[Code of Federal Regulations]

[Title 24, Volume 4]

[Revised as of April 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 24CFR970.13]



[Page 542-546]

 

                 TITLE 24--HOUSING AND URBAN DEVELOPMENT

 

CHAPTER IX--OFFICE OF ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, 

               DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

 

PART 970_PUBLIC HOUSING PROGRAM_DEMOLITION OR DISPOSITION OF PUBLIC 

HOUSING PROJECTS--Table of Contents

 

Sec.  970.13  Resident organization opportunity to purchase.



    (a) Applicability. (1) This section applies to applications for 

demolition or disposition of a development which involve dwelling units, 

nondwelling spaces (e.g. administration and community buildings, 

maintenance facilities), and excess land.

    (2) The requirements of this section do not apply to the following 

cases which it has been determined do not present appropriate 

opportunities for resident purchase:

    (i) The PHA has determined that the property proposed for demolition 

is an imminent threat to the health and safety of residents;



[[Page 543]]



    (ii) The local government has condemned the property proposed for 

demolition;

    (iii) A local government agency has determined and notified the PHA 

that units must be demolished to allow access to fire and emergency 

equipment;

    (iv) The PHA has determined that the demolition of selected portions 

of the development in order to reduce density is essential to ensure the 

long term viability of the development or the PHA (but in no case should 

this be used cumulatively to avoid Section 412 requirements);

    (v) A public body has requested to acquire vacant land that is less 

than 2 acres in order to build or expand its services (e.g., a local 

government wishes to use the land to build or establish a police 

substation); or

    (vi) PHA seeks disposition outside the public housing program to 

privately finance or otherwise develop a facility to benefit low-income 

families (e.g., day care center, administrative building, other types of 

low-income housing).

    (3) In the situations listed in paragraph (a) of this section, the 

PHA may proceed to submit its request to demolish or dispose of the 

property, or the portion of the property, to HUD, in accordance with 

Section 18 of the United States Housing Act of 1937 and 24 CFR part 970 

without affording an opportunity for purchase by a resident 

organization. However, resident consultation would be required in 

accordance with Sec.  970.4(a). The PHA must submit written 

documentation, on official stationery, with date and signatures to 

justify paragraphs (a)(2)(i), (ii), (iii), (iv), and (v) of this 

section. Examples of such documentation include:

    (i) A certification from a local agency, such as the fire or health 

department, that a condition exists in the development that is an 

imminent threat to residents; or

    (ii) A copy of the condemnation order from the local health 

department. If, however, at some future date, the PHA proposes to sell 

the remaining property described in paragraphs (a)(2)(i) through (iii) 

of this section, the PHA will be required to comply with this section.

    (b) Opportunity for residents to organize. Where the affected 

development does not have an existing resident council, resident 

management corporation or resident cooperative at the time of the PHA 

proposal to demolish or dispose of the development or a portion of the 

development, the PHA shall make a reasonable effort to inform residents 

of the development of the opportunity to organize and purchase the 

property proposed for demolition or disposition. Examples of 

``reasonable effort'' at a minimum include one of the following 

activities: convening a meeting, sending letters to all residents, 

publishing an announcement in the resident newsletter, where available, 

or hiring a consultant to provide technical assistance to the residents. 

The Department will not approve any application that cannot demonstrate 

that the PHA has allowed at least 45 days for the residents to organize 

a resident organization. The PHA should initiate its efforts to inform 

the residents of their right to organize as an integral part of the 

resident consultation requirement under Sec.  970.4(a).

    (c) Established Organizations. Where there are duly formed resident 

councils, resident management corporation, or resident cooperative at 

the affected development, the PHA shall follow the procedures beginning 

in paragraph (d) of this section. Where the affected development is 

fully or partially occupied, the residents must be given the opportunity 

to form under the procedures in paragraph (b) of this section.

    (d) Offer of sale to resident organizations. (1) The PHA shall make 

the formal offer for sale which must include, at a minimum, the 

information listed in this paragraph (d). All contacted organizations 

shall have 30 days to express an interest in the offer. The PHA must 

offer to sell the property proposed for demolition or disposition to the 

resident management corporation, the resident council or resident 

cooperative of the affected development under at least as favorable 

terms and conditions as the PHA would offer it for sale to another 

purchaser:

    (i) An identification of the development, or portion of the 

development, in the proposed demolition or disposition, including the 

development number and



[[Page 544]]



location, the number of units and bedroom configuration, the amount of 

space and use for non-dwelling space, the current physical condition 

(e.g., fire damaged, friable asbestos, lead-based paint evaluation 

results), and occupancy status (e.g., percent occupancy).

