**U.S. Department of Housing and Urban Development**

**Housing**

Special Attention of: **Notice** H 99-5 (HUD)

Multifamily Hub Directors; **Issued:** April 14, 1999

Program Center Supervisors; **Expires:** April 14, 2000

Supervisory Project Managers

> **Cross References:**
>
> Handbook 4571.2 (811)
>
> Handbook 4571.3 REV-1 (202)

**Subject:** Fiscal Year 1999 Policy for Capital Advance Authority
Assignments, Instructions and Program Requirements for the Section 202
and Section 811 Capital Advance Programs, Application Processing and
Selection Instructions, and Processing Schedule.

> **1.** **PURPOSE. This Notice transmits for Fiscal Year 1999:**
>
> A. Changes to Application/Selection Process
>
> B. Application Processing Schedule
>
> C. Allocations for Section 202 (ATT.1)
>
> D. Allocations for Section 811 (ATT.2)
>
> E. Section 811 Workshop Instructions (ATT.3)
>
> F. Section 202 Funding Notification (ATT.4)
>
> G. Section 811 Funding Notification (ATT.5)
>
> H. Applications Processing and Selections Policy (ATT.6)
>
> I. Congressional Notification Memorandum Format (ATT.7)
>
> J. Section 202 Minority Business Enterprise Goals (ATT.8)
>
> K. Section 811 Minority Business Enterprise Goals (ATT.9)
>
> L. Initial Screening for Curable Deficiencies (ATT.10)
>
> M. Technical Review Sheets (ATT.11)
>
> N. Section 202 Standard Rating Criteria Form (ATT.12)
>
> O. Section 811 Standard Rating Criteria Form (ATT.13)
>
> P. Draft Letter to Appropriate State or Local Agency with Enclosures
> (ATT.14)
>
> This Notice should be used in conjunction with the Final Rule (Part
> 891), the Super Notice of Funding Availability (SuperNOFA) published
> in the [Federal Register]{.underline} on February 26, 1999, and
> Handbook 4571.3 REV-1 - Section 202 Supportive Housing for the Elderly
> or Handbook 4571.2 - Section 811 Supportive Housing for Persons with
> Disabilities, as appropriate.
>
> **NOTE:** In addition to following the requirements in the Section 202
> and/or Section 811 program section of the SuperNOFA, it is essential
> to pay particular attention to the General Section of the SuperNOFA
> which includes important information regarding the application
> submission procedures

1

> Distribution: W-3-1

which have changed since Fiscal Year 1998 and additional application
requirements that are applicable to all programs contained in the
SuperNOFA.

**2.** **[CHANGES TO THE FY 1999 SECTION 202 AND SECTION 811
PROGRAMS:]{.underline}**

> **A.** **[Initial Screening for Curable Deficiencies.]{.underline}**
> The general discussion on initial screening for curable deficiencies,
> which is repeated below, was included in Notice 98-29 and a
> description of the curable deficiencies was mailed to potential
> applicants after SuperNOFA III was published. For FY 1999, the list of
> exhibits or portions of exhibits that are considered curable
> deficiencies have been included in the FY 1999 Section 202 and Section
> 811 program sections of the SuperNOFA (see paragraph V(A) of the
> Section 202 or Section 811 program section of the SuperNOFA, as
> appropriate).
>
> HUD Offices will complete an initial screening for curable
> deficiencies (using the Initial Screening Checklist in Attachment 10)
> of all applications received by the application deadline date (see
> Paragraph 4A(4) below). Curable deficiencies include those items in
> the application that are required but do not have an impact on the
> rating of the application (e.g., missing certifications). Applicants
> will no longer be afforded the opportunity to submit missing exhibits
> or parts of exhibits that have an impact on the rating of the
> application (e.g., a failure to include a description of local
> government support for the project in the Sponsor\'s description of
> its purpose, community ties and experience). Applicants will be given
> 14 calendar days from the date of HUD notification to correct any
> curable deficiencies. At the end of the 14-day curable deficiency
> period, all applications received in accordance with the application
> submission requirements will be placed into technical processing. At
> the conclusion of technical processing, the HUD Office will send out
> technical -reject letters to Sponsors of applications in which curable
> deficiencies were not corrected during the curable deficiency period,
> incurable deficiencies were discovered during initial screening,
> and/or technical deficiencies were identified during technical
> processing. The technical reject letter will indicate all of the
> reasons for rejection of the application and provide the Sponsor 14
> calendar days from the date of the letter to appeal the rejection. HUD
> must respond to the Sponsor within five (5) working days of receipt of
> the appeal.

2

**B.** **[Rating Factors.]{.underline}** The Department has become
increasingly concerned that Section 202 and Section 811 projects be
selected in areas with the greatest need for the units. In order to give
the need factor greater weight in the selection of Section 202 and
Section 811 applications, five (5) additional points have been added to
the Need/Extent of the Problem factor for a total of 15 points. To
provide the additional five points to the Need/Extent of the Problem
factor, five points were taken from the Capacity of the Applicant and
Relevant Organizational Staff factor, reducing that factor to 25 points.

**C.** **[Site Control.]{.underline}** The specific forms of site
control acceptable to the Department have been clarified (see paragraph
VI(B)(4)(d) of the Section 202 or Section 811 program section of the
SuperNOFA, as applicable). one of the clarifications that Sponsors must
pay particular attention to is the site option which must extend for one
year from the application deadline date (until May 27, 2000). The option
can be for a single one year term or may include one or more rights to
re-new up to one year, which right(s) must be at the sole discretion of
the Sponsor and not subject to any other contingencies. If extension of
the option requires a payment, the Sponsor must deposit the amount of
the payment in escrow and include in its site control submission
evidence that it has done so. A contract of sale must be free of any
limitations affecting ability to deliver ownership to the Sponsor
including a requirement for closing before the 202 or 811 closing.
Options may contain conditions on closing as long as the conditions are
for the protection of the Sponsor, **NOT** the seller. For example, an
acceptable condition would be the termination of the option if any of
the following occurred: 1) the appraisal of the property is lower than
the purchase price and an agreement for a reduced purchase price cannot
be reached; 2) proper zoning cannot be achieved; or 3) the Seller lacks
good and marketable fee simple title to the property.

> Sponsors must also provide evidence (a title policy or other
> acceptable evidence) that the site is free from any limitations,
> restrictions, or reverters which could adversely affect the use of the
> site for the proposed project for the 40-year capital advance period
> (e.g., reversion to seller if title is transferred). Mortgages are not
> considered to be limitations or restrictions that would adversely
> affect the use of the site. If the site is subject to any such
> limitations, restrictions, or reverters: 1) for Section 202, the
> application will be rejected; or 2) for Section 811, the site will be
> rejected, the application will not receive

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points for site control, for Site Approvability from Valuation or for
Site Suitability from FHEO, and the application will be processed as
\"site identified\" as long as the Sponsor indicated its willingness to
seek an alternate site.

**D.** **[Suitability of the Site from the Stand-point of Promoting a
Greater Choice of Housing Opportunities for Minority Elderly
Persons/Families and Persons with Disabilities, Including
Minorities.]{.underline}** In accordance with the Secretary\'s December
16, 1996, memorandum that requires NOFAs to include a selection factor
addressing affirmatively furthering fair housing, the application
submission requires a narrative description of how the Sponsor will use
the site to affirmatively further fair housing opportunities for
minority elderly person/ families and persons with disabilities,
including minorities.

