free, at 800-877-8339. Copies of all comments
submitted are available for inspection and downloading at http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Theodore Toon, Deputy Assistant
Secretary, Office of Affordable Housing Preservation (OAHP), Department
of Housing and Urban Development, 451 Seventh Street, SW., Room 6230,
Washington, DC 20024, telephone number 202-708-0001 (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.
SUPPLEMENTARY INFORMATION:
I. Background
The Multifamily Assisted Housing Reform and Affordability Act (42
U.S.C. 1437f note) (MAHRA) introduced a Mark-to-Market program designed
to preserve housing affordability, while
[[Page 52690]]
reducing the long-term costs of Federal assistance. Section 514 of
MAHRA provides for mortgage restructuring and rental adjustment via an
Operating Cost Adjustment Factor (OCAF). Section 524 of MAHRA deals
specifically with renewals of project-based Section 8 assistance
without mortgage restructuring. Section 512(2) of MAHRA requires that
an eligible multifamily housing project be subject to one of eight
different types of rental assistance contracts and further requires
that (i) project rents be above-market and (ii) the project be subject
to FHA-insured or HUD-held financing. Essentially, these eligible
projects are: (1) Those with rents that on average exceed the rents of
comparable properties in the same market area; (2) multifamily
properties consisting of more than four dwelling units; (3) financed by
a mortgage held or insured by HUD; and (4) covered in whole or part by
a contract for assistance under one of several specified programs.
These specified programs include current and former programs authorized
under the following authorities: (1) Section 8 of the U.S. Housing Act
of 1937 (42 U.S.C. 1437f); (2) section 23 of the U.S. Housing Act of
1937 as in effect before January 1, 1975 (the Section 23 Leased Housing
program, found at section 103 of the Housing and Urban Development Act
of 1965 (Pub. L. 89-117, approved August 10, 1965), which was the
predecessor to the current Section 8 program); (3) Rent Supplements
under 12 U.S.C. 1701s; and (4) the Section 8 program following its
conversion from the Rent Supplement program.
On September 11, 1998, HUD issued an interim rule implementing the
Mark-to-Market program in 24 CFR parts 401 and 402 (63 FR 48943). HUD
accepted public comments on this interim rule as a basis for future
rulemaking on this subject. HUD issued a subsequent final rule on March
22, 2000 (65 FR 15485), primarily to make regulatory changes regarding
procedures other than the renewal procedures in section 524 of MAHRA,
which were left to future rulemaking. On January 12, 2006, HUD issued a
final rule, amending its regulations in 24 CFR parts 401 and 402 (71 FR
2120).
The regulatory definition of an eligible project was originally
codified at 24 CFR 401.100. The version of Sec. 401.100 published in
the 1998 interim rule was a more succinct and general regulatory
provision than that published in the later January 2006 final rule. The
variation between the 1998 codification and the later codification of
Sec. 401.100 was due in part to the fact that a portion of the
regulation that became part of Sec. 401.100 was contained in the
definition of ``eligible project,'' published as part of the 1998
interim rule (63 FR 48944). As published in the 1998 interim rule, the
definition of ``eligible project'' read:
Eligible project means a project with a mortgage insured or held
by HUD, project-based assistance expiring on or after October 1,
1998, and rents for assisted units exceeding comparable market
rents; and otherwise meeting the definition of ``eligible
multifamily housing project'' in section 512(2) of MAHRA.
Section 401.100 of the 1998 interim rule read:
* * * Which projects are eligible for a Restructuring Plan under
this part?
General eligibility. A Restructuring Plan may be requested by an
owner of an eligible project that:
(a) Has project-based assistance with an expiration date of
October 1, 1998, or later;
(b) Has current gross potential rent for the project-based
assisted units that exceeds the gross potential rent for the project
based assisted units using comparable market rents; and
(c) Is not described in section 514(h) of MAHRA.