    (ii) In the case of disposition, a copy of the appraisal of the 

property and any terms of sale.

    (iii) A PHA disclosure and description of plans proposed for reuse 

of land, if any, after the proposed demolition or disposition.

    (iv) An identification of available resources (including its own and 

HUD's) to provide technical assistance to the resident management 

corporation, resident council or resident cooperative of the affected 

development to enable the organization to better understand its 

opportunity to purchase the development, the development's value and 

potential use.

    (v) Any and all terms of sale that the PHA requires for the Section 

18 action. (If the resident management corporation, resident council or 

resident cooperative of the affected development submits a proposal that 

is other than the terms of sale (e.g., purchase at less than fair market 

value with demonstrated commensurate public benefit or for the purposes 

of homeownership), the PHA may consider accepting the offer).

    (vi) A date by which the resident management corporation, resident 

council or resident cooperative of the affected development must respond 

to the HA's offer to sell the property proposed for demolition or 

disposition, which shall be no less than 30 days from the date of the 

official offering of the PHA. The response from the resident management 

corporation, resident council or resident cooperative of the affected 

development shall be in the form of a letter expressing its interest in 

accepting the PHAs written offer.

    (vii) A statement that the resident council, resident management 

corporation, and resident cooperative of the affected development will 

be given 60 days to develop and submit a proposal to the PHA to purchase 

the property and to obtain a firm financial commitment. It shall explain 

that the PHA shall approve the proposal from the resident council, 

resident management corporation or resident cooperative of the affected 

development, if it meets the terms of sale. However, the statement shall 

indicate that the PHA can consider accepting an offer from the resident 

council, resident management corporation or resident cooperative of the 

affected development that is other than the terms of sale; e.g., 

purchase at less than fair market value with demonstrated commensurate 

public benefit or for the purposes of homeownership. The statement shall 

explain that if the PHA receives more than one proposal from a resident 

council, resident management corporation or resident cooperative at the 

affected development, the PHA shall select the proposal that meets the 

terms of sale. In the event that two proposals from the affected 

development meet the terms of sale, the PHA shall chose the best 

proposal.

    (2) After the 30 day time frame for the resident council, resident 

management corporation, or resident cooperative of the affected 

development to respond to the notification letter has expired, the PHA 

is to prepare letters to those organizations that responded 

affirmatively inviting them to submit a formal proposal to purchase the 

property. The organization has 60 days from the date of its affirmative 

response to prepare and submit a proposal to the PHA that provides all 

the information requested in paragraph (g) of this section and meets the 

terms of sale.

    (e) PHA Review of Proposals. The PHA has up to 60 days from the date 

of receipt of the proposal(s) to review them and determine whether they 

meet the terms of sale set forth in its offer. If the resident 

management corporation, resident council or resident cooperative of the 

affected development submits a proposal that is other than the terms of 

sale (e.g., purchase at less than the fair market value with 

demonstrated commensurate public benefit or for the purposes of 

homeownership), the PHA may consider accepting the offer. If the terms 

of sale are met, within 14 days of the PHA's final decision, the PHA 

shall notify the resident management corporation, resident council or 

resident cooperative of the affected development of that fact and



[[Page 545]]



that the proposal has been accepted or rejected.

    (f) Appeals. The resident management corporation, resident council 

or resident cooperative of the affected development has the right to 

appeal the PHA's decision to the HUD field office. A letter requesting 

an appeal has to be made within 30 days of the decision by the PHA. The 

request should include copies of the proposal and any related 

correspondence. The field office will render a final decision within 30 

days. A letter communicating the decision is to be prepared and sent to 

the PHA and the resident management corporation, resident council or 

resident cooperative of the affected development.

    (g) Contents of Proposal. (1) The proposal from the resident 

management corporation, resident council or resident cooperative of the 

affected development shall at a minimum include the following:

    (i) The length of time the organization has been in existence;

    (ii) A description of current or past activities which demonstrate 

the organization's organizational and management capability or the 

planned acquisition of such capability through a partner or other 

outside entities;

    (iii) A statement of financial capability;

    (iv) A description of involvement of any non-resident organization 

(non-profit, for profit, governmental or other entities), if any, the 

proposed division of responsibilities between these two, and the non-

resident organization's financial capabilities;

    (v) A plan for financing the purchase of the property and a firm 

commitment for funding resources necessary to purchase the property and 

pay for any necessary repairs;

    (vi) A plan for the use of the property;

    (vii) The proposed purchase price in relation to the appraised 

value;

    (viii) Justification for purchase at less than the fair market value 

in accordance with Sec.  970.9, if appropriate;

    (ix) Estimated time schedule for completing the transaction;

    (x) The response to the PHA's terms of sale;

    (xi) A resolution from the resident organization approving the 

proposal; and

    (xii) A proposed date of settlement, generally not to exceed six 

months from the date of PHA approval of the proposal, or such period as 

the PHA may determine to be reasonable.