> To determine the acceptability of the site and to rate the
> application, FHEO will review the narrative submitted by the Sponsor.
> The site will be deemed acceptable if it increases housing choice and
> opportunity by (a) expanding housing opportunities in non-minority
> neighborhoods; or by (b) contributing to the revitalization of and
> reinvestment in minority neighborhoods, including improvement of the
> level, quality and affordability of services furnished to the minority
> elderly and persons with disabilities.

**E.** **[Bonus Points for Location of]{.underline}** Site. An
application containing satisfactory evidence of control of an approvable
site which is located in a high performing Federally designated
Empowerment Zone (EZ) or Enterprise Community (EC) will be awarded two
(2) bonus points. To be eligible to receive the two bonus points, the
Sponsors must certify (see Exhibit 7(j) of the application) that the
proposed project(s): (1) will be located in a Federally designated EZ or
EC and -,will serve residents of the EZ/EC; and (2) is consistent with
the strategic plan of the EZ/EC. CPD must determine that the area is in
a high performing EC/EZ (see CPD\'s Technical Processing Review and
Findings Memorandum in Attachment 11 of this Notice). For a scattered
site application with site control, all sites must be located in an
EZ/EC area, be approvable and have acceptable evidence of site control
to receive the two (2) bonus points. If the Certification requirements
are met and HUD\'s assessment of performance designates the EZ/EC as
high performing, then the application will receive the two bonus points.

4

Applications with sites located in EZs/ECs that have not been designated
by HUD as high performers can not receive bonus points.

> A list of the Federally designated EZs and ECs is included in the
> Application Kit as Appendix B and is available through the Internet at
> the following address: http://www.caliper.com/hud. The list of the
> high performing EZs/ECs will be published in the [Federal
> Register]{.underline} as well as on its website at www.hud.gov. prior
> to the application selection date. Local HUD Offices should also
> provide information about the local community agency for applicants to
> contact to determine if their proposed projects will be located in one
> of the Federally designated areas identified above.
>
> **F.** **[Secretary\'s Representative.]{.underline}** The Secretary\'s
> Representative will not participate in the rating of .applications
> submitted in response to the Fiscal Year 1999 SuperNOFA. The Project
> Manager will perform the function that was assigned to the
> Secretary\'s Representative in FY 1998 (review of Factor 5).
>
> **G.** **[Development Cost Limits]{.underline}.** The Development Cost
> Limits for the Section 202 program and for Section 811 independent
> living projects have been changed to be consistent with the statutory
> limits for multifamily insured Section 221(d)(3) projects. The
> Development Cost Limits for Section 811 group homes have also been
> increased. The high cost factors have been changed to correspond to
> the factors used for the multifamily insured Section 221(d)(3)
> projects.

**H.** **[Selection of Projects from Residual Funds.]{.underline}** The
restriction on the size of a project that can be reduced to use residual
funds has been changed from projects of nine (9) units or less to those
of five (5) units or less.

**I. [Section 811 - Exceptions to Project Size Limits]{.underline}.**
Sponsors of site control applications requesting approval to exceed the
project size limits must provide the information required in the
application kit and in Section VI(B)(4)(d)(i)(8) of the Section 811
NOFA, including documentation (e.g., results of a written or verbal
survey) that people with disabilities similar to those of the
prospective residents of the proposed project(s) have indicated
acceptance of and/or a preference to living in housing with as many
people with disabilities as proposed for the project(s).

5

Although the elimination of the upper limit for exceptions to project
size limits remains the policy for FY 1999, local HUD Offices will only
have authorization to approve exceptions up to 8 persons for a group
home and 24 persons for an independent living project. However, Offices
should be extremely cautious in approving exceptions to project size
limits that would exceed the 6 person limit for a group home and the 18
person limit for an independent living project. Offices need to ensure
that the program goal of integration is not compromised and should
handle each request on a case-by-case basis following the criteria
outlined in the NOFA.

> Requests for exceptions to exceed 8 persons for a group home and 24
> persons for an independent living project must be submitted to
> Headquarters, Office of Business Products, rm. 6138, Attention:
> 202/811, immediately upon the conclusion of initial screening for
> curable deficiencies. Please submit Exhibits 1, 4(a), (b), (c), and
> (d)(viii) of each application requesting such an exception. If the
> site is rejected (i.e.-, receives a score of 0 for Criterion 3(a)(1)
> or Criterion 3(b), or the request is denied, the application must be
> processed at the project size limit.

**J. [Section 811 - Site Issues. ]{.underline}**Applications containing
satisfactory evidence of control of an approvable site will **NOT** be
awarded 10 bonus points. Instead, an application will receive 5 points
for Criterion 3(a)(2), Site Control, if it contains legally acceptable
site control for all proposed sites and if all of the proposed sites are
approvable by Valuation (a score of 1 or higher for Criterion 3(a)(1),
Site Approvability) and FHEO (a score of 1 or higher for Criterion 3(b),
Site Suitability).

> **If the site control is NOT acceptable** in a single site
> application, the application will be treated as \"site identified\"
> and may still receive up to 10 points for Site Approvability
> (Criterion 3(a)(1)) from Valuation and up to 10 points from FHEO for
> the suitability of the site in promoting a greater choice of housing
> opportunities for persons with disabilities, including minorities
> (Criterion 3(b)).
>
> **If either VAL or FHEO REJECTS the site** in a single site
> application, the application will receive 0 points for Criterion
> 3(a)(1), Criterion 3(a)(2) and Criterion 3(b). The application will be
> treated as \"site identified\" and remain in the competition as long
> as the Sponsor indicated in Exhibit 3(d)(vii) that it is willing to
> seek an alternate site. Otherwise, the application will be rejected.

6

> **NOTE:** For a scattered site application to receive points for
> Criterion 3(a)(1), Criterion 3(a)(2) and Criterion 3(b), **all**
> proposed sites must be under acceptable control and be approvable.
>
> **K.** **[Section 811 - Accessibility.]{.underline}** All Section 811
> applications, whether proposing new construction, rehabilitation, or
> acquisition with or without rehabilitation, must adhere to the
> provisions of 24 CFR 891.310. The applications must also adhere to the
> provisions of 24 CFR 8.4(b)(5) which prohibits the selection of a site
> or location which has the purpose or effect of excluding persons with
> disabilities from the project. Sponsors who choose to use existing
> structures must make sure that the structures can be made accessible
> without resulting in infeasible projects.
>
> **L.** **[Section 811 - Project Type Name Change.]{.underline}** The
> term \"independent living facility\" has been changed to \"independent
> living project\" to eliminate the institutional connotation associated
> with the term \"facility\".

**3.** **[CHANGES PURSUANT TO THE APPROPRIATIONS ACT OF
1999:]{.underline}** In accordance with the waiver authority provided in
the FY 1999 Appropriations Act, the Secretary is extending the following
determination made in the Notice, published in 61 F.R. 3047 and in the
FY 1997 and FY 1998 Section 202 and Section 811 NOFAS, to FY 1999
funding by waiving the statutory and regulatory provisions governing the
amount and term of the Project Rental Assistance Contract (PRAC).