A HUD final rule published on March 22, 2000 (65 FR 15480) removed
Sec. 401.100 and entirely placed the material in the definition
section, combining it with the definition of `eligible project' in
Sec. 401.2(c)). Consequently, the March, 2000 definition of ``eligible
project'' reads as follows:
Eligible project means a project that:
(1) Has a mortgage insured or held by HUD;
(2) Receives project-based assistance expiring on or after
October 1, 1998;
(3) Has current gross potential rent for the project-based
assisted units that exceeds the gross potential rent for the project
based assisted units using comparable market rents;
(4) Has a first mortgage that has not previously been
restructured under this part or under a Reengineering demonstration
program;
(5) Is not described in section 514(h) of MAHRA; and
(6) Otherwise meets the definition of ``eligible multifamily
housing project'' in section 512(2) of MAHRA.
As provided in the March 2000 final rule, the list of eligible
multifamily housing projects is provided in the regulation by cross
reference to the statutory provision, section 512(2) of MAHRA.
The preamble to the March, 2000 final rule stated that further
changes to 24 CFR part 402 would be forthcoming based on the public
comments on the 1998 interim rule (65 FR 15476). The final rule
published on January 12, 2006 made these changes. Additionally, this
January 2006 final rule reinstates 24 CFR 401.100 instead of locating
the material related to project eligibility entirely in the definition
section. Section 401.100(a), rather than cross-referencing section
512(2) of MAHRA, lists the types of eligible projects.
Section 401.100(b) established the point in time at which a project
is judged to be eligible or ineligible for restructuring. Both
Sec. Sec. 401.100(a) and 400.100(b) as promulgated in the 2006 final
rule included matters that HUD believed were simply interpretive rules
not requiring public comment.
However, Sec. 401.100(b) was successfully challenged in the case
of Steinhorst Associates v. Preston, 572 F.Supp.2d 112, 122, 124
(D.D.C. 2008) on the basis that ``HUD promulgated the regulation
without following notice-and-comment procedures.'' (See Steinhorst at
124.) The District Court vacated Sec. 401.100(b) and remanded it to
HUD for further proceedings ``consistent with this opinion.'' (See 572
F.Supp.2d at 125). Since the failure to follow notice-and-comment
procedures was found by the court to have made the rule defective, the
appropriate remedial action for HUD is to propose the rule for notice
and public comment.
Accordingly, HUD is proposing 24 CFR 401.100(b) for public comment.
Since 24 CFR 401.100(a) has a similar procedural history, even though
that section was not challenged in the Steinhorst case, HUD is also
reopening public comment on Sec. 401.100(a). HUD will consider all
public comments and reach a de novo determination about the content of
these regulatory sections.
II. Findings and Certifications
Environmental Impact
A Finding of No Significant Impact with respect to the environment
was previously made regarding this rule in accordance with HUD
regulations in 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)) (See
71 FR 2120). The initial finding of no significant impact remains
applicable, and is available for public inspection between 8 a.m. and 5
p.m. weekdays in the office of the Regulations Division, Department of
Housing and Urban Development, 451 7th Street, SW., Room 10276,
Washington, DC 20410-0500.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.)
generally requires an agency to conduct a regulatory flexibility
analysis of any rule subject to notice and subject to comment
rulemaking requirements, unless the
[[Page 52691]]
agency certifies that the rule will not have a significant economic
impact on a substantial number of small entities. This rule affects
only multifamily Section 8 owners. There are very few multifamily
Section 8 owners that are small entities. Therefore, this rule would
not affect a substantial number of small entities within the meaning of
the RFA.
Accordingly, the undersigned certifies that this rule will not have
a significant economic impact on a substantial number of small
entities. Notwithstanding HUD's determination that this rule will not
have a significant effect on a substantial number of small entities,
HUD specifically invites comments regarding any less burdensome
alternatives to this rule that will meet HUD's objectives as described
in the preamble to this rule.