    (2) If the proposal is to purchase the property for homeownership 

under 5(h) or HOPE 1, then the requirements of Section 18 of the United 

States Housing Act of 1937 and 24 CFR part 970 do not apply, but the 

applicable requirements shall be those under the HOPE 1 guidelines, as 

set forth at 57 FR 1522, or the section 5(h) regulation, as set forth in 

parts 905 and 906 of this chapter. In order for a PHA to consider a 

proposal to purchase under section 412, using homeownership 

opportunities under section 5(h) or HOPE 1, the resident council, 

resident management corporation or resident cooperative of the affected 

development shall meet the provisions of this rule, including paragraphs 

(g)(1)(i) through (g)(1)(xii) of this section.

    (3) If the proposal is to purchase the property for other than the 

aforementioned homeownership programs or for uses other than 

homeownership, then the proposal must meet all the disposition 

requirements of Section 18 of the United States Housing Act of 1937 and 

24 CFR part 970.

    (h) PHA obligations. (1) Prepare and disperse the formal offer of 

sale to the resident council, resident management corporation and 

resident cooperative of the affected development.

    (2) Evaluate proposals received and make the selection based on the 

considerations set forth in paragraph (b) of this section. Issuance of 

letters of acceptance and rejection.

    (3) Prepare certifications, where appropriate, as discussed in 

paragraph (i)(3) of this section.

    (4) The PHA shall comply with its obligations under Sec.  970.4(a) 

regarding tenant consultation and provide evidence to HUD that it has 

met those obligations. The PHA shall not act in an arbitrary manner and 

shall give full and fair consideration to any qualified resident 

management corporation, resident council or resident cooperative of the



[[Page 546]]



affected development and accept the proposal if it meets the terms of 

sale.

    (i) PHA application submission requirements for proposed demolition 

or disposition. (1) If the proposal from the resident organization is 

rejected by the PHA, and either there is no appeal by the organization 

or the appeal has been denied, the PHA shall submit its demolition or 

disposition application to HUD in accordance with Section 18 of the 

United States Housing Act of 1937 and part 970 of this chapter. The 

demolition or disposition application must include complete 

documentation that the requirements of this section have been met. PHAs 

must submit written documentation that the resident council, resident 

management corporation and tenant cooperative of the affected 

development have been apprised of their opportunity to purchase under 

this section. This documentation shall include:

    (i) A copy of the signed and dated PHA notification letter(s) to 

each organization informing them of the PHA's intention to submit an 

application for demolition or disposition, the right to purchase; and

    (ii) The responses from each organization.

    (2) If the PHA accepts the proposal of the resident organization, 

the PHA shall submit a disposition application in accordance with 

Section 18 of the United States Housing Act of 1937 and part 970 of this 

chapter, with appropriate justification for a negotiated sale and for 

sale at less than fair market value, if applicable.

    (3) HUD will not process an application for demolition or 

disposition unless the PHA provides the Department with one of the 

following:

    (i) Where no resident management corporation, resident council or 

resident cooperative exists in the affected development and the 

residents of the affected development have not formed a new organization 

in accordance with paragraph (b) of this section, a certification from 

either the executive director or the board of commissioners stating that 

no such organization(s) exists and documentation that a reasonable 

effort to inform residents of their opportunity to organize has been 

made; or

    (ii) Where a resident management corporation, resident council or 

resident cooperative exists in the affected development one of the 

following, either paragraph (i)(3)(ii)(A) or paragraph (i)(3)(ii)(B) of 

this section:

    (A) A board resolution or its equivalent from each resident council, 

resident management corporation or resident cooperative stating that 

such organization has received the PHA letter, and that it understands 

the offer and waives its opportunity to purchase the project, or portion 

of the project, covered by the demolition or disposition application. 

The response should clearly state that the resolution was adopted by the 

entire organization at a formal meeting; or

    (B) A certification from the executive director or board of 

commissioners of the PHA that the thirty (30) day timeframe has expired 

and no response was received to its offer.



(Approved by the Office of Management and Budget under control number 

2577-0075)



[60 FR 3721, Jan. 18, 1995, as amended at 64 FR 50229, Sept. 15, 1999]