> Project rental assistance funds will be reserved based on **75
> percent** of the current operating cost standards to support the units
> selected for capital advances sufficient for a minimum **five-year**
> project rental assistance contract term. The Department anticipates
> that at the end of the contract term, renewals will be approved
> depending upon the availability of funds. **PLEASE NOTE THAT THE
> WAIVER BROADENING THE ELIGIBILITY OF TENANTS TO PERSONS WITH INCOMES
> AT 80 PERCENT OF THE MEDIAN OR BELOW (61 F.R. 3047, JANUARY 30,**
> **1996) IS NO** **LONGER IN EFFECT. THE STATUTORY PROVISION LIMITING
> ELIGIBILITY TO PERSONS WITH INCOMES AT 50 PERCENT OF THE MEDIAN OR
> BELOW REMAINS IN EFFECT.**

7

**4.** **[FISCAL YEAR 1998 AND EARLIER YEAR CHANGES STILL IN
EFFECT:]{.underline}**

> **A.** **[Changes Applicable to Both Programs.]{.underline}**
>
> **(1)** **[Rating Factors.]{.underline}** One of the purposes of
> publishing the SuperNOFA instead of 40 individual program NOFAs was to
> improve customer service by simplifying the application process. To
> that end, the Department developed five standard Rating Factors by
> which all applications for HUD funding will be rated, regardless of
> the program.
>
> In expanding the Rating Factors for the Section 202 and Section 811
> programs from three to five and from two to five, respectively, the
> existing criteria within the previous factors were retained for the
> most part but, in some cases, were reorganized to fit within the new
> Rating Factors.
>
> Furthermore, to ensure consistency among all HUD programs, it was
> necessary to add some additional criteria within the new Rating
> Factors as well as corresponding application submission requirements.
> The new criteria for the Section 202 and Section 811 programs in FY
> 1998 and still in effect in FY 1999 are:
>
> · The extent to which the Sponsor coordinated its application with
> other organizations to complement and/or support the proposed project;
>
> · The extent to which the Sponsor demonstrates that it has been
> actively involved, or if not currently active, the steps it will take
> to become actively involved in the community\'s Consolidated Planning
> process to identify and address a need/problem that is related in
> whole or part, directly or indirectly to the proposed project; and
>
> · The extent to which the Sponsor developed or plans to develop
> linkages with other activities, programs or projects related to the
> proposed project to coordinate its activities so solutions are
> holistic and comprehensive.
>
> In addition to these three criteria, for the Section 811 program only,
> the following criterion also applies:

8

· The extent to which the proposed design of the project and its
placement in the neighborhood will facilitate the integration of the
residents into the surrounding community.

**(2)** **[Allocation of Funds.]{.underline}** The allocation of funds
reflects the revised Field Office Multifamily Hub structure.

**(3)** **[Points for the Involvement of the Target Population in the
Development of the Application and in the Future Development and
Operation of the Project.]{.underline}** Applications will receive four
(4) base points if the Sponsor has involved the target population
(elderly persons, particularly minority elderly persons for Section 202
or persons with disabilities (including minorities) for Section 811), in
the development of the application, and intends to involve the target
population in the development and operation of the project.

**(4)** **[Revised Application Submission Procedures]{.underline}**
Application submission procedures have been made consistent for all
programs in the SuperNOFA. Hand carried applications must be received in
the appropriate HUD Office by the deadline date and time published in
the [Federal Register]{.underline}. Mailed applications will be
determined acceptable as long as they are postmarked on or before
midnight on the application deadline date and received by the
appropriate HUD Office within ten (10) days of the application deadline
date. Applications sent by overnight or express mail delivery will be
accepted before or on the application deadline date or after that date
as long as there is documentary evidence that they were placed in
transit with the overnight delivery service no later than the
application due date.

**The last page of the Application Kit contains an Acknowledgment of
Application Receipt form which must be completed and returned to the
Sponsor indicating whether or not the local HUD Office received the
application by the deadline as described above and, consequently,
whether it will be considered for funding.**

**(5)** **[Revised Selection Process.]{.underline}** At the conclusion
of technical processing, Rating/Selection Panels must score each Rating
Factor for all

9

> applications that successfully complete technical processing.
> Applications that receive a score of 60 base points or higher are then
> ranked in descending order. The Rating/Selection Panels then select
> for funding the highest rated applications ranked in descending order
> which most reasonably approximate the number of units and capital
> advance funds available to each HUD Office. The Rating/Selection
> Panels must select in rank order down to the next highest rated
> application that can utilize the remaining funds
> **[WITHOUT]{.underline}** skipping over a higher rated application.
> **NOTE: For Section 811, the Los Angeles Hub will first fund the
> application submitted by Whiteside Manor, Inc., a FY 1998 application
> which was not funded due to HUD error.**
>
> After making the initial selections, any residual funds may be used to
> fund the next rank-ordered application by reducing the units by no
> more than 10 percent rounded to the nearest whole number; provided the
> reduction will not render the project infeasible. Projects of five
> units or less may not be reduced. An example of a project becoming
> infeasible by a unit reduction is a project that will be rehabilitated
> (for Section 811 this applies only if the Sponsor has site control),
> where the project will not be able to sustain fewer units than those
> requested. Acceptance by a Sponsor of a project where the units have
> been reduced means acceptance of the reduced number of units.
>
> Under Section 202, the above processes must be done separately for
> each HUD Office\'s metropolitan and nonmetropolitan allocations. Once
> this is completed, HUD Offices may combine their unused metropolitan
> and nonmetropolitan funds to select the next highest ranked
> application in either category using the unit reduction policy
> described above.
>
> After the Offices have funded all possible projects based on the
> process above, residual funds from all HUD Offices in each Multifamily
> Hub will be combined. These funds will be used first to restore units
> to projects reduced by HUD Offices based on the above instructions.
> Second, additional applications within each Multifamily Hub will be
> selected in rank order with no more than one additional application
> selected per HUD Office unless there are insufficient approvable

10

applications in other HUD Offices within the Multifamily Hub. This
process will continue until there are no more approvable applications
within the Multifamily Hub that can be selected with the remaining
funds. However, any remaining residual funds may be used to fund the
next rank-ordered application by reducing the number of units by no more
than 10% rounded to the nearest whole number, provided the reduction
will not render the project infeasible. For this purpose, HUD will not
reduce the number of units in projects of five units or less.

Funds remaining after these processes are completed will be returned to
Headquarters. Under Section 202, these funds will be used first to fund
a FY 1994 application submitted by American Indian Council, in the
jurisdiction of the Milwaukee Multifamily Program Center, which was not
funded due to litigation. Under Section 811, these funds will be used
first to fund a FY 1998 application submitted by Ryder Memorial
Hospital, Inc., in the jurisdiction of the Caribbean Multifamily Program
Center, which was not funded due to HUD error. Then for both Section 202
and Section 811, the residual funds will be used to restore units to
projects reduced by HUD Offices as a result of the instructions above
and, third, for selecting applications based on field office rankings,
beginning with the next highest rated application nationwide. No more
than one application will be selected per HUD Office (excluding the
Milwaukee Multifamily Program Center for the 202 program and the
Caribbean Multifamily Program Center for the 811 program, already
funded) from the national residual amount, unless there are insufficient
approvable applications in other HUD Offices. If there are no approvable
applications in other HUD Offices, the process will begin again with the
selection of the next highest rated application nationwide. This process
will continue until all approvable applications are selected using the
available remaining funds.

**(6)** **[Application Unit Limit]{.underline}**. A Sponsor or a
Cosponsor may apply for a maximum of 200 units within a single Hub under
the Section 202 program and a maximum of 100 units in a single Hub under
the Section 811 program.

**(7)** **[Ineligible Activities.]{.underline}** The NOFAs include a
list of activities that are ineligible for funding through either the
Section 202 or Section 811 programs.

**(8)** **[Appeal Period for Technical Rejection.]{.underline}** The
appeal period for applications that receive a technical rejection is-14
calendar days from the date of HUD\'s letter notifying the Sponsor of
the technical rejection.

**(9)** **[Sponsors Cannot Require Residents to Accept Supportive
Services.]{.underline}** Section 202 and Section 811 Sponsors must
certify in their applications that they will **not** require residents
to accept any supportive services as a condition of occupancy. Although
the acceptance of services has never been a program requirement, it has
come to the Department\'s attention that in many cases residents have
been required to accept services in order to live in housing for persons
with disabilities developed under either the Section 202 Direct Loan
program or the Section 811 program.