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has federalism implications if the rule
either imposes substantial direct compliance costs on state and local
governments and is not required by statute, or the rule preempts state
law, unless the agency meets the consultation and funding requirements
of section 6 of the Executive Order. This proposed rule does not have
federalism implications and does not impose substantial direct
compliance costs on state and local governments or preempt state law
within the meaning of the Executive Order.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) (UMRA) establishes requirements for Federal agencies to
assess the effects of their regulatory actions on state, local, and
tribal governments, and on the private sector. This proposed rule does
not impose any Federal mandates on any State, local, or tribal
government, or on the private sector, within the meaning of UMRA.
List of Subjects in 24 CFR Part 401
Grant programs--Housing and community development, Housing, Housing
assistance payments, Housing standards, Insured loans, Loan programs--
Housing and community development, Low and moderate income housing,
Mortgage insurance, Mortgages, Rent subsidies, Reporting and
recordkeeping requirements.
The Catalogue of Federal Domestic Assistance number for the
programs affected by this rule is 14.871.
Accordingly, for the reasons stated in the preamble, HUD proposes
to amend 24 CFR part 401 as follows:
PART 401--MULTIFAMILY HOUSING MORTGAGE AND HOUSING ASSISTANCE
RESTRUCTURING PROGRAM (MARK-TO-MARKET)
1. The authority citation for part 401 continues to read as
follows:
Authority: 12 U.S.C. 1715z-1 and 1735f-19(b); 42 U.S.C.
1437f(c)(8), 1437f(t), 1437f note, and 3535(d).
Subpart A--General Provisions; Eligibility
2. Revise Sec. 401.100 to read as follows:
Sec. 401.100 Which projects are eligible for a restructuring plan
under this part?
(a) What are the requirements for eligibility? To be eligible for a
Restructuring Plan under this part, a project must:
(1) Have a mortgage insured or held by HUD;
(2) Be covered in whole or in part by a contract for project-based
assistance under--
(i) The new construction or substantial rehabilitation program
under section 8(b)(2) of the U.S. Housing Act of 1937 as in effect
before October 1, 1983;
(ii) The property disposition program under section 8(b) of the
U.S. Housing Act of 1937;
(iii) The moderate rehabilitation program under section 8(e)(2) of
the United States Housing Act of 1937;
(iv) The loan management assistance program under section 8 of the
United States Housing Act of 1937;
(v) Section 23 of the United States Housing Act of 1937 as in
effect before January 1, 1975;
(vi) The rent supplement program under section 101 of the Housing
and Urban Development Act of 1965;
(vii) Section 8 of the United States Housing Act of 1937, following
conversion from assistance under Section 101 of the Housing and Urban
Development Act of 1965; or
(viii) Section 8 of the U.S. Housing Act of 1937 as renewed under
section 524 of MAHRA;
(3) Have current gross potential rent for the project-based
assisted units that exceeds the gross potential rent for the project-
based assisted units using comparable market rents;
(4) Have a first mortgage that has not previously been restructured
under this part or under HUD's Portfolio Reengineering demonstration
authority as defined in Sec. 402.2(c) of this chapter;
(5) Not be a project that is described in section 514(h) of MAHRA;
and
(6) Otherwise meet the definition of ``eligible multifamily housing
project'' in section 512(2) of MAHRA or meet the following three
criteria:
(i) The project is assisted pursuant to a contract for Section 8
assistance renewed under section 524 of MAHRA;
(ii) It has an owner that consents for the project to be treated as
eligible; and
(iii) At the time of its initial renewal under section 524, it met
the requirements of section 512(2)(A), (B), and (C) of MAHRA.
(b) When is eligibility determined? Eligibility for a Restructuring
Plan under paragraph (a) of this section is determined by the status of
a project on the earlier of the termination or expiration date of the
project-based assistance contract, which includes a contract renewed
under section 524 of MAHRA, or the date of the owner's request to HUD
for a Restructuring Plan. Eligibility is not affected by a subsequent
change in status, such as contract extension under Sec. 401.600 or
part 402 of this chapter.
Dated: July 15, 2010.
David H. Stevens,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2010-21322 Filed 8-26-10; 8:45 am]
BILLING CODE 4210-67-P