**(10)** **[Congressional Notification Memoranda.]{.underline}**
Congressional Notification Memoranda are to be sent along with the other
Headquarters submission requirements (see Attachment 6 for details on
the submission requirements) to: Office of Business Products, room 6138,
Attention: 202/811. DO **NOT** SEND THEM TO THE OFFICE OF CONGRESSIONAL
AND INTERGOVERNMENTAL RELATIONS.

**(11)** **[Environmental Site Assessment.]{.underline}** In conformance
with 24 CFR 50.3(i), as revised (effective October 28, 1996), all
Section 202 applicants and those Section 811 applicants who have site
control are required to submit a Phase I Environmental Site Assessment
of their proposed site(s) with their applications. The Phase I
Environmental Site Assessment is to be completed in accordance with the
American Society for Testing and Material (ASTM), Standards E 1527-93,
as amended, and must be submitted with the application by the
application deadline date. The Phase I is **NOT** a curable deficiency.
Section 811 Sponsors submitting applications with identified sites
(i.e., not under control) are not required to submit a Phase I with
their applications. However, if they are selected for funding, they must
complete the Phase I Environmental Site Assessment upon obtaining site
control and prior to submitting their Application for Firm Commitment.

12

**NOTE:** [The Transaction Screen Process is no longer accepted as an
application submission requirement]{.underline}.

If the Phase I study indicates the possible presence of contamination
and/or hazards, further study must be undertaken. At this point, the
Sponsor must decide whether to continue with this site or choose another
site. Should the Sponsor choose another site, the same environmental
site assessment procedure identified above must be followed for that
site. **Since the Phase I studies must be completed and submitted with
the application, it is important that the Sponsor start the site
assessment process as soon after NOFA publication as possible. Ensure
that Sponsors receive a copy of \"Choosing an Environmentally Safe
Site\" to assist them in this process.**

If the Sponsor chooses to continue with the original site on which the
Phase I study indicated possible contamination or hazards, then a
detailed Phase II Environmental Site Assessment by an appropriate
professional will have to be undertaken. **NOTE: THE COST OF THE STUDY
MUST BE BORNE BY THE SPONSOR IF THE APPLICATION IS NOT SELECTED.** If
the Phase II Assessment reveals site contamination, the extent of the
contamination and a plan for clean-up (as identified in Section
VI.(B)(4)(d)(v) of the Section 202 NOFA and Section VI.(B)(4)(d)(i)(5)
of the Section 811 NOFA) of the site must be submitted to the local HUD
Office. The plan for clean-up must include a contract for remediation of
the problem(s) and an approval letter from the applicable Federal,
State, and/or local agency with jurisdiction over the site. For Section
202 applications to be considered for review and Section 811
applications with evidence of control of an approvable site to be
eligible for 5 points for site control, the Phase II Assessment and the
plan for clean-up including the contract for remediation (if
appropriate) must be submitted to the local HUD Office no later than
June 28, 1999. In the Section 202 program, if the required information
is not received by the deadline specified in the Section 202 NOFA, the

13

application must be rejected. In the Section 811 program, if the
information is not received by the deadline specified in the Section 811
NOFA, the application will be considered a \"site identified\"
application and will **NOT** receive any points for Site Approvability
(Criterion 3(a)(1)), 5 points for Site Control (Criterion 3(a)(2)) or
any points for Site Suitability (Criterion 3(b)). **NOTE: THIS COULD BE
AN EXPENSIVE UNDERTAKING. THE COST OF ANY CLEANUP AND/OR REMEDIATION
MUST BE BORNE BY THE SPONSOR.**

To be considered valid, no more than 6 months can elapse after
completion of the Phase I study. if the Phase I is more than 6 months
old, the preparer must update the environmental site assessment. If
there have been no changes since the previous assessment, the preparer
must certify to same.

**(12)** **[Historic Preservation.]{.underline}** Sponsors are to submit
with their applications, a letter from-the State Historic Preservation
Officer (SHPO) indicating whether the proposed site has any historic
significance or whether it impacts any site or area of historic
significance. Having this information submitted with the application
will assist HUD in the timely completion of its environmental review.
Sponsors must be informed to request a letter from the SHPO well in
advance of the application deadline date to ensure a timely response
from the SHPO.

If the Sponsor cannot obtain a letter from the SHPO due to the SHPO not
responding to the Sponsor\'s request or the SHPO responding that it
cannot or will not comply with the requirement, the Sponsor must submit
the following: (1) a letter indicating that it attempted to get the
required letter from the SHPO but that the SHPO either had not responded
to the Sponsor\'s request or would not honor or recognize the Sponsor\'s
request; (2) a copy of the Sponsor\'s letter to the SHPO requesting the
required letter; and, (3) a copy of the SHPO\'s response, if available.

In such cases, the HUD Office must process the application in accordance
with the standard environmental review procedures in place prior to the
NOFA publication (i.e., file with the SHPO, allow time for a response
from the SHPO, and then make the appropriate finding, which must be
received prior to convening the Rating/Selection Panel).

14

**(13)** **[Threshold Score.]{.underline}** The threshold score for an
application to be eligible for selection is 60 base points, not
including EZ/EC bonus points.

**(14)** **[Sponsor as Consultant.]{.underline}** The Sponsor may also
serve as a consultant to the project. Section 891.130(a)(2)(iii) of the
final rule for the Section 202 and Section 811 programs states that
developer (consultant) contracts between the Owner and the Sponsor or
the Sponsor\'s nonprofit affiliate will not constitute a conflict of
interest if no more than two persons salaried by the Sponsor or
management affiliate serve as nonvoting directors on the Owner\'s board
of directors.

**(15)** **[Limit on Amendments.]{.underline}** Per Section 891.100(d)
of the final rule for the Section 202 and Section 811 programs, fund
reservations may be amended only after initial closing, subject to the
availability of funds. This change must be emphasized to Sponsors so
that as they plan their projects they will be aware that they need to
keep the cost of the project within the fund reservation amount. Should
the cost exceed the fund reservation amount, it may be necessary for
Sponsors/Owners to seek outside funding sources to cover any additional
expenses.

**(16)** **[Limit on Fund Reservation Extensions.]{.underline}** Section
891.165 of the final rule for the Section 202 and Section 811 programs
permits fund reservations to be extended up to 24 months on a limited
case-by-case basis. This approval will be made at the local HUD Office
level.

**(17)** **[Minimum and Maximum Project Sizes.]{.underline}** For
**Section 202** applications, the minimum project size for both metro
and nonmetro proposals is five **(5)** units including the nonrevenue
manager\'s unit, if applicable. A Sponsor can propose scattered sites in
its application as long as each site consists of at least 5 units and
the Sponsor has site control for all sites. In such cases, for the
rating criteria pertaining to the need for supportive housing in the
area and the suitability of the site, each site is to be rated
separately and then the scores averaged. The maximum of 125 units for
projects in metro and nonmetro areas is unchanged.

15

For **Section 811** projects, the limits are as follows:

> [Group home]{.underline} - The minimum number of persons with
> disabilities that can be housed in a group home is three **(3)** and
> the maximum number is six **(6),** with one person per bedroom unless
> two residents choose to share one bedroom or a resident determines
> he/she needs another person to share his/her bedroom. The
> corresponding development cost limits for the larger group homes have
> been eliminated from the NOFA since, in many States, funding for
> supportive services will not be provided to persons with disabilities
> living in larger housing developments.
>
> [Independent living project]{.underline} The minimum number of units
> that can be applied for in one application is five; not necessarily in
> one structure. The maximum number of persons with disabilities that
> can be housed in an independent living project is 18.

**B.** **[Changes Applicable to the Section 811 Program
Only.]{.underline}**

> **(1)** **[Points for Applications Submitted by Sponsors whose Boards
> are Comprised of at Least 51% Persons with
> Disabilities.]{.underline}** Section 811 applications submitted by
> Sponsors whose boards are comprised of at least 51% persons with
> disabilities, including persons with disabilities similar to those of
> the prospective residents, will receive five (5) base points.
>
> **(2) [Occupancy Issues]{.underline}.**
>
> **(a)** **[Mixed Occupancy.]{.underline}** In the application
> submission requirements, the Sponsor is asked to specify whether the
> proposed housing will serve persons with physical disabilities,
> developmental disabilities or chronic mental illness, or any
> combination of the three.
>
> **(b)** **[Restricted Occupancy.]{.underline}** Sponsors may request
> approval to limit occupancy to a subcategory of one of the three main
> disability categories (i.e., physically disabled, developmentally
> disabled, chronically

16

mentally ill). For example, autism is a subcategory of developmentally
disabled. If requesting approval to limit occupancy, Sponsors must
submit more detailed information in their Supportive Service Plans for
HUD to determine whether approval is justified. Such information
includes: 1) a description of the population to which occupancy will be
limited, 2) an explanation of why it is necessary to limit occupancy, 3)
how restricted occupancy will promote the goals of the Section 811
program, 4) why the needs of the proposed occupants cannot be met in a
more integrated setting, 5) a description of the Sponsor\'s experience
in providing housing and/or supportive services to the proposed
occupants, and 6) a description of how the Sponsor will ensure that the
occupants will be integrated into the neighborhood and surrounding
community.

> The Project Manager (PM) will be responsible for reviewing requests
> for restricted occupancy and the PM Technical Processing Review and
> Findings Memorandum has been modified accordingly. If the PM
> determines that approval of restricted occupancy is justified, a
> memorandum to the file shall be developed for the signature of the
> Supervisory Project Manager (See instructions in Attachment 11 for
> approval language) and attached to the PM Technical Processing Review
> and Findings Memorandum. If the Sponsor is selected for funding, the
> Notification of Selection Letter must include the information in the
> Supervisory Project Manager\'s approval memorandum.
>
> **(c)** **[Single Occupancy Bedrooms in Group Homes.]{.underline}**
> Sponsors proposing to develop a group home may not require residents
> to share a bedroom unless a resident indicates a preference or need to
> share a bedroom with another resident.

**(3)** **[Intermediate Care Facilities (ICFS) are no Longer
Eligible.]{.underline}** Sponsors may no longer propose the development
of an ICF. Due to the quasi-institutional nature of an ICF which is
contrary to programmatic goals, the Department decided to eliminate its
eligibility for development under the program.

17

**(4)** **[Tenant-based Assistance.]{.underline}** Twenty-five percent
of the Section 811 appropriations will be used for tenant-based
assistance to be administered through public housing agencies and
nonprofit disability organizations. A separate Notice of Funding
Availability for the 25 percent was published in the [Federal
Register]{.underline} on March 8, 1999. It is entitled \"Mainstream
Housing Opportunities for Persons with Disabilities (Mainstream
Program)\" (FR 4415).

**(5) [Site Issues.]{.underline}**

> **(a)** **[Review of Sites under Control/Sites
> Identified.]{.underline}** Sites under control and sites identified
> will be evaluated using the same review factors. However, applications
> with sites identified will have to specifically include information on
> how the site will promote greater housing opportunities for persons
> with disabilities, including minorities, affirmatively further-fair
> housing and any other information on the suitability of the site for
> persons with disabilities.
>
> **(b)** **[Rejection of a Site Identified Application.]{.underline}**
> If, in the case of a site identified application, the evidence
> provided in the site description is not sufficient to lead to the
> conclusion that the Sponsor will have site control within six months,
> the application will be rejected.
>
> Although identified sites are **NOT** to receive an environmental
> review, if the local HUD Office has knowledge about an identified site
> that would result in rejection of the site, (e.g., it is located in a
> community that is already impacted with assisted housing), the
> application is to be rejected on the basis that it is unlikely that
> the Sponsor will be able to obtain control of an approvable site
> within six months of fund reservation. The reason for treating
> Sponsors who submit applications with site control where the site is
> unacceptable differently from Sponsors who submit applications with
> identified sites where the site is unacceptable, is that the
> Department can be more reasonably assured that Sponsors who were able
> to obtain site control during the application preparation period will

18

be able to obtain site control within six months of fund reservation
than are Sponsors who were only able to identify sites during this
period. The statute requires that the Department have \"reasonable
assurances that the applicant will own or have control of an acceptable
site for the proposed housing not later than six months after
notification of an award for assistance\".

**(c)** **[Specific Street Address Required.]{.underline}** Sponsors
must provide the specific street address of the site, even if it is an
identified site. If the Sponsor proposes one or more condominium units,
the unit number(s) must also be provided.

**(d)** **[Zoning.]{.underline}** Sponsors must provide evidence that
the proposed projects are either permissible under applicable zoning
ordinances or regulations or describe action that is required to make
the projects permissible as well as the basis for the belief that the
proposed action will be completed successfully before issuance of the
firm commitment application. Furthermore, Sponsors should be aware that,
under certain circumstances, the Fair Housing Act requires localities to
make reasonable accommodations to their zoning ordinances or regulations
to offer persons with disabilities an opportunity to live in an area of
their choice. If the Sponsor is relying upon a theory of reasonable
accommodation to satisfy the zoning requirement, then the Sponsor must
clearly articulate the basis for its reasonable accommodation theory.

**(e)** **[Relaxation of Site Location Requirements.]{.underline}**
Under Section 891.320(b) of the final rule for the Section 811 program,
the site and neighborhood standards were revised to provide more
flexibility to the site location requirements for Section 811 housing.
The final rule now indicates that Section 811 housing
[should]{.underline}, rather than [must]{.underline}, be located where
other family housing is located and [should not]{.underline}, rather
than [must not]{.underline}, be located adjacent to or in areas
concentrated by: schools or day-care centers for persons with
disabilities, workshops, medical facilities, or other housing

19

primarily serving persons with disabilities. Local HUD Offices will make
these determinations and must ensure that, in doing so, the selected
site will facilitate the integration of persons with disabilities into
the surrounding community. The requirements that not more than one group
home be located on one site and two group homes not be next to each
other remains in Section 891.320(b), since the prohibitions are
statutory.

**(6)** **[Scattered-site Applications.]{.underline}** If Sponsors are
applying for a scattered-site project consisting of different project
types (e.g., group home and independent living project) they may do so
in one application. In order to come up with an overall rating for the
rating criteria pertaining to the need for supportive housing in the
area and the approvability and suitability of the site, each site is to
be rated separately and then the scores averaged.

**(7)** **[Experience with Integrated Housing
Developments.]{.underline}** When describing any rental housing projects
sponsored, owned and operated by the Sponsor as part of the description
of its housing and/or supportive services experience, the Sponsor should
include its experience with integrated housing developments (i.e.,
persons with/without disabilities living in the same project/ building).

**(8)** **[Contact for Agency Providing Independent Living
Services.]{.underline}** The State Independent Living Council and the
local Center for Independent Living must be included on the list of
State and local agency contacts provided to Sponsors for submission of
the Supportive Services Plan of their applications.

**(9)** **[Restrictions Removed from Acquisition
Projects.]{.underline}** In Section 891.305 of the final rule, the
definition of \"acquisition\" was revised. The restriction to group
homes and Resolution Trust Corporation properties was removed so that
any housing type may now be acquired. The restriction to properties that
are at least three years old was also removed.

20

**(10)** **[Supportive Services.]{.underline}**

> **(a)** **[Residents\' Choice in Supportive Services
> Plan.]{.underline}** Since Sponsors cannot require potential residents
> to accept any supportive services as a condition of occupancy, they
> must design a Supportive Services Plan that offers potential residents
> the following choices: 1) to take responsibility for choosing and
> acquiring their own services; 2) to receive any supportive services
> provided directly or indirectly by the Sponsor; or 3) to not receive
> any supportive services at all. Such a Supportive Services Plan will
> offer maximum choice for residents while meeting the statutory
> requirement that Section 811 housing provide supportive services that
> address the individual health, mental health, and other needs of the
> residents.
>
> **(b)** **[Supportive Services Certification:]{.underline}** The
> Sponsor is required to submit a copy of its Supportive Services Plan
> and Supportive Services Certification to the appropriate State or
> local agency for review of the Supportive Services Plan and completion
> of the Supportive Services Certification which is a requirement of the
> Section 811 application. The Supportive Services Certification
> provides HUD with information about whether the Sponsor\'s proposed
> provision of supportive services is well designed to serve the special
> needs of persons with disabilities. Furthermore, it indicates whether
> the proposed housing is consistent with State or local policies or
> plans governing the development and operation of housing to serve
> individuals of the proposed occupancy category. In addition, the
> appropriate State or local agency must indicate on the Supportive
> Services Certification whether the Sponsor demonstrated that the
> necessary supportive services will be provided on a consistent,
> long-term basis.
>
> If the Supportive Services Certification is missing or incomplete, the
> Sponsor must be notified that it is a curable deficiency and be given
> the 14-day period to have the appropriate State or local agency
> complete

21

the Certification. If the Supportive Services Certification is not
received during the curable deficiency period the application must be
rejected but must still undergo technical processing. If the
Certification comes in during the curable deficiency period and the
appropriate State or local agency did not indicate whether the
Supportive Services Plan is well designed to meet the needs of the
residents, or indicated that it was **not** well designed, the
application must also be rejected. If the appropriate State or local
agency failed to respond to either one or both of the other two
questions (whether or not the housing is consistent with State or local
policies or plans governing the development and operation of housing to
serve the proposed population and whether or not the supportive services
will be provided on a consistent, long-term basis), the Project Manager
must review the Supportive Services Plan and respond to these two
questions.

> If the appropriate State or local agency or, if necessary, the Project
> Manager, determines that the housing is inconsistent with State or
> local policies or plans governing the development and operation of
> housing to serve the proposed population and the appropriate State or
> local agency will be a primary funding or referral source for the
> project or is required to license the project; or, that supportive
> services will not be provided on a consistent, long-term basis, the
> application must be rejected.
>
> Sponsors must be reminded to send their Supportive Services Plans to
> the appropriate State or local agency in ample time so that the agency
> can review them, complete the Supportive Services Certifications and
> return them to the Sponsors for inclusion in their applications to
> HUD.

**(11) [Applicant Eligibility. ]{.underline}**Section 603 of the Housing
and Community Development Act of 1992 (HUD Act of 1992) amended Section
811 of the NAHA by striking the language \"incorporated private\" and
thus expanding the definition of private nonprofit organization in
Section 811(k)(6) to include public and unincorporated institutions or
foundations. This amendment also requires such

22

sponsoring organizations to have received tax-exempt status under
section 501(c)(3) of the Internal Revenue Service Code of 1986 which
effectively limits the eligibility of public bodies. (Temporary
clearance to receive section 501(c)(3) tax-exempt status is not
permissible.) The same requirements apply to the Owner except that the
Owner must be incorporated.

> **(12)** **[Davis-Bacon Act.]{.underline}** Davis-Bacon Labor
> standards apply to housing containing 12 or more units. A group home
> is considered as one unit for this purpose; therefore, the labor
> standards do not apply. Independent living projects with 12 or more
> units **are** covered by the standards.
>
> **(13)** **[Lead-Based Paint.]{.underline}** The requirements of the
> Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846) and
> implementing regulations at 24 CFR part 35, and 24 CFR section 891.325
> apply to all Section 811 dwelling units except as indicated in the
> aforementioned regulations.
>
> **(14)** **[Exhibit 6 of the Application Kit.]{.underline}** Exhibit 6
> which must be completed if the site will involve relocation does not
> apply to Section 811 applications that are \"site identified.\"

**5.** **[SITES LOCATED IN FLOODPLAINS OR WETLANDS:]{.underline}** Due
to the length of the review process required for all sites that are
located in floodplains or (for new construction projects) wetlands (see
Attachment 6, paragraph A.5.), HUD Offices may not be able to complete
their reviews in time for the applications to be considered for funding.
Therefore, Sponsors should take this into consideration when selecting
project sites and put forth all efforts to locate sites that are not in
floodplains or (for new construction projects) wetlands.

**6.** **[FISCAL YEAR 1999 CAPITAL ADVANCE AUTHORITY
ASSIGNMENTS:]{.underline}**

> **A.** **[Fair Share Factors.]{.underline}** Although not subject to
> the section 213(d) requirements, a formula is still used for
> allocating Section 202 and Section 811 funds. The allocation formula
> was developed to reflect the \"relevant characteristics of prospective
> program participants\", as specified in 24 CFR 791.402(a).
>
> **Section 202.** The FY 1999 formula for allocating Section 202
> capital advance funds consists of one data element: a measure of the
> number of one and two person

23

renter households with incomes at or below the Department\'s Very-low
Income Limit (50 percent of area median family income, as determined by
HUD, with an adjustment for household size), which have housing
deficiencies. The counts of elderly renter households with housing
deficiencies were taken from a special tabulation of the 1990 Decennial
Census. The formula focuses the allocation on targeting the funds based
on the unmet needs of elderly renter households with housing problems.

> A fair share factor is developed for each metropolitan and
> nonmetropolitan portion of each local HUD Office jurisdiction by
> dividing the number of renter households for the jurisdiction by the
> total for the United States. The resulting percentage for each local
> HUD Office jurisdiction is then adjusted to reflect the relative cost
> of providing housing among the HUD Office jurisdictions. The adjusted
> needs percentage for the applicable metropolitan or nonmetropolitan
> portion of each jurisdiction is then multiplied by respective total
> remaining capital advance funds available nationwide.
>
> Eight-five (85) percent of the total capital advance amount is
> allocated to metropolitan areas and 15 percent to nonmetropolitan
> areas. Each HUD Office jurisdiction receives sufficient capital
> advance funds for a minimum of 20 units in metropolitan areas and 5
> units in nonmetropolitan areas. The total amount of capital advance
> funds to support these minimum set-asides is then subtracted from the
> respective (metropolitan or nonmetropolitan) total capital advance
> amount available. The remainder is fair shared to each HUD Office
> jurisdiction whose original fair share exceeded the minimum set-aside,
> based on the allocation formula fair share factor described above.

**NOTE:** The allocations for metropolitan and nonmetropolitan portions
of the Multifamily Hub or Program Center jurisdictions reflect the most
current definitions of metropolitan and nonmetropolitan areas, as
defined by the Office of Management and Budget.

> **Section 811.** The FY 1999 formula for allocating Section 811
> capital advance funds consists of two data elements from the 1990
> Decennial Census: (1) the number of non-institutionalized persons age
> 16 or older with a work disability and a mobility or self-care
> limitation; and (2) the number of noninstitutionalized persons age 16
> or older having a mobility or self-care limitation but having no work
> disability.

24

The fair share factors were developed by taking the sum of the number of
persons in each of the two elements for each state, or state portion, of
each HUD Office jurisdiction as a percent of the sum of the two data
elements from the Decennial Census, as described above, for the total
United States. The resulting percentage for each local HUD Office is
then adjusted to reflect the relative cost of providing housing among
the local HUD Office jurisdictions. The adjusted needs percentage for
each local HUD Office jurisdiction is then multiplied by the total
amount of capital advance funds available nationwide.

> Each HUD Office jurisdiction receives sufficient capital advance funds
> for a minimum of 10 units. The total amount of capital advance funds
> to support this minimum set-aside is then subtracted from the total
> capital advance available. The remainder is fair shared to each HUD
> Office jurisdiction whose original fair share exceeded the minimum
> set-aside, based on the allocation formula fair share factors
> described above.
>
> **B.** **[Program Fund Assignments.]{.underline}** HUD-185s will be
> processed assigning funds to the field offices when all of the
> selections for the FY 1999 program are finalized.

**7.** **[LOCAL HUD OFFICE ALLOCATIONS:]{.underline}**

> **A.** **[Allocation of Funds.]{.underline}**
>
> **Section 202:** The Department of Housing and Urban Development
> Reform Act of 1989 (HUD Reform Act) provides that allocations of funds
> be made to the smallest practicable areas consistent with the delivery
> of assistance through meaningful competition. The HUD Reform Act also
> states that program funding -under Section 202 shall be allocated in a
> manner that ensures selections of projects of sufficient size to
> accommodate facilities for supportive services appropriate to the
> needs of the population to be served. To meet the intent of the Reform
> Act, the following rules will apply to the FY 1999 Section 202
> allocations.
>
> \(1\) Offices are required to establish allocation areas only for the
> respective metropolitan and nonmetropolitan assignments of capital
> advance authority for the entire Office jurisdiction.

25

Therefore, all applications received from metropolitan areas will
compete against each other and all applications from nonmetropolitan
areas will compete against each other.

> \(2\) There is a minimum proposal size of **5** units and a maximum of
> **125** units for projects in metropolitan and nonmetropolitan areas.
> **Offices may NOT establish their own minimum or maximum application
> sizes.**
>
> Where the Office allocation in either the metropolitan or
> nonmetropolitan areas *is less* than 125, the maximum proposal size
> will be limited by the allocated amount. Among other requirements, to
> be considered responsive to the NOFA, an applicant must not request a
> larger number of units for the specific geographical area
> (metropolitan or nonmetropolitan) than permitted in the NOFA (see
> Attachment 1) and must not exceed the maximum number of units per
> application as established herein.
>
> **Section 811:** The allocations for Section 811 housing for persons
> with disabilities are not subject to the Section 213(d) requirements
> including the control on nonmetro funding and the requirement for a
> formula allocation. Accordingly, there will not be any division of
> funding between metropolitan and nonmetropolitan areas. We will,
> however, continue funding the program on a formula basis.
>
> In accordance with 24 CFR part 791, the Assistant Secretary has
> allocated the amounts available for capital advances for supportive
> housing for persons with disabilities for FY 1999. To be responsive to
> the NOFA, a Sponsor must request at least five (5) units if proposing
> to develop an independent living project (all five (5) units do not
> have to be on one site) or three (3) units if proposing to develop a
> -group home. The Sponsor cannot request more units in a Field Office
> jurisdiction than allocated to that Office in the NOFA (see Attachment
> 2).

**B.** **[Project Rental Assistance Contract Funds.]{.underline}** The
Department reserves project rental assistance contract funds for five
(5) years consistent with current operating cost standards.

**C.** **[Local HUD Office Funding Notifications.]{.underline}** This
paragraph expands on Paragraph 2-1 of Handbooks 4571.2 (Section 811) or
4571.3 REV-1 (Section 202) as

26

appropriate. All offices shall issue Funding Notifications in accordance
with this paragraph and the above Handbook references. See Attachments 4
and 5 for Funding Notification Formats The funding notification formats
shall be used by all Offices with no deviations.

> Although previous advertising requirements have been eliminated,
> Offices must notify potential applicants by following the instructions
> in Handbooks 4571.2 and 4571.3 REV-1 and Attachment 3 of this Notice.

**8.** **[CONSOLIDATED PLAN CERTIFICATION:]{.underline}** Each applicant
must submit a certification by the jurisdiction in which the proposed
project is to be located that the application is consistent with the
jurisdiction\'s HUD-approved Consolidated Plan for FY 1999. The
certification is to be signed by the unit of general local government if
it is required to have, or has, a complete Consolidated Plan. Otherwise,
the certification may be made by the State, or if the project will be
located within the jurisdiction of a unit of general local government
authorized to use an abbreviated strategy, by the unit of general local
government if it is willing to prepare such a plan.

All Consolidated Plan Certifications must be made by the public official
responsible for submitting the plan to HUD. All plan certifications must
be submitted as part of the application by the application submission
deadline set forth in the NOFA. The Plan regulations are published in 24
CFR Part 91.

**9.** **[WORKSHOPS:]{.underline}** To the extent possible, experienced
program and technical staff should conduct the workshops to provide
guidance, particularly for new program participants. Since first time
applicants may have difficulty with the complexity of the Section 202 or
Section 811 program, Offices are urged to conduct pre-workshops (to be
held prior to the start of the regularly scheduled session) for first
time applicants. These applicants should attend the pre-workshop and
remain for the regular session.

Particular emphasis should be placed on the new requirements for the FY
1999 program.

It should also be pointed out to potential applicants at the workshop
that the second to the last page of the Application Kit is an optional
form for them to fill out with their comments and suggestions about the
NOFA and the Application Kit which they can include as part of their
applications or submit separately to HUD Headquarters, 451 7th Street,
S.W., Washington, D.C.,

27

Office of Business Products, room 6138. Attention: Section 202/811.
Local HUD Offices are also encouraged to complete this form and return
it to HUD Headquarters at the above address, along with any
Sponsor-completed forms that may have been attached to applications.

**10.** **[SUBMISSIONS TO HEADQUARTERS:]{.underline}** For FY 1999,
application selection information will be reported to Headquarters via
the Development Application Processing System (DAP). Multifamily Hubs
will submit the following hard copies separately for the Section 202 and
Section 811 programs to Headquarters, Office of Business Products, rm.
6138,

> Attention: Section 202/811 (See Attachment 6 for more detailed
> instructions): (1) a transmittal memorandum summarizing the results of
> the selection process (e.g., number of applications received and
> number of applications selected, identification of any selected
> applications where units and dollars were reduced by up to 10% and the
> number of units and funds needed to restore the application to its
> original request, identification of any approvable but unfunded
> applications the Multifamily Hub funded with residual funds received
> from the Program Centers; amount of residual money being returned to
> Headquarters, achievement of MBE goals, nonmetro achievement for
> Section 202, etc.); (2) a recap sheet of the funds being allocated and
> awarded,
>
> \(3\) a list of initial selections, (4) a list of approvable but
> unfunded applications, (5) a list of applications that scored less
> than 60 base points, (6) Congressional notification memoranda (Do
> **NOT** send originals or copies to the Office of Congressional and
> Intergovernmental Relations), and (7) all selection information
> submitted by the Multifamily Program Centers to the Multifamily Hub
> (excluding technical processing review and findings memoranda). At the
> same time, Offices are to submit the 718s and PADs for the initial
> selections to the Office of the Comptroller, Field Accounting
> Division. These actions must be completed by August 27, 1999. **NOTE:
> IF ANY PROJECT WAS REDUCED BY UP TO 10 PERCENT SO IT COULD BE FUNDED
> FROM RESIDUAL FUNDS, PLEASE IDENTIFY THE PROJECT IN THE APPLICABLE
> TRANSMITTAL MEMORANDUM AND ON THE SELECTION LIST** **. ALSO, INCLUDE
> IN THE MEMORANDUM THE NUMBER OF UNITS REDUCED AND THE AMOUNT OF
> CAPITAL ADVANCE AND PRAC FUNDS NEEDED TO RESTORE THE UNITS TO THE
> PROJECT.**

**11.** **[MINORITY BUSINESS ENTERPRISE GOALS:]{.underline}** The
Department encourages participation by the Minority Business Enterprise
(MBE) sector in HUD programs and establishes MBE goals each fiscal year.
Therefore, MBE goals (expressed in dollars and units) have been
established for the Section 202 and Section 811 FY 1999 funding round as
set forth in Attachments 8 and 9. (These goals do not affect the rating
of Section 202 or Section 811 applications.) A minority

28

Sponsor is one in which more than 50 percent of the board members are
minority (i.e., Black, Hispanic, Native American, Asian Pacific, or
Asian Indian). Offices are expected to encourage participation by
minority Sponsors.

**12.** **[NOTIFICATION TO PROGRAM APPLICANTS:]{.underline}** Sponsors
must be advised that all applications submitted under the FY 1999
program must be in conformance with the [Federal Register]{.underline}
SuperNOFA, Regulations, Handbook and local HUD Office Funding
Notifications. To this end, FY 1999 applications must follow the format
provided in the Section 202 or Section 811 Application Kit, as
applicable, which is in accordance with the Paperwork Reduction Act of
1980 (P.L. 96-511).

**13.** **[PROCESSING SCHEDULE:]{.underline}**

In accordance with the schedule included in the SuperNOFA published in
the [Federal Register]{.underline}, the following processing schedule
has been developed. It is not mandatory that Offices maintain all dates
in this schedule. However, the underscored dates and actions are
specific deadlines which must be met:

[Application Deadline]{.underline} May 27, 1999

Initial Screening for Curable

Deficiencies Completed and

Deficiency Letters Mailed June 7, 1999

[Expiration of 14-day period]{.underline}

[for submission of missing application]{.underline}

[items]{.underline} June 21, 1999

Notification of Technical rejects July 19, 1999

[End of 14 day appeal period for]{.underline}

[Technical Rejects]{.underline} Aug. 2, 1999

[Program Center Offices submit]{.underline}

[transmittal memoranda,]{.underline}

[recapitulation sheets, lists]{.underline}

[of initial selections, approvable]{.underline}

[but unfunded applications, applications]{.underline}

[that scored less than 60 base pts.,]{.underline}

[and Congressional Notification]{.underline}

[Memoranda to Hubs]{.underline} [Aug. 11, 1999]{.underline}

[Hubs submit lists of initial]{.underline}

[selections, approvable but]{.underline}

[unfunded applications,]{.underline}

[applications that scored less]{.underline}

2 9

[than 60 base pts., transmittal]{.underline}

[memoranda, recapitulation sheets]{.underline}

[and Congressional Notification]{.underline}

[Memoranda to Headquarters and]{.underline}

[submit 718s and PADs to]{.underline}

> [appropriate]{.underline} location [Aug. 27, 1999]{.underline}

**14.** **[RELEASE OF INFORMATION ON RATINGS AND
RANKINGS:]{.underline}**

Release of information regarding selections or nonselections is
prohibited until after funding announcements are made. Local HUD Offices
may not release selection letters until authorized to do so by
Headquarters. It is the policy of the Department to operate an open
selection system. Release of rating and ranking information to Section
202 and Section 811 applicants or their authorized representatives is
permitted, but only after the release of selection letters. If standard
rating criteria forms or technical processing review and findings
memoranda are requested, they may also be released. However, the name of
the reviewer must be deleted from the copy released to the applicant.-

The above information may also be released to any member of the public
requesting such information under the Freedom of Information Act (FOIA).

**15.** **[HUD REFORM ACT PROVISIONS:]{.underline}** As required by the
HUD Reform Act, the Department will publish the funding decisions in the
[Federal Register]{.underline} at the conclusion of the funding cycle.
Local HUD Office staff also are reminded that the HUD Reform Act
prohibits advance disclosure of funding decisions. Also see 24 CFR Part
4.

**16.** **[UNIFORM RELOCATION ASSISTANCE AND REAL PROPERTY ACQUISITION
ACT (URA):]{.underline} It is imperative that the following information
be covered at the workshops:**

In addition to complying with the URA, Sponsors must be reminded of its
site acquisition provisions. These provisions apply to the acquisition
of sites with or without existing structures. The implementing
instructions regarding site acquisition under the URA are contained in
Chapter 5 of HUD Handbook 1378, Tenant Assistance, Relocation and Real
Property Acquisition.

Sponsors that do not have the power of eminent domain are exempt from
compliance with the site acquisition requirements of the URA under
certain conditions. The site acquisition requirements do not apply to
the above Sponsors if [prior]{.underline} to entering into a contract of
sale or any other method of obtaining site control, the Sponsor informs
the seller of the land:

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A. That it does not have the power of eminent domain and, therefore,
will not acquire the property if negotiations fail to result in an
amicable agreement; and

> B. Of its estimate of the fair market value of the property. An
> appraisal is not required; however, the Sponsor\'s files must include
> an explanation, with reasonable evidence, of the basis for the
> estimate.
>
> In those cases, prior to submission of an application for a fund
> reservation, where there are existing contracts or options and
> Sponsors did not provide the pre-contractual notifications to the
> sellers, the Sponsor must provide the notification after-the-fact and
> give the seller an opportunity to withdraw from the contract/option.
> All Section 202 and Section 811 applications for fund reservations
> that are filed in response to the FY 1999 NOFAs must be in compliance
> with the above.

**17.** **[PRIOR SUCCESSFUL APPLICANTS:]{.underline}** Sponsors applying
for a Section 202 or Section 811 fund reservation who have received a
Section 202 or Section 811 fund reservation, as applicable, within the
last three funding cycles are **NOT** required to submit the following:

> \- Articles of Incorporation, constitution, or other organizational
> documents;

\- By-laws;

> \- IRS tax exemption ruling
>
> Instead, these Sponsors must submit the project number of the last
> appropriate application selected and the local HUD Office to which it
> was submitted. If there have been any modifications or additions to
> the subject documents, Sponsors must indicate such, and submit the new
> material.

**18.** **[APPLICATION KITS:]{.underline}** Applicants may request
Application Kits from the SuperNOFA Information Center by calling
1-800-HUD8929 (the TDD number is 1-800-483-2209), by contacting the
appropriate HUD Office, or accessing the HUD Homepage on the Internet at
http://www.hud.gov. Program staff can also obtain Application Kits for
their use by accessing them from the HUD homepage at www.hud.gov. A
checklist of steps and exhibits involved in the application process is
included in the Application Kit.

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Programmatic questions concerning the FY 1999 Section 202 or Section 811
program may be discussed with the Office of Business Products in
Headquarters at 202-708-2866. Questions concerning DAP should be
directed to Eva Lantz, (202-708-4135, extension 2463).

Questions concerning Section 202 or Section 811 Capital Advance or
Project Rental Assistance Contract Authority should be directed to the
Funding Control Division (202-708-2750).

William C. Apgar

> Assistant Secretary for Housing-
>
> Federal Housing Commissioner

Attachments

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